In the
United States Court of Appeals
For the Seventh Circuit
No. 07-3933
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
G ARY E. P EEL,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Illinois.
No. 06-cr-30049-WDS—William D. Stiehl, Judge.
A RGUED D ECEMBER 10, 2009—D ECIDED F EBRUARY 12, 2010
Before P OSNER, M ANION, and H AMILTON, Circuit Judges.
P OSNER, Circuit Judge. The defendant was convicted
by a jury of bankruptcy fraud, obstruction of justice,
and possession of child pornography, and was sentenced
to 144 months in prison. His appeal challenges both the
convictions and the sentence.
The events giving rise to this case go back a long way.
In 1967 the defendant married. Seven years later he began
an affair with his wife’s 16-year-old sister. In the course
2 No. 07-3933
of the affair, which lasted several months, he took nude
photographs of her that the jury found were sexually
explicit within the meaning of the child-pornography
statute; he does not contest that finding. In response to
her later request for the pictures, he gave her some of
them (which she then destroyed) and, without telling
her, retained others in a file in his office.
In June 2003 the Peels divorced, and agreed to a
marital settlement. The following year Peel filed suit in
an Illinois state court to vacate the settlement. The year
after that he filed for bankruptcy and asked the bank-
ruptcy court to discharge the financial obligations to his
ex-wife that the settlement agreement had imposed.
She opposed the discharge and filed a claim for the
money that he owed her under the settlement. “Dis-
charge” may not be the right word for what he was
seeking—“abandonment” probably is better—because
his debt to her under the settlement probably was not
dischargeable in bankruptcy under the Bankruptcy Code
as it then read. 11 U.S.C. §§ 523(a)(5), (15)(A), (B) (2005);
In re Crosswhite, 148 F.3d 879, 881-82 (7th Cir. 1998); In re
Reines, 142 F.3d 970, 972-73 (7th Cir. 1998); In re Daulton,
139 B.R. 708, 710 (Bankr. C.D. Ill. 1992). (Under the
current Code, it almost certainly would not be
dischargeable. See 11 U.S.C. §§ 101(14A), 523(a)(5), (15).)
So he had to persuade her to drop the claim.
Negotiations looking to compromise it were predictably
acrimonious and in the course of them the defendant
told her about the nude photographs of her sister and
said that “these would be . . . an item that would likely get
out into the public if we didn’t stop this escalating battle
No. 07-3933 3
of putting things in the newspaper.” He backed up his
threat by placing photocopies of the photographs in her
mailbox. She complained to the police and later to
federal authorities, and at their direction made recorded
phone calls to the defendant. The conversations con-
firmed that he was blackmailing her with the photo-
graphs. He faxed her a draft of a settlement agreement
that she had previously rejected, adding a provision
requiring him to return certain unidentified photographs
to her. They met and he showed her the originals. The
meeting was recorded, and included an exchange in which
she said: “So you resort to blackmailing me?” He replied:
“There’s nothing left. I’m down to: no kids; no grand-kids;
no money.” “And, so,” she responded, “blackmailing me
with photographs . . . . Okay, but as long as I go ahead
and sign these settlement agreements . . . .” He replied:
“Right then you have . . . .” And she: ”. . . you’ll give me
the photographs . . . .” And he: “On the spot.”
He was convicted as we said of both bankruptcy
fraud and obstruction of justice. He argues that to
convict him of both violated the double jeopardy clause
of the Fifth Amendment, because one offense is included
in the other. It might seem that there would be no issue
of double jeopardy in a case in which multiple convic-
tions occurred in the same trial, Williams v. United States,
150 F.3d 639, 641 (7th Cir. 1998); United States v. Masters,
978 F.2d 281, 285 (7th Cir. 1992), since the purpose of
the clause is “ ‘to protect an individual from being sub-
jected to the hazards of trial and possible conviction
more than once for an alleged offense.’ ” Missouri v. Hunter,
459 U.S. 359, 365-68 (1983), quoting Burks v. United
4 No. 07-3933
States, 437 U.S. 1, 11 (1978). But the Supreme Court has
held that “with respect to cumulative sentences imposed
in a single trial, the Double Jeopardy Clause . . . pre-
vent[s] . . . the sentencing court from prescribing
greater punishment than the legislature intended.” Mis-
souri v. Hunter, supra, 459 U.S. at 366; see also Ohio v.
