Criminal Defense Lawyers

Loss Amount Disputes Fraud Cases

When Your Pre-Sentence Report Becomes Your Worst Nightmare

The number on page 12 of your Pre-Sentence Report isn’t just wrong – its going to cost you a decade of your life if you don’t challenge it in teh next 14 days. Your staring at a loss calculation that seems impossibly high, maybe $2.1 million when you know the actual amount was closer to $850,000. Your attorney just called and said “we need to file objections,” but you don’t really understand what that means or whether it will even work.

Look, here’s the deal – the loss amount calculation under Federal Sentencing Guideline §2B1.1 is the single most important number in your entire case. It matters more then whether you go to trial or plead guilty. It matters more then your criminal history. It determines whether you get probation or fifteen years in federal prison, irregardless of what you actually did.

This article explains how federal courts calculate loss amounts in fraud cases, why probation officers almost always inflate the numbers, and exactly how to dispute them with evidence that actually works. We’ll cover the critical 14-day deadline, which circuits favor defendants, and what happens at the evidentiary hearing that could save you years of your life.

Why the Loss Amount Is the Only Number That Matters

Most defendants facing federal fraud charges don’t realize that the loss calculation dwarfs every other sentencing factor combined. Your attorney might be talking about fighting the “sophisticated means” enhancement (2 levels) or the “role in the offense” adjustment (3-4 levels). But here’s what they should be telling you: a single bracket reduction in the loss table is worth more then all those other enhancements put together.

The math is simple but devastating. Under USSG §2B1.1(b)(1), loss amounts translate directly to offense level increases:

• $6,500 or less: no increase
• More than $15,000: add 4 levels
• More than $95,000: add 8 levels
• More than $550,000: add 14 levels
• More than $3.5 million: add 18 levels
• More than $25 million: add 24 levels

Let me show you what this actually means. If your loss calculation is $550,000, you get +14 levels. If your attorney can reduce it to $400,000, you drop to +12 levels. That 2-level difference translates to 12-18 months of additional prison time, depending on your criminal history. Now compare that to the sophisticated means enhancement – even if you win that argument and knock off 2 levels, your still facing the same math problem if the loss amount stands.

Bottom line: prosecutors know this. That’s why they focus so much energy on inflating the loss calculation. They know that if they can get the probation officer to adopt a $2 million loss figure instead of $900,000, they’ve essentially guaranteed you’ll serve an extra 3-4 years. And they know most defendants won’t fight it becuase they don’t understand the stakes until its to late.

Defense lawyers who spend time fighting peripheral issues while accepting the government’s loss calculation are doing there clients a massive disservice. At higher loss levels – anything above $550,000 – the loss amount becomes the ONLY thing that matters. Every dollar of disputed loss is worth fighting for, because the difference between $1.2 million and $850,000 could literally be the difference between seeing your kids graduate high school or missing it entirely.

How Probation Officers Actually Calculate Loss (And Why Their Numbers Are Inflated)

Here’s what no one tells you about how that loss number ended up in your PSR: probation officers don’t do independent investigations. They don’t hire forensic accountants. They don’t review your bank records or trace actual funds. What they do is take the highest number from any government document – the indictment, the criminal complaint, the search warrant affidavit, the FBI agent’s report – and use that as there starting point.

Real talk: this is there default methodology. If the indictment says “in excess of $2 million” based off the case agent’s “estimate,” that $2 million becomes the anchor. The probation officer then works backwards from there, looking for reasons to maybe reduce it slightly, but the goverment’s inflated figure has already set the baseline. Your fighting uphill from that moment.

I’ve seen cases where the indictment alleged $5 million in losses based on an FBI agent’s spreadsheet that literally said “estimated losses” in the header. The agent had never reviewed bank statements, never interviewed most of the alleged victims, never verified whether money was actually lost or just “at risk.” Didn’t matter. Probation adopted the $5 million figure, and the defendant had to spend $20,000 on a forensic accountant to prove the actual loss was $1.8 million. They eventually won that fight, but only because they had the resources to hire an expert and the time to gather evidence before the deadline.

Here’s another tactic prosecutors use that most defendants miss: victim impact statements. The goverment has alleged victims submit written statements claiming they lost everything – their live savings, there business, their retirement. These statements are emotional and dramatic, and they go straight into the PSR without any cross-examination or verification. Probation officers treat them as gospel truth, even though many victims exagerate losses out of anger or misunderstanding.

