United States v. Jonathan Kirschner ( 2021 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 20-1304
__________
UNITED STATES OF AMERICA
v.
JONATHAN KIRSCHNER,
a/k/a Jonathan Kratcher,
Appellant
__________
On Appeal from the United States District Court
for the District of New Jersey
(District Court No. 1:18-cr-00360-001)
District Judge: Honorable Robert B. Kugler
__________
Argued January 26, 2021
Before: RESTREPO, BIBAS, and PORTER, Circuit Judges
(Filed: April 22, 2021)
__________
Mark E. Coyne
Office of United States Attorney
970 Broad Street, Room 700
Newark, NJ 07102
Molly S. Lorber [ARGUED]
Office of United States Attorney
Camden Federal Building & Courthouse
401 Market Street
Camden, NJ 08101
Counsel for Appellee
Justin T. Loughry [ARGUED]
Loughry & Lindsay
330 Market Street
Camden, NJ 08102
Counsel for Appellant
__________
OPINION OF THE COURT
__________
RESTREPO, Circuit Judge.
In 2018, Jonathan Kirschner pleaded guilty to one count of
impersonating an officer acting under the authority of the
United States and one count of importing counterfeit coins and
bars with intent to defraud. At sentencing, the District Court
applied to Kirschner’s sentence three enhancements pursuant
to the U.S. Sentencing Guidelines—a 2-level enhancement be-
cause Kirschner’s fraud used sophisticated means; another 2-
level enhancement because Kirschner abused a position of
public trust to facilitate his crimes; and a 22-level enhancement
because the “loss” attributable to his scheme was greater than
$25 million but less than $65 million, even though it grossed
only about one one-thousandth of that.
Kirschner appeals the District Court’s judgment of sentence
and challenges the three enhancements it applied. For the rea-
sons that follow, we will vacate Kirschner’s sentence and re-
mand for resentencing. While the District Court was well
within its discretion to apply the abuse-of-trust and use-of-so-
phisticated-means enhancements, we conclude it clearly erred
in applying the 22-level enhancement for loss, and we cannot
say that the error was harmless.
I. BACKGROUND
In 2017, Jonathan Kirschner earned $30,105 by importing
counterfeit coins and bullion and then, posing as a federal law
2
enforcement agent, selling them as genuine articles to unsus-
pecting customers. Eventually, several customers discovered
the coins or bullion they bought were fakes and alerted federal
authorities—the real federal authorities. Pretending to be pro-
spective buyers, federal agents set up a sting and snared
Kirschner. Searching his home and interdicting packages des-
tined for him, agents discovered and seized thousands of coun-
terfeit coins and bullion that, according to the government’s
expert, would have been worth approximately $46.5 million if
genuine. Agents also seized a plethora of numismatic and bul-
lion paraphernalia meant to mimic the idiosyncratic packaging
materials used by the authentication agencies.
Kirschner subsequently pleaded guilty to one count of im-
personating a federal agent, in violation of 18 U.S.C. § 912,
and one count of importing counterfeit coins and bars with in-
tent to defraud, in violation of 18 U.S.C. § 485. In the plea
agreement, the parties agreed that the sentencing judge may
impose any “reasonable sentence” up to the statutory maxi-
mums—three years for the § 912 count, and fifteen years for
the § 485 count. The parties also agreed on the framework for
calculating an appropriate sentence under the Guidelines.
While acknowledging that the District Court retained “sole dis-
cretion” to impose Kirschner’s sentence, App. 55, the parties
agreed that, under the Guidelines, Kirschner’s base offense
level would be 6; the base offense level would be enhanced for
“intended losses” by either 14 (according to Kirschner) or 22
(according to the government); and the resulting offense level
would be reduced by 3 for Kirschner’s acceptance of responsi-
bility. The parties thus agreed that the total offense level ought
to be 17 (if Kirschner’s proposed enhancement for loss was
adopted) or 25 (if the government’s was). The parties did not
contemplate any further sentencing enhancements, reductions,
or deviations.
Prior to sentencing, a Presentence Investigation Report
(“PSR”) was prepared, employing the Guidelines. The PSR
calculated Kirschner’s base offense level to be 6, and included
a 22-level enhancement for loss and two 2-level enhancements
for use of sophisticated means and abuse of trust. It also
3
included a separate 2-level enhancement because Kirschner’s
crime involved ten or more victims. According to the PSR,
then, Kirschner’s total offense level was 34. Because of prior
offenses, Kirschner had a criminal history category of III.
Thus, the PSR calculated a Guidelines range of 188 to 235
months.
