United States v. Pham

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,  No. 06-30489
Plaintiff-Appellee, D.C. No.
v.  CR-05-00152-004-
LAM THANH PHAM, RSL
Defendant-Appellant.
 OPINION

Appeal from the United States District Court
for the Western District of Washington
Robert S. Lasnik, District Judge, Presiding

Argued and Submitted
February 4, 2008—Seattle, Washington

Filed September 23, 2008

Before: Raymond C. Fisher, Ronald M. Gould, and
Sandra S. Ikuta, Circuit Judges.

Opinion by Judge Gould;
Concurrence by Judge Fisher

13383
13386 UNITED STATES v. PHAM

COUNSEL

Jonathan S. Solovy, Esq., Law Office of Jonathan S. Solovy,
PLLC, Seattle, Washington, for appellant Lam Thanh Pham.

Jeffrey C. Sullivan and Patricia C. Lally, U.S. Attorney’s
Office, Seattle, Washington, for appellee United States of
America.
 UNITED STATES v. PHAM 13387
OPINION

GOULD, Circuit Judge:

This case illustrates the dangers of an identity theft scheme
whereby many persons and financial institutions are impacted
when criminals steal identities. Lam Thanh Pham (“Pham”)
appeals the 78-month sentence and $1 million restitution
order imposed on him after he pled guilty to one count of
bank fraud in violation of 18 U.S.C. § 1344.1 Pham and five
other individuals were indicted on forty-four counts of bank
fraud in connection with a massive identity theft scheme that
compromised the bank accounts of ninety-five people held by
fourteen different financial institutions and resulted in more
than $1.6 million in loss. Pham’s guilty plea followed. Pham
contends that it was error for the district court to apply a four-
level enhancement to his sentence for a property crime
involving fifty or more victims where the shortfalls in the
accounts of the ninety-five individuals whose identities were
stolen were fully reimbursed by their banks. We have jurisdic-
tion pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742, and
we vacate Pham’s sentence and remand for resentencing on
an open record.

I

Officials of the Starbucks Coffee Company alerted the FBI
that numerous Starbucks employees had had their identities
stolen and that counterfeit checks had been cashed on these
employees’ bank accounts. The ensuing investigation led to
the indictments of eight individuals, including six people
jointly indicted by a grand jury in the Western District of
1
The remaining issues presented in Pham’s appeal, as well as all issues
presented on appeal by My Thi Tran, who was indicted as a participant in
the same identity theft/bank fraud scheme and whose appeal, # 06-30529,
was consolidated with that of Pham, are addressed in a memorandum dis-
position filed concurrently with this opinion.
13388 UNITED STATES v. PHAM
Washington on April 14, 2005 on forty-four counts of bank
fraud in violation of 18 U.S.C. § 1344. One of those indicted
was Lam Thanh Pham, who other participants described as a
“boss” or “mastermind” of the scheme. According to these co-
conspirators, Pham created fraudulent driver’s licenses and
other identifying documents and orchestrated counterfeit
check cashing activities, the proceeds of which were then
deposited in his bank account or the account of another
scheme leader’s girlfriend.

Charging documents alleged the following facts about the
fraud scheme in which Pham was involved: Members of the
scheme’s group of identity thieves obtained personal informa-
tion, including bank account information, for individuals or
“targets” and used that information to create fraudulent identi-
fication documents and counterfeit checks made out to those
individuals. Participants in the scheme visited banks posing as
the targets, deposited the counterfeit checks and withdrew the
entire amount of the checks in cash. When the checks were
later determined not to be valid, the banks debited the targets’
accounts by the amount of the check. Because many checks
were written for large sums, this resulted in diminished and
even negative balances in the affected accounts. Once targets
discovered that their identities had been stolen and notified
their banks of the problem, their accounts were restored and
the banks absorbed the losses, which the FBI estimated to
total $1,662,873.95.

Pham entered a guilty plea to one count of bank fraud on
May 1, 2006. The plea agreement stipulated that the amount
of loss attributable to Pham would be determined at sentenc-
ing but would not exceed $1 million. The agreement further
stated that the government would seek an “upward adjust-
ment” under United States Sentencing Guidelines (“USSG”)
§ 2B1.1(b)(2) because Pham’s offense involved at least ten
victims.

In its presentence report on Pham, the United States Proba-
tion Office recommended a fourteen-level enhancement under
 UNITED STATES v. PHAM 13389
USSG § 2B1.1(b)(1)(H) for actual losses of between
$400,000 and $1 million and a four-level enhancement under
USSG § 2B1.1(b)(2)(B) for an offense involving fifty or more
victims. The government agreed with both of these recom-
mendations in its sentencing memorandum, stressing, with
respect to the number of victims, the ninety-five individuals
whose bank accounts were compromised in addition to the
fourteen banks that were affected. As evidence to support
these enhancements, the government provided a spreadsheet
prepared by the FBI detailing the withdrawals made by the
check cashers and the bank accounts from which those funds
were taken. The government also offered a Victim Impact
Statement from one married couple who had been targeted by
the scheme. This statement itemized financial losses the cou-
ple had suffered as a result of having their identities stolen,
such as $1,003 for three vacation days spent resolving the
problems with their account, $336.85 in insufficient funds and
collection agency fees (some of which were ultimately
refunded by their bank), $13.49 for certified letters to credit
reporting agencies, $96 for replacement checks, and $10 for
printer ink and paper to write letters. This statement also
described the “month of sleepless nights” the couple had
spent before the situation with their bank was resolved. Pham
argued in his sentencing memorandum that only a two-level
enhancement under USSG § 2B1.1(b)(2)(A)(i) was warranted
because only the fourteen financial institutions had sustained
actual monetary loss as documented in the government’s
spreadsheet.

