Money-Laundering Conspiracy Sentencing: Underlying-Offense Base Level Controls and USSG §2S1.1 Note 3(C) Is Limited to §2S1.1(a)(2)

Case: United States v. Abbas (1st Cir. Jan. 29, 2026)
Court: United States Court of Appeals for the First Circuit
Panel: Montecalvo, Lynch, and Thompson, Circuit Judges (opinion by Thompson, J.)

1. Introduction

United States v. Abbas is the First Circuit’s second decision involving Hassan Abbas, an attorney who facilitated “romance scams” and “business email compromises” by opening and operating shell-company bank accounts into which victims wired funds. After his co-schemers induced victims to send money, Abbas allegedly moved the funds among accounts and siphoned cash, continuing even after banks confronted him.

In the first appeal, the First Circuit affirmed Abbas’s wire-fraud and money-laundering-conspiracy convictions, but vacated certain substantive money-laundering convictions, his 108-month sentence, and a restitution order exceeding $2 million, remanding for resentencing. On remand, the district court imposed an 87-month sentence (below the 108–135 month Guidelines range) and reimposed restitution of $2,001,853.68. Abbas again appealed, challenging (i) procedural reasonableness (Guidelines calculations), (ii) substantive reasonableness (length and disparity), and (iii) restitution (scope and attribution).

The decision is significant for its concrete interpretive holdings about (a) how to determine the fraud guideline base offense level when sentencing a money-laundering conspiracy under USSG §2S1.1(a)(1), and (b) the limited reach of Application Note 3(C) (the “sole object was §1957” carve-out) to cases sentenced under USSG §2S1.1(a)(2), rejecting the logic of United States v. Tedder.

2. Summary of the Opinion

The First Circuit affirmed both the 87-month sentence and the restitution order. It held:

  • Base offense level: Because Abbas was sentenced for a §1956(h) money-laundering conspiracy under USSG §2S1.1(a)(1), the court correctly derived the base offense level from the underlying wire-fraud offense under USSG §2B1.1, including §2B1.1(a)(1)’s base level 7 (not 6) because Abbas was convicted of an offense “referenced” to §2B1.1 and that offense carries a statutory maximum of 20 years or more.
  • Money-laundering enhancements: The 2-level enhancement under USSG §2S1.1(b)(2)(B) applied by its terms to a §1956(h) conviction, and Application Note 3(C) did not remove it because Note 3(C), appearing under “Application of Subsection (a)(2),” governs only §2S1.1(a)(2) cases, not §2S1.1(a)(1) cases. The sophisticated-laundering enhancement under USSG §2S1.1(b)(3) stood because it depends on §2S1.1(b)(2)(B) being applicable.
  • Loss amount: Abbas’s “acquitted conduct” framing failed because the district court grounded loss on the wire-fraud scheme and relevant conduct principles (jointly undertaken activity and foreseeability). Challenges to the district court’s stated basis were deemed waived. A foreign-origin wire received into an Abbas-controlled U.S. account supported inclusion of the related loss amount; the extraterritoriality argument failed under the wire-fraud statute’s domestic “focus” on misuse of the wires.
  • Zero-point-offender reduction: Abbas did not show eligibility for USSG §4C1.1; in particular, he did not meaningfully engage the district court’s reasoning that “personally caused” substantial financial hardship can cover a participant whose actions (receiving and handling fraud proceeds through U.S. accounts) are integral to the scheme’s execution.
  • Substantive reasonableness: Abbas did not establish an unwarranted disparity under 18 U.S.C. §3553(a)(6), especially given case-specific factors emphasized by the district court (including abuse of a law license and persistence after warning).
  • Restitution: The MVRA restitution order properly included the foreign victim’s loss where the scheme used domestic wires (funds received into a U.S. account) and where losses were found reasonably foreseeable within the scheme; Abbas’s contrary arguments were largely waived or repackaged.

3. Analysis

3.1. Precedents Cited

The opinion’s principal doctrinal work is Guidelines interpretation and the domestic-application analysis for wire fraud. The court anchored its reasoning in the following lines of authority.