For example, a “victim” might claim they lost $500,000 when the reality is they recovered $350,000 through insurance, sold the remaining assets for $100,000, and their actual net loss was $50,000. But unless you challenge that victim’s statement with forensic evidence – actual bank records, insurance claim documents, asset sale receipts – the probation officer will adopt the $500,000 figure. And once its in the PSR, the burden shifts to you to disprove it.

The other thing probation officers do is ignore restitution you’ve already paid. If you paid back $200,000 immediately after your arrest, trying to make things right, that should reduce the loss calculation dollar-for-dollar. But if the probation officer drafts the PSR before documenting those payments, they might not credit you at all. Or they’ll mention it in a footnote as a “mitigating factor” rather then subtracting it from the loss amount itself.

This is why challenging the SOURCE documents matters so much. If you can get a superseding indictment with a lower loss allegation before the PSR is drafted, you’ve changed probation’s anchor point. If you can provide bank records and payment documentation to the probation officer during there investigation, you have a chance of getting a more accurate number in the initial PSR. Once that PSR is finalized and distributed, your fighting an uphill battle to change it.

Actual Loss vs. Intended Loss – Circuit by Circuit Breakdown

The single most important legal question in your case might not be whether you committed fraud – it’s whether your sentence is based on actual loss or intended loss. And the answer depends almost entirely on which federal circuit your case is in, irregardless of the facts.

Here’s the thing—and this is crucial—the Third Circuit ruled in December 2022 that loss means actual loss, not intended loss. If your case is in Pennsylvania, New Jersey, Delaware, or the Virgin Islands, you can demand that prosecutors prove every dollar of actual loss with bank records showing money leaving victim accounts. They can’t just estimate “intended” or “potential” losses. They can’t calculate what you “would have” stolen if the scheme had succeeded. They have to prove actual, verifiable financial harm.

This is a massive advantage, and alot of defense attorneys don’t push it hard enough. In the Third Circuit, you can force an evidentiary hearing where the government must produce actual bank statements for every claimed victim. If they can’t – if there case is based off projections or estimates – the loss amount drops to only proven losses. We’ve seen this reduce sentences by 40-60% in cases where victims were “potential” rather than actual.

But here’s the problem: most other circuits don’t follow this rule. The Eleventh Circuit (Florida, Georgia, Alabama) applies different standards depending on the type of fraud. In healthcare fraud cases, they use an “intended loss” calculation that can be devastating. Prosecutors will add up every single insurance claim you submitted – even the ones that were legitimate – and call the entire amount “intended loss.” The 2024 USSC Primer on Loss Calculation specifically notes that Eleventh Circuit courts treat healthcare fraud differently, allowing prosecutors to use billing totals rather then actual amounts paid or lost.

I mean, think about it: if you submitted 1,000 insurance claims over two years, and 100 of them were fraudulent, the government might argue the “intended loss” was the total value of all 1,000 claims. They’ll say you “intended” to defraud the insurance company of the entire amount, even though 900 claims were completely legitimate. This is how healthcare fraud defendants in the Eleventh Circuit end up with loss calculations 10x higher then defendants facing wire fraud or PPP fraud charges for similar conduct.

The Second Circuit (New York, Connecticut, Vermont) has seen everything when it comes to fraud cases, especially in the Southern District of New York. Judges their are skeptical of both government estimates and defendant claims. You need rock-solid evidence – forensic accounting reports, subpoenaed bank records, expert testimony. Showing up with incomplete documentation or making arguments that sound like excuses will get you nowhere. SDNY judges have heard every defense, seen every tactic, and they respond only to hard evidence.

The Ninth Circuit (California, Arizona, etc.) tends to be more receptive to intended loss challenges then the Eleventh Circuit, but your still facing an uphill battle. Prosecutors will argue that the “reasonably foreseeable” loss from your scheme was much higher then what actually occurred, and courts will often adopt a number somewhere between actual and intended loss as a compromise.

