Federal Sentencing Guidelines for COVID Loan Fraud

So your probably trying to figure out what sentence your facing for PPP or EIDL fraud, and the federal sentencing guidelines are where that calculation starts. The guidelines aren’t mandatory anymore—judges have discretion to vary above or below them—but they’re still the most important factor in determining your sentence. Understanding how the guidelines work is critical because even small differences in the calculation can mean years of additional prison time. A 2-level enhancement you didn’t expect can add 12 to 18 months to the recommendation. A loss amount dispute that goes against you can jump you into a higher bracket that adds 24 months or more.

We represent clients in PPP and EIDL fraud cases throughout California and the federal system, and the first thing we do after reviewing the charges is calculate the likely guideline range. That calculation involves your base offense level, enhancements for aggravating factors, reductions for acceptance of responsibility or minor role, and your criminal history category. The intersection of offense level and criminal history produces a range in months—like 12 to 18 months, or 33 to 41 months—and that range becomes the starting point for plea negotiations and sentencing arguments.

The United States Sentencing Commission publishes the guidelines, and there updated periodically. The current version applies to all federal sentences, including COVID loan fraud cases. What surprises most defendants is how MECHANICAL the process is—there’s a loss amount table, enhancement provisions, adjustment provisions, and a sentencing table, and you plug in the numbers to get a range. It’s not about whether the judge likes you or thinks your a good person—it’s math. And understanding that math is the first step toward realistic expectations and effective advocacy.

How Do Federal Sentencing Guidelines Work?

The guidelines are an advisory framework that federal judges use to determine appropriate sentences. They were mandatory from 1987 until 2005, when the Supreme Court’s decision in United States v. Booker made them advisory. Now judges must CALCULATE the guideline range and consider it, but there not required to sentence within it. They can vary upward or downward based on the 18 U.S.C. § 3553(a) factors, which include the nature and circumstances of the offense, the history and characteristics of the defendant, and the need for the sentence to reflect the seriousness of the offense, promote respect for the law, provide just punishment, and deter criminal conduct.

The process starts with determining the applicable guideline. For PPP and EIDL fraud, that’s almost always U.S.S.G. § 2B1.1, which governs theft, property destruction, and fraud offenses. Section 2B1.1 provides a base offense level, then lists specific offense characteristics that increase or decrease that level. The most important characteristic is loss amount—there’s a table that assigns additional levels based on how much money was involved. Other characteristics include number of victims, sophisticated means, use of identity information, and several others that apply less frequently in PPP cases.

After calculating the offense level under § 2B1.1, you apply Chapter 3 adjustments for victim-related matters, role in the offense (leader, organizer, minor participant), and obstruction of justice. Then you apply Chapter 4 criminal history calculations, which assign points based on prior convictions and produce a criminal history category (I through VI). The offense level and criminal history category intersect on the sentencing table in Chapter 5, which gives you a range in months. That range is the guideline recommendation.

The judge then considers whether any departures apply (situations where the guidelines specifically authorize going outside the range) and whether a variance is warranted under § 3553(a). The final sentence can be probation, prison within the guideline range, prison below the range (downward variance), or prison above the range (upward variance), plus supervised release, restitution, fines, and other conditions.

The practical effect of all this is that your sentence is largely determined by two numbers: the fraud amount and your criminal history. Everything else—sophisticated means enhancements, role adjustments, acceptance reductions—typically moves the offense level by 2 to 4 levels, which translates to months. But the loss amount can move it by 10, 14, 18 levels, which translates to YEARS. That’s why disputes about loss calculation are often the most contested part of sentencing in fraud cases.

What Is the Base Offense Level for PPP or EIDL Fraud?

Under § 2B1.1(a), the base offense level is either 6 or 7, depending on the specific statute of conviction. If your convicted under 18 U.S.C. § 1344 (bank fraud) or certain other financial institution fraud statutes, the base level is 7. For most other fraud offenses—including wire fraud under 18 U.S.C. § 1343, false statements to a financial institution under 18 U.S.C. § 1014, or false statements under 18 U.S.C. § 1001—the base level is 6. In PPP fraud cases, defendants are often charged with both bank fraud and wire fraud, so the base level is typically 7.

