By Ashley Adams & Chase Wortham.

The Second Circuit’s recent decision in United States v. Guldi [1] provides a stark reminder that defense attorneys need to fight the government when it seeks to apply the sophisticated means enhancement under the Federal Sentencing Guidelines. This enhancement adds two points to a defendant’s Offense Level under the Guidelines and means more prison time if upheld.  In most white collar crime cases, the government tries to claim that every alleged fraud scheme is “sophisticated.”  This, of course, is not true.  The Guldi Court agreed.  It held that a simple fraud scheme, which involved only common concealment tactics like transaction structuring and the use of cashier’s checks, did not warrant the two-level sophisticated means enhancement under U.S.S.G. § 2B1.1(b)(10)(C).  Guldi demonstrates that courts are willing and able to reject routine applications of this prosecutorial favorite—a development that could benefit white collar defendants in Arizona and beyond.

United States vs. Guldi

In March 2017, incarcerated George Guldi received a letter from Ditech Financial stating they had applied a $253,236 payment to his mortgage. Guldi, a former Suffolk County legislator and disbarred attorney with a history of fraud convictions, recognized he had never made the payment and quickly identified a chance to exploit Ditech’s error. Unknown to Guldi, the funds were settlement proceeds from a 2016 lawsuit related to his earlier insurance fraud, which Ditech had mistakenly categorized as his mortgage payment. Guldi assumed the district attorney had seized his funds and devised a simple strategy: convince Ditech he had mistakenly sent the payment and deserved a refund.

From prison, Guldi enlisted his former girlfriend Victoria Davidson, promising her $50,000 to execute the scheme. In recorded calls, he coached her to claim the payment was sent by mistake, telling her to “go with what works” and giving her broad discretion: “You can do whatever you want. This is information I’m giving you to use as you will.” Davidson forged an authorization letter and convinced Ditech representatives through false claims that she was an attorney threatening legal action over the erroneous payment.

On April 20, 2017, Ditech wired $253,236 to Davidson’s Wells Fargo account. Guldi then instructed Davidson to convert funds to cashier’s checks because “wires can be reversed” and to withdraw cash in $9,000 increments—”never take ten at a time”—to avoid federal reporting requirements. Prosecutors would later argue at sentencing that these instructions demonstrated sophisticated money laundering knowledge. Nonetheless, by the time Ditech discovered their error months later, the money had been spent, and Guldi’s recorded instructions had provided prosecutors with the evidence needed for his conviction. See Guldi at 4–10.  

The district court had applied a two-level “sophisticated means“enhancement based on Guldi’s instructions to Davidson:

1. Using cashier’s checks to move funds out of the account receiving the fraudulent wire transfer, and
2. Withdrawing funds in $9,000 increments.

On appeal, the Second Circuit struck down this enhancement, drawing a line against the routine application of what has become a go-to prosecutorial tool.

Moving Money Is Not Sophisticated

The Court held that “there is nothing sophisticated about moving money out of one’s bank account soon after receiving a fraudulently induced transfer.“  Guldi at 34. Emphasizing that even an unsophisticated fraudster knows the receiving account “is the first place anyone would look to recover the money and can easily move it.“ Id. Guldi’s suggestion to use cashier’s checks rather than withdrawing cash “does not transform this obvious move into a ruse worthy of an enhanced sentence.“ Id. The decision highlights the court’s reluctance to apply sentencing enhancements for what prosecutors routinely characterize as sophisticated conduct. But see Guldi at 39 (Park, J., concurring in part and dissenting in part) (arguing that using cashier’s checks and structuring transactions to avoid reporting requirements “is enough to constitute sophisticated means”).

Transaction Structuring is not sophisticated, either.

Perhaps most significantly, the court held that structuring transactions to avoid the $10,000 reporting threshold, “does not require any particular sophistication.“  Id.  This threshold, the court noted, “has been common knowledge for more than fifty years,“ which is why Congress made structuring a separate crime almost forty years ago. Id.

The court distinguished structuring from truly sophisticated concealment methods, noting that unlike “creating ‘fictitious entities, corporate shells, or offshore financial accounts,’ U.S.S.G. § 2B1.1 app. n.9(B), structuring does not require any particular skill, knowledge, planning, or coordination.“ Id. at 35.

The Second Circuit emphasized that “no court has ever watered down the sophisticated means enhancement to the degree that would be required to apply it to Guldi.“ Id. at 37. Guldi’s scheme was simple.  Id. at 35 n.4.

Sophisticated Means in the Ninth Circuit

United States v. Horob[2]

In United States v. Horob, the Ninth Circuit upheld a sophisticated means enhancement for an elaborate cattle fraud scheme that demonstrated the court’s willingness to apply the enhancement to multifaceted fraudulent conduct. 735 F.3d 866 (9th Cir. 2013). The defendant, a livestock buyer and cattle rancher, secured loans using “cattle he did not own” and “promised to use these loans for profitable business enterprises that did not exist.” Id. at 869. To execute and conceal his fraud, Horob employed multiple what the court characterized as sophisticated tactics: he “manipulated several people to lie for him, used several different bank accounts (including accounts of other people) to move funds around, and fabricated numerous documents.” Id. at 872. When banks attempted to verify the cattle offered as collateral, “Horob created fraudulent brand certificates and sent the bankers to feedlots in Nebraska, North Dakota, Minnesota, and Montana,” where he would have the owners lie on his behalf or simply point to cattle in the field and falsely claim ownership. Id. at 869.

