In United States v. Yafa, --- F.4th ---, No. 23-4108 (9th Cir. 2025), the panel affirmed the district court’s reliance on Application Note 3(B) in the commentary to United States Sentencing Guidelines § 2B1.1, which, at the time the Yafa brothers were sentenced, instructed courts to use the gain that resulted from the defendant’s offense as an alternative measure for calculating loss where loss cannot reasonably be determined.
The case arises from an alleged “pump-and-dump” stock manipulation scheme. The brothers were convicted of securities fraud and conspiracy to commit securities fraud.
At sentencing, the district court relied on Application Note 3(B) in the commentary to United States Sentencing Guidelines (“U.S.S.G.”) § 2B1.1, which instructs courts to use the gain that resulted from the defendant’s offense as an alternative measure for calculating loss where loss cannot reasonably be determined. U.S.S.G. § 2B1.1 cmt. n.3(B). 1 On appeal, the Yafas contend that it was legal error to defer to § 2B1.1’s commentary because the term “loss” is not genuinely ambiguous. Because we hold that deference is appropriate, we conclude that the district court did not err when it relied on the commentary and used “gain” as an alternative measure for the “loss” attributable to the Yafas.Because the Yafas were sentenced before Application Note 3(B) was moved from the commentary to the Guidelines, we must determine whether the district court’s reliance on the commentary was appropriate. To determine whether it is appropriate to defer to the commentary’s interpretation of a Guideline, we apply the analysis set forth in Kisor v. Wilkie, 588 U.S. 558 (2019). Castillo, 69 F.4th at 655–56.4 Kisor instructs that courts owe deference to an agency’s interpretation of its own rules where (1) the regulation is “genuinely ambiguous,” (2) the interpretation is “reasonable,” and (3) the interpretation is entitled to “controlling weight.” 588 U.S. at 574–79. Section 2B1.1’s commentary instructing courts to use gain as an alternative measure of loss satisfies these requirements.First, the term “loss” is genuinely ambiguous. A court may only conclude that a regulation is genuinely ambiguous after “exhaust[ing] all the traditional tools of construction.” Id. at 575 (internal quotation marks omitted). In other words, it must consider “the text, structure, history, and purpose of a regulation, in all the ways it would if it had no agency to fall back on.” Id. Although “[w]e have not previously held that the term ‘loss’ under § 2B1.1 is genuinely ambiguous,” United States v. Hackett, 123 F.4th 1005, 1012 (9th Cir. 2024), several of our sister circuits have reached this conclusion applying Kisor. See, e.g., United States v. You, 74 F.4th 378, 397–98 (6th Cir. 2023) (holding that “loss” is genuinely ambiguous); United States v. Boler, 115 F.4th 316, 328–29 (4th Cir. 2024) (same). But see United States v. Banks, 55 F.4th 246, 257–58 (3d Cir. 2022) (holding that the ordinary meaning of “loss” controls).Second, Application Note 3(B)’s instruction to use gain is a reasonable interpretation of “loss.” An agency’s interpretation is reasonable if it “come[s] within the zone of ambiguity the court has identified after employing all its interpretive tools.” Kisor, 588 U.S. at 575–76. As the foregoing analysis demonstrates, the zone of ambiguity for the term “loss” stretches, at a minimum, along a spectrum from the actual, calculable loss experienced by victims of an economic crime to the far broader harms involved in and arising out of a defendant’s criminal conduct. Application Note 3(B) falls within this range. Because federal theft and fraud statutes can “cover a broad range of conduct,” U.S.S.G. § 2B1.1, cmt. (background), relying on the amount of gain enables courts to “maintain[] sufficient flexibility” and issue sentences that “avoid[] unwarranted sentencing disparities among defendants . . . who have been found guilty of similar criminal conduct,” even where the actual loss resulting from a defendant’s conduct is difficult to calculate, 28 U.S.C. § 991(b)(1)(B).Finally, the character and context of Application Note 3(B) “entitles it to controlling weight.”Application Note 3(B)’s interpretation of “loss” warrants deference under Kisor. Therefore, the district court did not err when it used the gain that resulted from the Yafas’s offenses as an alternative measure for loss.
Of note: "our conclusion is limited to Application Note 3(B) and says nothing about the reasonableness of Application Note 3(A)’s instruction defining loss as the 'greater of actual loss or intended loss.'"
