United States of America v. Feroz Jalal

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued December 16, 2025
Decided December 31, 2025
Before
MICHAEL B. BRENNAN, Chief Judge
DIANE S. SYKES, Circuit Judge
REBECCA TAIBLESON, Circuit Judge
No. 25-1313
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
FEROZ JALAL,
Defendant-Appellant.
Appeal from the United States District
Court for the Northern District of
Illinois, Eastern Division.
No. 1:23-CR-00369(1)
John F. Kness,
Judge.
O R D E R
Feroz Jalal pleaded guilty to bank fraud and money laundering and was
sentenced to 62 months’ imprisonment. See 18 U.S.C. §§ 1344, 1956(a)(1)(B)(i). On
appeal, Jalal challenges his sentence, arguing that the district judge erred by
misapplying the manager role enhancement, failing to consider sentencing disparities,
and deferring to the guidelines range. Because the judge did not err in sentencing Jalal
to a below-guidelines sentence, we affirm.
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with F ED. R. APP . P. 32.1

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Background
During the COVID-19 pandemic, Jalal coordinated with several other individuals
to submit fraudulent applications for loans from the Paycheck Protection Program
(“PPP”). PPP loans were available to provide emergency financial assistance to small
businesses under the Coronavirus Aid, Relief, and Economic Security (CARES) Act of
2020, Pub. L. No. 116-136 § 1102, 134 Stat. 281, 286–94 (Mar. 27, 2020). To obtain a PPP
loan, an authorized representative for a business was required to apply to a
participating financial institution and provide information such as the number of
employees for the business and the average monthly payroll.
In March 2021, Jalal sought a PPP loan for $136,064 to support Bellezza Salon and
Spa. He represented that Bellezza employed seven people and had an average monthly
payroll of over $50,000. But in reality, Bellezza was not an operating business. Based on
his false representations, the PPP loan was approved. Jalal spent the funds for his
personal benefit.
Jalal also helped prepare and submit fraudulent applications for PPP loans for
others in exchange for a portion of the loan proceeds. For example, Jalal procured false
IRS forms for a business that he knew had been dissolved: He represented that the
business paid its employees over $700,000 in 2020 and fabricated a spreadsheet with
itemized payroll over several pay periods. Based on this information, the PPP loan was
approved. Jalal received approximately 2.5% of the loan proceeds.
Jalal recruited Nafees Usmani into the scheme to procure fraudulent PPP loans.
Usmani told Jalal he used to own a corporation but it had since been dissolved. Jalal
arranged for an associate to drive Usmani to the Illinois Secretary of State’s Office to
reinstate the corporation, instructed Usmani to open bank accounts for the corporation
and share the account information with Jalal, and directed Usmani to sign tax forms for
the corporation to be submitted with the PPP loan application. When the loan was
approved, Jalal advised Usmani to write checks from the corporation’s bank account to
his friends and family with the word “payroll” in the memo line and to give Jalal 10
blank checks from that account for Jalal’s share of the loan proceeds. Jalal received 33%
of the loan proceeds for his role in obtaining the loan, and he used some of those
proceedings to pay other individuals who had been involved in completing the loan
applications.
Jalal used others to hide his involvement in the fraudulent loan scheme. He often
asked the recipients of the fraudulent PPP funds to issue checks to others, including at

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least one individual who worked for him. Those individuals then deposited the checks
and withdrew the same amount in cash for Jalal.
In all, Jalal participated in submitting at least 11 PPP loan applications with
fraudulent information. Based on the false information in those applications,
approximately $1.644 million was improperly distributed by banks to Jalal and his
co-schemers.
Jalal was indicted by a grand jury in 2023. The superseding indictment charged
him with five counts of bank fraud in violation of 18 U.S.C. § 1344, and five counts of
money laundering in violation of 18 U.S.C. §§ 1956(a)(1)(B)(i), 1957. Jalal pleaded guilty
to one count of bank fraud and one count of money laundering.
During the sentencing hearing, the district judge heard argument on Jalal’s role
in the fraudulent scheme. The government argued that Jalal acted as a manager or a
supervisor of the scheme, which carries a three-level increase to his offense level.
See U.S.S.G. § 3B1.1(b). Jalal disagreed. The judge determined that there was sufficient
evidence that Jalal acted as a manager or supervisor. He considered that Jalal exercised
decision-making authority and recruited accomplices, two factors that determine a
person’s role in a criminal scheme. See § 3B1.1 cmt. n.4. Jalal’s instructions to Usmani,
his use of his employees to disguise and distribute the proceeds of the PPP loans, and
his “fingerprints” all over the scheme—ensuring that the fraud happened and that the
money was paid—all contributed to the judge’s finding that Jalal acted in the role of a
manager or supervisor.
The district judge calculated Jalal’s guidelines range. Based on an offense level of
27 and a criminal history category of I, Jalal’s guidelines range was 70 to 87 months’
imprisonment. During argument about the factors under 18 U.S.C. § 3553(a), Jalal
contended that a sentence below the guidelines range would avoid disparities between
Jalal’s offense and other similar offenses. He provided examples of defendants who also
committed PPP loan fraud and were sentenced to probation or sentences below his
guidelines range.
The judge considered the § 3553(a) factors in determining Jalal’s sentence. He
emphasized the vulnerable time in which the PPP loans were distributed and stated
that the need to provide punishment was a principal factor in his sentencing decision
because of the “particularly galling” offense and Jalal’s intent to obtain $2 million
“purely out of greed.” The judge also discussed the “strong deterrent message” needed
to deter not just Jalal, but also white-collar fraud in general. He explained that the