At Pham’s sentencing hearing, the government contended
that the ninety-five account holders targeted by the scheme
had suffered “actual loss” in the form of “making phone calls
. . . to their banks, taking off work, driving to their banks, . . .
[and] [b]orrowing money to make ends meet.” Pham’s attor-
ney responded that the Guidelines define “victims” as those
who have suffered some pecuniary harm and that this term
cannot include “people who have to go through a lot of upset,
hassle and non-pecuniary suffering.” The district court sided
13390 UNITED STATES v. PHAM
with the government and applied a four-level enhancement for
fifty or more victims, concluding that “the evidence that I’ve
heard of people whose lives were disrupted, who had to make
extraordinary efforts to get banks to take their complaints
seriously, to deal with bills that weren’t paid, problems that
came up with their credit, was much more than a short-lived
monetary loss that was immediately covered by a third party”
and so was sufficient to qualify the ninety-five account hold-
ers as “victims” for purposes of the sentence enhancement.
The district court then sentenced Pham to seventy-eight
months in prison and five years of supervised release, as well
as ordering him to pay restitution in the amount of $1 million.
This timely appeal of Pham’s sentence followed.

II

We review a district court’s interpretations of the federal
Sentencing Guidelines de novo, its factual determinations for
clear error, and its application of the Sentencing Guidelines to
the facts as it has found them for abuse of discretion. United
States v. Kimbrew, 406 F.3d 1149, 1151 (9th Cir. 2005). If
upon review we conclude that the district court committed a
“significant procedural error,” see Gall v. United States, 128
S. Ct. 586, 597 (2007), such as a “material error in the Guide-
lines calculation that serves as the starting point for the dis-
trict court’s sentencing decision, we will remand for
resentencing pursuant to 18 U.S.C. § 3742(f).” United States
v. Cantrell, 433 F.3d 1269, 1280 (9th Cir. 2006). If no such
material error in applying the Guidelines is found, however,
we may go on to evaluate the sentence for its substantive rea-
sonableness under an abuse of discretion standard. See Gall,
128 S. Ct. at 597; United States v. Carty, 520 F.3d 984, 993
(9th Cir. 2008) (en banc).

III

[1] Section 2B1.1(b)(2) of the U.S. Sentencing Guidelines
provides for a four-level enhancement where the offense
 UNITED STATES v. PHAM 13391
involved at least fifty but fewer than 250 victims. The com-
mentary to § 2B1.1 further provides that a “victim” is any per-
son who either (a) “sustained any part of the actual loss
determined under subsection (b)(1)”; or (b) “sustained bodily
injury as a result of the offense.” USSG § 2B1.1 cmt. n.1.
“Actual loss” is in turn defined as “the reasonably foreseeable
pecuniary harm that resulted from the offense.” Id. n.3(A)(i).
“Pecuniary harm” means “harm that is monetary or that other-
wise is readily measurable in money” and “does not include
emotional distress, harm to reputation, or other non-economic
harm.” Id. n.3(A)(iii). For such pecuniary harm to be “reason-
ably foreseeable,” the defendant must have known, or under
the circumstances reasonably should have known, that such
harm was a potential result of the offense. See id. n.3(A)(iv).
Finally, the Guidelines provide that loss “shall not include
[either] [i]nterest of any kind, finance charges, late fees, pen-
alties, amounts based on an agreed-upon return or rate of
return, or other similar costs[,]” or “[c]osts to the government
of, and costs incurred by victims primarily to aid the govern-
ment in, the prosecution and criminal investigation of an
offense.” Id. n.3(D).

The government has advanced two distinct theories that
would support counting the individual bank account holder
“targets” as “victims” of Pham’s fraud for purposes of
§ 2B1.1(b)(2). Each of these theories presents issues of first
impression in our circuit.

A

One government theory posits that because the amounts
covered by the counterfeit checks were debited from these
individuals’ accounts, they suffered “actual loss” when those
checks were rejected and their accounts were depleted. Pham
responds that to count the same financial losses ultimately
absorbed by the banks as having been suffered by the account
holders as well would constitute an impermissible double
counting. We reject Pham’s double-counting contention.
13392 UNITED STATES v. PHAM
[2] “Impermissible double counting occurs when one part
of the Guidelines is applied to increase a defendant’s punish-
ment on account of a kind of harm that has already been fully
accounted for by application of another part of the Guide-
lines.” United States v. Stoterau, 524 F.3d 988, 1001 (9th Cir.
2008) (internal quotation marks omitted). However, we have
held that “[t]here is nothing wrong with ‘double counting’
when it is necessary to make the defendant’s sentence reflect
the full extent of the wrongfulness of his conduct.” United
States v. Thornton, 511 F.3d 1221, 1228 (9th Cir. 2008)
(internal quotation marks omitted); see also United States v.
Holt, 510 F.3d 1007, 1012 (9th Cir. 2007) (“Because the two
enhancements account for . . . distinct wrongs, it was proper,
and no abuse of discretion, for the district court to apply both
to the challenged criminal conduct.”).

