United States v. Torlai

A person that uses fraud to qualify for a federal benefit is not an intended beneficiary, and the court's effort to differentiate legitimate from illegitimate claims is unnecessary because by committing fraud that person has exempted themselves from the guidelines of the federal benefit.

Gregory Torlai deliberately misrepresented his farm acreage and crop yields on insurance applications for federal farm benefits. He harvested and sold what he did grow and made up false claims of weather damage to his fictional crops that he submitted for indemnification. Torlai was found guilty on sixteen counts of making false claims for farm benefits and sentenced to thirty months in prison and thirty-six months of supervised release. At the sentencing hearing the government argued that claims that Torlai was paid for amounted to $410,372, and the United States Sentencing Guidelines (U.S.S.G.) recommended a 14-level sentencing guideline increase for that amount. Torlai argued that the amount should be reduced by the producer premiums that he paid as well as the losses that he incurred on the crops that he actually cultivated. Following Torlai’s calculation the U.S.S.G. would be reduced to a 12-level sentencing guideline increase, because the net amount was below $400,000. The district court used the government’s calculation in reaching its sentencing decision. The Ninth Circuit held that the district court did not err in its sentencing decision because Torlai used fraudulent information on his insurance applications the policies were void, and because of this the money that was paid in order to perpetuate the fraud, and the speculated amount of legitimate crop insurance proceeds were properly excluded from the government’s damage calculation. AFFIRMED