Strategic Acceptance Is Waiver: Agreeing to a Loss Figure Forecloses §2B1.1 Causation Challenges in the Seventh Circuit

Introduction

In United States v. Kenneth D. Courtright, the Seventh Circuit affirmed both the wire-fraud conviction and the sentence of the founder of Today’s Growth Consultant, doing business as “The Income Store.” The government proved at trial that Courtright promised investors perpetual monthly payments backed by advertising revenue but sustained those payments primarily by recycling upfront fees from new investors—classic Ponzi-scheme mechanics. On appeal, Courtright challenged the sufficiency of the evidence (arguing there was no “scheme to defraud” and no intent to defraud) and attacked the district court’s loss calculation at sentencing, asserting the court failed to conduct a causation analysis and should have credited substantial operating expenses.

The Seventh Circuit (Judge Jackson-Akiwumi, joined by Judges Easterbrook and Pryor) rejected those arguments. Most notably for sentencing law, the court held that a defendant who strategically agrees to a loss figure at sentencing waives any later appellate claim that the district court failed to perform the required causation analysis under U.S.S.G. § 2B1.1. The court also reiterated that material misstatements about the use of investor funds and corporate solvency satisfy the “scheme to defraud” element of wire fraud and that broad operating-expense deductions are unavailable where the defendant cannot show those expenses delivered legitimate, bargained-for services to the victims.

Summary of the Opinion

Convictions affirmed: The court held the government introduced ample evidence that Courtright made material misrepresentations about (i) the use of upfront fees (promised exclusively for website acquisition, hosting, maintenance, and marketing), and (ii) TGC’s financial condition (represented as “satisfactory,” solvent, and able to perform), while in reality the business relied on new investor money to meet guaranteed monthly obligations.
Intent to defraud: Although Courtright did not preserve a distinct intent argument, the panel found no plain error; the circumstantial evidence—including persistent use of upfront fees despite internal warnings—amply supported a finding of fraudulent intent.
Sentencing—loss calculation and causation: The panel concluded Courtright waived any appellate challenge to the lack of an explicit causation analysis by “unambiguously” agreeing to the government’s $69.3 million baseline loss figure as a matter of strategy in order to secure deductions moving the loss below the $65 million threshold.
Sentencing—deductions: The court upheld the district court’s denial of (i) a $22 million “buy-back” deduction (because it was conditional on Courtright’s continued employment) and (ii) a $34.73 million “infrastructure/operating expense” deduction (because the funds were commingled and Courtright could not show those expenses were legitimately performed for the victims consistent with the CPAs). Two deductions were allowed: roughly $6.995 million returned to investors in the SEC receivership and $7.873 million extinguished when investors accepted website ownership in lieu of cash.
Bottom line: With deductions, the court calculated a final loss of $52.5 million (yielding a +22 offense-level increase under § 2B1.1), and affirmed a 90-month sentence—well below the advisory range of 210–262 months.

Analysis

Precedents Cited and Their Role in the Decision

United States v. Harris, 51 F.4th 705 (7th Cir. 2022)
The standard for Rule 29 sufficiency challenges—whether any rational trier of fact could find guilt when viewing evidence in the government’s favor—framed the court’s approach to the wire fraud counts.
United States v. Weimert, 819 F.3d 351 (7th Cir. 2016) and United States v. Filer, 56 F.4th 421 (7th Cir. 2022)
Weimert cautions that sharp business negotiation tactics are not necessarily fraud if all essential terms are disclosed. Filer, however, warns against overreading Weimert, emphasizing that material obfuscation remains fraudulent. The court used Filer to cabin Weimert’s reach and to underscore that Courtright’s misstatements about how funds would be used and the company’s solvency were quintessentially material.
Kungys v. United States, 485 U.S. 759 (1988)
Provided the familiar definition of materiality—a statement capable of influencing the decisionmaker—easily satisfied by misrepresentations about the use of investor funds and TGC’s financial health.
United States v. Dewitt, 943 F.3d 1092 (7th Cir. 2019)
Supported the conclusion that expert testimony was unnecessary to interpret ordinary contractual terms like “solvent” or “satisfactory financial condition.”
United States v. Maez, 960 F.3d 949 (7th Cir. 2020); United States v. Knox, 540 F.3d 708 (7th Cir. 2008); United States v. Jones, 713 F.3d 336 (7th Cir. 2013); United States v. Groce, 891 F.3d 260 (7th Cir. 2018); United States v. Olano, 507 U.S. 725 (1993)
These cases framed the waiver/forfeiture and plain-error landscape for the belated “intent to defraud” argument. The court ultimately reviewed for plain error and found none.
United States v. Domnenko, 763 F.3d 768 (7th Cir. 2014)
The defense relied on Domnenko to suggest a lack of intent; the Seventh Circuit distinguished it and reaffirmed that intent can be proved by circumstantial evidence and inferences from the scheme’s design.
United States v. Pust, 798 F.3d 597 (7th Cir. 2015)
Confirmed that specific intent to defraud can be established circumstantially, including from the structure of the scheme.
United States v. Martin, 109 F.4th 985 (7th Cir. 2024); United States v. Garcia, 580 F.3d 528 (7th Cir. 2009)
Martin recognizes many procedural sentencing errors are reviewed de novo even without a contemporaneous objection; Garcia explains that a knowing, strategic decision can waive appellate review. The court applied Garcia to hold that Courtright’s on-the-record acceptance of the $69.3 million loss figure was a strategic waiver foreclosing a causation challenge.
United States v. Burns, 843 F.3d 679 (7th Cir. 2016); United States v. Whiting, 471 F.3d 792 (7th Cir. 2006)
These cases require a causation analysis for “actual loss” under § 2B1.1: both but-for and proximate causation. The court acknowledged the rule but declined to apply it due to waiver.
United States v. Collins, 949 F.3d 1049 (7th Cir. 2020)
Provides the deferential “clear error” standard for reviewing loss computations.
United States v. Swanson, 483 F.3d 509 (7th Cir. 2007); United States v. Betts-Gaston, 860 F.3d 525 (7th Cir. 2017)
Establish that loss cannot include the value of legitimate services actually performed for victims; services are “legitimate” when the victim agreed to pay for them. The court used these principles to reject Courtright’s sweeping operating-expense deduction in light of commingling and the absence of victim- or website-specific tracing.