In their sentencing memoranda, the parties tracked the con-
tours of their plea agreement. Both agreed that Kirschner’s
base offense level was 6 and that he should receive a 3-level
reduction for acceptance of responsibility. They further agreed
that Kirschner was due no further enhancement for the number
of victims, the use of sophisticated means, or the abuse of a
position of trust.
And they continued to disagree over the amount of loss at-
tributable to Kirschner’s scheme. Kirschner argued that he in-
tended to cause losses of only about $1.2 million, warranting a
14-level enhancement and a total offense level of 17 (base of-
fense level of 6 plus 14 for loss less 3 for acceptance of respon-
sibility). The government, by contrast, argued that he intended
to cause losses of approximately $36 million, equaling a 22-
level enhancement and a total offense level of 25 (base offense
level of 6 plus 22 for loss less 3 for acceptance of responsibil-
ity).
At sentencing, the District Court adopted the PSR’s recom-
mendations in part. It adopted the base level offense, and the
enhancements for loss, use of sophisticated means, and abuse
of trust. The District Court also granted Kirschner a 3-level
decrease for acceptance of responsibility, resulting in a total
offense level of 29. With his criminal history category of III,
Kirschner’s Guidelines range was 108 to 135 months. The Dis-
trict Court sentenced Kirschner to 126 months’ imprisonment,
and this appeal followed.
II. DISCUSSION
The District Court had jurisdiction under 18 U.S.C. § 3231,
and we have jurisdiction pursuant to 28 U.S.C. § 1291 and 18
4
U.S.C. § 3742(a). This Court reviews factual findings relevant
to the Guidelines for clear error and exercises plenary review
over a district court’s interpretation of the Guidelines. United
States v. Grier, 475 F.3d 556, 570 (3d Cir. 2007) (en banc).
A. The District Court’s increase of Kirschner’s offense
level for intended loss was clear error
Kirschner first argues that the District Court clearly erred
in applying a 22-level enhancement for intended loss. We
agree. The applicable advisory Guidelines provision is
U.S.S.G. § 2B1.1(b)(1), which enhances fraud sentences based
on “loss.” Under a Guidelines comment, a court must compare
the pecuniary harm the defendant “actual[ly]” inflicted on his
victims with the losses he “intended” to result, with “intended
loss” defined as “the pecuniary harm that the defendant pur-
posely sought to inflict[.]” See U.S.S.G. § 2B1.1 cmt.
n.3(A)(i)-(ii). A court must then identify the greater figure, the
actual or intended loss, and enhance the defendant’s offense
level accordingly. Only this comment, not the Guidelines’
text, says that defendants can be sentenced based on the losses
they intended. By interpreting “loss” to mean intended loss, it
is possible that the commentary “sweeps more broadly than the
plain text of the Guideline.” United States v. Nasir, 982 F.3d
144, 177 (3d Cir. 2020) (en banc) (Bibas, J., concurring). But
Kirschner assumes the comment is correct, and so we will too.
Relevant for our purposes, § 2B1.1 says that if the greater of
the actual or intended loss falls between $550,000 and $1.5
million, the defendant’s offense level should increase by 14
levels. But if the greater loss figure is more than $25 million
but less than $65 million, the defendant’s offense level should
increase by 22 levels.
There is no question that the actual losses Kirschner in-
flicted on his victims were far less than the losses he intended
to cause. Compare App. 259-62 (invoices revealing actual
losses of approximately $30,000), and Dist. Ct. Dkt. 72 (dis-
trict court ordering $14,600 in restitution to identified victims),
with App. 236-37 (government estimating intended losses of
approximately $36 million), and App. 190, 271-72 (Kirschner
5
estimating intended losses of $1.2 million). But the parties vo-
ciferously dispute what unrealized losses he intended.
Before the District Court, the government argued that
Kirschner intended to cause losses of approximately $36 mil-
lion and so merited a 22-level offense level increase. The gov-
ernment’s $36 million calculation involved these steps. To
begin, relying on a numismatic expert, the government esti-
mated and summed the fair market value of the genuine version
of each counterfeit seized from Kirschner, and concluded that
the total fair market value of all seized counterfeits was ap-
proximately $46.5 million. Next, the government analyzed in-
voices documenting Kirschner’s successful sales and deter-
mined that Kirschner historically had been able to sell his
counterfeits at about 77 percent of the estimated fair market
value of the counterfeits’ genuine counterparts. Finally, the
government multiplied the total market value of the genuine
versions of wares seized from Kirschner ($46.5 million) by
Kirschner’s historic yield (77 percent) to arrive at an intended
loss of approximately $36 million. Id. Roughly algebraically,
the government’s intended-loss methodology was as follows:
𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙 𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤 𝐹𝐹𝐹𝐹𝐹𝐹 𝑜𝑜𝑜𝑜 𝑡𝑡ℎ𝑒𝑒
𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿 = � (0.77) ∗ � 𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣 𝑜𝑜𝑜𝑜 �
𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓 𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤 𝑒𝑒𝑒𝑒𝑒𝑒ℎ 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠
Kirschner objected to the government’s loss figure. He ar-
gued that the government’s estimation of total intended loss did
not address what losses he “intended” to cause, that is, did not
address what losses he purposely sought to inflict on future vic-
tims. To understand the force of Kirschner’s objection, we
must unpack the contents of the government’s methodology.