The difference between base level 6 and 7 is minimal in the overall calculation—it’s one level, which might translate to 2 to 4 months in the final range, depending on where you end up after all the enhancements and adjustments. What matters much more is what gets ADDED to that base level. For a typical PPP fraud case involving $50,000, you start at base level 7, add 6 levels for loss amount (which gets you to 13), potentially add 2 levels for sophisticated means (15), then subtract 3 levels for acceptance of responsibility (12). At offense level 12 with criminal history I, the guideline range is 10 to 16 months.

The base level is mostly a technicality—what really drives the calculation is the loss table under § 2B1.1(b)(1). That table starts at losses of $6,500 and goes up to over $550 million, with increasing offense level additions at each threshold. For PPP and EIDL cases, the relevant thresholds are usually $6,500, $15,000, $40,000, $95,000, $150,000, $250,000, $550,000, and $1.5 million. Each threshold represents a 2-level jump, and those jumps compound quickly.

How Does Loss Amount Affect My Offense Level?

Loss amount is added to the base offense level according to the table in § 2B1.1(b)(1). The additions are:

• $6,500 or less: no increase
• More than $6,500: add 2 levels
• More than $15,000: add 4 levels
• More than $40,000: add 6 levels
• More than $95,000: add 8 levels
• More than $150,000: add 10 levels
• More than $250,000: add 12 levels
• More than $550,000: add 14 levels
• More than $1.5 million: add 16 levels
• More than $3.5 million: add 18 levels
• More than $9.5 million: add 20 levels
• More than $25 million: add 22 levels
• More than $65 million: add 24 levels
• More than $150 million: add 26 levels
• More than $250 million: add 28 levels
• More than $550 million: add 30 levels

So if your fraud amount is $50,000, you add 6 levels. If it’s $100,000, you add 8 levels. That 2-level difference typically translates to 6 to 12 months of additional prison time, depending on your criminal history and final offense level. This is why defendants fight so hard about loss calculation—the difference between $94,000 and $96,000 is two offense levels and potentially a year of prison.

The loss calculation uses “the greater of actual loss or intended loss.” Actual loss is the reasonably foreseeable pecuniary harm that resulted from the offense. Intended loss is the pecuniary harm that the defendant intended to inflict. For PPP fraud, if you applied for $100,000 and received $100,000, the loss is $100,000. If you applied for $100,000 but only received $75,000 because the lender reduced the amount, the loss is still $100,000 (intended loss). If you applied for $100,000, received it, then paid back $50,000 before you were caught, the loss is STILL $100,000—restitution paid after the fraud doesn’t reduce the loss for guideline purposes.

There’s an exception for restitution paid BEFORE the offense was detected. If you took $100,000, then voluntarily returned $50,000 before any investigation started, you might argue the loss should be calculated as $50,000. But the government will counter that the intended loss was $100,000, and the guidelines use the greater of actual or intended. These disputes get resolved through evidentiary hearings at sentencing, where both sides present evidence and the judge makes findings by a preponderance of the evidence (more likely than not).

For defendants facing multiple counts or a pattern of fraud, the loss amounts typically get aggregated. If you filed three PPP applications for $30,000 each and all three were funded, your loss is $90,000, not $30,000. That aggregation can push you over thresholds that substantially increase your offense level. Three separate $30,000 frauds are 6 levels (more than $40,000 but less than $95,000), but if you had filed four applications, the total would be $120,000, which is 8 levels (more than $95,000). One additional fraudulent application can add 2 levels and 6-12 months to your sentence.

What If I Didn’t Actually Get the Money—Does Intended Loss Count?

Yes, intended loss counts even if you never received a penny. The guidelines define loss as “the greater of actual loss or intended loss,” so if you applied for $500,000 in PPP loans using fabricated documents but your applications were denied before funding, the loss is still $500,000 for sentencing purposes. The theory is that your culpability is the same whether you succeeded or failed—you intended to steal $500,000, and the fact that you didn’t succeed is just good luck or good fraud detection, not a reason for leniency.

