United States v. Garcia (939 F. Supp. 2d 1155, 2013)

United States District Court for the District of New Mexico 2013-03-22

Crimes and Criminal Procedure

Citations

Full opinion text

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on: (i) the United States’ Objections to Presentence Report, filed May 4, 2012 (Doc. 89) (“U.S. Objections”); and (ii) the Defendant Vincent Garcia’s Formal Objections to the Presentence Report, filed August 6, 2012 (Doc. 101) (“V. Garcia Objections”). The Court held an evidentiary hearing on August 15, 2012. The primary issues are: (i) whether the Court should accept that the parties’ stipulation that the gross loss Defendant Vincent Garcia’s offense of bank fraud caused is $842,237.44; (ii) how any credits that V. Garcia has should be applied against the gross loss that his offense caused; (iii) whether V. Garcia should receive an enhancement pursuant to U.S.S.G. § 2Bl.l(b)(10)(C) for the use of “sophisticated means” in the commission of bank fraud; and (iv) whether V. Garcia should receive an enhancement pursuant to U.S.S.G. § 2Bl.l(b)(2) based upon the number of victims of his offense. The Court will adopt the parties’ proposed method for calculating the gross loss, but the Court will not adopt the parties’ stipulated gross loss amount, because the evidence before the Court does not support their figure. The Court will apply V. Garcia’s credits to offset the gross loss amount on a victim by victim basis. V. Garcia’s credits are the collateral he pledged to obtain loans with financial institutions that are victims in this case, and the Plaintiff United States of America has made no allegation that those loans were fraudulently obtained. Because V. Garcia’s offense of bank fraud arises from the fraudulent draw downs he submitted on otherwise legitimate loans, and the sum of those fraudulent draw downs is the gross loss amount his offense incurred, the Court will not apply the total value of V. Garcia’s credits — which were pledged for legitimate loans — to offset the gross loss amount incurred in fraudulent draw downs. Rather, the Court finds that a reasonable estimate of the net loss V. Garcia’s bank fraud caused may be ascertained by reducing V. Garcia’s credits by the ratio of his fraudulent draw downs to the outstanding balance on his loans, and then applying that reduced credit amount to offset V. Garcia’s gross loss amount. The Court determines that V. Garcia did not use sophisticated means to commit bank fraud, and sustains V. Garcia’s objection to a 2-level increase to his offense level pursuant to U.S.S.G § 2Bl.l(b)(10)(C). Lastly, the Court determines that the total number of victims in this case is less than ten, and will accordingly not enhance V. Garcia’s offense level pursuant to U.S.S.G. § 2Bl.l(b)(2). The Court thus sustains the United States and V. Garcia’s objections in part and overrules them in part.

FACTUAL BACKGROUND

This case involves V. Garcia’s, David Garcia’s, and Derek Barnhill’s misappropriation of loan funds to pay for personal living expenses, personal property, and the purchase of a casino in the state of Washington. See Presentence Investigation Report ¶ 13, at 4, disclosed Feb. 3, 2012. The parties dispute the gross loss amount that V. Garcia’s offense caused. Rule 32(i)(3)(B) requires that a district court at sentencing “must — for any disputed por-r tion of the presentence report or other controverted matter — rule on the dispute or determine that a ruling is unnecessary....” Fed.R.Crim.P. 32(i)(3)(B). See United States v. Orr, 567 F.3d 610, 614 (10th Cir.2009) (same). This Memorandum Opinion and Order’s findings of fact shall serve as the Court’s essential findings for rule 32(i)(3)(B) purposes.

When the parties dispute the gross loss amount that a defendant’s offense caused, for the purposes of sentencing the defendant under U.SS.S.G. § 2B1.1, the government bears the burden of proving its estimation of gross loss by a preponderance of the evidence. See United States v. Kieffer, 681 F.3d 1143, 1168 (10th Cir.2012) (“[T]he Government met its initial burden of proving relevant conduct, it then had to prove the amount of loss (or reasonable estimate thereof)). The Court has made a “reasonable estimate” of the value of disputed assets and collateral, based upon the information available to the Court. See U.S.S.G. § 2B1.1, cmt. n.3(C) (“The court need only make reasonable estimate of the loss.”).

. 1. In 2005, V. Garcia and D. Garcia, V. Garcia’s son, created Blue Dot Corporation, “a land development company in Albuquerque, New Mexico.” PSR ¶ 13, at 14; id. ¶ 24, at 9.

2. Blue Dot was the general contractor for the development of the properties known as the Downtown Anasazi, LLC and Copper Square, LLC located in Albuquerque, and Lockhaven Estates, LLC located in Clovis, New Mexico. See PSR ¶ 13, at 4; V. Garcia Objections at ll.

3. D. Garcia was Blue Dot’s vice president and employed as its General Contractor. See Plea Agreement ¶ 8(g), at 5, filed August 19, 2011 (Doc. 76); PSR ¶ 15, at 5; id. ¶ 24,- at 9.

4. In exchange for his services as the general contractor, D. Garcia received from Blue Dot a salary and construction work on his personal residence. See PSR ¶ 24, at 9; id. ¶ 26, at 9.

5. Around 2005, V. Garcia took an ownership share in Lockhaven Estates. See PSR ¶ 31, at 13.

6. V. Garcia took ownership of Lockhaven Estates with Derek Barnhill, an associate who had done construction management and real estate development with V. Garcia in the past. See PSR ¶ 31, at 13.

7. V. Garcia took out a loan for $1,800,000.00 from Columbian Bank & Trust (“Columbian Bank”) in 2006 to fund the development of Lockhaven Estates (the “Lockhaven Estates loan”). See Transcript of Hearing (taken Aug. 25, 2012) at 61:3-9 (Meacham) (“The Columbian, ... created a million eight credit in 2006 and secured by lock[ ]haven”) (“Tr.”); id. at 76:19 (Meacham) (“The loan was a million eight.”).

8. The Lockhaven Estates loan’s terms provided that V. Garcia and Barnhill could access the funds by submitting draw-down requests to Columbian Bank. See PSR ¶ 31, at 13.

9. In 2006, V. Garcia and D. Garcia obtained an $11,000,000.00 construction loan from Columbian Bank to finance the Downtown Anasazi project (the “Downtown Anasazi loan”), a “condominium development in downtown Albuquerque.” PSR ¶ 13, at 4.

10. The Downtown Anasazi is a “development project,” a property that is bought by an investor to be developed so as to generate income. Tr. at 90:18-92:16 (Bowles, Ilfeld).

11. V. Garcia guaranteed his loans with Columbian Bank with his personal property and assets. See PSR ¶ 60, at 23 (“According to the ‘Unconditional Guaranty’ between ... Columbian ... and Vincent Garcia dated Aug. 4, 2006, ... Garcia pledged a lien upon and a right of setoff against all monies, securities, and other property of Guarantor or hereafter in the possession of or on deposit with the Lender ....”); see Tr. at 108:22-109:11 (Bowles, Garcia) (Q: “[D]id you pledge collateral as against the loan [] on the Anasazi project?” A: “I did .... that says that the [guarantor] specifically [ ]grants[ ] a security____” Q: “[W]ho was the person receiving this guarantee?” A: “The security interest in the guarantee was received by the lender Columbian bank and trust.”).