Johnson, 467 U.S. 493, 499 (1984) (“the final component of
double jeopardy—protection against cumulative punish-
ments— is designed to ensure that the sentencing discre-
tion of courts is confined to the limits established by the
legislature”); United States v. Konopka, 409 F.3d 837, 838-39
(7th Cir. 2005); United States v. Fischer, 205 F.3d 967, 969 (7th
Cir. 2000); United States v. Hector, 577 F.3d 1099, 1100-11
(9th Cir. 2009); United States v. Miller, 527 F.3d 54, 70-73
(3d Cir. 2008). Some of the Justices disagree with this
extension of the double jeopardy clause—see the discus-
sion of their views in White v. Howes, 586 F.3d 1025, 1032-
35 (6th Cir. 2009)—but for now, at least, it is the law
and binds us.
So are bankruptcy fraud and obstruction of justice
committed in a bankruptcy proceeding the same offense
for purposes of double jeopardy? Bankruptcy fraud
requires, so far as relates to this case, that the defendant
“knowingly and fraudulently . . . offers compensa-
tion . . . for . . . forbearing to act in any case under” the
Bankruptcy Code. 18 U.S.C. § 152(6). (“[F]orbearing to
act” in this case would mean his ex-wife’s abandoning
her bankruptcy claim.) Obstruction of justice requires
that the defendant “corruptly obstructs, influences, or
impedes any official proceeding, or attempts to do so.” 18
No. 07-3933 5
U.S.C. § 1512(c)(2). So the elements of the offenses are
different, as the government points out. But since a bank-
ruptcy proceeding is an “official proceeding,” within
the meaning of the obstruction of justice statute, 18 U.S.C.
§ 1515(a)(1)(A) (“the term ‘official proceeding’ means . . . a
proceeding before . . . a bankruptcy judge”), the defen-
dant’s conviction for having attempted fraudulently
to influence the bankruptcy proceeding by blackmailing
his ex-wife into agreeing to drop her claim convicted
him of obstruction of justice as well.
The test for “whether there are two offenses or only
one, is whether each provision requires proof of a fact
which the other does not.” Missouri v. Hunter, supra, 459
U.S. at 366, quoting Blockburger v. United States, 284 U.S.
299, 304 (1932). The test was flunked here because con-
victing Peel of obstruction of justice did not require
proof of any fact that didn’t have to be proved to
convict him of bankruptcy fraud. It was thus a lesser-
included offense of bankruptcy fraud and the Blockburger
test makes clear, and many cases hold, that to punish
a person for a lesser-included offense as well as the
“including” offense is double jeopardy unless Congress
intended the double punishment. Rutledge v. United
States, 517 U.S. 292, 297-98 and n. 6 (1996); United States
v. Fischer, supra, 205 F.3d at 969; United States v. Xavier,
2 F.3d 1281, 1291 (3d Cir. 1993). The government
does not argue that Congress intended that.
This is like a case in which a person is tried for both
murder and attempted murder. The elements are dif-
ferent, but since conviction for murder automatically
6 No. 07-3933
convicts the defendant of attempted murder (for there
can be no murder without attempting the deed), the
defendant cannot be convicted of both crimes. See, e.g.,
People v. Davidson, 70 Cal. Rptr. 3d 913, 917-18 (App. 2008).