Over the course of the government’s investigation, agents
seized from Kirschner well over one-thousand counterfeit
coins and bars. The majority (something like 80 to 90 percent)
were fake bullion or counterfeits of common collector coins.
Estimating the fair market value of the genuine versions of
these counterfeits appears to have been straightforward. The
market for common collector coins is robust, so to estimate the
price their genuine counterparts could fetch on an open market,
6
the government’s expert reviewed auction sales and sales re-
ported in a popular trade publication. And valuing the bullion
was simpler still. Like any fungible commodity, the govern-
ment’s expert approximated the counterfeit bullion’s grade,
measured its weight, and valued it accordingly. The expert tes-
tified that valuing wares in this way was commonly accepted
in the numismatic community. App. 110. After discounting
the total estimated fair market value by Kirschner’s historic
yield, the government estimated the intended losses attributa-
ble to these counterfeits to be approximately $1.2 million ($1.5
million genuine fair market value discounted at 77 percent).
The remaining minority of wares seized from Kirschner,
however, were counterfeits of six exceptionally rare coins.
Agents seized three counterfeits of the 1933 Saint-Gaudens
Double Eagle; nine counterfeits of the 1804 Bowed Liberty;
four counterfeits of the 1794 Flowing Hair; six counterfeits of
the 1866-S coin, fifty-three Morgan Dollars (without the
motto, making them rarer); and one-hundred-twenty-seven
Morgan Dollars (with the motto, and thus more common). To
illustrate the exceptional rarity of these coins (counterfeits
though they were), the government’s expert identified the 1933
Saint-Gaudens Double Eagle as “one of the most valuable
coins in United States history.” App. 128. Indeed, only one
1933 Saint-Gaudens Double Eagle has been sold publicly, and
that one was sold at auction in 2002 for $8 million. See
Langbord v. U.S. Dep’t of Treasury, 832 F.3d 170, 177 (3d Cir.
2016) (en banc). And it had been owned by King Farouk of
Egypt.
Despite their extreme rarity, the government attempted to
estimate the fair market value of these coins just as it estimated
the fair market value of the others. It purportedly referenced
auction records and recent trades or sales among dealers and
collectors. But the uniqueness of the Saint-Gaudens Double
Eagle suggests that the market for these wares was signifi-
cantly less robust and more specialized than the market for
common collector coins. Nevertheless, employing the same
methodology, the government estimated that their intended
7
losses accounted for approximately $34.5 million, or about 97
percent of the total estimated intended loss, as follows:
Num. FMV of Total FMV Discounted
Coin Seized Each Coin of All Coins at 77 Percent
1933 Saint-
Gaudens 3 $8,000,000 $24,000,000 $18,480,000
1804 Bowed
Liberty 9 $2,000,000 $18,000,000 $13,860,000
1794 Flowing
Hair 4 $95,000 $380,000 $292,600
1866-S
Twenty Dollar 6 $82,000 $492,000 $378,840
Morgan Dol-
lar (no motto) 53 $37,587 $1,992,111 $1,533,925
Morgan Dol-
lar (motto) 127 $993 $126,111 $97,105
TOTAL $44,990,222 $34,642,471
The District Court adopted the government’s intended loss
methodology and resulting loss figure.
On appeal, Kirschner challenges the inclusion of the in-
tended losses associated with the six high-value counterfeits. 1
Kirschner contends that the District Court never found by a
preponderance of the evidence that he “purposely sought to in-
flict” the losses the government claims he intended to inflict.
He says that he never had access to the markets presupposed
by the government’s “fair market value” methodology, nor did
he attempt to access such markets. He further says that he had
no knowledge of the prices for which genuine versions of his
counterfeits had sold. Finally, he says that even if he knew the
prices the genuine versions had sold for, the government
1
Before the District Court and on appeal, Kirschner challenges
only the intended losses associated with the six sets of high-
value counterfeits. He does so, he says, because he does not
believe challenging the intended losses associated with the
common collector coins would bring his total intended loss be-
low the next relevant numeric threshold, which is $550,000.
See U.S.S.G. § 2B1.1(b)(H).
8
introduced no evidence that he would have attempted to sell
them at those prices discounted at 77 percent.