Legal Reasoning

1) Scheme to Defraud and Material Misrepresentations

The government had to show Courtright made material false statements or concealed material facts to obtain money, and used interstate wires to execute the scheme (18 U.S.C. § 1343). It did so with two categories of misstatements:

Use of upfront fees: Investors were told their upfront fees would be used “exclusively” for website acquisition, hosting, maintenance, and marketing, and that monthly payments would be funded by advertising revenue and cross-subsidization from better-performing sites—not from other investors’ principal. Company ledgers, testimony from the controller and accountant, and an FBI forensic accountant showed that upfront fees were, in fact, used to make guaranteed monthly payments.
Financial condition: The CPAs guaranteed that TGC was “in satisfactory financial condition, solvent, able to pay its bills when due and financially able to perform.” The trial record reflected the opposite: website revenue and ordinary financing were insufficient to meet the “guaranteed” obligations; TGC resorted to high-interest loans (some up to 200%) and relied on new investor fees to cover recurring obligations. Even Courtright acknowledged the revenue shortfall.

Materiality was straightforward. Investors testified that how their money would be used and how payments would be funded were central to their decisions. The court emphasized that these facts strike at the core of the bargain and readily satisfy Kungys’s “capable of influencing” standard.

The defense’s central refrain—that a CPA “draw provision” permitted using upfront fees to fund payments—fell flat because the documentary and testimonial record established the use of new investors’ fees to satisfy other investors’ monthly obligations, in tension with the CPAs’ “exclusive-use” language tied to particular websites. The court also rejected reliance on a 2019 “moratorium letter” that vaguely referenced “challenges and headwinds,” noting it did not clearly disclose the longstanding diversion of upfront fees and did not cure prior misrepresentations.

Addressing Weimert, the court—consistent with Filer—underscored that sophisticated negotiations do not shield deliberate misrepresentations about material facts. Here, unlike Weimert, the essential terms were not transparently disclosed; they were affirmatively misstated.

2) Intent to Defraud, Preservation, and Plain Error

Courtright’s intent argument surfaced for the first time on appeal. Rather than calibrate precisely between waiver and forfeiture, the court applied plain-error review and found no error, much less an obvious one affecting substantial rights. The circumstantial record persuasively established intent:

Internal warnings that upfront fees were being used for monthly payments did not stop the practice.
Company ledgers and testimony revealed persistent shortfalls and reliance on new money to honor “guaranteed” payments.
Courtright conceded on cross-examination that upfront fees were used to pay investors, contradicting the CPAs’ “exclusive-use” promise.

The court distinguished Domnenko and invoked Pust to reiterate that intent often is proved circumstantially; the design and execution of the scheme itself can demonstrate an intent to deceive people of ordinary prudence. That threshold was plainly met.

3) Sentencing—Loss, Causation, and Strategic Waiver

Section 2B1.1 requires “actual loss,” defined as reasonably foreseeable pecuniary harm resulting from the offense, which in turn calls for but-for and proximate causation analyses (Burns; Whiting). The district court did not explicitly march through that causation framework. Ordinarily, that could be a procedural problem.

But the panel held that Courtright waived any causation challenge by strategically and unambiguously agreeing to the government’s $69.3 million loss figure at sentencing—“there is agreement, obviously, to the 69.3”—in order to secure specific deductions. That strategy worked: two deductions were granted, reducing loss to $52.5 million, dropping the enhancement from +24 to +22. Under Garcia, such a knowing, tactical choice is waiver, not forfeiture, and it forecloses appellate review even though Martin recognizes that many unobjected-to procedural errors can receive de novo review. This is the opinion’s most consequential procedural holding.