There is an exception for cases in which the defendant
was convicted of the lesser-included offense before he
could have been prosecuted for the greater one, as
when the defendant is convicted of attempted murder
and later his victim dies. In such a case he can be tried
for murder. People v. Carrillo, 646 N.E.2d 582, 584-85
(Ill. 1995). The exception has no application to this case,
which must therefore be remanded with directions that
the judge vacate one of the two convictions.
The defendant argues that his conviction for obstruc-
tion of justice is the one that should be vacated, even
though it carries the higher statutory maximum sen-
tence, because it is a lesser-included offense of bank-
ruptcy fraud. It is lesser in the sense of having fewer
elements, see United States v. Smith, 34 F.3d 514, 517-18 (7th
Cir. 1994); United States v. Harley, 990 F.2d 1340, 1343-44
(D.C. Cir. 1993), because one can commit obstruction of
justice without committing bankruptcy fraud but not
bankruptcy fraud without committing obstruction of
justice. That is the only sense of “lesser” that matters
under the Blockburger test: that offense A has elements a, b,
c, and offense B has elements a, b, c, and d, so that con-
viction of B automatically convicts the defendant of A as
well. The remedy is to eliminate the doubleness. But
which conviction must be vacated is not dictated by the
Constitution. It is a matter committed to the trial judge’s
discretion because functionally it is a decision con-
No. 07-3933 7
cerning the length of the defendant’s sentence. Ball v.
United States, 470 U.S. 856, 864 (1985); Lanier v. United
States, 220 F.3d 833, 841-42 (7th Cir. 2000); United States v.
Fischer, supra, 205 F.3d at 970 n. 2; United States v. Hector,
supra, 577 F.3d at 1103-04; United States v. Miller, supra,
527 F.3d at 74. But usually it’s the conviction carrying
the lesser penalty that is vacated. As we noted in Lanier,
it would be paradoxical to give the defendant a
shorter sentence than he would have received had the
government not also charged him with the less serious
offense. 220 F.3d at 842.
What is true is that in a case in which the lesser-included
offense has fewer elements and is the less serious
offense, vacating the sentence for the graver offense
would be an abuse of discretion: imagine convicting a
person of attempted murder and of murder and punishing
him only for the attempt. This is not such a case; the lesser-
included offense of obstruction of justice is the graver
offense.
The defendant argues that it was not proved beyond a
reasonable doubt that he had committed either bank-
ruptcy fraud or obstruction of justice. Regarding the
obstruction charge, he argues that he did not act “cor-
ruptly” because he was prepared to disclose the photo-
graphs to the bankruptcy court. That is a distortion of
the deal he tried to make with his ex-wife. The deal was
that she would abandon her claim and in exchange
would get the photographs. He expected her to keep them
secret from the world, including the bankruptcy court, not
only because they were an embarrassment but also
8 No. 07-3933
because if the bankruptcy judge discovered that his ex-
wife had been blackmailed into dropping her claim he
would be certain to notify the authorities and the deal
would collapse. Peel’s expectation of secrecy was disap-
pointed because his ex-wife went to the police. So there
was no actual obstruction of justice, merely an attempt,
but the statute punishes the attempt equally with the
achieved obstruction.
His main argument against the conviction for bank-
ruptcy fraud is that his object was to get his ex-wife to
drop her opposition to his state-court suit to dissolve the
marital agreement. That was one object but he also
wanted her claim in the bankruptcy proceeding dismissed
because in all likelihood it was not dischargeable in
bankruptcy.
He further argues that bankruptcy fraud does not
extend to fraud committed in an “adversary proceeding”
in bankruptcy. The term refers to proceedings to resolve
claims within the overall bankruptcy case; a proceeding
to object to the discharge of a debt or to determine its
dischargeability is a typical adversary proceeding. Fed. R.
Bankr. P. 7001(4), (6); see Zedan v. Habash, 529 F.3d 398, 402-
03 (7th Cir. 2008); In re Marchiando, 13 F.3d 1111, 1113-14
(7th Cir. 1994); In re Duncan, 448 F.3d 725, 726 (4th Cir.
