Eleventh Circuit Clarifies Loss Amount Calculation for Securities Fraud Sentencing


The US Court of Appeals for the Eleventh Circuit recently vacated and remanded a defendant’s sentence because the US District Court for the Southern District of Florida inappropriately added a sentencing enhancement after miscalculating the loss amount in the case.

Laurence Isaacson’s co-conspirators created a fund that invested in publicly traded shell corporations with no assets that they owned. The fraudsters manipulated the price of the investments by buying artificially high, inflating the perceived value of the fund’s assets which convinced investors to buy into the fund. Isaacson first joined the conspiracy when he agreed to help fabricate business plans upon which the inflated values could be justified after auditors became suspicious of the shell companies’ growth. In 2010, Isaacson was convicted of conspiracy to commit securities fraud and was sentenced to 36 months in prison and $8 million restitution after applying a loss amount enhancement due to a $15 million investment in the fund in 2002. Isaacson appealed the conviction and sentencing. The Eleventh Circuit upheld the conviction, but vacated the sentence. 

The court noted that the District Court narrowly defined Isaacson’s criminal conduct as conspiring to defraud the auditors, not investors. The court concluded that holding Isaacson responsible for the $15 million investment would be speculative because the government did not show that the $15 million investment was dependent on the fraudulent report prepared in part by Isaacson. The court vacated the prison sentence and the $8 million restitution order, and remanded to the District Court for resentencing. 

United States v. Isaacson, Nos. 11-14287, 12-14703 (11th Cir. May 22, 2014).


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Katten Muchin Rosenman LLP | Attorney Advertising

Written by:


Katten Muchin Rosenman LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.