Intended Loss Includes Pre‑Scheme Funds Placed at Risk; No Investor‑by‑Investor Tracing Required, and Restitution May Cover All Scheme Victims — United States v. Miller (7th Cir. 2025)

Introduction

In United States v. Earl Miller, the Seventh Circuit affirmed a 97‑month sentence and a $2.3 million restitution order arising from a real estate–focused investment fraud. The decision clarifies critical sentencing and restitution principles in fraud cases:

For Guidelines loss under U.S.S.G. § 2B1.1, a court may use the amount the defendant “placed at risk” as intended loss, even if some of those funds were invested before the charged start of the scheme, so long as the defendant later misappropriated them as part of the same course of conduct.
Intended loss need not be traced investor‑by‑investor; identity of specific victims is not required for that calculation.
Restitution under the Mandatory Victim Restitution Act may extend to all victims of the overall scheme, not merely those named in counts of conviction, provided actual loss and causal nexus are shown.

The opinion offers a practical roadmap for loss and restitution determinations in complex, scheme‑based fraud prosecutions and underscores the “scheme‑wide” lens through which the Seventh Circuit views both sentencing and restitution in fraud cases.

Summary of the Judgment

A jury convicted Earl Miller, the sole owner of the 5 Star real estate investment entities, of securities fraud and five counts of wire fraud. The district court, relying on an FBI forensic accountant’s analysis of the companies’ bank records, found that Miller misappropriated approximately $4.5 million contrary to the governing Private Placement Memoranda (PPMs). It used that amount as “intended loss,” triggering an 18‑level enhancement under U.S.S.G. § 2B1.1(b)(1)(J). The court later ordered $2,313,873.28 in restitution to 45 victims, representing net actual losses after credits for any returns or bankruptcy distributions.

On appeal, Miller argued the loss figure was inflated and unsupported, particularly because some misspent funds had been invested before he became sole owner, and because the court did not identify each investor he supposedly defrauded at the time of investment. He also contested the scope of restitution beyond the trial victims. The Seventh Circuit rejected these arguments and affirmed:

Intended loss was properly set at $4.5 million—the amount Miller misappropriated—because those funds were placed at risk by his scheme, regardless of when investors originally contributed them.
No investor‑by‑investor tracing is required to calculate intended loss.
Restitution for all victims of the delineated scheme was appropriate upon proof of direct and proximate causation of actual loss, which the government established and to which Miller stipulated as to amount.

Factual and Procedural Background

5 Star Investments raised capital through PPMs promising investor funds would be used for residential real estate. After buying out his co‑owner in 2014, Miller became the sole signatory on company accounts and diverted millions of dollars to personal uses and to “green energy” ventures run by friends—without investor authorization and, initially, without any disclosure. When he later issued a new PPM purporting to cover “green products,” it contained false statements (e.g., about patents and distribution plans). As the business struggled and failed to pay returns, Miller kept soliciting funds, and ultimately the entities entered bankruptcy.

At sentencing, probation recommended a $30 million loss based on total invested principal at bankruptcy, which would have yielded a 22‑level enhancement. The district court instead adopted the forensic accountant’s $4.5 million as intended loss for an 18‑level enhancement and deferred restitution until it received investor‑specific tracing and net‑loss data. After the government identified 45 victims and netted out returns and bankruptcy distributions, the court ordered restitution in the stipulated amount of $2,313,873.28 and imposed a below‑Guidelines sentence of 97 months.