2006). An adversary proceeding is thus part of the bank-
ruptcy but it is not the bankruptcy case itself, as
illustrated by the fact that the dismissal of an adversary
proceeding is an appealable final order even though the
bankruptcy case continues. In re Marchiando, supra, 13
F.3d at 1113-14.
No. 07-3933 9
Bankruptcy fraud is fraud committed “in any case
under title 11” of the U.S. Code, 18 U.S.C. § 152(6), that is,
under the bankruptcy code; and we cannot find any
authority on whether all adversary proceedings in bank-
ruptcy are “case[s] under title 11” within the meaning
of the section. The fact that some adversary proceedings
can be heard in state court, 28 U.S.C. §§ 1334(a), (b);
1 Collier on Bankruptcy ¶ 3.01[1] (15th ed. 2009), and that
in many such proceedings no issue of bankruptcy law
is presented (often an adversary proceeding is a tort or
contract suit governed by state law, see, e.g., In re Teknek,
LLC, 512 F.3d 342, 345 (7th Cir. 2007); Alliance to End
Repression v. City of Chicago, 356 F.3d 767, 771 (7th Cir.
2004); SNA Nut Co. v. Haagen-Dazs Co., 302 F.3d 725, 729
(7th Cir. 2002); In re Caldor Corp., 303 F.3d 161, 163-64
(2d Cir. 2002)), suggests a negative answer. But a number
of cases suggest (none to the contrary) that at least fraud
in an adversary proceeding involving dischargeability
is bankruptcy fraud. In re Kallstrom, 298 B.R. 753, 758-59
and n. 25 (10th Cir. BAP 2003); In re Parker, 2003 WL
21703528, at *3 (Bankr. N.D. Ga. July 18, 2003); In re Taylor,
190 B.R. 413, 416 n. 3 (Bankr. D. Colo. 1995); In re Nicolosi,
86 B.R. 882, 887-88 (Bankr. W.D. La. 1988); 10 Collier on
Bankruptcy, supra, ¶ 7041.01. If the debtor succeeds in
obtaining a discharge, a creditor or class of creditors
particularly favored by Congress is hurt; hence
Bankruptcy Rule 7041 forbids dismissal of a complaint
objecting to a debtor’s discharge except on notice to the
trustee in bankruptcy (as well as to the U.S. Trustee and
anyone else that the bankruptcy court directs to be noti-
fied). In any event, since the ex-wife’s claim in this case
10 No. 07-3933
was the biggest claim in the bankruptcy proceeding, had
the defendant succeeded in knocking it out by his fraud
his action would have been fraud in the proceeding
itself rather than in an adversary proceeding that had
only a tangential effect on the overall bankruptcy case.
We move to the defendant’s conviction under 18 U.S.C.
§ 2252A for possession of child pornography, defined
as sexually explicit images of a minor. 18 U.S.C. § 2256(8).
The first federal child pornography statute, enacted in
1978 (four years after the defendant took the photo-
graphs of his 16-year-old sister-in-law), defined a “mi-
nor” to mean anyone under 16. Protection of Children
Against Sexual Exploitation Act, Pub. L. No. 95-225,
§ 2253(1), 92 Stat. 7 (1978). An amendment in 1984 rede-
fined “minor” as anyone under 18. Pub. L. 98-292, § 253(1),
98 Stat. 204 (1984). The defendant was charged with
possession of child pornography in 2005 and 2006, long
after the statute had been amended to raise the age of
majority. But he argues that since the photographs
were not illegal when made, the amended statute is
inapplicable to him.