A. Guidelines interpretation: USSG §2S1.1(a)(1) ties the base level to the “full calculated offense level” of the underlying offense

  • United States v. Cruzado-Laureano, 440 F.3d 44 (1st Cir. 2006): The court relied on its “long-held view” that USSG §2S1.1(a) “directs the sentencing court to take as the base offense level . . . the full calculated offense level that applies to the offense which produced the laundered funds,” i.e., “calculate the sentence as it would have applied to the [underlying] count[] standing alone.” This precedent framed the interpretive posture: start from the underlying offense’s guideline mechanics when §2S1.1(a)(1) applies.
  • United States v. Otunyo, 63 F.4th 948 (D.C. Cir. 2023); United States v. Capps, 977 F.3d 250 (3d Cir. 2020); United States v. Nikolovski, 565 F. App’x 397 (6th Cir. 2014): These cases supplied persuasive, “on-point” support for reading USSG §2B1.1(a)(1)’s phrase “convicted of an offense referenced to this guideline” to encompass any qualifying offense of conviction—including the underlying wire-fraud count—rather than only the money-laundering count.
  • United States v. Menendez, 600 F.3d 263 (2d Cir. 2010), and United States v. Blackmon, 557 F.3d 113 (3d Cir. 2009): The court cited these decisions to contextualize the 2001 amendment to USSG §2S1.1 that differentiates “direct money launderers” under §2S1.1(a)(1) from “third party money launderers” under §2S1.1(a)(2), reinforcing proportionality and higher ranges for those who committed the underlying predicate.

B. Limiting Application Note 3(C) to subsection (a)(2) and declining to follow Tedder’s “general application” suggestion

  • United States v. Tedder, 403 F.3d 836 (7th Cir. 2005): Tedder had “speculated” that Application Note 3(C) has “general application,” notwithstanding its placement under “Application of Subsection (a)(2).” The First Circuit explicitly refused to extend that logic here. It reasoned that the amendment-driven structure of §2S1.1—a design to punish direct launderers more severely—undercuts Tedder’s equality premise and supports reading Note 3(C) as limited to cases where §2S1.1(a)(2) sets the base level.

C. Lenity and interpretive caution in Guidelines cases

  • United States v. Pinkham, 896 F.3d 133 (1st Cir. 2018), and United States v. Suárez-González, 760 F.3d 96 (1st Cir. 2014): Cited for the proposition that lenity applies only where there is “substantial ambiguity.”
  • Muscarello v. United States, 524 U.S. 125 (1998), and Callanan v. United States, 364 U.S. 587 (1961): Used to reinforce that lenity is a last-resort canon requiring “grievous ambiguity” and cannot be used “to beget” ambiguity.

D. Extraterritoriality and domestic application of wire fraud

  • RJR Nabisco, Inc. v. Eur. Cmty., 579 U.S. 325 (2016); Morrison v. Nat’l Australia Bank, Ltd., 561 U.S. 247 (2010); WesternGeco LLC v. ION Geophysical Corp., 585 U.S. 407 (2018): These cases provided the two-step framework: (1) rebuttal of the presumption against extraterritoriality, and (2) domestic application by identifying the statute’s “focus” and locating relevant conduct.
  • United States v. McLellan, 959 F.3d 442 (1st Cir. 2020): The court treated McLellan as controlling on wire fraud’s “focus,” stating that the statute focuses “not [on] the fraud itself” but the “abuse of the wires,” and that sending or receiving wire communications while in the United States for the purpose of carrying out a scheme constitutes domestic application even if the victim is abroad.
  • United States v. Hussain, 972 F.3d 1138 (9th Cir. 2020): Cited as consistent out-of-circuit support that misuse of domestic wires anchors a domestic application.
  • Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108 (2013): Abbas invoked Kiobel’s “touch and concern” language; the First Circuit distinguished it, emphasizing that Kiobel did not undertake a “focus” analysis where “all relevant conduct” occurred abroad, whereas here the relevant conduct included receipt of funds into a U.S. account through wire transmissions.
  • EEOC v. Arabian Am. Oil Co., 499 U.S. 244 (1991): Cited for the general proposition that Congress can enforce laws beyond national borders, subject to statutory interpretation.