[3] This case differs from Thornton and Holt, and from all
other cases in our circuit in which double counting arguments
have been raised, in that here only one Guidelines provision,
USSG § 2B1.1(b)(2), is at issue, and the question is the proper
size of the enhancement for number of victims under that pro-
vision. Despite this difference, the principles that have guided
our other double counting cases remain applicable here. If the
account holders and the banks suffered “distinct wrongs” as
a result of Pham’s conduct and if accounting for those distinct
wrongs is necessary “to make the defendant’s sentence reflect
the full extent of the wrongfulness of his conduct,” then we
hold that it is not impermissible double counting to consider
both groups as victims even if their losses are ultimately
traceable to the same fraudulently obtained funds.

[4] Here, Pham and his co-conspirators stole confidential
identifying information from fifty or more individuals to use
that personal information to commit bank fraud. The theft of
this personal information and the subsequent withdrawal of
money from the identity theft victims’ accounts resulted in
“reasonably foreseeable pecuniary harm” to those account
holders when their accounts were debited, thus causing them
 UNITED STATES v. PHAM 13393
to suffer “actual loss” within the meaning of the Guidelines.
See USSG § 2B1.1 cmt. n.3(A)(i). At the same time, the par-
ticipants in the scheme committed their fraud by presenting
counterfeit checks to banks, and it was also reasonably fore-
seeable that the banks would ultimately cover the account
holders’ losses and thus suffer pecuniary harm as well. See id.
The fact that the same funds were involved in both losses
does not preclude both the account holders and the banks
from suffering harm or mean that the harms they suffered
were identical. Just as a single gunshot would have two vic-
tims suffering two distinct injuries if the bullet passed through
one person before striking a second, here Pham’s criminal
acts could have two groups of victims suffering distinct pecu-
niary harms where the debits to the account balances first suf-
fered by the account holders were later absorbed by the banks.
That the losses sustained by the account holders turned out to
be temporary does not necessarily disqualify the account
holders as victims either, because, to illustrate, an individual
who “sustained bodily injury as a result of the offense” would
still be considered a victim under part B of the definition
found in application note 1 to USSG § 2B1.1 even if he sub-
sequently recovered from that injury. We therefore hold that
where a bank fraud offense results in initial losses by bank
account holders of the funds in their accounts and a more per-
manent loss of those same funds by banks or other financial
institutions when those institutions reimburse the account
holders, both the account holders and the banks have suffered
harms that are “pecuniary” and “reasonably foreseeable” for
purposes of the Guidelines’ definition of “actual loss” and
that are sufficiently distinct from one another to avoid a dou-
ble counting problem. See Thornton, 511 F.3d at 1228; Holt,
510 F.3d at 1012.

Some of our sister circuits have encountered a different
type of “double counting” problem in cases that involve cal-
culations of loss under § 2B1.1(b)(1). This version of “double
counting” occurs where the same fraudulent check or stolen
credit card is erroneously counted twice in estimating the total
13394 UNITED STATES v. PHAM
loss attributable to a defendant. Reviewing courts have found
such errors to be material only where they bring the amount
of loss into a different category for Guidelines purposes, such
as from $900,000, which would carry a fourteen-level
enhancement under § 2B1.1(b)(1)(H), to $1.1 million, which
would carry a sixteen-level enhancement under § 2B1.1(b)
(1)(I). See, e.g., United States v. Mickens, 453 F.3d 668, 671-
72 (6th Cir. 2006) (holding that even if one of the govern-
ment’s calculation methods impermissibly counted funds
obtained from the same stolen credit card towards both actual
and intended loss, any error was harmless because an alternate
calculation method, which was free of any double counting,
also resulted in a loss amount of between $120,000 and
$400,000 and thus application of the same enhancement);
United States v. Lee, 427 F.3d 881, 896 (11th Cir. 2005)
(describing a defendant’s argument that two invalid checks
intended to cause a single loss were both erroneously included
in her total loss amount but not that of her codefendant and
explaining that this “double-counting” resulted in a total loss
amount of more than $1 million and a sixteen-level enhance-
ment for the appealing defendant as compared to a fourteen-
level enhancement for the codefendant).

[5] No such boundary between loss categories under
§ 2B1.1(b)(1) is implicated here, for while the method of
counting victims discussed above does attribute losses of the
same funds to the banks and to the account holders, the total
amount of loss for which Pham was held responsible did not
correspondingly increase. Instead, the government stipulated
as part of Pham’s plea agreement that the amount of loss
would not exceed $1 million, despite the FBI’s finding that
more than $1.6 million was involved. Consistent with this
stipulation, Pham was given a fourteen-level enhancement
under USSG § 2B1.1(b)(1)(H) for losses of between $400,000
and $1 million. Accordingly, any double counting of losses
had no effect on the total amount of loss attributed to Pham
and was only relevant to the victim-related enhancement at
§ 2B1.1(b)(2), a purpose for which double counting is war-
 UNITED STATES v. PHAM 13395
ranted, as discussed above, because of the distinct harms that
Pham’s conduct caused to these two groups of victims. See
Thornton, 511 F.3d at 1228.