12. Over the years of 2006 and 2007, V. Garcia directed Barnhill to submit draw-down requests on the loans with Columbian Bank, and he knew that at least some of the funds obtained “would not be utilized directly in the construction” of the project on behalf of which the draw down was submitted. Plea Agreement ¶ 8(b), at 4; PSR ¶¶ 32-36, at 13-15 (explaining that, according to Barnhill, V. Garcia expressed that in 2006 he was in need of money to proceed with the Downtown Anasazi LLC, and directed Barnhill to submit draw-down requests on behalf of Lockhaven Estates for funds that would be used for the Downtown Anasazi and Blue Dot’s expenses); V. Garcia Objections at 20 (“Mr. Garcia never instructed Mr. Barnhill to make fake invoices, but rather to get draws on the loan.”).

13. V. Garcia suggested to Barnhill, “in substance,” that Barnhill “should generate some false invoices for work on Lockhaven for submission to Columbian Bank and Trust, and that [V. Garcia] would use the proceeds for Blue Dot salaries and for expenses incurred on the Anasazi project.” Government Exhibit 4 at 5. See PSR ¶¶ 31-32, at 13 (stating that V. Garcia “suggested Barnhill should generate some false invoices for work on Lockhaven to be submitted to Columbian ..., and he would use the proceeds for Blue Dot Corporation salaries and for expense incurred on the Anasazi Project,” and that “no Lockhaven money went out of the office without Vincent Garcia’s knowledge”).

14. Barnhill submitted a series of draw downs to Columbian Bank on behalf of Lockhaven' Estates, the Downtown Anasazi, and Copper Square, which fraudulent invoices supported. See PSR ¶¶ 33-36, at 13-15; U.S. Objections at 3.

15. Barnhill created invoices using the names of businesses with whom V. Garcia and Barnhill had previously worked and by copying company logos from internet websites, which he placed on the invoices. See PSR ¶ 33, at 13-14.

16. V. Garcia intended to payback the funds that Barnhill obtained through the draw downs that did not go to the construction projects after the Downtown Anasazi became profitable. See Government Exhibit 4, at 5; PSR ¶ 32, at 13.

17. In 2007, V. Garcia increased his loan with Columbian Bank from $11,000,000.00 to $16,000,000.00. See PSR ¶¶ 19-21, at 7; Plea Agreement ¶ 8(b), at 4.

18. V. Garcia’s increased loan with Columbian Bank allowed the Downtown Anasazi and Copper Square projects to be funded with one loan, but did not leave enough money to complete or improve either project. See PSR ¶ 21, at 7.

19. Columbian Bank informed V. Garcia that it would not lend him any more funds until he increased his liquidity. See PSR ¶ 19, at 7 (“In order to secure a larger loan, CBT advised Vincent he needed additional liquid assets.... ”); Plea Agreement ¶ 8(b), at 4 (“Based on a recommendation by the bank’s correspondent broker and his statement that the. .bank was concerned about our liquidity,” V. Garcia purchased the J & J Casino).

20. Columbian Bank also informed V. Garcia that it would not loan him'any more funds until he moved Copper Square to another lender. See PSR ¶ 21, at 7 (“CBT advised Vincent Garcia they would not loan any further money until the loan securing the Copper Square building was. moved to another lender.”).

21. On February 13, 2007, V. Garcia directed Barnhill to submit a draw-down request to Columbian Bank in the amount of $365,677.00. See Plea Agreement ¶ 8(b), at 4.

22. V. Garcia was aware that Barnhill represented to Columbian Bank that the funds would be used for legitimate construction expenses, but V. Garcia planned to use the funds to purchase a casino. See Plea Agreement ¶ 8(b), at 4.

23. V. Garcia used the funds from the February 13, 2007, draw down to purchase the J & J Casino in Spokane, Washington: See Plea Agreement ¶ 8(b), at 4 (V. Garcia admitting that he used the funds from the February 13, 2007, draw down to purchase a casino in Spokane); PSR ¶ 19, at 7 (stating that V. Garcia purchased the J & J Casino in Spokane).

24. V. Garcia hoped that the proceeds he received from J & J Casino would increase his liquidity and help him fund his development projects. See Plea Agreement ¶¶ 8(b)-(c), at 4 (V. Garcia stating that he instructed Barnhill to draw down $365,677.00 from the Downtown Anasazi loan, which V. Garcia used to purchase the casino “with the intent to provide additional cash for the completion of the [Downtown Anasazi] building if the casino.proved successful.”).

25. V. Garcia obtained a $7,000,000.00 construction loan from First Financial in February, 2008 for the Copper Square project (the “Copper Square loan”). See Tr. at 36:3-18 (Gerson, Heyward).

26. Upon closing of the Copper Square loan, approximately $4,000,000.00 was transferred to Columbian Bank, Columbian Bank did not take an additional $1,000,000.00 from the loan in exchange for receiving a fourteen-point-nine percent participation interest in Copper Square, and Columbian Bank agreed to subordinate its lien on Copper Square to First Financial’s. See Tr. at 37:5-8 (Gerson, Heyward) (Q: “And the amounts that your bank first pushed out the door were to pay some obligation that Mr. Garcia ow[es]— owed to Columbian ... is that correct?” A: “Yes.”); id. at .41:2-7 (Gerson, Hey-ward) (explaining that, when Copper Square is sold, the owner of Columbian Bank’s participation interest will receive a share “based on what Columbian bank and trust’s original participation was at the point” First Financial funded the Copper Square loan, which is fourteen-point-nine percent of the net proceeds); id. at 51:5-6 (Heyward) (“[T]hree or four million dollars went to Columbian bank.”); PSR ¶ 16, at 6 (explaining that upon closing of the Copper Square loan, “$4 million was paid to CBT”); Tr. at 36:23-25 (Heyward) (“They withheld $1 million participation interest ....”); id. at 51:7-15 (Heyward) (“They agreed to hold back or not accept a million dollars, they agreed to subordinate their first position their first l[ie]n to our lien and take a second l[ie]n for a million dollars. That ... million that’s what was called the participation interest.”).

27. First Financial did not receive any value from the creation of a participation interest in Copper Square. See Tr. at 51:16-17 (Bowles, Heyward) (Q: “Did your bank receive any value from that transaction?” A: “No.”).

28. As with his loans with Columbian Bank, V. Garcia personally guaranteed the Copper Square loan. See Tr. at 166:15-24 (Court, Bowles, Gerson) (Bowles: “[T]he personal guarantees I for[]g[o]t to mention to the Court [are] as against both banks.” Court: “Let me make sure I understand what you’re saying. He gave personal guarantees on the say coin collection to both banks. Is that what you’re saying?” Bowles: “All collateral as to both banks.” ... Gerson: “I’ll accept Mr. Bowles’ representation.”)

29. The Copper Square project was designed to generate cash through the sale of units in the building, the proceeds from which would be used to fund further development and pay down the principal on the Copper Square loan. See Tr. at 37:15-23 (Heyward) (“[T]he plan was ... to build additional units which would sell and the sale would generate lump sum reductions of principal on the loan, generate more cash flow for Mr. Garcia....”).

30. Shortly after the Copper Square loan was fully funded, a condominium was sold in the property for $500,000.00. See Tr. at 50:14-20 (Bowles, Heyward).

31. The proceeds from the condominium sale went to First Financial to reduce the Copper Square loan. See Tr. at 112:14-113:4 (Garcia).