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Guidelines serve as a tool to avoid sentencing disparities because the guidelines ranges
are calculated based on data from previously imposed sentences. The judge also
considered mitigating factors. He highlighted Jalal’s attempts to start paying restitution,
40 pages of letters that were sent on Jalal’s behalf by his friends and family, and Jalal’s
ongoing health issues.
Before pronouncing the sentence, the judge asked both parties whether he had
addressed their principal arguments. Jalal raised an argument that the judge had not
discussed, and the judge briefly addressed it. Jalal then agreed that the judge had
addressed all his arguments.
Having considered both parties’ arguments, and based on the considerations
under § 3553(a), the judge sentenced Jalal to a below-guidelines sentence of 62 months’
imprisonment.
Analysis
On appeal, Jalal argues that the district judge committed three errors in deciding
Jalal’s sentence. He asserts that the judge: (1) erred in applying the manager or
supervisor offense-level increase to Jalal’s conduct; (2) failed to meaningfully consider
sentencing disparities between Jalal and other defendants who committed PPP loan
fraud; and (3) improperly relied on the guidelines range when sentencing Jalal.
Jalal first argues that the district judge should not have applied the three-level
increase based on his role as a manager or supervisor in the scheme to obtain fraudulent
PPP loans. He relies on the Application Notes to assert that the increase requires finding
that the “participants” over whom Jalal exercised authority had knowledge that they
were assisting in committing the offense. When imposing the § 3B1.1 sentencing
enhancement, Jalal also submits the district court erred in relying on the admissions in a
co-defendant’s plea agreement.
We review de novo whether the manager or supervisor increase applies, and
review for clear error the underlying factual findings made by the district judge. United
States v. Pugh, 147 F.4th 801, 808 (7th Cir. 2025). Factual findings at sentencing must be
supported only by a preponderance of the evidence, and we accord “great deference” to
those findings. Id. (citation omitted).
To begin, Jalal overemphasizes the Application Notes to § 3B1.1. Jalal insists that
because he did not exercise authority over knowing participants—people with

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knowledge of the fraud—he did not act as a manager or supervisor. But the Application
Notes list “the exercise of decision making authority” as only one factor to consider
among many, § 3B1.1 cmt. n.4, and we have explained that “none of the factors,
individually, is a prerequisite to the application of a § 3B1.1 enhancement,” United States
v. House, 883 F.3d 720, 724 (7th Cir. 2018). Moreover, we have rejected the argument that
the increase for a manager or supervisor applies only when there is an explicit finding
that the defendant exercised direct control or authority over a participant. Id. at 724–25
(affirming three-level increase for defendant who used his business as cover for
obtaining loans, was instrumental in designing the scheme, provided falsified
information to secure loans, and distributed proceeds). The manager or supervisor
inquiry is more permissive: It requires a “commonsense judgment” about Jalal’s relative
culpability in the scheme. Id. at 724 (citation omitted); see also United States v. Grigsby,
692 F.3d 778, 790 (7th Cir. 2012) (“[A] manager or supervisor should be
straightforwardly understood as simply someone who helps manage or supervise a
criminal scheme.”).
In his brief on appeal, Jalal states that he “played a central role in the operation”
to obtain fraudulent PPP loans. This certainly aligns with the evidence. Jalal admitted in
his plea agreement that he assisted in preparing and submitting fraudulent PPP loan
applications in exchange for a portion of the loan proceeds. He procured fabricated
documentation to support the fraudulent loan applications and coordinated with others
involved in the scheme to monitor the bank accounts they opened for the loan proceeds.
Jalal attempted to disguise his share of the loan proceeds by using his employees and
others to deposit checks and then withdraw the money in cash for him. The district
judge also determined that Jalal recruited Usmani to submit fraudulent PPP loans and
instructed him on how to do so. And Jalal’s contention that the judge erroneously relied
on a co-defendant’s admissions falls short. While Jalal claims the judge erred by looking
to his co-defendant’s plea agreement to find these facts, the undisputed portions of
Jalal’s own presentence investigation report support the judge’s findings.
Given Jalal’s role and conduct in the scheme to obtain fraudulent PPP loans, the
district judge did not err in applying the three-level increase. Jalal recruited Usmani,
which is an action of a manager or supervisor. See United States v. Curb, 626 F.3d 921,
925–26 (7th Cir. 2010). And he played an active role in organizing and carrying out the
scheme. Jalal’s relative culpability in the scheme supports the judge’s determination
that Jalal acted as a manager or supervisor. See House, 883 F.3d at 724–25.