[6] Despite the lack of a double-counting problem, the indi-
vidual account holders can still be counted as “victims” of
Pham’s bank fraud offense only if they “sustained any part of
the actual loss determined under” § 2B1.1(b)(1). See § 2B1.1
cmt. n.1. The Sixth Circuit, interpreting this language in a
case with similar facts to this one, has held that where bank
account holders’ “monetary loss is short-lived and immedi-
ately covered by a third-party,” the bank, those account hold-
ers have not suffered any “ ‘actual loss’ or ‘pecuniary
harm.’ ” United States v. Yagar, 404 F.3d 967, 971 (6th Cir.
2005). The district court in this case agreed with the Sixth
Circuit’s analysis and we, too, conclude it is persuasive. If the
account holders victimized by Pham were fully reimbursed as
soon as they notified their banks of the fraudulent activity,
then they cannot reasonably be said to have suffered or “sus-
tained” the losses that were only temporarily and fleetingly
reflected in their accounts. As the Sixth Circuit reasoned in
Yagar: they would have “suffered no adverse effect as a prac-
tical matter from [the defendant’s] conduct.” Id.

[7] However, the Sixth Circuit in Yagar pointed out that
“there may be situations in which a person could be consid-
ered a ‘victim’ under the Guidelines even though he or she is
ultimately reimbursed . . . .” Id. This case may present just
such a situation. The government’s proffered Victim Impact
Statement made clear that, at least for some of the account
holders, the refund was not instantaneous. To the contrary,
one couple referred to their “month of sleepless nights” and
stated that it took “several weeks [and] many emails and
phone calls” until the amount of the counterfeit check was
refunded and their account was unfrozen. The district court
commented at Pham’s sentencing that

the fact that ultimately people were restored to the
state they were in before the crime was committed,
13396 UNITED STATES v. PHAM
some after some considerable time, effort and
expense, is what the Court in Yagar said[—“]while
there may be situations in which a person could be
considered a victim under the [G]uidelines, even
though he or she is ultimately reimbursed[”]—that I
believe this case fits under that.

(Emphasis added).

Following similar logic, the Eleventh Circuit diverged from
the Sixth Circuit’s Yagar approach in United States v. Lee.
There, victims of a scheme involving the use of bad checks
to purchase homes and cars offset some of their losses by pur-
suing foreclosure, repossession and other legal proceedings.
427 F.3d at 895. The Eleventh Circuit concluded that where
the entities who sustained the bad debt had to wait “an appre-
ciable time and . . . resort to a legal remedy” before being
compensated by the defendants, they could properly be con-
sidered “victims” for purposes of § 2B1.1 despite ultimately
recovering most or all of their initial losses. See id. (emphasis
added).

This case differs from Lee in two key respects. First, the
Lee victims’ losses were not reimbursed by a third party but
rather were recouped from the defendants themselves after the
victims took legal action against them. Id. (“In none of these
cases was there a third party available to provide prompt
indemnification.”). By contrast, the account holders here were
fully reimbursed by their banks, and the only question is
whether that reimbursement was “immediate” as in Yagar or
whether some appreciable amount of time elapsed before the
accounts were replenished. Second, the Lee court had evi-
dence in the record detailing what the victims had to do to
recover their losses and how long those actions took. See 427
F.3d at 885-86. But except for the one Victim Impact State-
ment provided by the government, no such evidence was pre-
sented to the district court in this case.
 UNITED STATES v. PHAM 13397
Although the district court referred at Pham’s sentencing to
the “considerable time” that passed before some of the
account holders were “restored to the state they were in before
the crime was committed,” the district court did not explain
the basis for its conclusion that enough time had elapsed for
these account holders to distinguish their situation from the
“short-lived” losses “immediately covered by a third-party” in
Yagar. Nor did the district court explain how this temporal
reasoning could bring the total number of victims of the
offense to fifty, where only the losses of the fourteen financial
institution victims were itemized in the government’s spread-
sheet and the experiences of only one other account holder2
were recounted in the Victim Impact Statement.

[8] The government has the burden of proving the facts
necessary to support a sentence enhancement by a preponder-
ance of the evidence. See United States v. Allen, 434 F.3d
1166, 1173 (9th Cir. 2006). Here, the government provided
evidence that one account holder and his wife had experi-
enced a delay of several weeks, and had to send many e-mails
and make many phone calls, before the funds in their compro-
mised account were restored. If similar evidence, or evidence
of something more than a “short-lived [loss] immediately cov-
ered by a third-party” had been produced for enough of the
other account holders3 to bring this case outside of the situa-
2
Although the Victim Impact Statement was signed by both husband
and wife, the FBI spreadsheet shows that the affected account was in the
husband’s name, and so the government counted this couple as a single
“victim” in reaching its figure of ninety-five account holder victims.
3
Evidence of more than immediately reimbursed loss on the part of
thirty-five account holders, in addition to the evidence already in the
record about the losses suffered by the fourteen institutions listed in the
spreadsheet and the one account holder who did provide a statement,
would bring the total number of victims to fifty. However, it may not be
necessary for the government to produce evidence along these lines for
each and every one of thirty-five or more account holders. Commentary
in the Guidelines suggests that the amount of loss and the number of vic-
tims can be approximated, so it likely would be sufficient for the govern-
13398 UNITED STATES v. PHAM
tion covered by Yagar, then a four-level enhancement for fifty
or more victims might have been appropriate. However, the
government did not meet its evidentiary burden with respect
to all but one of the account holders, and so the government’s
first theory does not permit imposition of the
§ 2B1.1(b)(2)(B) enhancement based only on the scant evi-
dence in the record before us.