32. Between 2006 and 2008, the following line items were based upon fraudulent invoices in draw downs submitted to Columbian Bank and First Financial:

a. Draw down submitted to Columbian Bank on December 20, 2006: $42,323.00 based upon fraudulent Qwest invoice;

b. Draw down submitted to Columbian Bank on January 23, 2007: $38,419.00 based upon fraudulent Cox Communications invoice;

c. Draw down submitted to Columbian Bank on February 13, 2007: $365,677.00 based upon fraudulent sheet rock invoice from DevCorp;

d. Draw down submitted to Columbian Bank on July 30, 2007: $62,156.52 based upon invoices for construction performed at D. Garcia’s personal residence;

e. Draw down submitted to Columbian Bank on August 15, '2007: $144,478.80 based upon fraudulent R & D Perfection Cleaning invoice;

f. Draw down submitted to Columbian Bank on October 8, 2007: $61,182.12 based upon invoices for construction performed at D. Garcia’s personal residence;

g. Draw down submitted to First Financial on May 15, 2008: $128,471.25 based upon fraudulent Jay Lial A/C invoice;

See U.S. Objections at 3-4.

33. The total amount of fraudulent line items submitted in draw downs to Columbian Bank and First Financial, which the lending institutions funded, is $842,708.79. Cf. Plea Agreement ¶ 10(b), at 6 (listing the stipulated gross loss amount as $842,237.44); U.S. Objections at 4 (listing the total loss amount from fraudulent line items as $842,237.44); V. Garcia Objections at 2 (listing the total loss from fraudulent line items as $842,237.44).

34. The commercial real estate market has been in a nationwide decline since 2008, and the collapse of the mortgage and subprime real estate market has had a negative, state-wide impact on New Mexico’s real estate values. See Tr. at 91:21-92:9 (Bowles, Ilfeld) (A: “[T]here was significantly decreased demand for commercial property, lease space, and ownership because companies ... revenues[’] were declining, and so it was kind of a domino effect resulting in a severely depressed commercial real estate market in the period probably starting from ... early 2008’s.... It’s ... nationwide ... it’s certainly statewide”); Defense Exhibit A at 2 (“New Mexico suffered the same precipitous real estate declines as other areas nationally .... [Cjountless real estate projects that were well conceived, accurately proforma’d and financed ... still failed because of the prevailing economic conditions that overshadowed all other factors combined: demand disappeared.”).

35. As part of the downturn in the commercial real estate market, “demand for new space, and particularly in central business district nationally, came to a screeching halt.” Defense Exhibit A at 2.

36. In Albuquerque, when the commercial real estate market deflated, “several major commercial occupants vacated Downtown for alternative locations, the City’s Downtown desirability as a place to locate businesses, and consequently to develop new real estate projects, flagged.” Defense Exhibit A at 2-3.

37. V. Garcia eventually defaulted on his Downtown Anasazi and Lockhaven Estates loans. See PSR ¶ 60, at 22 (“Mr. Garcia[ ] ... ultimately defaulted on both loans.”).

38. Columbian Bank closed in August, 2008, and the Federal Deposit Insurance Corporation (“FDIC”) was named Columbian Bank’s receiver. See Tr. at 57:1-4 (Gerson, Meacham).

39. Columbian Bank failed because of it made bad loans and had poor management. See Tr. at 95:11-18 (Ilfeld) (explaining that, according to the FDIC, “at least a partial cause of’ Columbian Bank’s failure was its “ba[d] loans that were made, and ... mismanagement, ... in that [order.]”) (citing Office of Inspector Gen., Fed. Deposit Ins. Corp., Report No. AUD-09-005, Material Loss Review of the Columbian Bank and Trust Company, Topeka, Kansas (Mar. 2009) at 2, filed August 6, 2012 (Doe. 103-3)).

40. After the FDIC became Columbian Bank’s receiver, it sold Columbian Bank’s participation interest in Copper Square to an investment group based in Dallas, Texas. See Tr. at 40:20-41:1 (Heyward) (“[W]hen Columbian bank was taken over by FDIC that asset became property of FDIC.... [T]hat participation interest ... they ... sold ... to this investment group out of Dallas who now owns that note or that participation interest.”); id. at 51:18-22 (Bowles, Heyward).

41. The details of the sale of Columbian Bank’s participation interest to a Dallas-based investment group are unknown. See Tr. at 51:23-52:8 (Bowles, Heyward) (Q: “[D]id FDIC receive any value that you’re aware of from the sale of that note that participatory interest to this group in Dallas?” A: “I have no idea really.”).

42. The current outstanding amount that V. Garcia owes to the FDIC for his Lockhaven Estates and Downtown Anasazi loans is $15,430,533.08. This- figure includes the $555,000.00 which the FDIC received from the sale of the Downtown Anasazi mortgage note. See PSR ¶ 48, at 19.

43. The Lockhaven Estates loan has an outstanding balance of $2,998,866.00, which includes approximately $1,100,000.00 interest and fees: $672,000.00 in interest, $403,000.00 in default interest, and $12,000.00 in late fees. See Tr. at 76:16-25; id. at 77:5-8 (Bowles, Meacham).

44. The Downtown Anasazi, as a development project, is in the category of real estate that has “suffered the worst decline due to economic conditions.” Tr. at 93:5-10 (Bowles, Ilfeld) (“Any kind of property that was slated for or in the process of being developed ... generally took the biggest hit”).

45. The Downtown. Anasazi was sixty-five percent complete when the FDIC took over Columbian Bank. See Tr. at 74:6-75:23 ■ (Gerson, Meacham) (“The building was only 65 percent complete at best ”)

46. If V. Garcia ha'd .completed the Downtown Anasazi, it would still have depreciated in value because of the overall depression in the real estate market. See Tr. at 96:11-17 (Ilfeld); Defense Exhibit A at 2-3 (“If this project were started prior to the 2008 economic downturn a reasonable assessment, in say 2010, [it] would have been that the project’s inherent value would at that point in time be severely diminished.... This ... would have occurred wholly apart from any other non economic factors.... ”).

47. V. Garcia attempted to buy back the Downtown Anasazi mortgage note from the FDIC so that he could convert the property into a hotel. See Tr. at 81:7-83:7 (Bowles, Barela) (Walter Barela, a developer in Albuquerque, explaining that V. Garcia contacted him regarding converting the Downtown Anasazi into a hotel).

48. V. Garcia was unable to provide the FDIC with a firm offer, backed by a ten percent, non-refundable down payment for the Downtown Anasazi mortgage note. See Tr. at 68:15-69:18 (Bowles, Meacham) (Meacham stating that he knew, V. Garcia discussed offers for purchasing the Downtown Anasazi mortgage note, but that the FDIC required a downpayment of “10 percent ... nonrefund[ jable,. in writing” before it would go forward with any offer).

49. The FDIC did not provide V. Garcia with a firm price for which it would sell the Downtown Anasazi mortgage note to V. Garcia. See Tr. at 76:8-15 (Bowles, Meacham) (Q: “So you never provided Mr. Garcia with a written price you would accept for Anasazi?” A: “We just don’t do that.”).

50. The FDIC did not foreclose on the Downtown Anasazi, but sold the Downtown Anasazi mortgage note to First Southern National Bank for $555,000.00 on July 27, 2011. See Tr. at 59:4-12 (Gerson, Meacham, Bowles); id. at 68:7-10; 69:11-12 (Meacham, Bowles); PSR ¶ 48, at 19; id. ¶ 48, at 19.