E. Appellate review doctrines and sentencing administration

  • United States v. Pupo, 995 F.3d 23 (1st Cir. 2021), and United States v. Fargas-Reyes, 125 F.4th 264 (1st Cir. 2025): Standards for preserved error (abuse of discretion / de novo legal review / clear error fact review) and unpreserved error (plain error).
  • Molina-Martinez v. United States, 578 U.S. 189 (2016), and United States v. Cruz-Ramos, 987 F.3d 27 (1st Cir. 2021): Cited to acknowledge Guidelines complexity and general sentencing mechanics.
  • Waiver authorities such as Miller v. Jackson, 152 F.4th 258 (1st Cir. 2025), and Mirabella v. Town of Lexington, 64 F.4th 55 (1st Cir. 2023) played a decisive role where Abbas did not address the district court’s stated reasoning.

F. Substantive reasonableness and disparities

  • Gall v. United States, 552 U.S. 38 (2007): The court invoked Gall’s reasoning that correct Guidelines calculation and review inherently accounts for disparity concerns.
  • United States v. Dunfee, 821 F.3d 120 (1st Cir. 2016), and United States v. Floyd, 740 F.3d 22 (1st Cir. 2014): Emphasized the heightened difficulty of challenging a below-Guidelines sentence as substantively unreasonable.
  • Disparity analysis cases included United States v. Candelario, 105 F.4th 20 (1st Cir. 2024), United States v. Demers, 842 F.3d 8 (1st Cir. 2016), United States v. Flores-Machicote, 706 F.3d 16 (1st Cir. 2013), and United States v. Rodríguez-Adorno, 852 F.3d 168 (1st Cir. 2017).
  • On sentencing statistics: United States v. Joubert, 778 F.3d 247 (1st Cir. 2015), and United States v. Medoff, 159 F.4th 107 (1st Cir. 2025), supported skepticism about national averages lacking case-specific context.

G. Restitution under the MVRA

  • United States v. Cardozo, 68 F.4th 725 (1st Cir. 2023): Standard of review for restitution (abuse of discretion).
  • United States v. Corey, 77 F. App’x 7 (1st Cir. 2003) (unpublished): Cited by Abbas for the proposition that “unforeseeable consequential damages” are beyond the MVRA’s scope; the court found Abbas failed to engage the district court’s foreseeability findings.

3.2. Legal Reasoning

A. The new Guidelines clarification: “an offense” means any qualifying conviction, including the underlying offense used by §2S1.1(a)(1)

The centerpiece is the court’s textual approach to USSG §2S1.1(a)(1) and USSG §2B1.1(a)(1). Because Abbas was sentenced on the money-laundering conspiracy (18 U.S.C. §1956(h)), USSG §2S1.1 applied; because Abbas was a “direct money launderer” whose laundered funds came from wire fraud, USSG §2S1.1(a)(1) required use of “the offense level for the underlying offense from which the laundered funds were derived.”

Once the analysis properly pivoted to the underlying wire fraud (18 U.S.C. §1343), USSG §2B1.1(a)(1) set the base offense level at 7 if the defendant was convicted of “an offense referenced to this guideline” and the offense carries a 20-year (or more) statutory maximum. The court adopted the Otunyo reading: the indefinite article “an” is critical; it does not demand that the money-laundering count itself be “referenced” to §2B1.1 in Appendix A, but rather that any offense of conviction that is used as the underlying offense (here, wire fraud) is so referenced and meets the statutory maximum condition.

This reasoning simultaneously (i) makes §2S1.1(a)(1) functional—by allowing it to import the underlying offense’s full guideline mechanics, as Cruzado-Laureano contemplated—and (ii) aligns with the Sentencing Commission’s post-amendment proportionality goal discussed via Menendez.