And here’s a development that could change everything: in August 2025, the Supreme Court heard a case on whether the definition of “loss” is ambiguous regarding whether a victim’s actual loss includes the defendant’s gains through fraud. If SCOTUS rules that defendant’s profits don’t automatically equal victim losses, it could fundamentally reshape loss calculations in theft and embezzlement cases across all circuits. Defendants with sentencing dates after this ruling comes down (expected by summer 2026) should file motions to continue sentencing pending the decision.

So what does this mean for you? If your in the Third Circuit, you have a powerful argument to limit loss to actual, proven amounts. If your in the Eleventh Circuit facing healthcare fraud charges, you need to be prepared for an aggressive intended loss calculation and have evidence showing which specific claims were fraudulent versus legitimate billing errors. If your in the Second or Ninth Circuits, you need overwhelming documentation because courts won’t accept estimates from either side.

And if your case involves theft where you profited but victims had insurance or other recovery, your attorney should be tracking that August 2025 Supreme Court case closely. The law is evolving right now, and defendants whose lawyers aren’t paying attention are going to miss opportunities that could save them years.

The 14-Day Window and What Happens If You Miss It

Listen. This is the most important section of this entire article, and I need you to understand something: you have 14 days from recieving the Pre-Sentence Report to file objections. Not 15 days. Not “about two weeks.” Exactly 14 calendar days. And if you miss that deadline, your pretty much stuck with whatever loss amount the probation officer calculated, irregardless of how wrong it is.

I’ve seen defendants who got there PSR on a Friday, there attorney was on vacation, and they didn’t really focus on it until the following week. By the time they hired a forensic accountant and started gathering bank records, they had 3 days left. They filed a bare-bones objection just to meet the deadline, but they didn’t have the evidence ready. The prosecutor knew they was scrambling, refused to negotiate, and the court adopted the goverment’s inflated figure at sentencing. That defendant is serving an extra 6 years because of missed deadlines and poor planning.

Real talk: the 14-day deadline ain’t negotiable. Federal courts don’t grant extensions except in extraordinary circumstances, and “my attorney needed more time to gather evidence” doesn’t qualify. You need to treat the day you recieve the PSR like your hair is on fire. Here’s what has to happen in those 14 days:

Days 1-3: Your attorney needs to review the entire PSR with you, line by line. Identify every factual error, every inflated loss claim, every victim whose losses aren’t supported by documentation. Make a list of what evidence you need – bank statements, insurance records, asset valuations, payment receipts. If the loss calculation is off by more then $100,000, start calling forensic accountants immediately.

Days 4-7: Gather evidence like your life depends on it (because your freedom does). Subpoena bank records if you don’t have them. Contact insurance companies for claim documentation. Get written statements from anyone who can verify that victims recovered funds or suffered less loss then they’re claiming. If you paid restitution, get proof of every payment with dates and amounts.

Days 8-12: Your attorney drafts written objections to the PSR. These need to be specific, detailed, and supported by evidence. Not just “the loss amount is wrong” but “the PSR states loss amount is $2.1 million based off the indictment allegation, but attached bank records show actual losses totaling $847,000, as detailed in the forensic accounting report attached as Exhibit A.” Every objection needs supporting documentation.

Days 13-14: File the objections with the court and serve them on the prosecutor and probation officer. Request an evidentiary hearing if there’s a genuine factual dispute about loss amount. (This is called a Fatico hearing, and its your opportunity to present evidence and cross-examine the goverment’s witnesses.)

Now here’s something most defendants don’t know, and its critical: you can dispute the loss calculation without losing your acceptance of responsibility reduction. Alot of people think if they challenge anything in the PSR, they’ll lose the 3-level reduction for accepting responsibility. That ain’t true. You can say “I accept that I defrauded victims and I’m pleading guilty; I dispute the dollar amount of loss” and still get the acceptance credit—as long as your attorney frames it correctly.

The key is you have to accept the OFFENSE (yes, I committed wire fraud), while disputing a SENTENCING FACTOR (the amount of loss). Courts recognize this distinction. The problem is some defense attorneys are so worried about preserving acceptance that they don’t fight hard on loss amount. That’s a huge mistake. The 3-level acceptance reduction is worth maybe 6-12 months. A 6-level reduction in loss amount is worth 2-4 years. Do the math.