4) Sentencing—Deductions and “Legitimate Services”

The court affirmed denial of two large proposed deductions:

Buy-back proposal (~$22 million): Properly rejected because it was conditioned on Courtright’s continued employment—a contingency that made it an unreliable credit.
Operating expenses (~$34.73 million): Rejected under Swanson and Betts-Gaston. Although CPAs permitted use of funds for website-specific maintenance, the record showed commingling of funds and no reliable method to allocate expenses to the victim’s own website as the CPAs required. Without victim-consented, allocable services, these expenses could not reduce loss.

The court accepted two offsets: (1) sums the SEC receiver actually returned to investors (~$6.995 million), and (2) claims extinguished by investors who elected to take website ownership instead of cash (~$7.873 million). The district court’s vivid analogy—refusing to credit a bank robber for the cost of guns and getaway car—captured why system-wide overhead for a fraudulent enterprise cannot be deducted absent proof of legitimate, bargained-for value to victims.

Impact and Future Significance

A. The New Procedural Signal: Strategic Acceptance = Waiver

The opinion breaks important ground on sentencing preservation. Even though Burns and Whiting obligate district courts to conduct a causation analysis for actual loss under § 2B1.1, a defendant who strategically accepts a loss figure to leverage favorable deductions waives the right to complain later that the court did not conduct that analysis. Post-Courtright:

Defense counsel must preserve causation arguments expressly, even while negotiating deductions. “Agreement” to a number on the record will be treated as a tactical waiver that seals the result.
District courts, while free to accept stipulations, should confirm on the record whether the defendant is waiving any causation challenge as part of the agreement.
Prosecutors can argue waiver where defendants accept figures to obtain threshold-lowering deductions, thereby insulating the loss figure from appellate causation attacks.

B. Fraud Trials Involving “Guaranteed Returns” and Commingling

The opinion reinforces that:

Misstatements about the use of principal and the financial health of the enterprise are quintessentially material.
Generalized “moratorium” notices that avoid plainly disclosing ongoing misuse of investor funds will not sanitize earlier misrepresentations.
To claim deductions for operating expenses, defendants must produce concrete, victim-specific tracing that shows funds paid for legitimate, agreed services. Commingling undercuts such claims.

C. Practical Takeaways for Litigants

Defense counsel: If you need the benefit of a lower loss bracket, consider presenting alternative loss calculations while explicitly preserving causation objections. Avoid unqualified “agreement” language on the record.
Prosecutors: Build a clean record of commingling and lack of allocable services. Consider alternative loss formulas, but ensure all exceed required thresholds; if the defense stipulates to a figure, clarify waiver.
Courts: When parties adopt hybrid loss methodologies that integrate receiver recoveries and claim processes, ensure credits against loss are supported by the record and do not depend on speculative or contingent events.

Complex Concepts Simplified

Wire fraud (18 U.S.C. § 1343): Requires (i) a scheme to defraud using material misstatements or concealment, (ii) intent to defraud, and (iii) use of interstate wires. Materiality asks: Would the statement be capable of influencing a reasonable investor?
Scheme to defraud: A plan designed to obtain money or property by deception. Here, promising specific uses of funds and perpetual returns while actually using new investor money to pay existing investors fits the bill.
Intent to defraud: Often proven circumstantially—by the structure of the scheme, internal warnings ignored, and continued misstatements.
Rule 29 motion: A request for acquittal based on insufficient evidence. Appellate courts view the evidence in the light most favorable to the government and ask if any rational juror could convict.
Waiver vs. forfeiture: Forfeiture is a failure to timely assert a right (often triggering plain-error review). Waiver is the intentional relinquishment of a known right and generally bars appellate review entirely.
Guidelines loss (§ 2B1.1): “Actual loss” is reasonably foreseeable pecuniary harm caused by the offense. It requires causation analysis (but-for and proximate cause). Credits against loss can apply when money or value is returned to victims or when victims received the legitimate services they agreed to buy.
Commingling and deductions: When funds are commingled in a fraudulent enterprise, defendants must provide a reliable method to allocate expenses to legitimate, victim-consented services. Without that, broad “overhead” is not credited.

Conclusion

United States v. Courtright meaningfully clarifies two areas of federal criminal practice. Substantively, it reinforces that promises about how investor funds will be used and about a company’s solvency are material; using new investor principal to fund guaranteed returns while assuring investors of exclusive uses and financial soundness supports wire-fraud convictions. Procedurally, it sets a clear marker: a defendant who strategically “agrees” to a loss figure at sentencing waives the right to appellate review premised on the district court’s failure to conduct a causation analysis under § 2B1.1.

The opinion’s treatment of deductions also provides practical guidance: courts will credit concrete, realized recoveries (e.g., receiver returns) and claim extinguishments, but they will reject conditional or speculative offsets and refuse to treat generalized operating expenses as “legitimate services” without reliable, victim-specific tracing—particularly in commingled, Ponzi-like schemes.

In short, Courtright is a cautionary decision on both fronts: for fraud defendants, that material misstatements about fund usage and solvency are perilous, and for sentencing advocates, that strategic concessions about loss can lock in outcomes and close the door to later causation challenges.