B. Application Note 3(C) is not a universal carve-out; it is cabined to §2S1.1(a)(2)

Abbas attempted to avoid the §2S1.1(b)(2)(B) enhancement by invoking Application Note 3(C), which states that subsection (b)(2)(B) “shall not apply” if the defendant was convicted of a §1956(h) conspiracy and the conspiracy’s sole object was a §1957 offense. The First Circuit treated the Note’s placement as decisive: because Note 3(C) appears under the heading “Application of Subsection (a)(2),” it applies only where the base offense level is derived from §2S1.1(a)(2)—not where, as here, the base offense level is derived from §2S1.1(a)(1).

The court’s rejection of United States v. Tedder was grounded in structure and purpose: the Commission amended §2S1.1 to impose higher ranges on “direct money launderers” under §2S1.1(a)(1) than “third party money launderers” under §2S1.1(a)(2). That structural policy makes it implausible to treat Note 3(C) as a freestanding parity device that would erase (b)(2)(B) in (a)(1) cases, because doing so would undermine the amendment’s differentiation.

C. Loss calculations: scheme-based relevant conduct and appellate waiver

The court treated Abbas’s “acquitted conduct” framing as a mismatch to the district court’s stated rationale: the district judge grounded the loss amount in the wire-fraud scheme and foreseeability principles (jointly undertaken activity and reasonably foreseeable acts in furtherance). Because Abbas did not address that rationale in his opening brief, the First Circuit found waiver and declined to revisit the loss calculation on the terms Abbas proposed.

D. Foreign-origin wire received in the U.S. is a domestic application of the wire-fraud statute under McLellan’s “focus” analysis

For the Kenyan transfer associated with Pak Sum Low, the court applied the extraterritoriality framework by moving directly to step two: the wire-fraud statute’s “focus” is the “abuse of the wires,” per United States v. McLellan. Receipt of the wire into an Abbas-controlled Illinois account constituted “domestic conduct through domestic wires,” making application domestic even though the victim and originating conduct were abroad.

Notably, the court faulted Abbas’s appellate approach as aimed at step one (whether the statute is extraterritorial) while failing to grapple with step two (domestic application given the statute’s focus). This framing strengthens McLellan’s practical import: defendants challenging “foreign loss” inclusion must confront the domestic-wires focus when the charged conduct includes sending or receiving wires in the United States.

E. “Personally caused” substantial financial hardship and joint activity (USSG §4C1.1)

The court did not definitively parse the causal standard (but-for/proximate) because Abbas did not preserve or develop the issue. Still, the decision underscores the district court’s permitted view that, in a fraud scheme, the person who receives and processes the victim’s money through the scheme’s infrastructure can “personally” cause the hardship even if another conspirator performed the direct victim solicitation—particularly where the recipient’s conduct is “integral” and “necessary” to the scheme’s execution.

F. Substantive reasonableness: below-Guidelines sentence, case-specific aggravators, and weak comparators

The 87-month sentence was below the 108–135 month range, placing Abbas in the difficult posture of arguing that a downward variance was still too high. The court credited the district judge’s identified aggravators (abuse of a law license, persistence after warning, limited remediation) and found Abbas’s comparator cases and generalized JSIN statistics insufficiently matched to establish unwarranted disparity.

G. MVRA restitution: scheme victims, domestic wires, and foreseeability

The restitution holding largely followed the earlier wire-fraud domestic-application analysis and waiver principles. Under the MVRA, a “scheme” offense may encompass “any person directly harmed . . . in the course of the scheme.” The First Circuit found Abbas’s “purely foreign conduct” premise already defeated by the domestic receipt of wire communications, and it declined to entertain foreseeability-based limitations where Abbas did not meaningfully engage the district court’s foreseeability findings on appeal.

