with rolled back odometer and no physical alterations may still have part of its value attributable to legitimate activities of the odometer tamperer. Cars' values vary according to the time of year and their location. All things being equal, a convertible might well command a higher price in the spring than in the fall. Historically, Fords have been more popular in the west and Chevrolets more popular in the east. An odometer tamperer who holds a car until prime season for its demand or who moves a car to a place where the make or model is more popular has added legitimate value to the car, as well as fraudulent "value" due to reduced mileage on the odometer.
Likewise, an odometer tamperer who buys a car at a particularly favorable price through skillful and non-deceptive bargaining or because he has located a seller desperate to sell performs an important service to the economy, whose efficient functioning depends on market makers. The odometer tamperer should not be punished for such constructive, wholly legitimate activities. Yet, perversely, that is the effect of measuring the tamperer's gain solely by a comparison of his purchase and sale prices.
Following discovery of the possible overestimate of loss, the court offered all six of the defendants involved in the scheme in which defendant participated the option of continuing their sentencings while the various probation officers assigned to these cases determine the actual loss associated with each defendant's wrongful activities. Two of the defendants declined the option, because it seemed apparent that recalculation would not alter their Guidelines offense level sufficiently to have a material effect on their sentence range. The other defendants, including the defendant here, took the option to continue the sentencing and their cases were put over to a later date.
In recalculating the victim loss adjustment, the probation officer should be guided by the following principles. Any loss used to calculate the specific offense characteristic must be attributable solely to the odometer adjustments of which defendant stands convicted. That means that the difference between defendant's purchase and sale prices sets an outside limit to the amount of the loss. One way of determining the loss would be to consult the many reliable and widely used valuation services or reports to compare the mileage adjustment for the particular make, model and year of the cars involved. Another way, although actual data may be hard to come by, would be to take the defendant's resale price and deduct his actual costs, including purchase price, rehabilitation, transportation and other costs. Yet another way would be to consult reputable dealers or auto auction houses to obtain the ranges and estimates that they used during the periods when the cars at issue went through the auctions. The able probation officer here may be able to develop still additional means of making a determination of the odometer loss attributable solely to defendant's misconduct and, of course, will do so if he can.
Government counsel at the March 19 hearing correctly pointed out that the amount of loss used to calculate a defendant's specific offense characteristic need not be determined with "precision." See § 2F1.1, Application Note 8. In the case of odometer fraud, as indeed with most frauds, it is impossible to make a precise determination, but that fact does not warrant the court using a loss calculation methodology that the court knows to be in error.
The government, as it seems so often to do in cases involving the application of section 2F1.1, would have the court unduly magnify the victims' loss from fraud. In this case, the government urges that the loss be calculated by subtracting the difference between what defendant purchased each car for and what its ultimate purchaser paid for it, even though the car passed through the hands of one or more legitimate dealers or resellers before finally finding an end user. This would unwarrantedly incorporate into the victim loss adjustment the value added by all the legitimate distributional activities of those between the defendant and the end user. While defendant deserves to be punished, his punishment must bear a rational connection to the victims' loss and the government's approach lacks that connection. See United States v Schneider, 930 F.2d 555 (7th Cir 1991).
The Guidelines are still a relatively new undertaking and concededly "imperfect." § 2F1.1, Background following Application Note 18. Despite the Guidelines' admission of imperfection, there is no excuse for the court, or its probation officers, to use data or an approach which plainly misstate the victim loss. Because that was unfortunately done in this case,
IT IS ORDERED that the sentencing of the defendant shall be continued to April 23, 1993, in order to afford the probation officer an opportunity to make the appropriate adjustments in the amount of victim loss inflicted by defendant.
VAUGHN R. WALKER
United States District Judge