51. Lockhaven Estates is a development project — the type of commercial real estate that has suffered the most severe economic losses in the recent housing and mortgage downturn. See Tr. at 93:11-22 (Bowles, Ilfeld); Tr. at 93:5-10 (Bowles, Ilfeld).

52. As of November 2, 2011, Lockhaven Estates was appraised at $560,000.00. See Tr. at 62:10-23 (Gerson, Meacham) (reading from Government Exhibit 3).

53. The FDIC is unlikely to receive the appraisal value of Lockhaven Estates in the current real estate market. See Tr. at 72:1-3 (Meacham, Bowles) (“In this market, we rarely ever get close to appraised value.”).

54. The FDIC intends to sell Lockhaven Estates. See Tr. at 62:24-63:1 (Ger-son, Meacham) (Q: “[I]s it the FDIC’s intention ultimately to sell this land ... to defray some of the losses on the loan?” A: “That’s right.”).

55. V. Garcia defaulted on the Copper Square loan in June, 2008. See Tr. at 38:9-12 (Gerson, Heyward).

56. When the Copper Square loan went into default, First Financial stopped honoring V. Garcia’s draw-down requests. See Tr. at 38:14-19 (Heyward).

57. The Copper Square loan was the largest loan in First Financial’s portfolio at the time, but V. Garcia’s default did not threaten the credit union’s ability to stay solvent. See Tr. at 38:20-25 (Heyward).

58. First Financial planned to immediately foreclose on Copper Square, but V. Garcia initially responded to the possible foreclosure with threats of a lawsuit alleging lender liability against First Financial. See Tr. at 39:9-14 (Heyward) (“[W]e would have to foreclose on the building, ... in order to recoup any damages.... Mr. Gar[eia] started telling us about events ... that would result in accusations and possibility a lawsuit of lender liability.”); PSR ¶ 17, at 6 (“V. Garcia threatened to file for bankruptcy, claiming lender liability.”).

59. First Financial agreed to a settlement with V. Garcia, around April, 2009, in which V. Garcia agreed to release all claims of lender liability against First Financial, and which allowed First Financial to foreclose on Copper Square. See Tr. at 39:19-40:2 (Heyward) (“We wanted to foreclose.... [What] we did was to negotiate a settlement with Mr. Garcia that did two things. One is hold us harmless in the future for any claim for lender liability and consent to judgment on the foreclosure.”); id. at 47:1-5 (Bowles, Heyward) (Q: “[W]hat was the approximate dates of that settlement agreement?” A: “A[pril] of 2009 sounds right.”); PSR ¶ 17, at 6.

60. First Financial paid $250,000.00 to V. Garcia in exchange for V. Garcia’s release of any lender liability claims against First Financial. See Tr. at 53:23-54:2 (Gerson, Heyward) (Q: “[Wjould it be correct to characterize the $250,000 payment that your bank made to Mr. Garcia or to Co[p]per square as being for a release from a potential lender liability claim?”' A: Wes.”).

61. First Financial foreclosed on Copper Square in May, 2010. See PSR ¶ 39, at 15.

62. The FDIC did not receive any value from Copper Square’s foreclosure, because Columbian Bank was the second lien holder on the property. See Tr. at 60:14-21 (Gerson, Heyward) (Q: “[I]s that to say that the receiver on Columbian bank and trust did not receive any value?” A: “That’s correct.” Q: “Upon those foreclosures?” A: “No value.”).

63. Copper Square was appraised at $5,675,000.00 in January, 2010. See Tr. at 42:21-43:9 (Gerson, Heyward) (reading from Government Exhibit 1).

64. An August 4, 2011 Copper Square was appraised at $1,600,000.00. See Tr. at 41:12-23; id. at 43:8-44:3 (Gerson, Hey-ward) (reading from Government Exhibit 2).

65. Market conditions have changed from the time First Financial had Copper Square appraised in January, 2010, and August 4, 2011, which contributed to the property’s decrease in value. See Tr. at 49:10-50:4 (Bowles, Heyward) (Q: “[T]here was talk about this property dropping in value but that was due to market conditions correct?”., A: “Yes.”).

66. First Financial is asking $3,000,000.00 for Copper Square. See Tr. at 54:3-6 (Gerson, Heyward); PSR ¶ 53, at 20.

67. First Financial estimates that, if Copper Square sold for $2,000,000.00, First Financial would have approximately $200,000.00 to. $300,000.00 worth of expenses, including: “closing costs, environmental reports, appraisals, surveyfs], [and] broker fees.” Tr. at 44:17-21 (Heyward).

68. First Financials’ expenses in closing on Copper Square will vary with the actual sale price. See Tr. at 45:1-6 (Ger-son, Heyward) (Q: “[I]f the sale price were different your ultimately numbers would obviously be different as well ... ?” A: “Yes that’s correct.... ”).

69. V. Garcia appraised his personal residence at a value of $800,000.00 before it went into foreclosure. See Tr. at 127:19-24 (Bowles, Garcia); id. at 128:2-4 (Bowles, Garcia); PSR ¶ 60, at- 23 (noting that V. Garcia’s personal residence was appraised at $800,000.00 as of September 1, 2011).

70. V. Garcia’s personal residence was sold in foreclosure in March, 2011 for $551,000.00, which was less than the value of the first mortgage on his home. See Tr. at 72:7-19 (Gerson, Meacham) (Q: “Was the house sold at auction, do you know?” A: “It was ... a[t] [a] sheriff[’]s sale ... in March of 2011, and it was ... foreclosed and it was bid in by the ... mortgage holder. There [were] no competing bids.” Q: “They bid $555,000?” A: “I think it was $551,000.”).

71. The FDIC did not bid in the foreclosure on V. Garcia’s personal residence; the FDIC holds the second mortgage, the first mortgage exceeded the appraised value of V. Garcia’s personal residence, and the FDIC could not make a profit through bidding on the foreclosure. See Tr. at 73:23-25 (Meacham) (“[T]he first mortgage was far in excess of what we considered the appraised value, so it was ... it was not prudent to buy the first mortgage.”).

72. V. Garcia believes that, at the time he pledged personal property and assets to Columbian Bank the value of that collateral was between $7,000,000.00 and $10,000,000.00. See Tr. at 110:18-23 (Garcia).

73. The current balance in V. Garcia’s Wells Fargo personal checking account is approximately $100.00. See Tr. at 124:22-23 (Garcia). Cf. PSR ¶88, at 33 (listing value as $459.00 as of October, 2011).

74. The current value in V. Garcia’s Wells Fargo commercial checking account is approximately $50.00. See Tr. at 124:23-25 (Garcia). Cf. ¶PSR 88, at 33 (listing value as $258.00 as of October, 2011).

75. V. Garcia could not testify with certainty regarding the USPO’s estimations in the PSR that he received approximately $16,500.00 from the sale of a Lexus and gold and silver coins. See Tr. at 124:24-125:1 (Garcia) (“I don’t know. It says cash assets sold. I’m not sure what that refers to.”) (citing PSR ¶ 88, at 33). Cf. PSR ¶88, at 33; id. ¶¶ 89-90, at 36 (listing $14,000.00 which V. Garcia acquired from the sale of a Lexus, and $12,500.00 which V. Garcia acquired from the sale of gold and silver coins).

76. V. Garcia’s artwork and paintings are currently worth between $50,000.00 and $75,000.00. See Tr. at 125:3-6 (Garcia). Cf. PSR ¶ 88, at 33 (listing the value of approximately 50 to 60 pieces of artwork at $75,000.00).