He does not argue that Congress can’t criminalize the
continued possession of pornography that was legal when
created. United States v. Bateman, 805 F. Supp. 1053, 1055
(D.N.H. 1992); United States v. Porter, 709 F. Supp. 770, 774
(E.D. Mich. 1989), aff’d, 895 F.2d 1415 (6th Cir. 1990). But
he contends that unless his interpretation is adopted, the
statute will be incoherent because it creates an “affirma-
tive defense” for cases in which either the “minor” de-
picted in the pornography possessed by the defendant
No. 07-3933 11
was actually an adult or the pornography was not pro-
duced “using any actual minor.” 18 U.S.C. § 2252A(c). (The
two clauses are redundant—the second includes the
first—but the second is broader because it includes the
case in which no person was used in the creation of the
pornographic depiction; it might be a painting of an
imaginary person or a computer simulation.) One func-
tion of the affirmative defense, he argues, is to grand-
father the possession of pornography that was legal
when it was created. Peel did not raise the issue in the
district court, but it is the heart of his challenge to
his conviction for child pornography.
At argument the government’s lawyer conceded that to
prove a violation of the statute the government has to
prove that a real-life minor, not a computer simulation or
an adult looking like a minor, was used in the creation
of the pornography. The effect of an affirmative defense
that entitled the defendant to prove the contrary would
thus be that the government would have to prove that a
child was used and the defendant would have to prove
that a child wasn’t used. The statute is confused, but
not that confused; and the least plausible interpretation
is that it grandfathers a category of what the law now
deems to be child pornography.
The affirmative defense came into the statute in 1996,
when Congress in the Child Pornography Prevention Act,
Pub. L. No. 104-208, § 121, 110 Stat. 3009-26 (1996), for
the first time outlawed virtual child pornography—
pornography involving a computer simulation of a child
rather than an actual child: an image “that . . . appears to
12 No. 07-3933
be . . . of a minor engaging in sexually explicit conduct.” 18
U.S.C. § 2256(8)(B) (1996). This language could have
been thought to reach a case in which an adult who
looked like a child was used in the production of pornog-
raphy rather than an actual child. But that was not Con-
gress’s intent; its concern was with computer simulations.
Hence the affirmative defense, explained in the Senate
committee report as follows:
[The bill] . . . does not, and is not intended to, apply
to a depiction produced using adults engaging in
sexually explicit conduct, even where a depicted
individual may appear to be a minor. Accordingly, the
bill includes . . . an affirmative defense provision
for material produced using adults. Under that provi-
sion, it is an affirmative defense to a charge under
section 2252A that the material in question was pro-
duced using an actual person or persons engaging
in sexually explicit conduct, each of whom was an
adult at the time the material was produced, provided
the defendant did not intentionally pander the
material as being child pornography.
S. Rep. No. 358, 104th Cong., 2d Sess. 21 (Aug. 27, 1996).
Within a few years, however, the defense was over-
taken by the Supreme Court’s decision holding that the
production of non-obscene pornography in which no
child was involved cannot constitutionally be prohibited,
because there is no sexual abuse in such a case, Ashcroft v.
Free Speech Coalition, 535 U.S. 234, 250-51 (2002), and only
the presence of that abuse, the Court ruled, justifies the
suppression of pornography that does not cross the line
No. 07-3933 13
to obscenity. The government must therefore prove that
a child was used unless the pornography is considered
obscenity, which only a subset of pornography is, see, e.g.,
United States v. Schales, 546 F.3d 965, 971-72 (9th Cir. 2008);
18 U.S.C. § 1466A, and the statute under which Peel
was convicted is not an obscenity statute. United States v.
Irving, 452 F.3d 110, 120 (2d Cir. 2006); United States v.
Hilton, 386 F.3d 13, 16 (1st Cir. 2004) (per curiam). (He
does not argue that because the photos of his sister-in-
law were not illegal when he took them, they could not
constitute sexual abuse of a minor.)
With the government thus required to prove beyond a
reasonable doubt that the apparent child in the porno-
graphic image is a real child, the only work left for the
provision creating the affirmative defense is to require
(in a part of the provision that we did not quote) that
the defendant notify the government of his intention to
challenge the government’s proof that a child was used.
