USA v. FORD

i
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
UNITED STATES OF AMERICA,
v.
HENRY FORD,
Defendant.
CRIMINAL ACTION
NO. 23-130
OPINION
Slomsky, J. 	January 5, 2026
TABLE OF CONTENTS
I. 	INTRODUCTION............................................................................................................. 1
II. 	BACKGROUND ............................................................................................................... 1
A. The Corporations............................................................................................................... 2
B. The Scheme ....................................................................................................................... 3
C. Investigation by the U.S. Securities and Exchange Commission (the “SEC”) ................. 5
D. The Present Criminal Case ................................................................................................ 7
i. Fraud Loss Calculation in the Presentence Report ......................................................... 7
III. 	ANALYSIS ....................................................................................................................... 10
A. “Loss” as Described in the United States Sentencing Guidelines and
United States v. Banks ......................................................................................................11
i. 	2018 United States Sentencing Guidelines Manual ......................................................11
ii. 	Third Circuit Court of Appeals Decision United States v. Banks ............................... 12
iii. 2024 United States Sentencing Guidelines Manual .................................................... 14
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B. The 2018 Guidelines Manual Will Be Used at Sentencing, and “Actual Loss” to the
Victims Does Not Include the Money Returned by the SEC .......................................... 16
C. 	Defendant is Not Entitled to Credit for Any Alleged “Legitimate Business Expenses”
Incurred by Fallcatcher Inc………………………………………………………... ..... 21
IV. 	CONCLUSION ............................................................................................................... 23
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I. 	INTRODUCTION
On March 23, 2023, a grand jury indicted Defendant Henry Ford, a/k/a “Cleothus Lefty
Jackson,” charging him with one count of securities fraud and aiding and abetting, in violation of
15 U.S.C. § 78j(b), 78ff, 17 C.F.R. § 240.10b-5 and 18 U.S.C. § 2 [Count One], and with seven
counts of wire fraud, in violation of 18 U.S.C. § 1343 [Counts Two to Eight]. Defendant has
entered guilty pleas to committing these offenses. The charges stem from a scheme in which
Defendant defrauded sixty-one (61) victims out of $4,964,775.79 through a series of deceptive
representations and tactics involving the alleged sale of securities. After an investigation
conducted by United Stated Securities & Exchange Commission (the “SEC”), the SEC recovered
$2,869,295.41, which was returned to the victims, leaving a balance of $2,095,480.38 still owed
to the victims as restitution. Sentencing is the next step in this case.
The key inquiries now are, first, whether the money recovered by the SEC and returned
to the victims should be deducted from the calculation of loss under § 2B1.1 of the United States
Sentencing Commission Guidelines in light of the Third Circuit Court of Appeals decision in
United States v. Banks, 55 F.4th 246 (3d Cir. 2022). In Banks, the court held that the word
“loss” means the loss or harm the victims actually suffered. For the reasons discussed below, the
answer to this first inquiry is yes. The second inquiry is whether the balance of the money not
returned to the victims should be deducted from the calculation of loss under § 2B1.1 of the
Guidelines because this money was allegedly used for “legitimate business purposes” to enhance
the mission of the corporation. The answer to the second inquiry is no.
II. 	BACKGROUND
The following facts are agreed to by Defendant and support the charges in the Indictment.
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A. 	The Corporations
Defendant Henry Ford (“Defendant”) founded and operated several businesses using the
name “Fallcatcher.” (PSR ¶12.) Fallcatcher’s business was to develop and market an electronic
system that was designed to track the use of medication by addiction recovery patients in order to
prevent medical billing fraud on insurers and government agencies. (Id.)
In March 2017, Defendant first incorporated an entity named Fallcatcher, Inc. in Florida
to facilitate the design of the Fallcatcher system and to hold any patents for Fallcatcher design
concepts. (Id. at ¶12.) He used this entity to develop the Fallcatcher system and to raise funds.
(Id. at ¶13.) By the Spring of 2018, the Florida entity began to run out of money. (Id. at ¶14.)
Needing additional funding for the development of the Fallcatcher system, Defendant
incorporated, in May 2018, a Delaware entity with an almost identical name: Fallcatcher Inc.
(Id. at ¶14.) Shortly thereafter, in August 2018, a related entity was formed in Delaware named
Fallcatcher IP Holdings Co., Inc. (Id. at ¶15.) The purpose of this entity was to hold any patents
or intellectual property related to the Fallcatcher system and to license them to Fallcatcher Inc.,
the other Delaware entity. (Id.)
According to facts agreed to by Defendant, he operated and controlled each of these
Fallcatcher entities and held various titles, including President, Vice President, Chief Information
Officer, Chief Product Founder, and Chairman of the Board. (Id. at ¶16.) At the initial
sentencing hearing held on October 29, 2025, Defendant also described himself as the “Chief
Technical Officer” and maintained that his companies were legitimate enterprises and operated
by an independent Chief Executive Officer (“CEO”) and other businesspeople who believed in
the system. (See TR 32 ¶¶21–25; 33 ¶¶1–14.) The money raised by Defendant through
fraudulent representations and not returned to the victims was apparently spent by an elected
Board and the CEO to promote the business and hire employees. (See TR 36 ¶¶8–25; 37 ¶¶1–
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22; 38 ¶¶9–13.) A detailed Private Placement Memorandum dated August 27, 2018 for
Fallcatcher Inc., offering to sell shares in the company, was prepared and released to lure
investors to buy stock in the company.