77. V. Garcia’s coin collection is currently worth approximately $20,000.00. See Tr. at 125:6-10 (Garcia, Bowles). See PSR ¶ 88, at 33 (listing the value of V. Garcia’s coin collection as $20,000.00).

78. V. Garcia’s jewelry is currently worth approximately $5,500.00. See Tr. at 125:11 (Garcia). See PSR ¶ 88, at 33 (listing the value of V. Garcia’s jewelry as $5,500.00).

79. ,V. Garcia’s furniture, fixtures, and equipment are worth approximately $5,000.00. See Tr. at 125:12-15 (Garcia, Bowles) (A: “Furniture!,] fixtures!,] and equipment, $22,500,1 would say that that’s gone down through the sale of some items to about $5,000.”) (citing PSR ¶ 88, at 38). Cf. PSR ¶ 88, at 33 (listing the value of V. Garcia’s furniture, fixtures, and equipment as $22,500.00).

80. V. Garcia’s knife collection is worth approximately $8,500.00. See Tr. at 125:16 (Garcia). See PSR ¶ 88, at 33 (listing thé value of V. Garcia’s knife collection as $8,500.00).

81. Y. Garcia’s 1974 Mercedes Benz 450 SL is currently worth approximately $25,000.00. See Tr. at 125:16-22 (Garcia, Bowles). See PSR ¶ 88, at 33 (listing the value of V. Garcia’s 1974 Mercedes Benz 450 SL as $25,000.00).

82. V. Garcia’s 1994 Mercedes Benz 600 SL is worth approximately $5,000.00. See Tr. at 125:23-126:6 (Garcia, Bowles). Cf. PSR ¶ 88, at 33 (listing the value of V. Garcia’s 1994 Mercedes Benz 600 SL as $8,000.00).

83. The current value of V. Garcia’s ‘Vehicle .(unknown model/type)” is $7,000.00. PSR ¶ 88, at 33. See Tr. at 125:23-126:7 (Bowles, Garcia). Cf. PSR ¶ 92, at 36 (stating that V. Garcia possesses a vehicle of unknown model/type with an approximate fair market value between $7,000.00 and $10,000.00).

84. V. Garcia’s Seottrade Brokerage Account currently contains approximately $250.00. See Tr. at. 126:8-9 (Garcia) (A: “The next page Scott! ]trade brokerage account is $250.”) (citing PSR ¶ 88, at 34). Cf. PSR ¶ 88, at 34 (listing the value of V. Garcia’s Seottrade Brokerage Account as $1,107.40).

85. V., Garcia’s Oppenheimer Funds IRA currently contains approximately $2,200.00. See Tr. at 126:9 (Garcia) (A: “Oppenheimer funds IRA is $2, 20[0].”) (citing PSR ¶ 88, at 34): Cf. PSR ¶ 88, at 34 (listing the value of V. Garcia’s Oppenheimer Funds IRA as $3,219.08).

86. V. Garcia’s interest in Biotech Partners LLC is currently worth approximately $31,550.00 or higher. See Tr. at 126:9-14 (Garcia, Bowles). Cf. PSR ¶ 88, at 34 (listing the value of V. Garcia’s interest in Biotech Partners LLC as $31,550.00).

87. V. Garcia’s interest in White Oak investments is currently worth approximately $150,000.00. See Tr. at 126:15-19 (Garcia). See PSR ¶ 88, at 34 (listing the value of V. Garcia’s interest in White Oak investments as $150,000.00)

88. The current value of V. Garcia’s current business endeavor, Wisdoms by Vincent, is approximately $50,000.00. See Tr. at 127:7-14 (Bowles, Garcia); PSR ¶ 88, at 34 (listing the value of Wisdoms by Vincent as $50,000.00).

89. The value of V. Garcia’s American Life Settlements life insurance policies are approximately $324,000.00. See Tr. at 127:16-18 (Garcia, Bowles); PSR ¶ 88, at 34 (listing the value of V. Garcia’s American Life Settlements policies as $324,000.00).

90. The FDIC has not yet received any value to off-set its losses on the Downtown Anasazi from Y. Garcia’s personal guarantees on his loan with Columbian Bank. See Tr. at 59:21-60:4 (Gerson, Meacham); id. at 60:22-61:1 (Gerson, Meacham).

91. Besides the $555,000.00 from the sale of the Downtown Anasazi mortgage note, the FDIC’s losses in the Downtown Anasazi have not been offset by any other sources of value. See Tr. at 60:22-61:1 (Gerson, Meacham).

92. V. Garcia owes subcontractors approximately $1,550,000.00. See V. Garcia Objections at 13. Cf. PSR ¶ 56, at 20 (listing the amount that V. Garcia owes subcontractors as $2,520,302.61).

PROCEDURAL BACKGROUND

V. Garcia was indicted on nineteen counts, and has pled guilty to one — bank fraud in connection with the purchase of the J & J Casino. See Indictment, filed June 10, 2010 (Doc. 2); Plea Agreement, filed August 29, 2011 (Doc. 76). V. Garcia was charged with bank fraud, money laundering, and laundering of money instruments. His crime occurred in a time of economic tumult across the country, and the parties dispute how much pecuniary harm should be attributed to him.

1. V. Garcia’s Plea Agreement.

On August 19, 2011, V. Garcia entered into a Plea Agreement. V. Garcia pled guilty to count three of the Indictment, the allegation that he committed Bank Fraud, in violation of 18 U.S.C. § 1344(2), through the devising and utilizing a “scheme and artifice to obtain moneys, funds, credits, assets, securities and other property owned by and under the control of ... Columbian Bank and Trust ... by means of false and fraudulent pretenses, representations and promises.” Indictment ¶ 1, at 1. See Plea Agreement ¶ 3, at 2. V. Garcia admits that he “executed a plan- to obtain: funding from the Columbian Bank & Trust Co. by means of false representations,” by directing his associate, Barnhill, to “submit a bank construction loan draw-down request containing a material false statement....” Plea Agreement ¶ 8(a), at 4. To address Columbian Bank’s concerns about his liquidity, V. Garcia admits that he directed Barnhill to request a construction loan draw down in the amount of $365,677.00, which falsely informed Columbian Bank that the “funds were needed for ‘materials and price lock’ for construction services to be provided by a company called DevCorp., Inc.,” for the construction of the Downtown Anasazi project. Plea Agreement ¶¶ 8(b), 8(c) at 4. In reality, V. Garcia used the funds to “purchase an interest in a casino in the State of Washington.” Plea Agreement ¶ 8(b), at 4. V. Garcia intended to provide additional funds to complete the Downtown Anasazi project if the casino were successful. See Plea Agreement ¶ 8(c), at 4. The United States and V. Garcia stipulate that the “gross loss amount in this case is $842,237.44.” Plea Agreement ¶ 10(b), at 6. The parties also stipulate that the net loss V. Garcia’s offense caused should be determined pursuant to U.S.S.G. § 2B1.1, cmt. n.3(E)(i) and (ii). See Plea Agreement ¶ 10(c). V, Garcia waives his right to appeal his conviction “and any sentence, including any fíne, within the statutory maximum authorized by law, as well as any order of restitution entered by the Court.” Plea Agreement ¶ 13, at 8.

