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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_________________________
No. 95-10325
________________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
J. D. TEDDER,
Defendant-Appellant.
____________________________________________________
Appeal from United States District Court
for the Northern District of Texas
__________________________________________________
April 15, 1996
Before LAY*, HIGGINBOTHAM and STEWART, Circuit Judges.
CARL E. STEWART, Circuit Judge:
Pursuant to a plea agreement, Tedder pled guilty to one count of fraudulent use of a social
security number, 42 U.S.C. §408(a)(7)(B), and one count of aiding and abetting, 18 U.S.C. §2 for
selling fraudulent social security numbers and counseling individuals with poor credit on how to
submit fraudulent loan applications based on the phony numbers. The district court adopted the
probation department's findings in the Presentence Report (PSR), and sentenced Tedder to a term
of thirty months, based on a potential loss of $865,643.99. Tedder appeals his sentence, contending
that the calculation should have been based on "actual" loss under U.S.S.G. §2F1.1. Finding no
error, we AFFIRM.
FACTS
Tedder was in the business of counseling people with poor credit. For a fee, Tedder provided
his clients with false social security numbers and gave them instructions on how to apply for loans
*Circuit Judge of the Eighth Circuit, sitting by designation.

using those numbers. As a result, many of Tedder's clients were able to qualify for car loans and
mortgages for which they would not otherwise have qualified. Tedder did not know whether his
clients would fulfill their contractual obligations with the lenders, though he gave them specific
instructions to pay their bills on time and not to lie to any governmental agency.
The original PSR calculated a total offense level of 11 and noted a guideline range of 12 to
18 months of imprisonment. Based on further investigation and an updated Victim Impact Statement,
an amendment to the PSR raised that offense level to 16 and a guideline range of 27-33 months. The
recommendation, as amended, was based on a "potential loss amount" of $865,643.99 in loans
applied-for. Loans were granted in the amount of $735,878.99, and the realized loss at the time of
amending the PSR was $21,681.55. Tedder disputes the 30 month sentence, arguing that the loss
should have been based on the actual loss of $21,681.55, and t hat the amended PSR calculation
significantly overstates the seriousness of his conduct because it included loans applied-for but never
approved, loans that were current, loans secured by collateral, and loans applied-for by individuals
not named in any of the counts.
DISCUSSION
The calculation of the amount of loss is a factual finding, reviewed for clear error. United
States v. Wimbish, 980 F.2d 312, 313 (5th Cir. 1992), cert. denied, __ U.S. __, 113 S. Ct. 2365, 124
L.Ed. 2d 272 (1993). However, the interpretation and application of the Guidelines is reviewed de
novo. United States v. Hill, 42 F.3d 914, 916 (5th Cir.), cert. denied __U.S. __, 116 S. Ct. 130, 113
L. Ed. 2d 790 (1995).
The sum and substance of this appeal is how U.S.S.G. §2F1.1 applies to Tedder's fraudulent
scheme. Section 2 F1.1(b)(1)(A)-(S) provides for incremental increases in the offense level
depending on the amount of loss. Comment (n.7) provides that loss is the value of the thing
unlawfully taken. Id. In a fraudulent loan application case, " the loss is the actual loss to the victim
or if the loss has not yet come about, the expected loss." Id. at comment (n.7(b)). However, "where
the intended loss is greater than the actual loss, the intended loss is to be used." Id. The next
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paragraph of the comment delineates a `ballpark' provision: "Where the loss determined above
significantly understates or overstates the seriousness of the defendant's conduct, an upward or
downward departure may be warranted." U.S.S.G. §2F1.1 comment (n.7(b)).
Tedder argues that the higher calculation based on "intended" loss is inappropriate because
he lacked the intent to defraud lenders, as evidenced by his instructions to his clients "not [to] lie to
the government and to pay their bills on time." He contends that the actual loss should have been
measured by subtracting the amounts the lending institutions can expect to recover or have recovered
from the amount of the loans not likely to be repaid at the time the offense was discovered, as
indicated in comment n.7(b)'s instructions calculating actual loss.
The amount of loss in a fraudulent loan application case is factually dependant. Where the
defendant intends to repay the loans, then actual loss, rather than intended loss, is the appropriate
basis for calculating loss under §2F1.1. United States v. Henderson, 19 F.3d 917 (5th Cir.), cert.
denied __ U.S. __, 115 S. Ct. 207, 130 L. Ed. 2d (1994). However, where the defendant does not
intend to repay, and the actual loss is less than the intended loss, only because law enforcement
official thwarted his plans, then the full intended loss is the appropriate basis for calculation. United
States v. Brown, 7 F.3d 1155, 1159 (5th Cir. 1993).
The defendant's conduct is similar to that of the defendant in facts in the case sub judice in
United States v. Hill, 42 F.3d at 919. Hill "rented" faked securities to individuals and companies
who wanted to dress-up their balance sheets. He received in rent a much smaller amount than the
face value of the securities. The securities pledged in Hill had no value and there was no evidence
presented to show that the defendant intended to repay the loans. This Court held that the "intended"
loss for Guidelines purposes was the face value of the securities, not the "actual" amount received
in rentals because the purpose of the scheme was to allow the victims to pledge the face value of the
securities as collateral for loans, or to allow them to increase the assets reflected on their balance
sheets by that amount. Hill, 42 F.3d at 919.
The purpose of Tedder's scheme was to allow his clients to fraudulently obtain loans to the
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full extent of the amounts requested in the loan applications. Tedder's clients were therefore at risk
to jeopardize their financial st ability to the full amount of the loan requested. Tedder's and Hill's
schemes put the clients, as well as the loan institutions, in precarious financial situations.
Furthermore, both schemes enabled the defendants' clients to cheat loan institutions, and one of
Tedder's clients also cheated an innocent victim of his good credit standing. Like Hill, Tedder sold
his expertise, his research, and his fraudulent product specifically for the purpose of enabling his
clients to obtain fraudulent loans. Although the banks had received repayment on some of the loans,
there is no evidence that the defendant had any control over any such repayment and therefore, as in
Hill "he could not have intended to replace them... if it became necessary." Because Tedder had no
control over repayment of the loans, his argument that he intended the loan to be paid is unpersuasive.
Thus, we find that the intended, rather than the actual amount of the loss is the appropriate measure
for guidelines purposes.
At sentencing, the lower court adopted the facts as detailed in the amended PSR, and Tedder
offered no rebuttal evidence to refute any of the Victim's Impact Statement's findings upon which
the calculation of the offense level was based. A court is justified in relying on information provided
in a PSR where it has an adequate evidentiary basis. United States v. Mir., 919 F.2d 940, 943 (5th
Cir. 1990). The trial court found it a reasonable inference from the information given that a very
large percentage, if not one hundred percent, of the amount lent either had or would at some point
go into default, and that it was problematic that there would be any substantial recovery. Thus, the
trial court implicitly found that the seriousness of Tedder's crime justified the calculation of the loss
based upon the total of the loan amounts applied for. Finding no error of fact or law, the sentence
as imposed by the lower court is AFFIRMED.
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