And here’s the restitution timing trap that can cost you years: if you pay restitution BEFORE the PSR is drafted, it gets credited against the loss amount directly. But if you pay restitution AFTER the PSR is finalized, it only shows up as a potential basis for a downward departure – which is entirely discretionary. I’ve seen defendants scramble to pay $100,000 in restitution the week before sentencing, thinking it would help. It did help – the judge mentioned it as a mitigating factor. But it didn’t reduce the loss calculation at all, because the PSR was already final. If that same defendant had paid the $100,000 two months earlier, before probation finished there investigation, the loss amount would of dropped by $100,000, reducing there guideline range by 2-4 levels.

So the timeline matters enormously. If you have any ability to pay restitution, do it immediately after arrest or indictment, before the PSR is even started. Document every payment. Provide proof to the probation officer during there initial interview. Make sure its reflected in the PSR itself, not just mentioned at sentencing.

And if you miss the 14-day deadline? Your not completely hopeless, but your options become very limited. You can try to raise the issue at sentencing, but the court isn’t required to consider new evidence or arguments you didn’t timely object to. You can try to appeal, but appellate courts review sentencing decisions for “reasonableness,” and if you didn’t preserve the issue by objecting to the PSR, you’ve basically waived it. Some circuits allow “plain error” review, but that’s an incredibly high standard – you have to show the error was obvious and affected your substantial rights.

Bottom line—and I mean this—the 14 days after you recieve the PSR are the most important two weeks of your entire case. More important then the trial (if you had one). More important then the plea hearing. Because this is when the loss calculation gets locked in, and that number determines whether you serve 2 years or 10 years. Don’t waste a single day. Don’t wait for your attorney to call you. Don’t assume they’re on top of it. Call them the day you get the PSR and demand an emergency meeting to review the loss calculation and start gathering evidence. Seriously. Period.

Evidence That Actually Works vs. What Fails Every Time

So you’ve decided to fight the loss calculation. Good. Now you need to understand what evidence actually works in federal court and what’s just a waste of time and money. I’ve seen defendants spend thousands of dollars on “evidence” that judges won’t even look at, while missing the simple documentation that would of won there case.

What Actually Works:

Bank records showing actual losses beat goverment spreadsheets every single time. If prosecutors claim victims lost $2 million but you can produce bank statements showing only $850,000 actually left victim accounts, you win. Courts trust bank records because they’re objective, contemporaneous, and hard to fake. Get them subpoenaed if you have to. Get them from victims if they’ll cooperate. Get them from banks, credit card companies, PayPal, Venmo – anywhere money actually moved.

Forensic accounting expert testimony is expensive ($10,000-$25,000 for a federal sentencing case) but it pays for itself if the disputed loss amount is over $500,000. A good forensic accountant will review all the financial records, trace actual fund flows, identify what was lost versus what was recovered, and present it in a clear report the judge can rely on. Judges love expert testimony because it takes the burden off them to figure out complex financial transactions. Just make sure you hire someone who actually does federal sentencing work, not just corporate accounting. The analysis is different.

Insurance recovery documentation is critical and most defendants forget about it. If a “victim” claimed $300,000 in losses but there insurance company paid them $250,000, the actual loss is $50,000. But you need proof – the insurance claim, the payment records, documentation showing the victim was made whole or nearly whole. Prosecutors won’t volunteer this information. You have to demand it in discovery or subpoena it directly from the insurance company.

Asset sale receipts and mitigation evidence can dramatically reduce loss calculations. If the goverment seized assets worth $400,000 and is claiming $1.2 million in losses, the actual victim loss is $800,000 (and that’s only if the assets are sold for full value). Get appraisals showing what the assets are really worth. Get documentation of any funds that were returned or frozen. Every dollar of asset forfeiture or recovery should reduce the loss amount.

Proof that claimed “victims” never actually lost anything is powerful when you can get it. Sometimes prosecutors include people in the victim count who were “at risk” but never actually lost money. Maybe you targeted them but the scheme was detected before they paid anything. Maybe they were sent a fraudulent invoice but never paid it. Those aren’t victims for loss calculation purposes – they might support other enhancements, but they don’t add to the loss amount. You need evidence showing no money changed hands.

What Fails Every Time:

Arguing “I didn’t intend to defraud anyone” fails because intent for conviction is different then intent for loss calculation. Even if you genuinely believed your business was legitimate or you were gonna pay everyone back eventually, that doesn’t reduce the loss amount. Courts calculate loss based on what actually happened, not your state of mind.