2. The Presentence Investigation Report.

On February 3, 2012, the United States Probation Office disclosed its Presentence Investigation Report. The USPO determines that Y. Garcia’s base- offense level is 7, pursuant U.S.S.G. § 2B1.1(a)(1), because his conviction of bank fraud under 18 U.S.C. § 1344(2) carries a maximum penalty of 30 years imprisonment. See PSR ¶ 59, at 21. The USPO applies an increase to V. Garcia’s base offense level for specific offense ■ characteristics, pursuant to U.S.S.G. § 2Bl.l(b)(l). See PSR ¶ 60, at 21-22. The USPO determines that V. Garcia knew, or should have known, that his conduct would result in actual losses of $23,550,835.69. The USPO bases this determination on certain statements in the PSR from cooperating witnesses that indicate that V. Garcia was misusing Blue Dot’s loan funding to pay for personal expenses. See PSR ¶¶ 13-15, at 4-5. The USPO also states that V. Garcia spent the down payments he received on Downtown Anasazi presales. ■ See PSR ¶ 15, at 5. The USPO states that V. Garcia diverted a “significant portion” of the loan proceeds from Lockhaven Estates to purchase the J & J Casino, and that V. Garcia sent the furniture used in the Lockhaven Estates model homes to the J & J Casino. -PSR ¶ 15, at 5. The USPO states that V. Garcia had no interest in completing the Downtown Anasazi. See PSR ¶ 15, at 5. The USPO states that V. Garcia took contractor profits in advance when the First Financial loan closed and took $450,000.00 “directly to his pocket.” PSR ¶ 16 at 6. According to the USPO, before V. Garcia defaulted on the Copper Square loan, First Financial discovered that V. Garcia was submitting invoices for work that First Financial had already paid for separately. See PSR ¶ Í6, at 6. The USPO states that First Financial wanted to purchase Copper Square after V. Garcia defaulted on his loan, but that it could not, because Columbian Bank held a $16,000,000.00 lien on the property. See PSR ¶ 17, at 6. The USPO indicates that V. Garcia used loan proceeds for personal gain. See PSR ¶29, at 10. The USPO states that no money from the Lockhaven Estates loan left the office without V. Garcia’s personal knowledge and that V. Garcia directed Barnhill to create fraudulent invoices. See PSR ¶¶ 31-32, at 13. The USPO states that V. Garcia would transfer funds amongst banks to hide their origin. See PSR ¶ 36, at 15. The USPO also lists all liens filed against Blue' Dot and the Downtown Anasazi by subcontractors for allegedly unpaid work as part of the actual losses V. Garcia’s offense caused. See PSR ¶ 30, at 10-13; id. ¶¶ 55-56, at 20.

. The USPO also determines that the following credits should be applied to the actual losses, pursuant to U.S.S.G. § 2B1.1 cmt. n.3(E): (i) $555,000.00 that the FDIC received from the.acquisition of the Downtown Anasazi loan; (ii) $1,600,000.00 — the market value of the Copper Square property as of August 4, 2011; (iii) $800,-000.00 — the market value of V. Garcia’s personal residence as of September 1, 2011, which V. Garcia pledged as collateral to secure the $16,000,000.00 with Columbian Bank; and (iv) $500,000.00 — the value of personal property and assets against which V. Garcia granted Columbian Bank a lien for the securing of the loans. See PSR ¶ 60, at 23. The USPO, thus, calculates that the actual (net) loss in this case is $20,650,835.69. The USPO concludes that the actual loss and intended loss that V. Garcia’s offense caused is the same, because there is no evidence he intended to cause more loss beyond that which the USPO sets forth. The USPO notes that, pursuant to U.S.S.G. § 2Bl.l(b)(l)(L), if the loss exceeds $20,000,000.00, the base offense level should be increased by 22. The 'USPO does not apply this increase, however, because the parties stipulated in the Plea Agreement that the gross loss in this case is $842,237.44. The USPO calculates that the parties’ stipulated gross losses, minus V. Garcia’s credits, amounts to a net loss of negative $2,057,762.56. The USPO, thus, determines that an adjustment under U.S.S.G. § 2Bl.l(b)(l) for the amount of loss V. Garcia’s offense caused is not warranted. See PSR ¶ 60, at 24.

The USPO increases V. Garcia’s base offense level 2 levels, pursuant to U.S.S.G. § 2Bl.l(b)(2)(A), finding that the offense involved twenty-four identifiable victims: two financial institutions and twenty-two subcontractors. See PSR ¶ 61, at 24. The USPO increases V. Garcia’s offense level to 12, pursuant to U.S.S.G. § 2Bl.l(b)(10)(C), because V. Garcia used sophisticated means to commit bank fraud by falsifying the invoices upon which the draw downs were based. See PSR ¶ 62, at 24. The USPO does not increase V. Garcia’s offense level pursuant to U.S.S.G. § 2Bl.l(b)(15)(B), for having substantially jeopardized the safety and soundness of a financial institution, as may be evidenced by the financial institution becoming insolvent, because, although Columbian Bank closed on August 22, 2008, “it does not appear his conduct led to the Columbian Bank and Trust’s [injsolvency.... Columbian [Blank was experiencing deficiency in their management, asset quality, liquidity and supervision practices prior to Mr. Garcia[’s] loan acquisition in 2006.” PSR ¶ 63, at 26. The USPO also does not adjust V. Garcia’s offense level based upon his role, pursuant to U.S.S.G. § 3B1.1, because, the USPO cannot determine whether V. Garcia fully directed Barnhill, given that both Barnhill and V. Garcia received a portion of the proceeds from the bank fraud. See PSR ¶ 65, at 26-28. The USPO thus calculates that V. Garcia’s adjusted offense level is 12. See PSR ¶67, at 28. V. Garcia receives a 2-level reduction for acceptance of responsibility, pursuant to U.S.S.G. § 3E1.1. See PSR ¶ 68, at 28. According to the USPO, V. Garcia’s total offense level is, therefore, 10. See PSR ¶ 69, at 28.

V. Garcia has no criminal history points; therefore, his criminal history category is I. See PSR ¶72, at 28. Based on an offense level of 10 and criminal history category of I, V. Garcia’s guideline imprisonment range is 6 to 12 months. See PSR ¶ 105, at 38. V. Garcia is not eligible for probation, because he is convicted for a Class B felony, pursuant to 18 U.S.C. § 3561(a)(1), see U.S.S.G. § 5Bl.l(b)(l). The USPO notes that, had the parties not stipulated to a gross loss amount of $842,237.44, V. Garcia’s offense level would have been increased by 22-levels, making his total offense level 31. Were V. Garcia’s offense level 31 and criminal history category I, his guideline imprisonment range would be 108 to 135 months. See PSR ¶ 106, at 39.

Pursuant to 18 U.S.C. § 1344(2) the guideline range for a fine for V. Garcia’s offense is between $2,000.00 and $1,000,000.00. See PSR ¶¶ 111, 113 at 40. The USPO states that V. Garcia does not have the ability to pay any fines, given that his debts far outweigh his assets. The USPO notes, however, that the Mandatory Victims Restitution Act of 1996, 18 U.S.C. § 3572, requires the Court to “enter restitution without consideration of the defendant’s ability to pay and without consideration of the costs of collection efforts to the Department of Justice.”, PSR ¶ 103, at 38. See id. ¶ 115, at 40-41. The USPO states that V. Garcia’s assets should be used for victims’ restitution. See PSR ¶ 103, at 38. The USPO calculates that V. Garcia owes $23,550,835.69 in restitution. The USPO determines that V. Garcia owes $15,430,533.08 to the FDIC, $5,600,000.00 to First Financial, and $2,520,302.61 to twenty-two contractors. See PSR ¶ 116, at 41. The USPO states that the Court may set a deadline for additional restitution claims to be submitted to the USPO, no later than ninety days after V. Garcia is sentenced, pursuant to 18 U.S.C. § 3664(d)(5). See PSR ¶ 120, at 42. The USPO recommends that if V. Garcia owes restitution after being released from custody, his monthly restitution payments should be no less than twenty-five percent of his net monthly income. See PSR ¶ 116, at 41.