B

The government’s second theory in support of the enhance-
ment is that the “actual loss” the account holders suffered was
not the temporary shortfall in their accounts but rather collat-
eral expenses that they incurred in the process of resolving
those shortfalls and related problems. With respect to the
account holder who submitted a Victim Impact Statement,
these costs included $1,003 for the value of three days taken
off from work to resolve account problems, $336.85 in insuf-

ment to produce evidence for enough of the account holders to allow the
sentencing court reasonably to infer a pattern of delayed reimbursement.
See, e.g., USSG § 2B1.1 cmt. n.3(C) (“The court need only make a reason-
able estimate of the loss” and may include in that estimate “[t]he approxi-
mate number of victims multiplied by the average loss to each victim”);
cmt. n.4(C)(ii)(I) (creating a “Special Rule” that where an offense
involved the theft or attempted theft of mail from “a United States Postal
Service relay box, collection box, delivery vehicle, satchel, or cart, [the
offense] shall be considered to have involved at least 50 victims”). We
decline to specify at this time how many account holders would have to
provide evidence and what form that evidence would have to take to sup-
port such an inference, because our proper role is to review decisions on
such matters by the district court for abuse of discretion after the record
is developed. See United States v. Kimbrew, 406 F.3d 1149, 1151 (9th Cir.
2005). However, the delay in reimbursement of several weeks and perhaps
as much as a month experienced by one account holder and documented
in his Victim Impact Statement is very different from the “short-lived,”
“immediately reimbursed” loss discussed in Yagar, and qualifies this indi-
vidual as a victim for purposes of USSG § 2B1.1 by virtue of the concrete,
albeit temporary, financial loss he suffered when his bank account was
depleted.
 UNITED STATES v. PHAM 13399
ficient funds and collection agency fees (some of which were
ultimately refunded by the bank), $13.49 for certified letters
to credit reporting agencies, $96 for replacement checks, and
$10 for printer ink and paper to write letters. Pham contends
that these expenses are the sort of “other . . . costs” “similar”
to interest, finance charges, and late fees that the Guidelines
have explicitly excluded from the calculation of loss under
§ 2B1.1. See USSG § 2B1.1 cmt. n.3(D)(i). With the possible
exception of insufficient funds and collection agency charges
incurred when the account was in overdraft, however, the
costs described in the Victim Impact Statement are not “simi-
lar” to the finance charges, late fees, and other penalties cov-
ered by this application note, and we conclude that they do
not fall within its reach. Moreover, the costs of forfeited vaca-
tion time spent meeting with bank personnel were not
expended “primarily to aid the government in . . . the prosecu-
tion and criminal investigation of [this] offense” but rather to
resolve the couple’s own financial situation, and so these
costs do not fit the Guidelines’ other exception for govern-
ment assistance expenses. USSG § 2B1.1 cmt. n.3(D)(ii).

[9] The sorts of costs set forth in the Victim Impact State-
ment and the other examples given by the government at
Pham’s sentencing and in its appellate brief, such as the cost
of gas mileage for trips to and from banks and the cost of
stamps and telephone calls, satisfy the Guidelines’ definition
of “actual loss” because they are “monetary” or “readily mea-
surable in money.” § 2B1.1 cmt. n.3(A)(iii). These costs asso-
ciated with resolving disputed account activity, canceling
credit cards and initiating fraud investigations with credit
reporting agencies are also “reasonably foreseeable” conse-
quences of identity theft, which was an integral component of
this bank fraud scheme. See id. n.3(A)(iv). Accordingly, we
hold that financial costs to bank account holders that are
incurred in the course of resolving damage done to those
accounts by a fraud scheme may be included in the calcula-
tion of actual loss under § 2B1.1(b)(1) and may qualify the
13400 UNITED STATES v. PHAM
individuals who incurred those costs as “victims” of the
offense under § 2B1.1(b)(2).

[10] Again, however, there is a problem of insufficient evi-
dence. A “victim” under § 2B1.1 must have “sustained . . .
part of the actual loss determined under subsection (b)(1).”
§ 2B1.1 cmt. n.1. The actual loss in this case was determined
to be at most $1 million, based on the stipulation in the plea
agreement that the government would not seek a higher
amount and the FBI spreadsheet itemizing the banks’ losses
of more than $1.6 million. This spreadsheet did not include
any information about the costs suffered by individual bank
account holders in resolving the fraudulent activity on their
accounts. Because no evidence of any such costs was included
in the government’s calculation of actual loss, those costs can-
not serve as the basis for including the account holders as vic-
tims of Pham’s scheme.

The Tenth Circuit has confronted a similar evidentiary
problem in United States v. Leach, a case involving the theft
by a U.S. postal employee of checks mailed to a charitable
organization. 417 F.3d 1099, 1101 (10th Cir. 2005). In that
case, the government had sought a four-level enhancement for
an offense involving between fifty and 250 victims because
“over 200 people reported undelivered donations and incurred
the expense of writing and mailing a replacement check.” Id.
at 1106 (internal quotation marks omitted). The Tenth Circuit
rejected this argument, noting that “[t]here was no testimony
presented at the sentencing hearing regarding the type and
amount of loss suffered by donors” and that the court’s calcu-
lation of loss was based entirely on the amount of money the
defendant intended to steal from the charity, which did not
include the costs of replacement checks. Id. at 1106-07
(emphasis in original). The court concluded that because “the
loss suffered by these 200 donors was not part of the actual
loss determined . . . under” § 2B1.1(b)(1), the district court
erred by counting the donors as ‘victims’ for purposes of an
enhancement under U.S.S.G. § 2B1.1(b)(2).” Id. at 1107.
 UNITED STATES v. PHAM 13401
[11] The Tenth Circuit’s reasoning in Leach was sound and
applies with equal force to the government’s arguments in this
case based on collateral costs to bank account holders that
were not included in the actual loss amount. Because the
enhancement for fifty or more victims cannot be supported on
this second theory, and for the reasons set forth in part A
above with respect to the government’s first theory of victim
counting, we conclude that the district court erred in imposing
a four-level enhancement to Pham’s sentence under
§ 2B1.1(b)(2)(B) for an offense involving fifty or more vic-
tims.