We agree. While the District Court “focus[ed] [] on what
[Kirschner] intended to do” with the high-value counterfeits,
App. 156, it never found that Kirschner intended to sell the
coins as counterfeits for the prices the government claimed. At
the sentencing hearing, the District Court’s findings on in-
tended loss were dedicated to rebuffing Kirschner’s ill-fated
argument that he intended to sell the high-value counterfeits as
replicas, not as the real thing. But the first-order inquiry is not
whether Kirschner intended to sell the high-value counterfeits
as replicas or the real thing. The first-order inquiry is whether
the government proved, by a preponderance of the evidence,
that Kirschner intended to sell these coins at the prices the gov-
ernment claims.
The District Court reasonably rejected Kirschner’s sell-
them-as-replicas argument. As the Court found, “[h]is entire
behavior was that he was importing these things in order to sell
them and get over on people and defraud people,” and none of
the counterfeit coins seized “were marked in any way to indi-
cate that they were replicas.” App. 156-57. But the Court
made no other finding supporting the intended losses associ-
ated with the high-value coins. Indeed, the District Court ad-
mitted that it did not know “[w]hat [Kirschner] intended to do
specifically, logistically, with these valuable coins,” only that,
“by a preponderance of the evidence, at some point he was go-
ing to try to sell those coins as legitimate coins.” App. 157.
On this record, we cannot say that the government carried
its burden to show that Kirschner had the requisite purpose to
sell the high-value counterfeits for the prices it suggested. The
past coin sales detailed in the government’s complaint were of
a particular type—advertised on the website Facebook; con-
summated in grocery-store parking lots and local bank lobbies;
and priced on the order of $100 per coin. It is not clear whether
Kirschner intended to evolve his operation to attempt the type
of rarefied sales contemplated by the government’s loss fig-
ures. Nor can we say the District Court’s error adopting the
9
government’s methodology and resulting loss figure was harm-
less. The possibility exists that the District Court, on remand,
may find that the government fails to prove by preponderance
of the evidence that Kirschner intended to sell the high-value
counterfeits at those prices. And again, the principal question
is not whether Kirschner could have sold the high-value coun-
terfeits at the prices claimed by the government. The question
is whether he intended to.
While we have not considered how to estimate intended
loss in this context, we have addressed how to do so in similar
circumstances. In United States v. Diallo, the defendant trav-
eled throughout the mid-Atlantic using stolen credit cards. 710
F.3d 147, 148 (3d Cir. 2013). Through the scheme, the defend-
ant caused actual losses of $160,000. Id. at 149. But a Secret
Service case agent testified that the total intended loss was ap-
proximately $1.6 million. Id. To arrive at that figure, the agent
had contacted the financial institutions associated with each
stolen credit card to request the card’s credit limit, and was told
the total credit limit for the 327 stolen credit cards was $1.6
million. Id. Over the defendant’s objections, the government
argued that this figure should be the “intended loss” for the
purposes of sentencing. Id. The district court accepted the
government’s arguments, and increased the defendant’s sen-
tence accordingly.
On appeal, we considered “how sentencing courts should
calculate what pecuniary harm was intended to result from
credit card fraud when the fraud’s perpetrator did not know the
credit limit, which is the potential loss amount from the stolen
credit card.” Id. at 150 (internal quotation marks omitted).
Looking to United States v. Geevers, 226 F.3d 186 (3d Cir.
2000), we held that “‘[w]hile intended loss may not be auto-
matically determined based on what the potential loss is, in-
tended loss may still equal potential loss.’” Diallo, 710 F.3d
at 151 (quoting Geevers, 226 F.3d at 192). We noted, however,
that “‘[i]t is clear that a district court errs when it simply
equates potential loss with intended loss without deeper analy-
sis.’” Id. (quoting Geevers, 226 F.3d at 192). Instead, a bur-
den-shifting framework is appropriate in such cases.
10
“[T]hough the government bears the burden of proof in guide-
lines cases, the burden of production may shift to the defendant
once the government presents prima facie evidence of a given
loss figure.” Id. (quoting Geevers, 226 F.3d at 188). But we
reiterated that “the government always bears the burden of
proving by a preponderance of the evidence that the facts sup-
port a sentencing enhancement, and the defendant does not
have to prove the negative to avoid the enhanced sentence.” Id.(emphasis added) (internal quotation marks omitted).
