In United States v. Shi, et al., --- F.4th ---, No. 24-2054 (9th Cir. 2026), the Court affirmed in part and vacated in part the sentences imposed on Defendants Blade Bai, Bowen Hu, and Tairan Shi following their convictions for offenses arising from their participation in a sophisticated scheme to launder Target gift cards purchased by telephone-scam victims; and remanded for a limited resentencing.
This case is about how to properly calculate the Guidelines for these types of offenses.
Over the course of a year, Defendants Blade Bai, Bowen Hu, and Tairan Shi (Defendants) participated in a sophisticated scheme to launder Target gift cards purchased by telephone-scam victims. The jury convicted Defendants of conspiracy to commit money laundering in violation of 18 U.S.C. § 1956(h) (Count 1). The jury also convicted Bai of conspiracy to commit money laundering while under release in violation of 18 U.S.C. §§ 1956(h) and 3147 (Count 2).1 Defendants appeal their sentences, challenging the district court’s calculation of the loss amount, application of the sophisticated laundering enhancement, and application of the aggravated and minor role adjustments. For the reasons below, we affirm as to the calculation of the loss amount and role adjustments but reverse as to the sophisticated laundering enhancement.We first consider Defendants’ claims regarding the district court’s calculation of loss amount for the base offense level determination. Defendants contend that (1) as a matter of law the intended loss amount may not be included in the value of laundered funds, (2) the district court improperly calculated the amount of laundered funds, and (3) if the loss amount calculation was not error, the district court should have applied a three-level reduction under U.S.S.G. § 2X1.1(b)(2). 2 For the reasons discussed below, we reject these arguments and conclude that the district court properly applied and calculated the loss amount.To determine the offense level, the district court applied § 2X1.1, which is the starting point for sentencing calculations of offenses involving attempts, solicitations, and conspiracies not already covered by specific offense guidelines. Under § 2X1.1(a), courts calculate the base offense level by using “[t]he base offense level from the guideline for the substantive offense, plus any adjustments from such guideline for any intended offense conduct that can be established with reasonable certainty.” (Emphases added). The “substantive offense” “means the offense that the defendant was convicted of soliciting, attempting, or conspiring to commit.” Id. cmt. n.2.Accordingly, the district court turned to § 2S1.1, the money laundering guideline. Section 2S1.1(a)(2) provides for a base offense level of “8 plus the number of offense levels from the table in § 2B1.1 (Theft, Property Destruction, and Fraud) corresponding to the value of the laundered funds.” The district court found that the value of the laundered funds conspired to be laundered exceeded $1.5 million but was less than $3.5 million. It thus increased Defendants’ base offense level by 16 pursuant to § 2B1.1(b)(1)(I) for a total level of 24.Defendants contend this analysis was error, arguing that the term “adjustments” as used in § 2X1.1(a) refers only to specific offense characteristics under § 2S1.1(b), and does not apply to alter the base offense level. Thus, under Defendants’ theory, the district court only considers intended loss when looking at specific offense characteristics.[W]e conclude that the district court did not err by considering the intended loss as part of the “value of the laundered funds” under § 2S1.1(a)(2). 3 Defendants’ “intended conduct is a proper basis for the enhancements the district court applied,” including an “enhancement[] for loss amount . . . based on conduct that [they] intended but did not carry out.”Defendants also argue that even if the district court did not err by considering the intended loss in its base offense level determination, it nevertheless improperly calculated the amount of funds laundered. At sentencing, the evidence showed, and the district court agreed, that the total value of laundered funds came to $2.48 million. Defendants argue that the district court wrongfully assumed that every single card number was valued at $500, constituted proceeds of a specified unlawful activity, and was successfully laundered.We see no basis to disturb the district court’s findings on review. The Government presented evidence extracted from Defendants’ WeChat messages showing that over the course of 12 months, Defendants received 5,256 unique gift card numbers from Magic Lamp. After further automated extraction and manual review, the Government calculated that the average value of each card was $472. Thus, the total value came to $2.48 million.Finally, Defendants alternatively assert that if the district court properly calculated their base offense level, it should have also granted them a three-level reduction under § 2X1.1(b)(2).The district court did not plainly err by not applying this three-level reduction. The evidence showed that Defendants engaged in a money laundering scheme for over a year. There is no indication that they intended to stop their unlawful activities until Bai was arrested in November 2020. And the jury found in Count 2 that even the first arrest did not stop Bai from continuing to offend. Further, Magic Lamp continually supplied Defendants with cards for the duration of the conspiracy, supporting the inference that the cards they transacted were successfully laundered. In sum, we hold that the district court did not err with respect to its calculation of loss amount.Defendants next challenge the two-level enhancement for sophisticated laundering under § 2S1.1(b)(3).The district court determined that Defendants were engaged in the business of laundering funds and so applied subsection (b)(2)(C) to increase Defendants’ offense level by four. It also applied subsection (b)(3) on the basis that Defendants engaged in sophisticated laundering, which increased the offense level by another two levels. Defendants thus received a six-level total increase under § 2S1.1(b). The issue we must decide is whether subsection (b)(3) requires the district court to have actually imposed the two-level increase under subsection (b)(2)(B), or if it is enough simply that the defendant was convicted under 18 U.S.C. § 1956.As an initial matter, the parties dispute the applicable standard of review.Defendants respond that “it is claims that are deemed waived or forfeited, not arguments.” United States v. Pallares-Galan, 359 F.3d 1088, 1095 (9th Cir. 2004). They assert that de novo review applies because though their argument now includes condition (A) as a basis for why subsection (b)(3) does not apply, their general claim that subsection (b)(3) does not apply was raised to the district court. Defendants have the better argument.[T]he plain language and structure of § 2S1.1 leads us to conclude that a district court must actually apply (b)(2)(B) before a defendant can be subject to (b)(3). Because the district court here applied (b)(2)(C), and not (b)(2)(B), it improperly imposed the two-level enhancement under (b)(3) for sophisticated laundering. This error requires that we vacate and remand for the limited purpose of adjusting the guideline computation and resentencing the Defendants. The district court is not required to conduct a plenary resentencing.Finally, we consider the role adjustments applied to Hu’s and Shi’s sentences. For the reasons discussed below, we affirm the district court’s application of the aggravated role adjustment to Hu and Shi and its decision not to grant Shi a minor role adjustment.