This comes up most often in cases where the defendant is charged with attempt or conspiracy rather than completed fraud. If your charged with conspiracy to commit bank fraud and wire fraud, and the object of the conspiracy was to obtain $2 million in fraudulent PPP loans, your offense level calculation will be based on $2 million even if the conspiracy was broken up before any money was disbursed. Similarly, if you applied for five loans totaling $400,000 but only two were funded (totaling $150,000), the loss is $400,000 because that’s what you intended to get.

Defendants sometimes argue that using intended loss overstates there culpability, particularly in cases involving applications that were clearly going to be denied (maybe because the documents were SO obviously fake that no reasonable underwriter would approve them, or because the business didn’t exist and a simple check would reveal that). The argument goes: if there was no realistic chance of success, the intended loss shouldn’t count. Courts have generally rejected this argument. As long as the defendant took substantial steps toward completing the fraud—submitting applications, providing documents, signing certifications—the intended loss applies regardless of how likely success was.

The practical impact is that your sentence can be based on conduct that never actually harmed anyone. If you applied for $1 million, got caught during the underwriting process, and no funds were disbursed, you can still be sentenced based on an offense level calculated from $1 million in intended loss. That might seem harsh, but it’s consistent with how attempt and conspiracy are treated generally in federal law—you get punished for what you tried to do, not just what you succeeded in doing.

What Are Common Enhancements in PPP Fraud Cases?

The most common enhancements we see in PPP and EIDL fraud cases are for sophisticated means, number of victims, and use of identity information. Each of these adds levels to the offense level, which increases the guideline range.

Sophisticated means enhancement (§ 2B1.1(b)(10)(C)): If the offense involved sophisticated means, add 2 levels. The guidelines define “sophisticated means” as “especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense.” In PPP fraud, this typically applies if you created fake business entities, forged tax documents, fabricated bank statements, used nominee owners to hide your involvement, or employed other tactics beyond just lying on the application. Simply inflating your 2019 payroll numbers on an otherwise truthful application probably doesn’t qualify. Creating a shell corporation, filing fake tax returns under that corporation’s name, opening business bank accounts with fabricated documents, and then applying for PPP loans under multiple business names—that’s sophisticated means.

Number of victims (§ 2B1.1(b)(2)): If the offense involved 10 or more victims, add 2 levels; 50 or more victims, add 4 levels; 250 or more victims, add 6 levels. This enhancement is less common in PPP fraud cases because the “victim” is usually just the SBA or the lending institution. But if you ran a loan-prep scheme where you prepared fraudulent PPP applications for 50 other people and took kickbacks, those 50 people might be considered victims (they’re facing prosecution because of your conduct), which would trigger this enhancement.

Unauthorized use of means of identification (§ 2B1.1(b)(11)): If the offense involved the unauthorized use of a means of identification, add 2 levels (or 4 levels if the means of identification was of an individual other than the defendant and the offense level is less than level 14). This applies if you used someone else’s Social Security number, EIN, or personal information to apply for loans. If you used a deceased person’s identity, a stolen identity, or made up a synthetic identity, this enhancement applies. And if your charged with aggravated identity theft under 18 U.S.C. § 1028A, you also face a mandatory consecutive 2-year sentence in addition to the guideline calculation for the underlying fraud.

Financial institution enhancement (§ 2B1.1(b)(16)): This provision was amended and the specific enhancement for affecting a financial institution was removed in recent guideline amendments, but the APPLICATION NOTE still provides that affecting a financial institution can be considered as an upward departure factor. Since PPP loans were made by banks and credit unions (financial institutions) and backed by the SBA, prosecutors sometimes argue for upward departures based on the impact to the financial system. This is less common than the other enhancements but it comes up.

The cumulative effect of enhancements can be substantial. If you start with base level 7, add 8 levels for $100,000 loss (gets you to 15), add 2 levels for sophisticated means (17), add 2 levels for unauthorized use of identity information (19), then subtract 3 for acceptance (16), your at offense level 16. With criminal history I, that’s 21 to 27 months. Without the enhancements, you’d be at offense level 12 (10 to 16 months). The enhancements added 11 months at the low end of the range.