The USPO states that an upward departure may be warranted in this case, because the gross loss amount to which the parties stipulated “substantially under-represents the actual harm caused.” PSR ¶ 22, at 43. The USPO identifies that, pursuant to U.S.S.G. § 5K2.0(a)(3), a departure may be warranted “in an exceptional case, even though the circumstances that form[ ] the basis for the departure is taken into consideration in determining the guideline range,” if the Court determines that the circumstance is in the offense “to a degree ... substantially in excess of [ ] ... that which ordinarily is involved in that kind of offense.” PSR ¶ 121, at 43. The USPO states that the gross loss amount that V. Garcia’s offense caused is $23,550,835.69, yet the parties stipulated to a gross loss amount of $842,237.44. The USPO further notes, that had V. Garcia’s offense level been determined based upon the actual gross loss that it finds his offense caused, his guideline imprisonment range would be 108 to 135 months. The USPO thus states that the “Court could consider departing upward to a guideline imprisonment sentence no more than the maximum statutory penalty of 30 years.” PSR ¶ 122, at 43.

The USPO also determines that a downward departure is not warranted in V. Garcia’s case. The USPO notes that, pursuant to U.S.S.G. § 5K2.20, the Court may depart downward if V. Garcia had “committed a single criminal occurrence or single criminal transaction that (1) was committed without significant planning; (2) was of limited duration; and (3) represents a marked deviation by the defendant from an otherwise law-abiding life.” PSR ¶ 123, at 43. See U.S.S.G. § 5K2.20. The USPO states that, although V. Garcia’s involvement “could be considered a marked deviation from an otherwise law-abiding life,” his- offense was “not committed without significant planning nor was it for a limited duration,” as V. Garcia’s criminal activity began in December 2006, and continued through May, 2008. PSR ¶ 123, at 43. The USPO notes that it took significant planning to orchestrate the fraudulent invoices and to transfer funds from one lender to another. The USPO thus asserts that a downward departure is not warranted under U.S.S.G. § 5K2.20 for V. Garcia. See PSR ¶ 123, at 43.

3. The United States’ Objections to the PSR.

The United States objects to the USPO’s calculation of the gross loss amount in the PSR. The United States notes that the parties stipulated to a gross loss amount of $842,237.44 and that, pursuant to U.S.S.G, § 2B1.1, cmt. n.3 (E)(i), certain credits may be applied to reduce the gross loss amount. The United States states that the parties have not agreed upon the net-loss amount, and thus the Court should determine the net loss amount, to which the parties may object. The United States objects to the USPO’s determination of the “the gross loss ..., the offsetting credits ...and how the credits were “applied to the gross loss.” U.S. Objections at 1.

The United States contends that the gross loss amount based upon V. Garcia’s relevant conduct is $842,237.44. The United States calculates the gross loss amount from the value of V. Garcia’s draw down from Columbia in the amount of $365,-677.00 — the offense of conviction — and V. Garcia’s total draw-down requests based upon fraudulent line items. The United States asserts that counts one, two, and four through seven of the Indictment are based upon drawdowns with fraudulent line items, and thus the total losses from those draw downs amounts to all “ ‘harms that resulted from’ the offense of conviction, together with all harms that resulted from acts that were ‘part of the same course of conduct or common scheme or plan as the offense of conviction.’ ” U.S. Objections at 2-3 (quoting U.S.S.G. § lB1.3(a)(l), (2), (3)). The United States includes a chart that lists the portion of V. Garcia’s draw-down requests alleged in counts one through seven that are based upon fraudulent line items:

U.S. Objections at 4. The United States asserts that $842,237.44 is the total value of V. Garcia’s fraudulent transactions in counts one, two, and four through seven, and thus that amount should be V. Garcia’s gross loss amount based upon his relevant conduct. See U.S. Objections at 3-4. The United States contends that the USPO erred by not providing an explanation for the parties stipulated gross loss amount in the PSR, in that, without the explanation, the PSR “gives the unfortunate impression that the parties had no factual basis for the stipulated loss amount.” U.S. Objections at 4.

The United States also asserts that the USPO should not have included the unpaid balances of V. Garcia’s Columbian Bank and First Financial loans, or the contraetors’ liens, in the gross loss amount. The United States contends that these losses might have arisen from V. Garcia’s relevant conduct “if the defendant had been charged with having obtained the construction loans by fraud, because the losses would have been the foreseeable result of the defendant’s misconduct in obtaining the loans.” U.S. Objections at 5. The United States argues that, because. V. Garcia pled only to “having executed a scheme and artifice to defraud by incorporating false line items into draw requests .... the losses to the banks beyond the false line items in the draw request” are not part of V. Garcia’s relevant conduct. U.S. Objections at 5. The United States thus argues that the gross loss amount from V. Garcia’s offense should be $842,237.44. See U.S. Objections at 4.

The United States also objects to the USPO’s calculation of Y. Garcia’s credits as totaling $2,900,00.00. The United States contends that the USPO should not have accepted V. Garcia’s information regarding the value of his assets. The United States further contends that the $1,600,000.00 applied as credits that is based upon the value of Lockhaven Estates is overstated, because Lockhaven is “an incompletely developed trailer park....” U.S. Objections at 5-6. The United States also asserts that the USPO overstated the value of Lockhaven Estates and V. Garcia’s personal residence. The United States asserts that the actual value of these properties can only be determined through an evidentiary hearing. The United States requests an evidentiary hearing regarding the value of these properties. See United States Objections at 6.

The United States also objects to the USPO’s calculation that the net loss in this case is $0.00, based upon the USPO’s determination that V. Garcia’s credits exceed the stipulated gross loss amount. The United States asserts that the USPO erred by not adjusting V. Garcia’s offense level based upon the net loss in the case, pursuant to U.S.S.G. § 2B1.1, cmt. n.3(A)(i). The United States asserts that the Court should determine that the net loss in this case exceeds $400,000.00, but is less than $1,000,000.00; and that V. Garcia’s offense level should accordingly be increased 14 levels pursuant to U.S.S.G. § 2Bl.l(b)(l). The United States asserts that the parties stipulated to a non-binding methodology for calculating the net loss amount: “ ‘The net loss amount in this case should be determined by the application of credits pursuant to U.S.S.G. § 2B1.1, cmt. n.3 (E)(i) and- (ii) against the gross loss amount.’” U.S. Objections at 7 (quoting Plea Agreement ¶ 10(d), at 6).

The United States asserts that, pursuant to U.S.S.G. § 2B1.1, cmt. n.2(c), which requires a court to make only a reasonable estimate of the loss amount, the “reasonable way to allocate the credits in this case is to prorate them between relevant categories of losses.” U.S. Objections at 7-8. The United States states that the total losses to banks and lienholders was $23,550,836.69. See U.S. Objections at 8 (citing PSR ¶ 60, at 22). The United States asserts that the $842,237.44 amount in gross loss arising from criminal activity, as the parties have stipulated, is approximately $0,036 per dollar lost. The United States argues, thus, $0,036 of each dollar in credit should apply towards the gross loss amount, not the entirety of the value of V. Garcia’s credits. See U.S. Objections at 8.