With respect to the defendant’s sentencing in Diallo, we
found that the district court had not engaged in the requisite
“deeper analysis.” We noted that:
It is possible that the District Court relied on the Secret
Service agent’s testimony that the search of his car un-
covered a skimming device; the evidence that Diallo has
traveled from Virginia to New York in order to use the
fraudulent credit cards; that Diallo had already spent
$160,000 and was continuing to make additional pur-
chases; or that at the time of his arrest, Diallo had re-
turned to a store where he had made $2,600 in purchases
just one day prior. It is also conceivable that the District
Court agreed with the Government’s argument that Di-
allo intended to charge up to the credit limit on every
credit card number found in his possession. On the
other hand, the District Court might simply have incor-
rectly presumed that the aggregate credit limit alone can
make out a prima facie case for intended loss amount in
credit card fraud. . . . [W]e would be speculating as to
what evidence or argument was the basis for the District
Court’s finding that $1.6 million was Diallo’s intended
loss amount.
Id. at 153. Accordingly, we vacated the sentence and re-
manded for reconsideration of intended loss and whether a de-
parture was warranted based on the intended loss amount over-
stating or understating the seriousness of the offense. Id. at
154.
It is true that our decision to vacate and remand in Diallo
primarily was caused by the district court’s failure to justify its
11
conclusion that the defendant intended to commit the maxi-
mum potential loss. Here, the District Court did not commit
that error. Following the government, the Court discounted the
estimated fair market value of the counterfeits’ genuine coun-
terparts by Kirschner’s historic yield of 77 percent.
But our admonition in Diallo that district courts must con-
duct a “deeper analysis” before inferring that a defendant in-
tended to cause a particular loss applies to any loss methodol-
ogy the government elects to adopt. So, in Diallo, the district
court’s decision to equate intended loss with maximum poten-
tial loss without justification was an example of a sentencing
court failing to conduct the requisitely deep analysis. A district
court similarly runs afoul of Diallo if, as here, it adopts an in-
tended-loss methodology without demonstrating that the de-
fendant’s “purpose” was to inflict the losses the government
claims he intended to inflict. See U.S.S.G. § 2B1.1 cmt.
n.3(A); see also United States v. Manatau, 647 F.3d 1048,
1050-51 (10th Cir. 2011) (Gorsuch, J.) (detailing the mental
state requirement of the intended loss analysis).
In sum, to estimate the losses a defendant intended to cause
his victims under U.S.S.G. § 2B1.1 cmt. n.3(C), a district court
must conduct a “deeper analysis” to make sure the defendant
purposely sought to inflict each component of the losses the
government claims he intended to inflict. In conducting that
analysis, the court is free to make reasonable inferences about
the defendant’s mental state from the available facts. The gov-
ernment need only prove a defendant’s intent by a preponder-
ance of the evidence, and the court need only make a “reason-
able estimate” of the intended loss. See Diallo, 710 F.3d at
150; U.S.S.G. § 2B1.1(b)(1) cmt. n.3(C). If the losses associ-
ated with the defendant’s past conduct are easily extrapolated
to losses the defendant intended to cause in the future (as in
stealing credit cards and charging the same amount on each be-
fore discarding), the district court is free to estimate intended
losses using one governing methodology (say, number of sto-
len but unused cards times dollar amount charged on used and
discarded cards). But if the losses associated with the defend-
ant’s past conduct do not neatly map to intended future losses,
12
the district court must finely tune its methodology to ensure it
does not underestimate or overestimate a defendant’s intended
losses.
Here, on remand, the District Court should examine
whether Kirschner purposely sought to inflict the losses asso-
ciated with the six high-value counterfeits. Among other in-
quiries, the District Court may examine whether Kirschner had
knowledge of the fair market values claimed by the govern-
ment; whether Kirschner intended to sell the high-value coun-
terfeits at the claimed market price with only a minor discount,
or whether he took any steps to sell counterfeits of those types
at all; whether Kirschner had sold any of the high-value coun-
terfeits in the past and, if so, whether that sale price is not the
most sensible intended loss for future sales of that coin, see
Kirschner Br. at 27 (government claiming $37,000 per coin
losses for coin previously sold for $20); and whether Kirschner
was aware of various idiosyncrasies that would cause the value
of a counterfeit to go up or down, as with the motto on the
Morgan Dollars. The court may also consider whether the
comment is right that intended loss matters, and whether
Kirschner has preserved this issue. Cf. United States v. Nasir,
982 F.3d 144, 157-59 (3d Cir. 2020) (en banc). But if intended
loss does matter and Kirschner has preserved the issue, the Dis-
trict Court cannot simply estimate “intended loss” by accepting
the government’s slightly discounted fair market values with-
out any finding that the defendant intended to inflict losses rea-
sonably approaching those figures. 2
2
Two additional points warrant discussion. First, the parties
spend a good deal of their briefs discussing whether
Kirschner’s selling the high-value counterfeits was even possi-
ble, and whether and how to count losses that would have been
impossible or unlikely to occur. Before the District Court,
Kirschner had argued that selling the high-value counterfeits at
genuine prices would have been impossible and, therefore, the
losses associated with them should be excluded. The Court
rejected that argument, noting that “if you look at Application
Note 3, intended loss means that pecuniary harm that the de-
fendant purposely sought to inflict and includes intended
13
pecuniary harm that would have been impossible or unlikely to
occur.” App. 156. It “underst[oo]d the argument that it would
have been almost impossible to sell these $8 million coins or
the 1804 silver dollars,” but “[impossibility] doesn’t matter un-
der the Sentencing Guidelines.” Id. It is true that under the
Guidelines comment, intended loss “includes intended pecuni-
ary harm that would have been impossible or unlikely to occur
(e.g., as in a government sting operation, or an insurance fraud
in which the claim exceeded the insured value).” U.S.S.G.