C

It should be obvious to any thoughtful observer of modern
economic life that identity theft has the potential to cause
those whose identities are stolen the gravest of concerns about
lost funds, impaired credit, and impaired reputation. It is also
obvious that the individual victims of Pham’s scheme, though
they were reimbursed by their banks, undoubtedly suffered
personal anguish, anxiety and concern about the identity theft
until it was satisfactorily resolved. It might be rational to say
that the anxiety of persons whose identities and personal
finances are compromised by identity theft justifies, in pro-
portion to the number of anguished persons, heightened pun-
ishment. We, however, deal with statutes and statutory
penalties as enacted by Congress and sentencing guidelines as
specified by the United States Sentencing Commission. At the
pertinent times for Pham’s crime, these guidelines recognized
and permitted weight to be given to pecuniary loss, but not to
mental anxiety, distress, lost reputation, or other non-
economic harm.

Although the Guidelines are now discretionary, the
Supreme Court has continued to indicate that a correct initial
assessment of the Guidelines range is a starting point before
the discretionary judgment is made on a reasonable sentence
in the light of the 18 U.S.C. § 3553(a) factors. See, e.g., Gall,
13402 UNITED STATES v. PHAM
128 S. Ct. at 596-97; Carty, 520 F.3d at 991; Cantrell, 433
F.3d at 1279-80. The government’s case for imposing an
enhancement for an offense involving fifty or more victims
was not supported by a preponderance of the evidence show-
ing that fifty or more victims suffered actual loss in the form
of pecuniary harm. Because of that evidentiary deficiency, we
cannot sustain the enhancement for the number of victims on
the current record.

IV

[12] Because we have identified a significant error4 in the
Guidelines calculation that provided the starting point for the
district court’s sentencing decision, we vacate Pham’s sen-
tence and remand this case for resentencing pursuant to 18
U.S.C. § 3742(f)(1). Cantrell, 433 F.3d at 1280; see also Gall,
128 S. Ct. at 597 (requiring that an appellate court “first
ensure that the district court committed no significant proce-
dural error, such as . . . improperly calculating . . . the Guide-
lines range”). In remanding, we do not limit the evidence that
the district court may consider in resentencing to the evidence
that was before it during Pham’s initial sentencing hearing.
See United States v. Matthews, 278 F.3d 880, 885-86 (9th Cir.
2002) (en banc) (“On remand, the district court generally
should be free to consider any matters relevant to sentencing,
even those that may not have been raised at the first sentenc-
ing hearing, as if it were sentencing de novo.”) (citations
omitted). Rather, we remand this matter on an open record so
4
This error is “significant,” Gall, 128 S. Ct. at 597, because it raised
Pham’s Guidelines range from 57-71 months (which would have been his
range if only a two-level enhancement for ten or more victims had been
applied) to 70-87 months. The 78-month sentence he received was in the
middle of his Guidelines range as calculated but would have constituted
an above-Guidelines sentence if he had been given only the two-point
enhancement for between ten and forty-nine victims. Such an outside-
Guidelines sentence would have required the district court to “consider the
extent of the deviation and ensure that the justification [was] sufficiently
compelling to support the degree of the variance.” Id.
 UNITED STATES v. PHAM 13403
that both parties can present evidence relevant to the proper
number of victims in light of this opinion’s guidance on a
matter of first impression in our circuit.

SENTENCE VACATED AND REMANDED FOR
RESENTENCING.

FISHER, Circuit Judge, concurring in part and concurring in
the judgment:

I agree fully with all but Part III.A of the majority’s opin-
ion. If, as the majority holds in Part III.B, the government
demonstrates that the account holders whose accounts were
targeted by Pham’s scheme incurred actual collateral
expenses while convincing the banks to restore their account
balances and correct errors in their credit histories, these
expenses constitute reasonably foreseeable pecuniary harm
arising from Pham’s conduct. These individuals could there-
fore be counted as the “victims” of Pham’s conduct for the
purpose of a sentencing enhancement under U.S. Sentencing
Guideline § 2B1.1(b)(2). I part ways with the majority, how-
ever, with regard to Part III.A, where the majority holds, in
the alternative, that both the financial institution and the
account holder could be counted as a “victim” based on the
same actual theft of funds, which was temporarily reflected in
the account holder’s account balance but ultimately sustained
by the bank. Although I agree that the temporary deprivation
of access to one’s account funds is some kind of harm, it is
not a pecuniary harm, and thus it is not a kind of harm
accounted for under the Guidelines.