Detailed Analysis

Precedents Cited and Their Role

United States v. Newton, 76 F.4th 662 (7th Cir. 2023) — Reinforces that the government must prove loss by a preponderance and that courts need only make a “reasonable estimate” of loss. The panel relied on this framework to uphold the district court’s conservative $4.5 million estimate based on bank‑record‑supported misspending.
United States v. Meza, 983 F.3d 908 (7th Cir. 2020) — Confirms that because wire fraud is a “scheme” offense, loss can include the entire scheme’s losses, not just the transactions charged. This undergirds including all misspent funds connected to the common course of conduct.
United States v. Yihao Pu, 814 F.3d 818 (7th Cir. 2016) — Establishes standards of review: de novo for methodology, clear error for the ultimate loss figure. Applied here to sustain the district court’s calculation.
United States v. Kyereme, 127 F.4th 702 (7th Cir. 2025) — Clarifies the defendant’s “heavy burden” to show loss findings are outside permissible computations. The panel highlighted this in rejecting Miller’s challenges.
United States v. Klund, 59 F.4th 322 (7th Cir. 2023); United States v. Durham, 766 F.3d 672 (7th Cir. 2014); United States v. Lauer, 148 F.3d 766 (7th Cir. 1998) — Articulate the “placed at risk” approach to intended loss: the measure is the amount the scheme exposed to loss, not merely what was taken. This principle allowed inclusion of funds originally invested before Miller became sole owner, because he later placed them at the same risk through misappropriation.
United States v. Stochel, 901 F.3d 883 (7th Cir. 2018); United States v. Mei, 315 F.3d 788 (7th Cir. 2003) — Emphasize that fraud statutes punish the scheme as a whole and that “amount obtained” may understate true risk; these cases support a scheme‑wide loss lens.
United States v. Moose, 893 F.3d 951 (7th Cir. 2018) — Affirms that the intent to repay does not reduce intended loss; the whole misappropriated amount counts. The panel used Moose to reject Miller’s suggestion that hoped‑for returns from diverted investments should mitigate intended loss.
United States v. Tartareanu, 884 F.3d 741 (7th Cir. 2018); United States v. Betts‑Gaston, 860 F.3d 525 (7th Cir. 2017) — Hold that neither the Guidelines nor case law requires identification of specific victims to compute intended loss. This defeats Miller’s investor‑tracing argument at sentencing.
United States v. Schaefer, 291 F.3d 932 (7th Cir. 2002); United States v. Chube II, 538 F.3d 693 (7th Cir. 2008) — Caution that enhancements must be explained and grounded in unlawful conduct. Distinguished here because the district court gave a reasoned, evidence‑anchored explanation and limited the loss to documented unauthorized expenditures.
United States v. Allen, 529 F.3d 390 (7th Cir. 2008) — For restitution, only actual loss counts and must be net of any returns or bankruptcy distributions. The $2.3 million award complied.
United States v. Locke, 643 F.3d 235 (7th Cir. 2011) — Authorizes restitution across the entire scheme, not just the counts of conviction, so long as the scheme is properly demarcated and causation is shown. This supported restitution to all 45 victims.
United States v. Betts, 99 F.4th 1048 (7th Cir. 2024) — Sets the abuse‑of‑discretion standard for restitution and requires proof that losses were directly and proximately caused by the scheme. The government met this with tracing and netting, which Miller stipulated as accurate.
United States v. Kones, 77 F.3d 66 (3d Cir. 1996) — Quoted in Locke: a court may order restitution to victims of the overall scheme even if the defendant was not convicted of defrauding each one individually.

Legal Reasoning

Intended loss may equal the amount misspent in breach of investment promises.
The district court accepted the forensic accountant’s tracing of $4,524,137.57 in unauthorized outflows—to pay off a buyout debt, a spiritual advisor, green‑product ventures run by friends, a management firm (Global Impact), a law firm, and Miller himself. Because these uses plainly violated the PPMs and were part of the same course of conduct, the court treated the entire figure as the amount Miller purposely put at risk. The Seventh Circuit endorsed this as a reasonable, conservative estimate of intended harm.
Funds invested before the charged scheme start may count toward intended loss if later placed at risk by the scheme.
Rejecting Miller’s temporal argument, the court held it “makes no difference” that some of the misspent funds had been invested before he became sole owner in July 2014. The decisive point is that he later placed those very funds at risk through his fraudulent misappropriation. The “placed at risk” doctrine measures the gravity of the scheme as a whole and does not confine intended loss to post‑start‑date deposits when earlier funds were swept into the same unlawful course of conduct.
No investor‑by‑investor tracing is required for intended loss.
The court reaffirmed that intended loss does not require identifying specific victims or proving that each investor was deceived at the moment of investing. That level of granularity is required for restitution (actual loss), not for intended loss, which punishes the scheme. The court therefore rejected Miller’s attempt to limit loss to the five trial victims.
Intent to repay or hoped‑for returns do not reduce intended loss.
Echoing Moose and Lauer, the panel reiterated that defendants who divert funds in violation of promises are accountable for the full misappropriated amount as intended loss, even if they subjectively hoped that other investments would generate sufficient returns to make investors whole.
Restitution may cover all victims of the scheme, based on net actual losses directly and proximately caused.
Under the MVRA, the court awarded restitution to 45 victims whose investments were traced to the unauthorized expenditures, net of any interest payments or bankruptcy recoveries. The Seventh Circuit found no abuse of discretion. It emphasized that restitution can span scheme‑wide victims once the scheme is properly demarcated and proximate causation is shown, even beyond those named in the indictment or who testified at trial.
Conservative exercise of discretion at sentencing.
The panel noted that probation proposed a $30 million loss (total invested principal at bankruptcy) and that approximately $10 million flowed in during the indictment period alone. The district court confined loss to the $4.5 million it could conclusively tie to unauthorized expenditures—a restraint the Seventh Circuit endorsed as both conservative and well‑supported.

