The White Collar Appeal: Like Beauty, “Sophisticated Means” is in the Eye of the Beholder

• Two recent decisions from the Second Circuit and the Fourth Circuit illustrate just how subjective the application of the sophisticated-means Sentencing Guidelines enhancement can be.
• In United States v. Guldi, the Second Circuit reversed a finding of sophisticated means in a case where the defendant employed “two relatively unsophisticated tactics,” while in United States v. Sanders, the Fourth Circuit affirmed such a finding based on conduct that appears hardly more sophisticated than what occurred in Guldi.
• Notwithstanding the divergent outcomes, both decisions provide fodder for defense attorneys at sentencing.  Certainly Guldi provides helpful precedent, but Sanders contains a potentially helpful nugget too:  the Fourth Circuit held that “sophisticated means” is ambiguous, thereby opening the field for creative interpretive arguments about why a defendant’s conduct does not qualify as “sophisticated.”

Background

United States v. Guldi, No. 23-6909 (2d Cir. June 27, 2025).  A former Long Island-based legislator, George Guldi was convicted of various fraud schemes in New York state court in 2011.  The schemes involved misappropriating proceeds from an insurance settlement that Guldi was supposed to use to pay back a mortgage company. After his conviction, the bank where Guldi deposited the misappropriated funds sent a portion of the money (about $250,000) to the mortgage servicer.  When Guldi got wind of this, he enlisted his girlfriend to try to “break it loose” and convince the servicer to disburse the money to Guldi.  Remarkably, somehow Guldi’s girlfriend persuaded the servicer to transfer the funds to her account.  Guldi then told her she should (1) convert the funds to bank checks so that they would not remain in her bank account and (2) conduct transactions in amounts less than $10,000, to avoid generating currency transaction reports.  Based on those two actions, the district court applied the sophisticated-means enhancement under U.S.S.G. § 2B1.1(b)(10)(C), resulting in a two-level increase in Guldi’s offense level.

United States v. Sanders, No. 23-4486 (4th Cir. July 24, 2025).  Sanders had contracts to supply teleconference equipment and support services to federal government agencies, but he was never quite able to perform. Instead of brand-new phones, he shipped used ones.  Instead of the top-tier certifications he claimed his company had, it only had basic, low-level ones.  In one services contract he obtained, he simply never showed up at all.  Eventually, after a number of his contracts were terminated for cause, Sanders formed a new company, CyCorp, to continue bidding on government contracts without the burden of the prior company’s poor, and presumably disqualifying, performance record.  But Sanders’ poor performance didn’t change.  He supplied falsified documents to persuade the government the company had the required certifications from telecom hardware providers like Polycom; he used multiple names and alternate email addresses to make it seem his company had multiple employees; and at various times, he blind-shipped equipment from non-conforming suppliers to conceal the source of the equipment and to continue the illusion of providing authorized equipment.  Relying on these facts, the district court applied the two-level sophisticated-means enhancement.

Holdings

Guldi.  The Second Circuit vacated the sentence in a divided opinion.  The majority held that this was a “garden-variety fraud” because (1) “there is nothing sophisticated about moving money out of one’s bank account soon after receiving a fraudulently induced transfer.  Even an unsophisticated fraudster knows that account is the first place anyone would look to recover the money and can easily move it,” and (2) “structuring transactions to avoid the $10,000 reporting threshold also does not require any particular sophistication.  The $10,000 reporting threshold has been common knowledge for more than fifty years.” (This note omits internal quotation marks, citations, alterations, and footnotes from citations and quotations.)  The dissent argued that tactics that, like Guldi’s, were designed “to conceal offense conduct are indicia of the sophistication of an offense” and that prior decisions had affirmed application of a sophisticated-means enhancement based on each of the grounds on which the district court had relied.

Sanders.  The Fourth Circuit reached a decision more in line with the dissent in Guldi.  Emphasizing that, even where “the individual pieces of [a] scheme” are “relatively straightforward and unsophisticated, the scheme’s ultimate sophistication [may be] revealed by the way all the steps were linked together,” the court held that, taken together, Sanders’ conduct, over a period five years, constituted sophisticated means under the Guidelines.  In reaching that decision, however, the court deemed it necessary to consider whether the phrase “sophisticated means” was “genuinely ambiguous.”  Holding that the phrase is ambiguous, the court then relied on the Guidelines commentary, which defines “sophisticated means” as “especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense.”  The court did not consult alternative sources of authority to construe the meaning of “sophisticated means.”

Key Takeaways

The results in Guldi and Sanders are difficult to reconcile.  There appears to be little differentiating the conduct in Guldi from the conduct in Sanders.  Each involved a few concededly unsophisticated maneuvers. Small-time fraudsters have been fabricating credentials and using different names for at least as long as structuring transactions has been a crime.  One possible explanation is that Sanders’ scheme occurred over multiple years and multiple contracts with multiple victims, whereas Guldi’s scheme was short-lived and discrete.  So perhaps these decisions reflect that a long con is more likely to be deemed sophisticated than is a short grift.  Regional differences may play a role too.  The Second Circuit’s comparatively heavy docket of financial cases involving complicated schemes of spoofing, interest-rate manipulation, bond indenture fraud, and the like may have an anchoring effect that makes a relatively “garden-variety fraud” like Guldi’s seem minor and unsophisticated.  Another possibility is a slight difference in the standards of review the courts applied.  In Sanders, the Fourth Circuit reviewed the district court’s application of the enhancement for clear error, holding the district court’s “finding” that Sanders employed sophisticated means was “certainly plausible.”  The Second Circuit majority, by contrast, applied clear-error review to the district court’s factual findings that Guldi encouraged the use of cashier’s checks and structuring, but it reviewed de novo the conclusion that those facts warranted the enhancement.  (The Guldi dissent, for its part, would have affirmed because “the district court’s application of the enhancement … was reasonable.”) 

Notwithstanding the outcome, Sanders may provide a bright spot for defendants. In Sanders, the Fourth Circuit held for the first time that the term “sophisticated means” is genuinely ambiguous.  This may provide defendants an opportunity to make creative interpretive arguments to explain why their conduct does not warrant the enhancement.  For example, although the Fourth Circuit adopted the definition of “sophisticated means” contained in the Guidelines commentary, that definition itself is not free from ambiguity.  What is “especially complex” or “especially intricate”?  Defense attorneys may wish to marshal additional sources of authority that can shed light on those arguably ambiguous phrases.

Defendants appealing sophisticated-means enhancements should pay close attention to the standard of review.  Even in the Fourth Circuit, where precedent states that the Court of Appeals should apply clear-error review to the question of whether a defendant’s conduct involved sophisticated means, defendants should argue for the Second Circuit majority’s bifurcated approach.  Fourth Circuit precedent also states that “any legal interpretation of the term ‘sophisticated means’” receives de-novo review, so arguably the Fourth Circuit should employ the bifurcated approach, as well.  At a minimum, defendants should preserve the issue for a potential cert petition.