Victim statements without supporting documentation get dismissed. If a victim says they lost there entire retirement savings of $500,000, but you can show there bank account never had more then $200,000 in it, the statement loses credibility. But you need that bank record – you can’t just argue the victim is lying or mistaken. Judges won’t make credibility determinations based on competing stories. They want hard evidence.

Claiming the goverment’s calculation is “unreasonable” or “excessive” without providing an alternative calculation gets you nowhere. You can’t just say “the PSR is wrong” – you have to say “the PSR is wrong and here’s the correct number with supporting evidence.” Courts operate on the preponderance of evidence standard (more likely then not), and if the government presents a calculation and you just complain about it without offering proof of a different number, the goverment wins by default.

Waiting until the sentencing hearing to raise challenges is almost always too late. I’ve seen defendants show up to sentencing with banker’s boxes full of documents they never provided to probation or the prosecutor. The judge says “why wasn’t this raised in your PSR objections?” and the defendant says “we just found it.” Too late. The court isn’t going to continue sentencing so you can present evidence you could of gathered during the 14-day objection period. You get one shot at this, and its the PSR objection.

Here’s the thing about the preponderance standard that most defendants don’t understand: it means the goverment only has to prove the loss amount is “more likely then not” correct – basically 51% probability. But here’s the defendant’s advantage that almost no one uses: if the evidence is truly in equipoise – if the goverment’s calculation and your calculation are both supported by roughly equal evidence – the tie goes to you. Disputed amounts must be resolved in the defendant’s favor when the evidence is genuinely balanced.

So if prosecutors claim $1.2 million in losses based off victim statements and there spreadsheet, and you present bank records and forensic accounting showing $850,000, and the evidence is roughly equal in weight, the court should adopt $850,000. But most defendants accept the higher number without forcing the goverment to meet its burden. Make them prove every dollar. Make them produce bank records, not estimates. Make them show actual losses, not projected or theoretical ones.

The cost-benefit analysis is simple: if the disputed loss amount would change your guideline range by 2+ levels, its worth spending $15,000-$25,000 on a forensic accountant. Two levels equals 1-3 years of additional prison time depending on your criminal history. Would you pay $20,000 to avoid an extra 2 years in federal prison? Of course you would. But you have to make that investment during the 14-day window, not at sentencing when its too late.

Multi-Defendant Cases and Loss Attribution

If your one of multiple defendants in a conspiracy case, you need to understand something critical: your not automatically responsible for the entire conspiracy loss. But courts will default to holding you responsible for the total amount unless you affirmatively assert your right to limited attribution based on what was “reasonably foreseeable” to you.

Here’s how this works under USSG §1B1.3: your responsible for your own conduct, plus any conduct by co-conspirators that was within the scope of the agreement and reasonably foreseeable to you. That last part – “reasonably foreseeable” – is your defense. If the total conspiracy involved $3.5 million in losses over 24 months, but you only joined in month 18 and your role was limited to a specific part of the scheme, you can argue your responsible only for losses during your participation period and losses that you could reasonably have anticipated.

For example, let’s say there was a PPP fraud conspiracy where three people submitted fraudulent applications for 50 shell companies. The total loss was $3.5 million (which would be +18 levels). But you only helped with 8 applications totaling $400,000, and you wasn’t aware of the other 42 applications. Your attorney needs to argue that your loss amount is $400,000 (+12 levels), not $3.5 million. That 6-level difference is the difference between 5-7 years and 10-15 years in prison.

But here’s the trap: if you don’t raise this argument in your PSR objections, the court will adopt the total conspiracy loss and hold all defendants jointly and severally liable for the entire amount. Prosecutors love this because it simplifies there sentencing memorandum – everyone gets the same loss calculation irregardless of their actual role. Your attorney has to fight for individual attribution based on the facts of your specific involvement.

The evidence you need is documentation showing when you joined the conspiracy, what you actually did, what you knew about co-defendants’ activities, and what losses occurred during your participation. If you can show you joined late, had a limited role, and wasn’t aware of the full scope, you have a strong argument for reduced attribution. But you need contemporaneous evidence – text messages, emails, bank records showing timing of your involvement.

