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IN ZERO-POINT REDUCTION, THE GUIDELINE PROPOSES BUT THE JUDGE DISPOSES

In any sentence reduction motion under 18 USC § 3582(c)(2) arising from a retroactive Guideline amendment, the district court has a lot of latitude to do whatever it wants to do. A case last week involving a zero-point reduction made that point very clearly.

Shefiu Hanson ran a scheme that tricked businesses to wire him money using bogus invoices. The total loss to 30 victims amounted to over $1.1 million. She was sentenced to 46 months. After the Sentencing Commission adopted Amendment 821, which let people like Shef get a 2-level reduction if they had zero criminal history points and met set of ten criteria, Shef applied for a sentence reduction that reflected the Amendment.

One of the criteria to qualify for an Amendment 821 sentence reduction is that the defendant did not personally cause “substantial financial hardship” to any victim in committing the offense. Causing “substantial financial hardship” is a specific enhancement under USSG § 2B1.1(b)(2) (§ 2B1.1 being the well-used Guideline for theft and fraud offenses), which increases the offense score by at least 2 levels. Amendment 821 leans heavily on the § 2B1.1(b)(2) enhancement language, specifically directing that the criteria to be considered in determining “substantial financial hardship” should be those listed in § 2B1.1, Note 4(F).

At sentencing, Shef’s Guideline range was not increased by the § 2B1.1(b)(2) “substantial financial hardship” enhancement, so he figured he was a shoo-in for the Amendment 821 reduction.

His district court thought otherwise, holding that Shefiu had caused substantial financial harm to multiple victims, making him ineligible under USSG § 4C1.1(a)(6) – the new Guideline made retroactive by Amendment 821 – for the reduction. Even if that were not so, the court said, applying the 18 USC § 3553(a) sentencing factors led it to conclude that giving Shef the reduction would “render his sentence inadequate to reflect the seriousness of the offense… provide just punishment for this offense… afford adequate deterrence to criminal conduct… [and] protect the public from further crimes of the defendant.”

On appeal, Shef argued the financial hardship to victims the district court relied on didn’t rise to the level of “substantial hardship” as contemplated by the Sentencing Commission, because none of the examples of financial hardship the district court cited fit within any of the § 2B1.1 Note 4(F) factors. What’s more, Shefiu argued, the district court failed to make specific financial hardship findings with respect to each victim, instead relying “generalized comments” about financial hardship.

Last week, the 6th Circuit turned him down. Nothing keeps courts from considering factors other than those in Note 4(F). In fact, USSG § 4C1.1(b)(3) directs that Application Note 4(F) merely provides a “non-exhaustive list of factors.” The appeals court held that the financial hardship that Shefiu caused victims “need not fall perfectly” within the factors of Note 4(F) to be considered substantial.

The Circuit ruled that Application Note 4(F) “merely provides a list of exemplars from which we may extrapolate analogous conduct.” Thus, “the district court did not err in holding that Hanson was ineligible for a sentencing reduction under § 4C1.1 based on factors outside of the non-exhaustive list in Application Note 4(F) of 2B1.1… Given the number of victims and amount defrauded, the district court reasonably concluded that the financial hardship was substantial.”

The 6th agreed that the record evidence showed that Shef’s conduct caused several of his victims to individually suffer substantial financial hardship. One victim said “[t]he loss of revenue for our small company was crippling.” Another said the wire transfer to Shefiu “made it difficult for the company to pay invoices” and yet another said that due to the fraud, many of his bank accounts were “abruptly closed.” The Circuit held, “The district court reasonably determined that the financial hardship to at least one victim was substantial.”

United States v. Hanson, Case No. 24-3442, 2025 U.S.App. LEXIS 85 (6th Cir. January 3, 2025)

– Thomas L. Root