                             In the
United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 01-3488
UNITED STATES OF AMERICA,
                                                  Plaintiff-Appellee,
                                 v.


PRECIOUS THERÉSE FEARMAN,
                                              Defendant-Appellant.
                          ____________
             Appeal from the United States District Court
      for the Northern District of Indiana, South Bend Division.
              No. 00 CR 58—Robert L. Miller, Jr., Judge.
                          ____________
       SUBMITTED JUNE 27, 2002—DECIDED JULY 25, 2002
                          ____________


  Before POSNER, KANNE, and EVANS, Circuit Judges.
   POSNER, Circuit Judge. Precious Therése Fearman appeals
from a ten-month sentence for bankruptcy fraud. The dis-
trict judge had raised her offense level by four steps on
the basis of his finding that she had intended to inflict a
loss on a creditor of between $20,000 and $40,000. U.S.S.G.
§ 2F1.1(b)(1)(E). (The punishment for fraud is based on
either the actual or the intended loss, whichever is greater.
U.S.S.G. § 2F1.1, Application Note 8. The judge thought
the actual loss zero, as we’ll see.) Had Fearman intended
a smaller loss, her maximum sentence would have been
2                                                No. 01-3488

shorter—might have been as short as six months (if the
intended loss was zero—and it may have been, as we’ll also
see), in which event the judge would not have been re-
quired to impose any prison sentence, as he was required
to do if his calculation of the intended loss was correct. See
U.S.S.G. §§ 5C1.1(b), (d).
  Fearman’s husband owned a building in South Bend on
which there was a mortgage. He defaulted and the mort-
gagee obtained a judgment of foreclosure. A sheriff’s sale
of the building was scheduled for April 27, 2000, which
happened to be a week after the original mortgagee had as-
signed the mortgage to EMC Mortgage Corporation. EMC,
which was owed $47,000 on the mortgage, planned to bid
$37,000 for the building at the sale. Fearman thwarted the
sale by faxing the sheriff’s office, on the morning of April
27, a forged “notice of automatic stay,” which falsely repre-
sented that her husband had filed for bankruptcy and that
the automatic stay of creditors’ suits against a debtor in
bankruptcy was in effect. Not knowing the notice was
bogus, the sheriff canceled the sale. It was rescheduled for
June 22. In May, EMC discovered that the building had
numerous violations of the building code and that a hearing
to demolish it had been scheduled. After investigating,
EMC concluded that it would cost more to bring the build-
ing up to code than it was worth. The foreclosure sale was
canceled, the building was demolished, and EMC wrote off
the debt.
  As of April 27, the district judge correctly found, the
building was worthless. But he decided that since EMC had
been planning to bid $37,000 for it (not in cash, presumably,
as that would mean that EMC was paying itself, but
in exchange for discharging the mortgage), this was the
amount of the loss that Fearman intended to cause EMC.
No. 01-3488                                                 3

   We do not agree with this approach to calculating the in-
tended loss. EMC had no interest in the building as such.
Its interest was in collecting as much of the $47,000 it was
owed as it could. After the thwarted foreclosure, Fearman’s
husband still owed EMC $47,000. Indeed, if the foreclosure
sale had been conducted as planned and EMC had walked
away with title to the property, Fearman’s husband would
have owed EMC only $10,000, the remaining debt after the
discharge of the mortgage; because the foreclosure was
thwarted, he remained indebted to EMC for the full
$47,000. Since EMC probably had little prospect of collect-
ing a deficiency judgment from him and so would have
wanted to foreclose as soon as possible, it probably thought
it would be worse off if the foreclosure sale was delayed—
but how much worse off and, more to the point, how much
worse off Fearman thought she was making EMC are ques-
tions unrelated to EMC’s $37,000 bid.
  And if Fearman believed the building was worthless on
April 27, then it is difficult to see how EMC was hurt by the
delay in foreclosing on it. Neither EMC’s estimate of the
value on that date, nor the actual value (zero, which the
judge thought the actual as distinct from the intended loss
caused EMC by Fearman’s fraud), matters; the relevant
understanding of values for purposes of determining in-
tended loss under the sentencing guidelines is that of the
criminal, not that of the victim. United States v. Yeaman, 194
F.3d 442, 460 (3d Cir. 1999); see also, e.g., United States v.
Lorefice, 192 F.3d 647, 655 (7th Cir. 1999); United States v.
Wade, 266 F.3d 574, 586 (6th Cir. 2001). The judge considered
that possibility but rejected it on the ground that had
Fearman thought the building worthless she would not
have bothered to prevent its sale to EMC. That is a sensible
inference, but leaves unanswered what Fearman thought
the building was worth or how her opinion of its worth
4                                                   No. 01-3488

would have translated into an intended loss to EMC. Could
she have thought that she could stave off foreclosure indef-
initely? Or that a later foreclosure would produce a higher
sale price, thus reducing the amount of the deficiency judg-
ment that EMC could obtain against her husband?
   Well, suppose she did think these things. Or even sup-
pose, contrary to our earlier analysis, that Fearman’s valu-
ation of the building was the amount of the loss she
intended to inflict on EMC; no matter; for there was no
basis for the judge’s finding that she thought the building
worth at least $20,000 (let alone $37,000). She knew it was
encrusted with violations of the building code and she
knew the significance of such violations—the judge cred-
ited the statement by a city official that no landlords in
South Bend had more building-code violations than Fear-
man and her husband. True, the demolition hearing had
not yet been scheduled on April 27, which is the relevant
date for determining the intended loss because it was the
date of the fraud. United States v. Nichols, 229 F.3d 975, 979
(10th Cir. 2000); United States v. Janusz, 135 F.3d 1319, 1324
(10th Cir. 1998); United States v. Wells, 127 F.3d 739, 746 (8th
Cir. 1997); cf. United States v. Lorefice, supra, 192 F.3d at 655.
But it was only a few weeks later that EMC discovered that
the property was worthless, and Fearman doubtless had a
better idea of its value than EMC did (the record does not
disclose what EMC paid for the assignment of the mort-
gage to it). It is unlikely therefore that she thought the prop-
erty worth more than a few thousand dollars on April
27, in which event the increase in her sentence was improp-
er regardless of principles of secured-transactions law. We
are therefore constrained to vacate the sentence and remand
the case for resentencing.
No. 01-3488                                                  5

  What benefit Fearman thought she or her husband was
obtaining from preventing the sale of the building is ob-
scure, even if the building was worth something, since
EMC was owed some $47,000 and would get the building
eventually. Maybe there was rental income coming in. In
any event an intended loss is not only not an actual loss; it
is not a realistically expectable loss either. United States v.
Coffman, 94 F.3d 330, 336-37 (7th Cir. 1996). But it must exist
at least in the defendant’s mind.
                                  VACATED AND REMANDED.

A true Copy:
        Teste:

                           _____________________________
                            Clerk of the United States Court of
                              Appeals for the Seventh Circuit




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