The history makes clear that the affirmative defense
was not added to the statute in order to grandfather
pornography created before the definition of a child was
changed from younger than 16 to younger than 18. It was
added to exculpate child pornography made with adult
rather than child models, at a time when the Supreme
Court had not yet ruled that the making of such pornog-
raphy could not constitutionally be punished, and there-
fore at a time when Congress thought it could place the
burden of proof concerning the age of the model used
in producing the pornography on the defendant rather
than on the government. There isn’t the slightest indica-
14 No. 07-3933
tion of a congressional purpose to grandfather a category
of child pornography, so that anyone who happened
to have pornographic photographs of 16- and 17-year-
olds taken before 1984 would be free to market them.
Such a person would have a market that was shielded
from new competition and thus offered him substantial
profit opportunities—because after 1984 there could be
no further legal production of such pornography in
which an actual child had been used. The possessor
would enjoy the same kind of quasi-monopoly as some-
one who possesses paintings by an artist when he dies pre-
maturely, freezing the quantity of his output and thus
pushing up the price.
Possession of a photograph of an underage girl or boy
must be knowing, however, and the defendant, besides
invoking the affirmative defense, argues that the gov-
ernment failed to prove that he knew in 2005 and 2006
that his sister-in-law had been under 18 when he took the
photographs. Actually the evidence of his knowledge
was extensive. He had known her since she was in fourth
grade, had spent a great deal of time with her at the
time of his marriage to her sister, when she was in high
school, and years later had represented her (the
defendant is a lawyer) in her divorce proceeding.
We turn to the sentencing issues. In calculating intended
loss for purposes of determining the guideline range for
the defendant’s offenses of bankruptcy fraud and obstruc-
tion of justice, the judge began with the amount that the
defendant owed his ex-wife under the terms of the
marital settlement—$230,000—and the amount that the
No. 07-3933 15
settlement required him to pay her in the future—
$2500 per month for the rest of Peel’s life. His life expec-
tancy was 17.5 years, so the estimated total payout over
that time would be $525,000. So far, so good, for Peel
hoped by his blackmail to get her to drop both claims.
But Peel argues that the estimated $525,000 in future
monthly payments that he owed his ex-wife should be
discounted to present value, since a smaller sum
received today and conservatively invested would yield
$525,000 over a period of 17.5 years. In civil cases
in which the loss for which damages are sought will be
incurred in the future (as where the plaintiff in an
accident case is disabled from earning future income),
courts reduce the future loss to a sum that the plaintiff
could invest safely at an interest rate at which the sum
would grow to an amount that would compensate him
fully for his future loss. See, e.g., Transcraft, Inc. v. Galvin,
Stalmack, Kirschner & Clark, 39 F.3d 812, 819 (7th Cir. 1994).
Courts do this because civil damages (excluding
punitive damages) seek to put the plaintiff in the finan-
cial position that he would have occupied had he not
been wronged by the defendant. Illinois School Dist. Agency
v. Pacific Ins. Co., 571 F.3d 611, 617 (7th Cir. 2009). Because
the aim of criminal sanctions is to punish, we find pro-
visions in the sentencing guidelines that would strike
a discordant note in a civil case—such as the direction
to sentencing judges to include even those losses that
“would have been impossible or unlikely to occur,”
U.S.S.G. § 2B1.1, Advisory Note 3(A)(ii), and the
further direction that “loss shall not include the
16 No. 07-3933
following: Interest of any kind, finance charges, late fees,
penalties, amounts based on an agreed-upon return or
rate of return, or other similar costs,” U.S.S.G. § 2B1.1,
Advisory Note 3(D)(i), so that the offense level for a
financial crime is not increased if the prosecution is
delayed, even though the delay increases the cost of the
crime.