Does the Sophisticated Means Enhancement Apply to My Case?

Whether sophisticated means applies depends on how you executed the fraud, not just whether you committed fraud. The enhancement requires conduct that’s “especially complex or especially intricate” in execution or concealment. Courts have held that merely lying on an application, even with some supporting false documents, isn’t enough—there has to be a level of planning and complexity that goes beyond ordinary fraud.

Examples of conduct that courts HAVE found sufficient for sophisticated means in PPP fraud cases include: creating shell LLCs with nominee owners to hide the defendant’s involvement; filing fake tax returns with the IRS to create a paper trail supporting the fraudulent applications; opening multiple business bank accounts under different business names to receive loan proceeds and obscure the money trail; using encrypted communications and burner phones to coordinate the fraud; layering transactions through multiple accounts to conceal the source of funds; and creating elaborate false documentation including fake employee records, fabricated contracts, and forged financial statements.

Examples of conduct that courts have found INSUFFICIENT for sophisticated means include: inflating payroll expenses on the PPP application without creating fake supporting documents; using a real business but exaggerating the number of employees or revenue; submitting an application with some false information but no elaborate concealment efforts; and making false statements on the application that were easily detectable with basic verification.

The key distinction is between lies and schemes. Lying about your 2019 payroll is fraud, but it’s simple fraud. Creating an entire fake company, complete with website, fake employees, fabricated tax filings, and forged bank statements, then using that company to apply for multiple loans—that’s sophisticated. The more steps involved, the more documents created, the more entities used to obscure the defendant’s role, the more likely the enhancement applies.

We fight the sophisticated means enhancement aggressively because it’s worth 2 levels (typically 4-8 months), and because it’s somewhat subjective. What one judge views as “especially complex” another might view as standard fraud. The application notes say to consider whether the conduct was more complex than typical for the offense—and there’s argument about what’s “typical” for PPP fraud. If thousands of defendants inflated there payroll numbers and submitted fake tax documents, is that now typical rather than sophisticated? Courts have split on this, but the trend is toward finding sophisticated means in any case involving fabricated documents or multiple entities.

What Is the Leadership Role Enhancement?

If you organized, led, managed, or supervised others in committing the fraud, you can receive a leadership role enhancement under U.S.S.G. § 3B1.1. The enhancement is 4 levels if you were an organizer or leader of criminal activity involving five or more participants or that was otherwise extensive, or 2 levels if you were a manager or supervisor but the activity didn’t meet the threshold for the 4-level increase.

This comes up most often in PPP fraud cases where the defendant ran a loan-prep scheme—advertising services to help people get PPP loans, preparing applications for clients, taking fees or kickbacks, and submitting dozens or hundreds of applications. If you had employees or co-conspirators helping you, and you directed there activities, your an organizer or leader. The 5-participant threshold includes both participants who were criminally responsible (co-conspirators) and those who were unwitting (employees who didn’t know the applications were fraudulent). So if you ran an operation with four employees helping you prepare fake applications, even if the employees thought it was legitimate, you can get the 4-level enhancement.

The “otherwise extensive” language applies even if there weren’t five participants. If you personally prepared and submitted 200 fraudulent PPP applications without any assistance, that could be considered “otherwise extensive” criminal activity that warrants the 4-level enhancement. Courts look at the scope, planning, and duration of the activity to determine if it was extensive.

The 2-level enhancement applies to mid-level managers—people who supervised others but weren’t the ultimate leaders. If you worked for someone who ran a PPP fraud ring, and you supervised a team of three people who helped prepare applications, you might get the 2-level enhancement while the person above you gets the 4-level enhancement.

If you acted alone, there’s no leadership enhancement. If you and one other person committed the fraud together as equal partners, there’s no enhancement (because neither of you led or managed the other). The enhancement requires some degree of control or supervision over others’ criminal conduct. For defendants facing leadership enhancements, challenging the participant count or the “otherwise extensive” determination is often critical because 4 levels can add 18 to 30 months to the guideline range at higher offense levels.

Can I Get a Reduction for Accepting Responsibility?