§ 2B1.1 cmt. n.3(A)(ii). But as the insurance fraud and sting
examples illustrate, counting an “impossible or unlikely” loss
still requires the defendant to have possessed the requisite men-
tal state. Further, as we explained in Geevers, that inflicting
certain losses would have been “impossible” is not a defense
to a finding of purposeful intent. Instead, “impossibility” bears
on whether a defendant had purposeful intent to begin with.
See Geevers, 226 F.3d at 195 (“Impossibility bears on what is
reasonable for the person to have intended to do, . . . adven-
turesome or deluded criminals are [not] to have their actions
interpreted differently than those of their more sober counter-
parts.”). Here, on remand, if the District Court finds that
Kirschner “purposely” tried and failed to sell any of the high-
value counterfeits at the prices the government suggested,
Kirschner cannot defend against a § 2B1.1 enhancement by
claiming that such sales were impossible or unlikely to begin
with. But Kirschner may argue that he did not possess the req-
uisite mental state to sell the high-value counterfeits at the
prices the government suggested in part because such sales
would have been impossible or unlikely.
Second, and related, Kirschner suggests that had the govern-
ment’s sting operation involved the attempted sale of a Saint-
Gaudens Double Eagle for $4 or $5 million or more, “if
Kirschner has accepted the proposition and made arrangements
to make the sale, of course the sentence must reflect the four or
five or even eight million dollar loss[.]” Kirschner Reply Br.
7-8. But we have left this issue open. Anytime a government
sting operation triggers not-yet-triggered mandatory mini-
mums or Guidelines enhancements, courts may be concerned
with so-called sentencing entrapment or sentencing factor ma-
nipulation. See United States v. Sed, 601 F.3d 224, 229-31 (3d
Cir. 2010). Sentencing entrapment focuses on the defendant’s
14
B. The District Court’s increase of Kirschner’s offense
level for abuse of a position of trust was not clear error
Kirschner next argues that the District Court erred in apply-
ing the abuse-of-trust enhancement. We disagree. That en-
hancement, set forth in Chapter 3 of the Sentencing Guidelines,
tells a sentencing court that, “[i]f the defendant abused a posi-
tion of public or private trust . . . in a manner that significantly
facilitated the commission or concealment of the offense, in-
crease [the offense level] by 2 levels.” U.S.S.G. § 3B1.3.
In United States v. Douglas, 885 F.3d 124 (3d Cir. 2018)
(en banc), we adopted a two-step inquiry to determine whether
to apply the abuse-of-trust enhancement. Under Douglas, we
ask, first, “whether the defendant actually occupied a position
of public or private trust.” Id. at 130. To aid that inquiry, we
ask whether the defendant’s position included “the power to
make decisions substantially free from supervision based on
(1) a fiduciary or fiduciary-like relationship, or (2) an authori-
tative status that would lead his actions or judgment to be pre-
sumptively accepted.” Id. at 133.
If we conclude that the defendant did hold such a position,
we reach the second step. There, the question is whether the
defendant abused his position of trust “in a manner that signif-
icantly facilitated his crime.” Id. at 130 (citation and internal
predisposition—did law enforcement entrap him into commit-
ting crimes beyond what he was predisposed to commit? Sen-
tencing factor manipulation, by contrast, focuses on the gov-
ernment’s conduct. According to “its broadest formulation,” it
is a violation of the Due Process Clause, and occurs when the
government engages in a longer-than-needed investigation or
extraordinary sting operation to unfairly exaggerate the de-
fendant’s sentencing range. See id. at 231. But we have “nei-
ther adopted nor rejected the doctrines of sentencing entrap-
ment and sentencing factor manipulation.” Id. at 229. And
because the agent in this case sought to buy from Kirschner
wares similar to ones Kirschner had sold previously and other-
wise committed herself with professionalism, we need not con-
sider that issue today.