As the majority explains, the Guidelines allow an individ-
ual to be counted as a “victim” for the purpose of a sentencing
enhancement under § 2B1.1(b)(2) only if he or she “sustained
any part of the actual loss” from the fraudulent scheme.
U.S.S.G. § 2B1.1 cmt. n.1. This loss must be “pecuniary,”
13404 UNITED STATES v. PHAM
which means “harm that is monetary or that otherwise is mea-
surable in money,” and “does not include emotional distress,
harm to reputation, or other non-economic harm.” Id.
n.3(A)(iii). In Part III.A, the majority holds that the account
holders could be shown to have suffered such “actual loss”
because “their accounts were debited,” even where “the losses
sustained by the account holders turned out to be temporary”
because these funds were later restored by the bank. Maj. Op.
at 13392, 13393. The majority concedes that some reimburse-
ments may be so speedy that the victim could not be said to
have actually suffered or sustained the loss, but holds that a
reimbursement that is not “instantaneous” is an actual pecuni-
ary loss under the Guidelines. Id. at 13395. The majority thus
creates a vague standard for defining “actual loss,” whereby
reimbursed account holders are “victims” if “some apprecia-
ble amount of time elapsed before the accounts were replen-
ished,” but not if they were “fully reimbursed as soon as they
notified their banks of the fraudulent activity.” Id. at 13395,
13396.

As the majority acknowledges, the losses to the account
holders in this case turned out to be ephemeral. Pham and his
co-defendants defrauded banks by impersonating legitimate
account holders and presenting counterfeit checks in the
account holders’ names, inducing the banks to give money to
Pham and his co-defendants while improperly lowering the
account balance of the victimized account holder. By restor-
ing the account holders’ balances, the bank agreed that the
money had not been validly drawn from these accounts. The
reimbursement reflected the bank’s acknowledgment that it
had committed error by improperly accepting a counterfeit
check and improperly debiting an individual’s account for
funds that were, in fact, fraudulently stolen from the bank
itself. See United States v. Erpenbeck, 532 F.3d 423, 442 (6th
Cir. 2008) (“When a customer of a bank or a creditcard com-
pany is defrauded, the customer is generally protected by an
agreement that the bank or company will handle any fraud
based upon unauthorized charges against the customer’s
 UNITED STATES v. PHAM 13405
account . . . . [Thus] a loss under this type of contractual
agreement is necessarily temporary, and the customers are
fully reimbursed.”).

I agree that it was reasonably foreseeable that the bank
would mistakenly debit the holders’ accounts and that — as
a result — the holders would, for a time, lose access to their
account funds while the bank sorted out who should be the
proper party to bear the loss. Assuming the bank fully reim-
burses the account holders, however — including refunding
any lost interest or other charges caused by the improper deb-
iting of funds — I do not believe it can fairly be said that the
account holders have suffered any actual pecuniary harm from
the temporary deprivation of access to their funds. Rather,
they have sustained an inconvenience and a headache, which
I do not dispute can be of serious proportions. To the extent
the account holders’ inconvenience can be monetized in the
form of lost vacation days, phone calls and letters to the bank
and credit reporting agencies, unreimbursed expenses for
replacement checks and so on, then I agree that the account
holders have sustained a reasonably foreseeable, actual pecu-
niary loss that is sufficient to count them as “victims” under
the Guidelines. See United States v. Abiodun, No. 06-
5335CR, ___ F.3d ___, 2008 WL 2924341 at *6 (2d Cir. July
30, 2008) (holding that reimbursed account holders may be
“victims” under § 2B1.1 based on “loss of time” that can be
measured in monetary terms). This is what I understand to be
the holding of Part III.B of the opinion, which I fully join. To
label the temporary deprivation of access to funds alone an
“actual loss,” however, goes beyond the Guidelines’ clear —
and narrow — definition of what makes someone a “victim”
under § 2B1.1(b)(2).

Moreover, I am concerned that the majority’s definition of
“actual loss” in Part III.A risks double-counting both the num-
ber of victims and the amount of loss caused by the defendant.
“Impermissible double counting occurs where one part of the
Guidelines is applied to increase a defendant’s punishment on
13406 UNITED STATES v. PHAM
account of a kind of harm that has already been fully
accounted for by the application of another part of the Guide-
lines.” United States v. Thornton, 511 F.3d 1221, 1227-28
(9th Cir. 2008) (internal quotation marks omitted). The major-
ity’s definition of “actual loss” means that both the account
holder and the bank could be counted as “victims” based on
the same harm, the pecuniary loss from the theft of funds. The
majority acknowledges that this case differs from cases such
as Thornton and United States v. Holt, 510 F.3d 1007, 1011-
12 (9th Cir. 2007), where we upheld sentencing enhancements
against double-counting challenges because the defendant’s
sentence was enhanced under different guidelines that cap-
tured different aspects of the defendant’s harm. Here the
majority proposes that a single harm — the pecuniary loss
from the funds — constitutes an “actual loss” to two different
parties under the same Guideline, simply because some time
elapsed before one party agreed to absorb the loss. The pecu-
niary loss from the stolen funds, however, is fully absorbed by
the bank. By also counting the account holder as a victim, the
majority would either be double-counting the victims of the
pecuniary loss, or else accounting for some other, non-
pecuniary harm to the account holder, which is not permitted
by the Guidelines.