The United States contends that the USPO’s reduction of the gross loss amount by the entire value of V. Garcia’s credits is an incorrect calculation. The United States .argues that it is not reasonable to apply the full amount of V. Garcia’s credits to his gross loss amount. The United States asserts that “a fair allocation of $2.9 million in credits would result in a net loss of $738,526.10 for purposes of the criminal case,” although the United States objects to this amount of credits.. U.S. Objections at 9. The United States asserts that the USPO’s approach to the calculation of the net losses “puts the fraud losses at the front of the line for pairing off with available credits, and tells the other losses that they must wait to be made whole out of whatever is left after the fraud losses have been satisfied.” U.S. Objections at 9. The United States contends that its proposed approach “puts every dollar of loss on an equal footing with every other dollar, and would permit all categories of losses to share equally in the available credits.” U.S. Objections at 9.

■ The United States states that the USPO is not bound by any stipulation in the Plea Agreement regarding the calculation of the net loss amount. The United States asserts, however, that U.S.S.G. § 2B1.1, cmt. n.3(E)(i) and-'(ii) do not “mandate the PSR’s approach to the calculation of -net loss in this case.” U.S. Objections at 10. The United States asserts,, thus, that the USPO’s calculation of the net loss amount based upon all of the loss incurred and all of the collateral pledged and property returned does not create a reasonable estimate of the net loss amount. See U.S. Objections at 10. The United States requests, thus, that the Court hold an evidentiary hearing regarding the value of V. Garcia’s credits, and that the Court conclude that the net loss amount exceeds $400,000.00 but is less than $1,000,000.00. See U.S. Objections at 11.

4. V. Garcia’s Objections to the PSR.

V. Garcia objects to the PSR on a number of bases. He first objects to the USPO’s calculation of gross losses as $23,550,835.69. V. Garcia contends that, “in addition to what the government stated in opposing the PSR’s calculation,” the USPO incorrectly failed to reduce the gross loss amount by the amounts accrued from interest, finance charges, late fees, penalties, and similar costs. See V. Garcia Objections at 1 (citing United States v. Dunn, 300 Fed.Appx. 336, 338-39 (6th Cir.2008) (unpublished); United States v. Morgan, 376 F.3d 1002, 1014 (9th Cir.2004)).

V. Garcia also objects to the United States’ approach to dividing his credits on a pro rata basis. V. Garcia contends that neither the guidelines nor case law provides a basis for a pro rata reduction of his credits. Y. Garcia argues that, pursuant to U.S.S.G. § 2B1.1, cmt. n.3(E), his credits “ ‘shall’ ” be credited towards the gross loss amount. V. Garcia Objections at 2 (quoting U.S.S.S.G. § 2B1.1, cmt. n.3(E)). V. Garcia agrees with the USPO’s application of the entire value of his credits against the gross loss amount, although he contends that the USPO improperly calculates the gross loss amount as more than the stipulated gross loss amount. See V. Garcia Objections at 2-3. V. Garcia asserts that, under U.S.S.G. § 2B1.1, cmt. n.3(E)(i), the gross losses should be reduced by the money and property he and those acting with him returned, and that credits- based upon pledged collateral should be determined by the fair market value of the collateral at the time of his sentencing. V. Garcia asserts that the intended loss should be reduced by the “value of real property used to collateralize the fraudulently obtained loan.” V. Garcia Objections at 4 (citing United States v. Lane, 323 F.3d 568, 590 (7th Cir.2003); United States v. Downs, 123 F.3d 637, 643-44 (7th Cir.1997)). V. Garcia contends that he provided documentation of the fair market value of all the pledge collateral, and he identified all of the money he returned, which the USPO accurately calculated in the PSR. V. Garcia argues that, thus, - his offense level should not be increased by 14 levels, as the United States argues, because the net loss amount is $0.00 after the credits are accounted; See V. Garcia Objections at 4.

V. Garcia also takes issue with the sentencing guidelines provision which allows a 14-level increase for net loss amounts over $400,000.00 but less than $1,000,000.00. Y. Garcia contends that “[tjhere is no basis in empirical data or national experience to increase the offense level by 14 levels for the supposed amount of loss, even assuming there was a net loss amount close to $400,000.00.” V. Garcia Objections at 4. V. Garcia asserts that the increase “furthers no purpose of sentencing.” V. Garcia Objections at 4. He further contends that the increase was implemented on the basis of outside pressure from former sentencing commission commissioners. See V. Garcia Objections at 4. V. Garcia requests the Court to sustain his and the United States’ objections to the PSR regarding the gross loss amount, and to accept the stipulated gross loss amount of $842,237.44. V. Garcia further argues that the Court should sustain his objection of applying the total value of his credits to the gross loss amount, resulting in a net loss, as the USPO calculates. See V. Garcia Objections at 6.

V. Garcia also objects to the inclusion of reported losses from Mountain Shadows Construction, Grant - & Associates, Mechanical, Inc., and Pace Iron Works, Inc. in the gross loss amount. See V. Garcia Objections at 6. These- entities submitted victim impact statements to the USPO, asserting combined losses of $2,520,302.61, because of V. Garcia’s criminal activities. See PSR ¶ 56, at 20. V. Garcia contends that the “then prevailing economic climate,” not his actions, caused the losses that these entities sustained. V. Garcia Objections at 6. V. Garcia asserts that these entities’ losses were not reasonably foreseeable pecuniary harm, as the USPO characterizes them, because “nobody reasonably could foresee the economic climate that was to come and the failure of developments across the country.” V. Garcia Objections at 6. In support, V. Garcia asserts that, without any of his criminal activity, “the Anasazi Building would have dropped in value to the point of being upside down.” V. Garcia Objections at 6. V. Garcia further asserts that his actions likely did not cause Columbian Bank’s losses. V. Garcia contends that Columbian Bank suffered losses “because of market conditions and poor lending practices.” V. Garcia Objections at 7. V. Garcia further asserts that he attempted to finish the Downtown Anasazi, and even offered to pay off the Columbian Bank loan, but the FDIC chose to sell V. Garcia’s Columbian Bank loan to First Southern Bank instead. See V. Garcia Objections at 7.

V. Garcia also objects to the USPO’s statement that an upward departure may be warranted given that he stipulated to a gross loss amount far lower than the total monetary loss that his actions caused. See V. Garcia Objections at 7 (citing PSR ¶ 122, at 43). V. Garcia asserts that he is not responsible for the total amount of losses alleged in this matter, because “[ejconomic conditions beyond his control which plagued the national market, contributed to the remaining losses above and beyond the $842,000 agreed to by the parties.” V. Garcia Objections at 8. V. Garcia contends that theses additional losses should not be attributed to him as relevant conduct pursuant to U.S.S.G. § IB 1.3, because it “was not reasonably foreseeable to Mr. Garcia, or anyone, that the market would fail.” V. Garcia Objections at 8.

V. Garcia further asserts that First Financial is not a victim, as the USPO categorizes it. V. Garcia contends that he entered into a séttlement and confidentiality agreement with First Financial, and thus First Financial is not a victim. See V. Garcia Objections at 8 (citing PSR ¶¶ 50-54