I’ve seen this issue come up alot in PPP fraud cases where one person was the ringleader and recruited others to help submit applications. The recruits thought they were helping with 5-10 applications, not realizing the ringleader was running 50+ applications simultaneously. Those recruits are entitled to attribution based only on there reasonably foreseeable conduct, but they have to prove it with evidence of what they actually knew at the time.

What’s Changing Right Now in 2025

If your case is still pending or your sentencing hasn’t occurred yet, you need to know about several major legal developments that could affect your loss calculation.

First, the August 2025 Supreme Court case on whether defendant’s gains equal victim losses could fundamentally change theft and embezzlement sentencing. The case challenges whether “loss” is ambiguous about whether a victim’s actual loss includes the amount a defendant profited through fraud. If SCOTUS rules that defendant’s profits don’t automatically equal victim losses – especially when victims had insurance or other recovery mechanisms – it could slash loss calculations in thousands of pending cases. Defense attorneys should file motions to continue sentencing pending this ruling if your case involves theft where you profited but victims had insurance coverage or recovered assets.

Second, the May 2025 Supreme Court ruling on wire fraud rejected the argument that economic loss is required for conviction, but it emphasized materiality as a limiting element. This doesn’t directly affect loss calculations, but it does signal that courts are looking for concrete harm, not theoretical exposure. Defense attorneys can use this to argue against speculative or inflated loss calculations.

Third, the 2024 USSC Primer on Loss Calculation (32 pages) provides the most comprehensive guidance on §2B1.1 loss calculations, including circuit-by-circuit analysis of how courts apply actual versus intended loss standards. If your attorney hasn’t read this, they’re behind. It includes specific examples of how different circuits handle healthcare fraud, securities fraud, and PPP fraud loss calculations.

Fourth, the COVID-19 Fraud Enforcement Task Force is winding down, which means prosecutors are more willing to negotiate loss amounts in PPP and EIDL fraud cases, especially where defendants have repaid funds or can show the loans were used for eligible expenses. Two years ago, prosecutors wouldn’t negotiate at all on these cases. Now there’s more flexibility, but you still need evidence of repayment or legitimate use of funds.

These developments mean that loss calculation law is evolving right now in 2025. Defense attorneys who are just applying 2019-2022 case law are missing opportunities. Courts are more skeptical of speculative loss calculations, more receptive to actual loss arguments, and more willing to consider whether victims were truly harmed versus just “at risk.” But you have to make these arguments with evidence and cite to current authority.

What You Need to Do Right Now

If you’ve recieved a PSR with a loss calculation you believe is inflated, don’t wait another day. Contact a federal criminal defense attorney who handles sentencing disputes immediately. Not a general practice attorney. Not someone who does state court cases. You need a lawyer who understands §2B1.1, knows the circuit law on actual versus intended loss, and has experience fighting loss calculations with forensic evidence.

Bring your PSR, the indictment, and any financial records you have. Be prepared to discuss whether you have resources to hire a forensic accountant (budget $10,000-$25,000 if the disputed amount would change your guideline range by 2+ levels). Ask your attorney which circuit your in and whether actual loss or intended loss applies. Ask whether they’ve read the 2024 USSC Primer and whether they’re tracking the August 2025 Supreme Court case on gains versus losses.

Real talk: the 14-day deadline is absolute. Federal courts don’t grant extensions except in extraordinary circumstances. Every day you wait is a day your not gathering bank records, insurance documentation, asset valuations, and expert reports. This is the most important fight of your entire case, because the loss calculation determines whether you serve 2 years or 12 years in federal prison.

Don’t assume your attorney is handling it. Don’t assume the probation officer will correct errors on there own. Don’t assume prosecutors will be reasonable. The only way to challenge a inflated loss calculation is with hard evidence, filed within 14 days, supported by expert testimony when warranted. This cannot be fixed on appeal if you don’t preserve the issue now.

Not tomorrow. Today. Your freedom depends on what you do in the next 14 days, and no one else is gonna fight this battle for you unless you make them. Call a federal defense attorney right now who understands loss calculations, demand they review your PSR immediately, and start gathering the evidence that can save you years of your life. That’s not a recommendation – its the only option you got if you want a fair sentence instead of the inflated number the goverment is pushing.