Yes, under U.S.S.G. § 3E1.1, defendants who clearly demonstrate acceptance of responsibility for the offense receive a 2-level reduction, and if the offense level is 16 or greater and the defendant timely notifies authorities of the intention to plead guilty, an additional 1-level reduction applies (for a total 3-level reduction). This is one of the most important adjustments in the guidelines because 3 levels typically translates to 6 to 12 months off your sentence, and it’s largely within your control.

To get the reduction, you must “clearly demonstrate” acceptance of responsibility through your conduct. Pleading guilty is a significant factor, but it’s not automatically sufficient. The court looks at whether you truthfully admitted the conduct comprising the offense, whether you voluntarily made restitution before adjudication, and whether you exhibited genuine remorse. Factors that weigh AGAINST acceptance include: falsely denying involvement or minimizing your role; putting the blame on others; making frivolous motions or arguments; and engaging in conduct after arrest that suggests you haven’t accepted responsibility (like threatening witnesses, destroying evidence, or continuing criminal activity).

The 2-level reduction is available even if you go to trial, but as a practical matter, defendants who go to trial and lose almost never receive it. The commentary says acceptance of responsibility is “not intended to apply to a defendant who puts the government to its burden of proof at trial by denying the essential factual elements of guilt” unless there are extraordinary circumstances. So while it’s theoretically possible, we’ve never seen it happen. If you go to trial and lose, expect to lose the 3-level reduction, which typically means an additional 6-12 months in prison compared to what you would’ve received if you’d pled guilty.

The additional 1-level reduction for timely notification requires that you notify authorities of your intent to plead guilty early enough to permit the government to avoid preparing for trial. Pleading guilty at arraignment or within the first 30-60 days usually qualifies. Pleading guilty the week before trial, after months of litigation, usually doesn’t. The government has to file a motion for this additional 1-level reduction—the court can’t grant it on its own. So if you plead guilty late or if your conduct during the case suggests lack of acceptance (you blamed your accountant, denied knowledge, made false statements to probation), the government might not file the motion, and you’ll only get the 2-level reduction instead of 3.

We prep clients extensively on acceptance of responsibility because it’s worth so much and because it’s about more than just pleading guilty. You need to take ownership in your statements to probation, in your sentencing memorandum, and at the sentencing hearing. Generic statements like “I’m sorry for what happened” aren’t enough. Judges want to hear that you understand what you did, why it was wrong, the harm it caused, and what you’ve done to take responsibility and make amends. Paying restitution, cooperating with the investigation, and demonstrating genuine remorse through your actions carries far more weight than words.

How Does Criminal History Affect My Guideline Range?

Your criminal history score determines your criminal history category, which intersects with your offense level on the sentencing table to produce the guideline range. Criminal history is calculated under Chapter 4 of the guidelines, which assigns points for prior convictions based on the sentence imposed. The points are:

• 3 points for each prior sentence of imprisonment exceeding one year and one month
• 2 points for each prior sentence of at least 60 days but not more than one year and one month
• 1 point for each other prior sentence (including probation, fines, or shorter jail terms)
• 2 points if the defendant committed the offense while under a criminal justice sentence (on probation, parole, supervised release, or in custody)
• 2 points if the defendant committed the offense less than two years after release from imprisonment on a sentence counted under the above provisions

The total criminal history points determine your category: 0-1 points is Category I, 2-3 points is Category II, 4-6 points is Category III, 7-9 points is Category IV, 10-12 points is Category V, and 13 or more points is Category VI. Most first-time offenders with no prior criminal record have 0 points and fall into Category I.

The sentencing table shows that at any given offense level, the range increases as criminal history category increases. For offense level 16 (a typical PPP fraud case involving $150,000-$200,000), the ranges are: Category I is 21-27 months, Category II is 24-30 months, Category III is 27-33 months, Category IV is 30-37 months, Category V is 33-41 months, and Category VI is 33-41 months (same as V at this level). So a defendant with prior convictions faces substantially longer sentences than a first-time offender at the same offense level.