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Jalal next argues that the judge did not sufficiently address his argument that his
sentence created disparities with others who committed PPP loan fraud. Jalal identified
22 other cases of PPP loan fraud to show that similar defendants often received
sentences below his guidelines range.
But Jalal waived this argument. Jalal’s challenge is procedural, not substantive,
and therefore can be waived. Cf. United States v. Bridgewater, 950 F.3d 928, 934 (7th Cir.
2020) (arguments about the substantive reasonableness of a sentence, including that the
sentence resulted in sentencing disparities, are not waived by affirming that the judge
addressed that factor). Before announcing Jalal’s sentence, the judge asked the parties if
he adequately considered their principal arguments. See United States v. Garcia-Segura,
717 F.3d 566, 569 (7th Cir. 2013). Jalal did not respond that the judge failed to consider
his argument about sentencing disparities. This waived Jalal’s argument on appeal that
the judge’s consideration of sentencing disparities was insufficient. See United States v.
Patel, 921 F.3d 663, 671 n.4 (7th Cir. 2019).
Regardless, Jalal’s argument also fails on the merits. We have explained that “the
Sentencing Guidelines are themselves an anti-disparity formula.” United States v.
Blagojevich, 854 F.3d 918, 921 (7th Cir. 2017) (citing Gall v. United States, 552 U.S. 38, 54
(2007)). Jalal’s sentence was below his guidelines range; his argument for a lower
sentence is a request for a more significant disparity in his favor. Cf. United States v.
Bartlett, 567 F.3d 901, 908 (7th Cir. 2009) (“The best way to curtail ‘unwarranted’
disparities is to follow the Guidelines, which are designed to treat similar offenses and
offenders similarly.”). He offered examples of other defendants who were convicted of
PPP loan fraud and were sentenced to below his guidelines range, but he did not
establish that those defendants had guidelines ranges similar to his. That other
defendants who committed similar offenses received sentences below Jalal’s guidelines
range does not override the Guidelines or their application to the facts of Jalal’s case.
Here, the district judge sufficiently considered Jalal’s argument about sentencing
disparities. The judge recognized the Guidelines’ role in reducing sentencing disparities
and expressed concern that the defendants in the other PPP loan fraud cases were often
sentenced to probation. The judge also emphasized the need for a strong deterrent to
white-collar fraud: “I think it’s important that sentences in cases like this, with a
seven-figure loss and with repeated bald-faced conduct to defraud the people of this
country, the people of this district, then I think a strong deterrent message needs to be
sent.” A judge must address a defendant’s arguments in mitigation, but his explanation
need not be extensive. United States v. Tounisi, 900 F.3d 982, 987 (7th Cir. 2018). The

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judge’s consideration of Jalal’s sentencing-disparity argument more than cleared that
bar. See Patel, 921 F.3d at 670–71 (“It is clear from the sentencing transcript that [the
defendant] made the disparity argument, the government had the opportunity to
respond, and the court addressed it on the record. We do not require more than that
from sentencing courts.”).
Finally, Jalal argues that the district judge improperly relied on the guidelines
range in sentencing Jalal at the expense of a case-specific assessment. But this argument
is a nonstarter. First, the judge correctly understood the role of the Guidelines in the
sentencing consideration: “[J]udges have to calculate the [Guidelines] range correctly,
and then they need to consider it seriously. But they may not presume it’s accurate. But
if they do vary from the Guidelines range, either below or above, the farther the
variance goes, the judge must provide more compelling reasons.” See United States v.
Vasquez-Abarca, 946 F.3d 990, 994 (7th Cir. 2020) (instruction for sentencing judges on
consideration of the Guidelines). And second, the judge supported his sentencing
decision with reference to many factors specific to Jalal’s case. The judge discussed
Jalal’s “particularly galling” offense and the need to deter his conduct as aggravating
factors and Jalal’s health concerns and attempts to begin restitution payments as
mitigating factors. This explanation was sufficient to justify Jalal’s below-guidelines
sentence. See United States v. Saldana-Gonzalez, 70 F.4th 981, 986 (7th Cir. 2023).
AFFIRMED

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