The question whether to discount future losses (actual or
intended) to present value seems to have arisen rarely
in criminal cases. A few cases, however, have discounted
a future intended loss to present value, such as United
States v. Broderson, 67 F.3d 452, 457 (2d Cir. 1995), where
just as in a civil case the court required discounting to
present value an expected stream of monthly payments
of which the defendant had defrauded the government.
See also United States v. Edgar, 971 F.2d 89, 93-94 and n. 5
(8th Cir. 1992); United States v. Brown, 338 F. Supp. 2d 552,
559 (M.D. Pa. 2004). We have found no cases that refused
to discount a future loss to present value if asked to do so.
Almost everyone would rather lose $2 in 20 years than
$1 today, and this implies that the loss inflicted by ap-
propriating a $2 benefit that the victim would have to
wait 20 years to receive is less than taking $1 from
him now.
So if a defendant presents credible evidence for dis-
counting a stream of future payments to future value, the
district court must consider it. And in this case the
defense presented expert evidence that the present value
of the stream of future monthly payments that Peel
owed his ex-wife was $314,000. This amount, if adopted
as the measure of intended future loss and added to
No. 07-3933 17
the intended present loss of $270,000, would, after sub-
traction of the $158,000 in cash that the ex-wife would
have received under the agreement that Peel tried to
force on her, have produced an offense level two levels
below the one applied by the district court. The court,
however, rejected the effort to prove present value on the
ground that U.S.S.G. § 2B1.1, Application Note 3(E),
entitled “Credits Against Loss,” does not include, among
the credits listed, discounting to present value; credits
are such things as “the fair market value of the property
returned” to the victim by the criminal before the
offense was detected. But credits presuppose that the
loss or intended loss has been determined and afterward
part of it was restored, as in a case where an embezzler
gambles successfully with the embezzled funds and so
is able to (and does) return those funds. The amount of
the embezzlement is the loss, United States v. Lauer,
148 F.3d 766, 767-68 (7th Cir. 1998); United States v.
Mount, 966 F.2d 262, 266-67 (7th Cir. 1992), but the
harm caused by the loss is lessened by the criminal’s
voluntary act. That has nothing to do with calculating
the loss; the calculation precedes consideration of any
credits to which the defendant is entitled; and so the
application note has no relevance to whether loss is
measured by its discounted or an undiscounted value.
We are reluctant to make federal sentencing more
complicated than it is, but requiring a calculation of the
present value of a future loss, if the defendant presents
credible evidence, need not burden the judge, let alone
put him in a straitjacket. “The court need only make a
reasonable estimate of the loss. The sentencing judge is
18 No. 07-3933
in a unique position to assess the evidence and estimate
the loss based upon that evidence. For this reason, the
court’s loss determination is entitled to appropriate
deference.” U.S.S.G. § 2B1.1, Application Note 3(C). Since
the guidelines are no longer binding, Gall v. United States,
552 U.S. 38 (2007); United States v. Booker, 543 U.S. 220
(2005), the judge need not give controlling weight to the
present-value calculation.
Of particular relevance to the present case, the nature
and circumstances of the defendant’s crime may make
discounting to present value of only limited utility in
assessing loss. Peel’s attempted blackmail of his ex-wife
is a case in point. A blackmailer is apt not to stick to his
deal with his victim but instead to come back for more
later, as in Commonwealth v. Beauchamp, 732 N.E.2d 311,
316-17 (Mass. App. 2000), and United States v. Veltmann, 6
F.3d 1483, 1488-89 (11th Cir. 1993), so that the initially
intended loss is apt to understate the loss to the victim
had the blackmail succeeded. True, if Peel were to give
all the photos back to his ex-wife, as he promised to do,
he could not have blackmailed her further. But there
would have been no assurance that he would do that,
since she didn’t know how many of the photos he had.
And even if the blackmailer doesn’t return for more, the
victim is apt to be in constant fear of such a return, adding
to the cost of the crime. Ronald H. Coase, “The 1987
McCorkle Lecture: Blackmail,” 74 Va. L. Rev. 655, 674-75
(1988).