The Ninth Circuit’s analysis reflects a broad application of the sophisticated means enhancement, emphasizing the complexity and coordination required for the scheme rather than requiring extraordinary technical sophistication. The court found that “Horob’s scheme was complex” because he “did more than lie to obtain a loan.” Id. at 872. Significantly, the court noted that “the complicated and fabricated paper trail made discovery of his fraud difficult,” suggesting that the enhancement applies when defendants create numerous, systematic obstacles to detection. Id. This reasoning demonstrates the Ninth Circuit’s focus on the overall complexity and coordination of fraudulent conduct, finding sophistication in the defendant’s ability to orchestrate multiple people, accounts, and false documentation across several states—an approach that contrasts with more restrictive circuits that require truly extraordinary or technical complexity before applying the enhancement.

United States v. Jennings[3]

In United States v. Jennings, the Ninth Circuit upheld a sophisticated means enhancement for a tax fraud scheme that involved creating a deceptively named bank account to conceal diverted corporate funds. The defendants operated Environmental Soil Sciences, Inc. and hired a legitimate vendor called “Eco-Logic Environmental Engineering.” Id. at 1146. To siphon money from their corporation for personal use, they opened a separate bank account named “Ecologic”—deliberately mimicking their vendor’s name so that payments into this account would appear to be legitimate business expenses to Eco-Logic Engineering. Id. The defendants deposited over $2.5 million from the corporate account into their personal “Ecologic” account, using the funds for homes, cars, and cash payments to family members while never reporting this income to the IRS. Id.

Here, the reasoning reflects a notably liberal application of the sophisticated means enhancement. The court explicitly held that “conduct need not involve highly complex schemes or exhibit exceptional brilliance” and that the enhancement “properly applies to conduct less sophisticated than the list articulated in the application note.” Id. at 1145, 1147. Rejecting the defendants’ argument that they had not used corporate shells or offshore accounts, the court emphasized that the Guidelines’ examples are “not exhaustive.” Id. at 1147. The court found sophistication in the defendants’ effort to conceal income through the deceptively named account, noting that the scheme could have been figured out “only by someone who knew that the Ecologic account was controlled by Jennings, or who knew to look at both the ESS records and the Ecologic account ownership records.” Id. at 1147-48. This approach establishes a relatively low bar for sophistication, focusing on deliberate concealment efforts rather than requiring extraordinary complexity—a standard that contrasts sharply with the Second Circuit’s more restrictive approach in Guldi.

The 2015 Amendment’s Impact

The Guldi decision also highlights the importance of the 2015 amendment to § 2B1.1(b)(10)(C), which “narrow[ed] the focus of the enhancement to the sophistication of the defendant’s personal conduct, not the scheme as a whole.“  Guldi, slip op. at 32 n.3 (citing Amendment 792). This amendment requires courts to focus on “cases in which the defendant intentionally engaged in or caused conduct constituting sophisticated means.“

The Second Circuit’s emphasis on this amendment suggests that courts should scrutinize whether the defendant’s personal conduct, rather than the overall scheme, involved sophisticated means. This focus underscores the importance of breaking down a defendant’s conduct incrementally to demonstrate how their individual actions were not complicated, even in the face of a complex overall scheme. By isolating and simplifying each component of a defendant’s conduct, practitioners can better argue against sophisticated means enhancements.

Practical Implications

Even though Guldi is not binding precedent in the Ninth Circuit, it might be worth a footnote in your next sentencing memorandum. Key takeaways include:

1. Document the Simplicity: In cases involving basic concealment methods, thoroughly document the routine nature of the defendant’s conduct and the lack of specialized knowledge required.
2. Challenge Routine Applications: The decision provides authority to challenge sophisticated means enhancements that have become routine in simple fraud cases.
3. Sentencing Preparation: Guldi reminds practitioners that Guidelines calculation errors are not automatically harmless and require careful analysis of their impact on the ultimate sentence.

As the circuits continue to grapple with the proper scope of the sophisticated means enhancement, Guldi provides a roadmap for more restrictive application that could benefit white collar defendants throughout the country, including in Arizona.

This analysis is based on the Second Circuit’s decision in United States v. Guldi and current Ninth Circuit precedent. Practitioners should consult current authority and consider case-specific factors in developing defense strategies.

This alert is for informational purposes only and does not constitute legal advice. We are not your lawyers unless we have entered into a written engagement agreement with you.

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[1] No. 23-6909-cr, 2025 WL [slip op.] (2d Cir. June 27, 2025)

[2] United States v. Horob, 735 F.3d 866, 873 (9th Cir. 2013).

[3] United States v. Jennings, 711 F.3d 1144 (9th Cir. 2013).