Impact and Practical Consequences

Expanded universe of loss for scheme‑based frauds. The decision cements that intended loss can include funds invested before a charged start date if the defendant later folds those funds into the scheme. This matters in long‑running investment operations where pre‑scheme deposits remain in pooled accounts.
Lower evidentiary burden at sentencing than defendants often argue. Prosecutors need not perform investor‑by‑investor tracing to compute intended loss. A reliable, record‑based aggregation of unauthorized expenditures can suffice when tied to a common scheme.
Restitution strategy: trace and net. For restitution, the government must provide investor‑specific tracing and net out returns and bankruptcy distributions. Miller’s case shows that once net losses are properly traced to the scheme and the scheme is demarcated, restitution to all affected victims will be sustained.
Defense implications. Attempts to exclude pre‑scheme funds from intended loss or to confine loss and restitution to counts of conviction will likely fail in the Seventh Circuit where pooled funds were later misappropriated as part of the same course of conduct. Where possible, defense challenges should focus on undermining tracing reliability, disputing whether expenditures were truly “unauthorized,” or contesting the demarcation of the scheme.
Compliance and governance lessons. Corporate fiduciaries who assume control over legacy investor funds face exposure if they later repurpose those funds contrary to governing documents. Transparent amendments, investor consent, and strict adherence to PPM terms are crucial to avoid transforming legacy capital into “at‑risk” funds for intended loss purposes.

Complex Concepts Simplified

Intended loss vs. actual loss
Intended loss is the amount the defendant purposely sought to harm—often measured by the amount placed at risk by the fraudulent scheme. Actual loss is the real, net financial harm suffered by victims (after credits for returns or recoveries).
“Placed at risk” approach
In fraud cases, courts assess the magnitude of risk the scheme created. If the defendant exposed $4.5 million to loss by misappropriation, intended loss can be $4.5 million even if some of that money was raised earlier in a legitimate phase of the business.
Scheme to defraud
Wire fraud punishes a scheme—a course of conduct involving deceit—not just isolated transactions. This permits aggregation of losses and broader restitution for scheme‑wide victims.
Sentencing Guidelines § 2B1.1 loss enhancement
The Guidelines increase offense level in steps as loss increases. Here, $4.5 million produced an 18‑level increase. The court aims for a reasonable estimate supported by the record.
Standards of review
Appellate courts review the method used to calculate loss de novo, but the number itself for clear error (a deferential standard). Restitution awards are reviewed for abuse of discretion.
MVRA restitution
For listed offenses like wire fraud, restitution is mandatory for the full amount of each victim’s actual loss directly and proximately caused by the offense conduct. It may encompass all victims of the scheme, not only those charged or who testified, if the scheme is properly defined.
Private Placement Memorandum (PPM)
A PPM is an offering document setting out how investor funds will be used and the terms of the investment. Spending that violates the PPM can evidence fraudulent misappropriation.
Accredited/sophisticated investor
These are regulatory categories indicating investors presumed to have sufficient financial knowledge or capacity. Their presence in a PPM does not excuse misappropriation or false statements.

Conclusion

The Seventh Circuit’s decision in United States v. Miller provides clear guidance on two recurring issues in fraud cases. First, for Guidelines purposes, intended loss may equal the total amount a defendant misappropriated in breach of investment terms—the sum the defendant placed at risk—without investor‑by‑investor tracing and even when some funds were invested before the charged start of the scheme. Second, restitution may extend to all victims of the properly demarcated scheme based on net actual losses directly and proximately caused by the scheme, not merely those named in the indictment or who testified.

By affirming a conservative, record‑driven loss estimate and a carefully traced restitution award, the court reinforces a scheme‑centric approach to both sentencing and restitution. The opinion will influence future white‑collar sentencings by broadening the temporal and victim scope of intended loss and confirming the evidentiary pathway for comprehensive restitution in scheme‑based prosecutions.