This case has to be remanded for other reasons, and we
leave to the discretion of the district judge whether to
discount the monetary loss inflicted by a blackmail
No. 07-3933 19
attempt (in this case an intended such loss) to its present
value and how best to weigh that determination in de-
ciding on an appropriate sentence.
Besides not discounting the future loss intended by
Peel, the judge added a further intended loss—the $611,000
in other claims that had been filed in the bankruptcy
proceeding. By bringing the total intended loss above
$1 million (it would have fallen just short of that
amount had he done the present-value calculation of the
ex-wife’s future loss suggested above), the addition
further increased Peel’s guidelines sentencing range. That
addition was error. None of the other creditors (or
anyone else) would have been hurt had the blackmail
attempt succeeded; nor was it any part of the defendant’s
intention to hurt them. Intended losses are intended
losses, not bookkeeping entries. See United States v. Arthur,
582 F.3d 713, 720-21 (7th Cir. 2009); United States v. Bussell,
504 F.3d 956, 960-63 (9th Cir. 2007); United States v.
Holthaus, 486 F.3d 451, 455 (8th Cir. 2007); United States
v. Wheeldon, 313 F.3d 1070, 1073 (8th Cir. 2002). The credi-
tors would actually have been better off had the black-
mail attempt succeeded because there would then
have been one less creditor with whom to divide the
defendant’s meager assets. The bankruptcy court would
not have been hurt merely because one creditor had
dropped out. In fact it would have saved time by not
having to adjudicate that creditor’s claim.
The remaining sentencing issue is whether the judge
was right to apply section 2G2.2(b)(3)(A) of the sen-
tencing guidelines, which increases the guidelines sen-
tencing range for child pornography if the pornography
20 No. 07-3933
was “distribut[ed] for pecuniary gain.” The pecuniary
gain, the judge determined, was the amount of money
that the defendant had hoped to gain from his black-
mail attempt. The defendant was offering to sell the
pornographic photographs to his ex-wife for forgiveness
of part of his debt to her under their marital settlement
agreement.
The primary aim of the pecuniary-gain enhancement
is to discourage trafficking in pornography, which in-
creases the incentive to create pornography and thus the
amount and so the number of abused children, the “mod-
els” for the photographs. New York v. Ferber, 458 U.S.
747, 761-62 and n. 13 (1982); see also United States v.
Goldberg, 491 F.3d 668, 672 (7th Cir. 2007); United States v.
Richardson, 238 F.3d 837, 839 (7th Cir. 2001). But the use
of pornography for blackmail is not obviously less bad
conduct than the sale of pornography in the market. The
defendant used pornography to avoid a debt and thus
for pecuniary gain, and we think that brings him within
the scope of the guidelines provision.
It’s true that in ordinary language “distribution” sug-
gests sale to more than one person. But in the guidelines
it means “any act, including possession with intent to
distribute, production, transmission, advertisement, and
transportation, related to the transfer of material involving
the sexual exploitation of a minor,” U.S.S.G. § 2G2.2,
Application Note 1 (emphasis added). That must
include a single sale. Moreover, the defendant was
offering to sell to his ex-wife a number of photos, and it
is hard to see why selling one pornographic photo to
No. 07-3933 21
each of (say) five people deserves a heavier punishment
than selling five photos to one person, especially given
the underlying concern with the harm to the child
model used in the photographs.
To conclude, the judgment is affirmed in part and
reversed in part, and the case remanded with direc-
tions that the judge vacate either the bankruptcy fraud
conviction or the obstruction of justice conviction, recal-
culate the intended loss, redetermine the guidelines
sentencing range, and resentence the defendant in ac-
cordance with 18 U.S.C. § 3553(a).
A FFIRMED IN P ART, R EVERSED IN P ART,
AND R EMANDED WITH INSTRUCTIONS.
2-12-10