Certain prior convictions don’t count for criminal history purposes. Sentences imposed more than 10-15 years ago (depending on the sentence length) are too old to count. Juvenile adjudications are counted only in limited circumstances. And very minor offenses that resulted in no incarceration and minimal fines might not count. The PSR (presentence investigation report) prepared by probation calculates your criminal history, and if you disagree with there calculation, you can object and the judge will hold a hearing to resolve it.

For PPP fraud defendants, criminal history is usually straightforward—most are first-time offenders with no prior record. But if you have ANY prior convictions, it’s worth carefully reviewing whether they should count and how many points there assigned. A 1-point difference can move you from Category I to Category II, which adds 3-6 months to your range. A challenge to the scoring might be worth pursuing if there’s a legitimate argument that a prior conviction is too old, was improperly counted, or should receive fewer points than the PSR assigned.

What’s the Difference Between the Guidelines and Actual Sentence?

The guidelines produce an ADVISORY range that the judge must calculate and consider, but the actual sentence can be higher, lower, or within that range based on the § 3553(a) factors. Since United States v. Booker in 2005, the guidelines are no longer mandatory—judges have discretion to vary from them if the variance is reasonable and justified by the § 3553(a) factors.

The § 3553(a) factors include: the nature and circumstances of the offense and the history and characteristics of the defendant; the need for the sentence to reflect the seriousness of the offense, promote respect for the law, provide just punishment, afford adequate deterrence, protect the public, and provide the defendant with needed training or treatment; the kinds of sentences available; the guideline range; any pertinent policy statements from the Sentencing Commission; the need to avoid unwarranted sentence disparities; and the need to provide restitution to victims.

In practice, most sentences in PPP fraud cases fall within the guideline range or slightly below. According to Sentencing Commission data, approximately 45-50% of fraud sentences are within the guideline range, 40-45% are below (either through government-sponsored departures for cooperation or through judicial variances), and 5-10% are above the range. For PPP fraud specifically, the percentage of within-range sentences is slightly higher—judges have been less inclined to vary downward in pandemic fraud cases compared to other fraud offenses.

Downward variances typically occur when there are compelling mitigating circumstances: extraordinary family hardship, serious health issues, minimal criminal conduct in the context of an otherwise law-abiding life, full restitution before sentencing, or substantial cooperation that didn’t result in a formal § 5K1.1 motion from the government. We’ve obtained downward variances by presenting evidence of the defendant’s role as a caretaker for disabled family members, terminal illness diagnoses, extraordinary charitable work, and circumstances showing the fraud was an aberration during the pandemic rather than part of a criminal lifestyle.

Upward variances occur when the judge finds the guideline range doesn’t adequately account for the seriousness of the conduct. This happens more often in PPP fraud cases than in traditional fraud, particularly when the spending was egregious (luxury items, gambling, lavish trips), when the defendant obstructed the investigation, when there were vulnerable victims beyond just the government, or when the judge wants to send a deterrent message about pandemic fraud. We’ve seen upward variances in cases involving defendants who bought Lamborghinis with PPP money, cases where defendants threatened witnesses, and cases where judges explicitly stated that pandemic fraud deserves harsher treatment than typical economic crime.

Can the Judge Go Below the Guideline Range?

Yes, judges can impose sentences below the guideline range through either departures (authorized by the guidelines themselves) or variances (based on § 3553(a) factors). Departures are specific circumstances the guidelines identify as potentially justifying a sentence outside the range—things like substantial assistance to authorities (§ 5K1.1), diminished capacity (§ 5K2.13), extraordinary family circumstances (§ 5H1.6), or aberrant behavior (§ 5K2.20). Variances are broader—the judge can vary based on any § 3553(a) factor, as long as the sentence is reasonable.

The most common basis for below-range sentences in PPP fraud cases is substantial assistance. If you cooperate with the government’s investigation—providing information about co-conspirators, testifying against others, helping identify additional fraud schemes—the government can file a § 5K1.1 motion asking the court to depart below the guideline range. The extent of the departure depends on the value of your cooperation. Minor assistance might get you a 2-level reduction; extensive cooperation that leads to successful prosecution of multiple defendants can result in recommendations for sentences 50% or more below the guidelines.