3.3. Impact

  • Sentencing of “direct money launderers” in the First Circuit: The decision solidifies that when USSG §2S1.1(a)(1) applies, the sentencing court looks to the underlying offense and then applies USSG §2B1.1(a)(1)’s base level 7 if any offense of conviction (including the underlying one) is referenced to §2B1.1 and carries a 20-year (or more) statutory maximum. This aligns the First Circuit with Otunyo, Capps, and Nikolovski, and rejects arguments that would mechanically tie “referenced” status to the laundering statute’s Appendix A entry.
  • Constraining Application Note 3(C): By limiting Note 3(C) to USSG §2S1.1(a)(2) cases and declining to adopt Tedder’s broader reading, the court preserves the Commission’s direct/third-party launderer distinction and makes the §2S1.1(b)(2)(B) enhancement more predictably applicable in §2S1.1(a)(1) cases.
  • Cross-border fraud fact patterns: The decision strengthens the view that wire fraud can be applied domestically (and thus used for loss and restitution) when scheme-related wire transmissions are received in U.S. accounts, even where victims and origin points are abroad, consistent with McLellan’s “focus” on wire misuse.
  • Appellate strategy consequences: The opinion is also a practical warning: sentencing appeals often turn on engaging the district court’s stated rationale. Abbas repeatedly lost issues (loss, foreign-loss framing, zero-point offender) due to waiver—i.e., failure to attack the actual ground of decision.

4. Complex Concepts Simplified

  • Base offense level (BOL): The starting point in the Guidelines calculation before enhancements and reductions are applied.
  • USSG §2S1.1(a)(1) vs. §2S1.1(a)(2): Section (a)(1) applies when the defendant committed (or is accountable for) the underlying crime that generated the laundered proceeds (“direct” launderer). Section (a)(2) is used when the defendant did not commit the underlying crime or it is impracticable to determine the underlying offense level (“third-party” launderer).
  • “Referenced to this guideline” (USSG §2B1.1): A technical phrase meaning the Statutory Index (Appendix A) points to §2B1.1 for the offense of conviction. The key move in Abbas is that when §2S1.1(a)(1) directs the court to the underlying offense, the court examines whether that underlying offense (wire fraud) is referenced to §2B1.1 and meets the statutory maximum requirement.
  • Application notes and headings: Commentary can control, but this case treats the heading/placement of the note (“Application of Subsection (a)(2)”) as limiting the note’s scope—meaning not every note necessarily applies to every subsection of a guideline.
  • Relevant conduct / jointly undertaken activity: In sentencing, loss and other facts can include reasonably foreseeable acts of co-participants taken in furtherance of jointly undertaken criminal activity, not merely the defendant’s isolated acts.
  • Presumption against extraterritoriality (two-step test): Courts ask (1) whether Congress clearly made a statute apply abroad; if not, (2) whether applying the statute in the case is still “domestic” by looking at the statute’s “focus.” For wire fraud in this circuit, the “focus” is misuse of the wires, so receiving scheme-related wires in the U.S. can make the application domestic.
  • MVRA restitution in a “scheme” offense: For an offense involving a scheme, restitution can cover persons directly harmed in the course of that scheme, not solely those named in particular counts—subject to the causal/foreseeability limits that a defendant must preserve and properly litigate.

5. Conclusion

United States v. Abbas affirms a below-Guidelines fraud-and-money-laundering sentence and a $2 million-plus restitution order, but its enduring importance is doctrinal: the First Circuit clarifies that, when sentencing a §1956(h) money-laundering conspiracy under USSG §2S1.1(a)(1), courts derive the base offense level from the underlying offense and may apply USSG §2B1.1(a)(1)’s base level 7 based on any qualifying conviction (including the underlying wire-fraud conviction). The court also cabins USSG §2S1.1 Application Note 3(C) to subsection (a)(2), rejecting the broader approach suggested by United States v. Tedder.

The opinion further reinforces McLellan’s “focus” analysis for wire fraud: domestic receipt and use of wire communications can anchor a domestic application even in cross-border scenarios, supporting loss and restitution where proceeds are directed into U.S. accounts. Finally, the decision illustrates that, in sentencing appeals, waiver doctrine can be outcome-determinative when the appellant does not directly confront the district court’s articulated reasoning.