More troubling is what this might mean in future cases for
the calculation of the loss amount for purposes of a sentencing
enhancement under § 2B1.1(b)(1). If both the bank and the
account holder, as the majority suggests, sustained an “actual
loss” as a result of the theft of funds, then it is not clear why
the amount stolen should not also be doubled for purposes of
calculating a sentencing enhancement for the loss amount.
Thus, under the majority’s rationale, a defendant who
defrauded a bank of $500,000 could seemingly be punished
as if he had stolen $1,000,000 — netting a two-level enhance-
ment — because he would have caused $500,000 in “actual
loss” to the bank and another $500,000 in “actual loss” to the
account holders. See U.S.S.G. § 2B1.1(b)(1). The majority
points out that such double-counting is not implicated in
 UNITED STATES v. PHAM 13407
Pham’s case because the government stipulated to the loss
amount. See Maj. Op. at 13394-95. This will not, of course,
necessarily be so in future cases. This leads to the troubling
proposition that defendants who steal by identity theft could
be exposed to significantly higher punishments because the
“actual loss” amount would be doubled, at least in cases
where the bank understandably takes some time to verify that
fraud occurred before agreeing to absorb the loss.

No other circuit has held that two victims can both be
counted under the Guidelines based on the same “actual loss”
of funds. In United States v. Lee, 427 F.3d 881, 894 (11th Cir.
2005), the Eleventh Circuit rejected a defendant’s argument
that the losses he caused should not be counted under the
Guidelines because the victims managed to recover their
stolen property from the defendant himself. The Lee court
properly rejected this argument, which would have rendered
a crime “victimless” if the victim recovered his stolen prop-
erty. See id. at 895. Here, however, as in United States v.
Yagar, 404 F.3d 967 (6th Cir. 2005), our task is not to decide
whether there was any victim who sustained the loss, but to
choose between two possible victims. In Yagar, the Sixth Cir-
cuit suggested in dicta that there “may be situations in which
a person could be considered a ‘victim’ under the Guidelines
even though he or she is ultimately reimbursed” by the bank
for the lost funds. Id. at 971. The Sixth Circuit did not explain
how or why such a person could be considered a victim, nor
explain what actual losses would have to be shown to make
such a person a victim. The Sixth Circuit may well have sim-
ply anticipated our reasoning in Part III.B, in which I concur,
which holds that unreimbursed collateral expenses incurred
by the account holders could be sufficient to render these indi-
viduals “victims” under the Guidelines. In any event, nothing
in the Sixth Circuit’s reasoning compels the conclusion that
delay prior to reimbursement is alone sufficient to render the
account holder a “victim” under the Guidelines, absent proof
that the delay itself caused independent pecuniary harm.
13408 UNITED STATES v. PHAM
The majority’s holding thus puts this court into tension
with other circuits that have interpreted Yagar to mean that
reimbursed victims of identity theft can be counted as “vic-
tims” under § 2B1.1(b)(2) only when the government shows
actual pecuniary losses apart from the temporary losses that
were reimbursed. In United States v. Abiodun, 2008 WL
2924341 at *6, the Second Circuit held that reimbursed vic-
tims could be counted as “victims” due to the lost time
involved in resolving shortfalls in their accounts, but only to
the extent that “this ‘loss of time’ [can] be measured in mone-
tary terms” and the value of the lost time is reflected in the
calculation of total loss resulting from the defendants’
offenses. Similarly, the Fifth Circuit rejected the suggestion
that “account holders are victims because they suffered pecu-
niary harm at the moment” that stolen funds are charged
against their accounts. See United States v. Conner, No. 06-
50218, ___ F.3d ___, 2008 WL 2876564 at *7 (5th Cir. July
28, 2008). The Fifth Circuit joined the Eighth Circuit in hold-
ing that “only the party that ‘ultimately’ bore the pecuniary
harm from the offense suffered an ‘actual loss’ ” under the
Guidelines. Id. (quoting United States v. Icaza, 492 F.3d 967,
970 (8th Cir. 2007)). Consistent with the Second Circuit and
our reasoning in Part III.B, the Fifth Circuit agreed that “[i]t
is possible that with a proper evidentiary foundation . . .
unreimbursed business losses [incurred while seeking reim-
bursement] could be considered ‘actual losses’ for the pur-
poses of counting ‘victims.’ ” Id. at *8 (emphasis added). No
court, however, has endorsed the broad proposition that the
majority advances here, which is that mere delay prior to
reimbursement — which has not itself been shown to have
caused a separate, actual pecuniary loss — is sufficient to
make someone a “victim” under the Guidelines.

There is no question that identity theft schemes such as
Pham’s take a heavy toll on individual account holders, who
may spend days or weeks working with the bank to investi-
gate the fraud and restore their account funds, and then spend
considerable time dealing with the fallout from their devas-
 UNITED STATES v. PHAM 13409
tated credit histories. If the government can prove that such
individuals incurred real, unreimbursed expenses as a foresee-
able result of Pham’s conduct — even if these pecuniary
losses are minimal, but so long as they are monetized — then
I agree that Pham’s sentence can be enhanced under the
Guidelines for his impact on these victims. Further, the dis-
trict court always may “consider the large number of individ-
ual account holders affected by [Pham’s] crime as part of its
consideration of § 3553(a) factors if the court decided to issue
a non-guidelines sentence.” See Conner, 2008 WL 2876564
at *9. District judges therefore have ample tools to punish
defendants for the very real harms they inflict on those whose
identities become the vehicles for financial fraud. There is no
need for us to create difficult-to-apply rules that would make
the number of victims turn on the length of time the bank
spent investigating the fraud before reimbursing the account
holder, and that risk punishing the defendant twice for causing
a single pecuniary harm through his theft of funds. Therefore,
I respectfully cannot join the majority’s reasoning in Part
III.A.