For defendants who can’t or won’t cooperate (because they acted alone or because they won’t implicate others), variances based on personal circumstances are the alternative. We’ve successfully argued for variances based on: serious medical conditions that make imprisonment particularly difficult; caretaking responsibilities where imprisonment would leave dependents without support; age (very young defendants sometimes receive leniency on the theory that they have better prospects for rehabilitation); extraordinary post-offense rehabilitation; and unusual circumstances surrounding the offense that make it less serious than typical cases.

The key to obtaining a downward variance is presenting concrete, documented evidence of mitigation. Medical variances require letters from treating physicians, medical records, and sometimes expert testimony about how imprisonment would affect the condition. Family circumstance variances require evidence that no one else can care for the dependents and that imprisonment would cause genuine hardship beyond the normal impact of incarceration. Judges hear mitigation arguments in every case—to be effective, yours has to be SPECIFIC and SUPPORTED by evidence, not just assertions that your a good person with family ties.

One important limitation: judges can’t vary below the guideline range SOLELY because they disagree with the guidelines as a policy matter. The variance has to be based on the specific facts of your case as applied to the § 3553(a) factors. A judge can’t say “I think fraud guidelines are generally too harsh, so I’m going to vary down in all fraud cases.” But they can say “In THIS case, considering the defendant’s age, lack of criminal history, the circumstances of the offense during the pandemic, the full restitution, and the extraordinary family hardship, a within-guidelines sentence would be greater than necessary to achieve the § 3553(a) purposes.” That’s a permissible variance.

What About Upward Variances—Can the Judge Go Above the Guidelines?

Yes, and it’s happening more frequently in PPP fraud cases than in most other offense categories. Judges can impose sentences above the guideline range if they find the range is insufficient to meet the § 3553(a) purposes. The government can request an upward variance, and the judge can impose one even if the government doesn’t request it, as long as the defendant had notice and opportunity to argue against it.

The most common justifications for upward variances in PPP fraud cases are: the need for general deterrence (sending a message that pandemic fraud will be punished severely); egregious spending of the stolen funds; obstruction of justice or lying to investigators; the scale of the fraud relative to the defendant’s legitimate income; and the impact on public confidence in government programs. Judges have specifically cited the need to deter others from committing pandemic fraud as a reason for above-guideline sentences, reasoning that the publicity around lenient sentences would encourage more fraud.

We’ve seen upward variances in cases where defendants spent PPP money on luxury cars, jewelry, or gambling—even when the loss amount guideline calculation already accounted for the total stolen. The judge’s reasoning is usually that the frivolous spending demonstrates a level of greed and disrespect that warrants additional punishment. We’ve also seen upward variances when defendants lied to investigators during the initial interview, then later pled guilty—the early false statements cost them the acceptance reduction AND resulted in an upward variance for obstruction.

The data shows upward variances are imposed in about 6-8% of fraud cases overall, but in PPP fraud specifically, the rate appears to be closer to 10-12% based on reported cases. This reflects judicial sentiment that pandemic fraud is particularly egregious—defendants took advantage of a national emergency and stole money intended to help struggling businesses. That narrative has resonated with judges, particularly in 2024-2025 as the economic impact of the fraud has become clearer.

Defendants don’t have much recourse against upward variances as long as there procedurally correct and substantively reasonable. On appeal, the standard of review is abuse of discretion—did the district court properly calculate the guidelines, consider the § 3553(a) factors, adequately explain the sentence, and impose a sentence that’s reasonable in light of the facts? If the answer to all those questions is yes, the appellate court will affirm even if they might have imposed a different sentence. And because reasonableness is assessed based on the totality of circumstances, judges have wide latitude to vary upward if they can articulate a valid justification.

How Do I Calculate My Likely Sentence?

To calculate your likely guideline range, you need to determine your offense level and criminal history category. Here’s the step-by-step process:

Step 1: Determine base offense level. For PPP fraud, it’s usually 7 (bank fraud or financial institution fraud) or 6 (other fraud). Use 7 if your charged with violating 18 U.S.C. § 1344.

