Summary
This Ninth Circuit opinion affirms the conviction and sentence of Andrew Hackett for conspiracy to commit securities fraud and securities fraud. The panel reviews for plain error whether the district court erred in applying a sentencing enhancement based on "intended loss" rather than "actual loss" under U.S.S.G. § 2B1.1. The court holds that any error was not clear or obvious given circuit precedent and a lack of consensus among other circuits, and thus affirms the judgment.
Topics
Practice areas
Questions Presented
- Whether Hackett preserved a legal objection to using intended loss, as defined in the commentary to U.S.S.G. § 2B1.1, rather than merely objecting to the amount of intended loss calculated.
- Whether the district court plainly erred by relying on the § 2B1.1 commentary's definition of loss as the greater of actual loss or intended loss.
- Whether the Ninth Circuit should exercise discretionary de novo review despite the lack of a sufficiently specific sentencing objection.
Holdings
- Hackett's objections to the loss calculation challenged the number of shares and projected price, but did not specifically argue that intended loss was legally impermissible under Kisor or otherwise. The objection therefore did not preserve de novo review.
- The district court did not plainly err by relying on the commentary defining loss as the greater of actual loss or intended loss. Any error was not clear or obvious because Ninth Circuit precedent had recognized both actual and intended loss and the circuit courts lacked consensus on the effect of Kisor.
- The court declined to exercise discretionary de novo review because Hackett failed to develop the factual basis for an actual-loss calculation and allowing the issue to be considered years after sentencing would prejudice the government.
Key quotations
“The district court did not plainly err by relying upon the definition of “loss” set forth in the commentary to § 2B1.1. Because of the unsettled nature of the law on this issue, any error was not clear or obvious.” (123 F.4th at 1023)
“In sum, we have not grappled with the effect of the Kisor decision on the deference we have afforded the definition of “loss” in the guideline commentary. We decline to do so now because any error was not clear or obvious given our precedent recognizing both actual and intended loss, and because there is a lack of consensus among the circuit courts on this issue.” (123 F.4th at 1018)
“In short, because Hackett did not sufficiently object to the district court’s reliance on the commentary to determine the loss amount for the enhancement, we conclude that our review is for plain error.” (123 F.4th at 1015)
Factual background
Hackett participated in a scheme involving the promotion and manipulation of First Harvest stock, later renamed Arias Intel. He obtained or controlled shares, helped arrange promotional efforts through newsletters and call rooms, and promoted the stock before selling shares in the market. The district court found that Hackett owned 550,000 shares and intended to sell them at $4 per share, resulting in a $2.2 million intended-loss calculation and a 16-level sentencing enhancement.
Procedural history
A jury convicted Hackett of conspiracy to commit securities fraud and securities fraud arising from a pump-and-dump stock-promotion scheme. The district court attributed $2.2 million in intended loss to Hackett, imposed a 16-level enhancement under the pre-November 1, 2024 version of U.S.S.G. § 2B1.1(b)(1)(I), and sentenced him to 46 months' imprisonment. The Ninth Circuit affirmed in this published opinion; it addressed Hackett's additional appellate challenges in a concurrently filed memorandum disposition.