15
quotation marks omitted). In answering that question, courts
should consider, among other relevant and case-specific fac-
tors, “whether the defendant’s position allowed him to commit
a difficult-to-detect wrong”; whether the defendant’s position
granted him “authority vis-à-vis the object of the wrongful
act”; or “whether the victim relied on the defendant’s integrity,
such that the victim became a more susceptible target for the
defendant.” Id. at 134.
Here, the District Court heard sufficient evidence to support
the abuse-of-trust enhancement. Kirschner admitted at his plea
hearing and does not contest on appeal that he occupied a po-
sition of trust relative to his victims. 3 The record also
3
Though not at issue here, under Guidelines commentary, the
abuse-of-trust enhancement “also applies in a case in which the
defendant provides sufficient indicia to the victim that the de-
fendant legitimately holds a position of private or public trust
when, in fact, the defendant does not.” U.S.S.G. § 3B1.3 cmt.
n.3. That appears to align with the enhancement’s text. Read-
ing the enhancement naturally, to “abuse” a position of trust, a
defendant can actually hold such a position and then leverage
the formal powers granted to that position for nefarious ends
or pretend to hold one in order to exploit the perception of
power a victim bestows on that position. So the abuse-of-trust
enhancement has applied to an investment broker employed by
a real brokerage house who, using certain powers granted to
him by the brokerage house and the governing law, embezzles
an investor’s money. See, e.g., United States v. Rivernider, 828
F.3d 91, 114 (2d Cir. 2016). And the abuse-of-trust enhance-
ment also has applied to an individual who leads investors to
believe he is a legitimate investment broker employed by a real
brokerage house in order to steal their money. See, e.g., United
States v. Reyes-Rivera, 812 F.3d 79, 86-87 (1st Cir. 2016). If
this reading holds, then at the first step of Douglas, where the
question is whether the defendant “actually occupied” a posi-
tion of public or private trust, 885 F.3d at 130, what we want
the sentencing court to ask is, Did the defendant hold a position
of public or private trust relative to the victim? This formula-
tion clarifies that Douglas’s threshold requirement that a de-
fendant “actually occupy” a position of trust encompasses not
just defendants who hold positions of trust in fact but also
16
demonstrates that Kirschner’s impersonation of a law enforce-
ment agent “significantly facilitated the commission or con-
cealment of the offense.” See Douglas, 885 F.3d at 134. A
buyer of Kirschner’s counterfeits testified that she thought
Kirschner may have been perpetuating “one of those scams you
hear about all the time,” but appeared to overcome that fear in
part because Kirschner represented to her that he was a federal
law enforcement agent. See App. 164. Several other victims
similarly alleged that Kirschner’s apparent position as a federal
law enforcement agent aided his fraud. One said he “person-
ally felt more secure making the $11,000 purchase from
Kirschner because Kirschner represented himself to be an ATF
Special Agent.” PSR, at 13. Another explained how Kirschner
used his position as a federal agent to explain how he came to
possess the valuable coins. To that victim, Kirschner said that
as a federal agent, he “ha[d] access to variety of decommis-
sioned silver and gold coins.” PSR, at 19. And another said
that when Kirschner flashed his badge and explained he was
undercover, “I believed him,” and “[h]e seemed credible to
me.” PSR, at 20.
Kirschner contends he only impersonated a law enforce-
ment agent so that his buyers would not try to rob him.
Kirschner Br. 30; App. 174. But that contention is belied by
the record. During his plea colloquy, Kirschner admitted that
he falsely claimed to be a federal agent so that his victims
would “feel more at ease.” App. 92. Kirschner’s fear-of-get-
ting-robbed contention also is belied by logic. If impersonat-
ing a federal law enforcement officer protected his counterfeits
or the money earned from them from robbery, then by defini-
tion the impersonation played a significant role in the execu-
tion of his scheme.
As this Court has held previously, we do not today hold that
every fraud committed by law enforcement or those masquer-
ading as them will justify an upward adjustment under § 3B1.3.
defendants who sufficiently represented to their victims that
they did.
17
Cf. United States v. Brann, 990 F.2d 98, 103 (3d Cir. 1993).
Further, at the second step of Douglas, a defendant’s intention
to assume and then abuse a position of trust to significantly
facilitate a crime may not always warrant a Guidelines en-
hancement. A defendant could pretend to be a police officer to
facilitate some fraud, but the record could reveal that the de-
fendant’s apparent position played no role in the fraud’s suc-
cess or failure. Sentencing courts, acting pursuant to the
Guidelines, must always determine whether the defendant’s
apparent position significantly facilitated the commission of
the crime or concealment of it. Under the facts of this case, the
District Court reasonably found that Kirschner’s pretending to
be a federal law enforcement agent contributed substantially to
his ability to defraud his victims.