Step 2: Calculate loss amount and add corresponding levels. Use the table in § 2B1.1(b)(1). If your fraud was $100,000, add 8 levels (more than $95,000). If it was $50,000, add 6 levels (more than $40,000). Remember to use intended loss if it’s greater than actual loss, and aggregate multiple fraudulent applications.

Step 3: Add enhancements. Sophisticated means: +2 levels if you used fake entities, forged documents, or complex schemes. Unauthorized use of identity: +2 or +4 levels if you used someone else’s information. Number of victims: +2, +4, or +6 depending on victim count (rare in PPP cases). Leadership role: +2 or +4 levels if you organized or supervised others.

Step 4: Apply reductions. Acceptance of responsibility: -3 levels if your offense level is 16+, or -2 levels if it’s 15 or less, assuming you plead guilty early and demonstrate genuine acceptance. Minor role: -2 or -4 levels if you played a minimal or minor role (rare if your the defendant who applied for the loan).

Step 5: Calculate final offense level. Base level + loss addition + enhancements – reductions = final offense level. Example: 7 (base) + 8 (loss) + 2 (sophisticated means) – 3 (acceptance) = 14.

Step 6: Determine criminal history category. 0-1 points = Category I. Most first-time offenders are Category I. If you have prior convictions, calculate points under Chapter 4.

Step 7: Find the intersection on the sentencing table. Offense level 14, Criminal History I = 15-21 months. That’s your guideline range.

Step 8: Consider variances. Do you have mitigation that might justify a below-range sentence? Are there aggravating factors that might result in an above-range sentence? The judge isn’t bound by the range, but approximately 50% of sentences in fraud cases fall within it.

Here are some examples using common fact patterns:

Example 1: $30,000 PPP fraud, no sophisticated means, first-time offender, pleads guilty. Base level 7 + 4 (loss $15,000-$40,000) – 2 (acceptance, because offense level is less than 16) = offense level 9, criminal history I = 4-10 months guideline range.

Example 2: $120,000 PPP fraud using fake business entities and forged tax documents, first-time offender, pleads guilty. Base level 7 + 8 (loss $95,000-$150,000) + 2 (sophisticated means) – 3 (acceptance) = offense level 14, criminal history I = 15-21 months guideline range.

Example 3: $400,000 PPP fraud across five businesses, ran a loan-prep scheme helping others file fake applications, used stolen identities, first-time offender, pleads guilty. Base level 7 + 12 (loss $250,000-$550,000) + 2 (sophisticated means) + 4 (unauthorized use of identity because offense level less than 14 before this enhancement) + 4 (organizer/leader of five+ participants) – 3 (acceptance) = offense level 26, criminal history I = 63-78 months guideline range. Plus mandatory consecutive 24 months for aggravated identity theft under § 1028A = total 87-102 months.

These calculations are starting points. The actual sentence depends on whether the judge varies from the range, whether there are departures, and how the § 3553(a) factors apply to your specific case. But knowing your likely guideline range is essential for making informed decisions about plea negotiations, cooperation, and trial strategy. If your guideline range is 12-18 months and the government offers a plea with a recommended sentence of 15 months, that’s consistent with the guidelines. If your range is 6-12 months and there offering 24 months, something’s wrong—either there’s an enhancement you don’t know about, or there seeking an upward variance, or they’ve miscalculated.

An experienced federal defense attorney should calculate your guideline range early in the case and identify any disputes about loss amount, enhancements, or adjustments that need to be litigated. We’ve had cases where challenging the loss calculation reduced the offense level by 4 levels (12-18 months less prison time), cases where successfully defeating a sophisticated means enhancement saved 2 levels (6 months), and cases where documenting extraordinary mitigation resulted in variances that took clients from 30 months to probation. The guidelines are the framework, but how you fight within that framework makes an enormous difference.

If your facing PPP or EIDL fraud charges, don’t try to navigate the sentencing guidelines on your own. The calculations are complex, the case law interpreting specific enhancements and adjustments is constantly evolving, and the difference between a correct calculation and an incorrect one can be years of your life. We represent clients in federal fraud cases throughout California and we’re experienced in guideline litigation, mitigation presentations, and sentencing advocacy. Call us for a consultation about your case and a realistic assessment of your likely sentencing exposure.