Kirschner finally argues that the District Court’s abuse-of-
trust enhancement double-counts his impersonation charge un-
der § 912. But as the District Court found, there was no double
counting because of the Guidelines’ grouping rules. App. 160;
see also App. 61, ¶ 9 (agreeing in plea agreement to group of-
fenses). Under those rules, Kirschner’s fraud and impersona-
tion counts were grouped for sentencing purposes because
U.S.S.G. § 2B1.1 governed sentencing for each 4 and because
4
Provision 2B1.1 expressly governed Kirschner’s fraud count.
See § 2B1.1 (cross-referencing 18 U.S.C. § 912, the charged
statute). Provision 2B1.1 also governed Kirschner’s imperson-
ation count. While § 2J1.4 generally governs impersonation
counts, § 2J1.4(c)(1) says that if the impersonation count “was
to facilitate another offense,” the district court should apply the
guideline for that other offense “if the resulting offense level”
for the other offense “is greater than the offense level” for the
impersonation offense. Here, the parties agreed that
Kirschner’s impersonation of a federal agent “was to facilitate”
his importation and sale of counterfeit goods. App. 59-60 (plea
agreement). And “the resulting offense level” from the fraud
count was “greater than the offense level” from the imperson-
ation count. Kirschner’s impersonation of a federal agent car-
ried an adjusted offense level of 8. App. 60, ¶ 5 (plea agree-
ment); see also § 2B1.1(b)(1)(B). But the parties stipulated
that the fraud count carried an adjusted offense level of at least
18
“the offense behavior was ongoing and continuous in nature.”
App. 61, ¶ 9 (citing the grouping rules in § 3D1.2(d)).
Kirschner’s sentence therefore did not account for his imper-
sonation of a federal agent because sentencing for that crime
was subsumed by sentencing for the counterfeiting crime. In
any case, even if there was double counting, in this context
double counting would have been fine. See United States v.
Fisher, 502 F.3d 293, 309 (3d Cir. 2007).
C. The District Court’s increase of Kirschner’s offense
level for use of sophisticated means was not clear error
Kirschner finally argues that the District Court erred in ap-
plying the use-of-sophisticated-means enhancement. We dis-
agree. That enhancement, set forth in Chapter 2 of the Sen-
tencing Guidelines, tells a sentencing court that, if “the offense
otherwise involved sophisticated means and the defendant in-
tentionally engaged in or caused the conduct constituting so-
phisticated means, increase [the offense level] by 2 levels.”
U.S.S.G. § 2B1.1(b)(10)(C). The commentary to § 2B1.1
elaborates on what conduct might constitute “sophisticated
means.” That note says, “‘sophisticated means’ means espe-
cially complex or especially intricate offense conduct pertain-
ing to the execution or concealment of an offense.” Id. at cmt.
n.9(B).
Like with the abuse-of-trust enhancement, the District
Court heard sufficient evidence to find that Kirschner’s fraud
employed sophisticated means. While Kirschner did not him-
self create the counterfeits he sold or the intricate packaging in
which he sold them, he deployed various other strategies to
conceal his fraud. He used a pseudonym to conceal his iden-
tity, and he created fake businesses, social media accounts, and
sale invoices to give his scheme the veneer of legitimacy. App.
158-60.
20. App. 61, ¶ 8 (plea agreement). Section 2Bl.1 therefore
governed both the impersonation and fraud counts.
19
Kirschner appears to oppose the enhancement on two
grounds. Neither is decisive. First, Kirschner claims that his
“criminal conduct was in fact highly unsophisticated” because
it “involv[ed] selling out of the trunk of his car in a public park-
ing lot, or in a public bank lobby.” Kirschner Br. 18-19. But
that argument could only prove that Kirschner’s conduct could
have been more sophisticated, which, without more, is not
enough to upset the District Court’s finding. See, e.g., United
States v. Lewis, 93 F.3d 1075, 1082 (2d Cir. 1996) (reversing
finding that tax evasion scheme was not sophisticated, even
though it did not employ shell corporations, defendant did not
conceal his identity, and a “reasonably competent IRS auditor”
would have uncovered it).
Second, Kirschner observes that he did not create any of the
packaging material used to sell his counterfeits himself; he just
bought them on the internet. That argument again is inapt. For
one, like with the locations he used for his sales, that Kirschner
could have delivered his wares in more sophisticated packag-
ing is not enough to upset the District Court’s finding. For an-
other, that argument does not address the District Court’s find-
ing that Kirschner’s fake business entities and the like played
major roles in the commission and concealment of his crimes.
III. CONCLUSION
For the foregoing reasons, we will vacate the District
Court’s judgment of sentence and remand for reconsideration
of the loss amount. The District Court need not reconsider the
two 2-level sentence increases for use of sophisticated means
and abuse of trust.
20