B. 	The Scheme
As noted, Defendant needed to raise additional capital for the development of the
Fallcatcher system after Fallcatcher, Inc, the Florida entity, had begun to run out of money. (PSR
¶14.) In May 2018, in order to raise the additional funding, Defendant sought the assistance of
an acquaintance, described as Person 1, to aid in fundraising for Fallcatcher. (PSR ¶18.) Person
1 had a company in the Eastern District of Pennsylvania that provided information regarding
investment products to a network of investors. (Id. at n.2.)
During their initial communications, Defendant provided Person 1 with descriptions of
the Fallcatcher system and false and misleading information about its development and
marketing. (Id.) For example, on May 27, 2018, Defendant sent to Person 1:
• 	An email falsely stating that Fallcatcher was “offering 27,500,000 shares of Non-
Voting Class Common Stock at a price of [$].275 per share.” (Id.) In the same
email, Defendant also falsely stated that the Fallcatcher system had “the support
of the Local and Federal Government for development.” (Id.)
• 	An email, referenced in Count Two, falsely stating that Fallcatcher had letters of
interest (“LOI”) from various insurance companies and healthcare providers to
conduct pilot programs with the Fallcatcher system. (PSR ¶19.) Defendant
attached to that email what purported to be a letter of interest (LOI) from the
investment subsidiary of a major insurance company (“Company 1”). (Id.)
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Similarly, on June 13, 2018, Person 1 requested that Defendant reply to an email request
from a potential investor so that Person 1 “could forward” Defendant’s response to the
prospective investor. (PSR ¶20.) Later that day, Defendant responded by email, falsely
representing that Fallcatcher had “pilot approvals in writing” with Company 1 and with two
other large insurance companies and that several states “want the [Fallcatcher] technology”
[Count Five]. (Id.) In reality, Fallcatcher did not have any pilot programs with insurance
companies and the LOI was not a legitimate document. (Id. n.3.) Defendant’s statements that he
had state, local, and federal government support were also untrue. While Fallcatcher engaged a
lobbyist (J.K.) in early 2018, whose firm identified state grants that Fallcatcher could apply for,
J.K.’s firm stopped working for Fallcatcher by June 2018 after Defendant stopped paying the
firm. (Id. n.4.)
Based on the false information provided by Defendant, Person 1 agreed to provide
information regarding Fallcatcher to his investor network. (PSR ¶21.) Over the next several
months, Person 1 did so through email and in-person presentations. (Id.) For example, on June
5, 2018, Person 1 forwarded the May 27, 2018 email described above to his investor network and
invited them to attend in-person presentations by Defendant on June 19, 20, and 21, 2018, in
Pennsylvania and New Jersey [Count 3]. (Id.) On June 7, 2018, Person 1 sent a similar email to
his investor network [Count 5]. (Id.)
On June 20, 2018, Defendant gave a presentation, which was recorded, where he
displayed the Company 1 LOI, claiming that he had nine offers for pilots on the Fallcatcher
system between major insurance companies and local government agencies. Defendant also
falsely represented that J.K. had discussions with several state governments to begin pilot
programs with Fallcatcher’s technology. (PSR ¶22.) Over the next several weeks, Person 1
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emailed the recording of the presentation to prospective investors. (See id. at ¶23.) Between
June 27, 2018 and July 5, 2018, Person 1 sent emails to potential investors with a link to the
videotaped presentation. (Id. ¶23.)
On August 22, 2018, Defendant emailed potential investors and stated, “We are ready to
start taking investor dollars!” (PSR ¶24.) And on August 27, 2018, Fallcatcher finalized the
“Confidential Private Placement Offering Memorandum” (PPM) describing Fallcatcher and its
system, and offering for sale twenty (20) million shares of Fallcatcher at a price of $.50 per
share. (Id.) After the time opened in which to buy shares in accordance with the PPM,
Defendant continued to make false representations about Fallcatcher through email and phone
communications with prospective investors. (Id.) 	Specifically, on September 9, 2018,
Defendant emailed potential investors and falsely stated that Fallcatcher would “be moving
forward with [Company 1] and the local State Government in Florida” [Count 8]. (Id.)
Consequently, approximately sixty-one (61) investor victims invested $4,964,775.79 in
Fallcatcher, in return for shares of Fallcatcher’s common stock at a price of $.50 per share. (PSR
¶25.) These investments constituted the purchase of securities. (Id.) And although Defendant
did not have access to the investment proceeds located in Fallcatcher bank accounts, bank
records reflect that Defendant and his wife received approximately $493,000 in payments from
Fallcatcher after the proceeds were in the accounts. (Id.)
C. 	Investigation by the U.S. Securities and Exchange Commission (the “SEC”)
After the SEC1 initiated an investigation into Fallcatcher, Defendant continued to
promote and conceal his fraudulent scheme. (PSR ¶27.) The investigation essentially began on
1 	The SEC is an independent agency of the United States authorized to protect investors by
regulating and monitoring the purchase and sale of securities. (PSR ¶26.) Federal securities
law prohibit fraud in connection with the purchase and sale of securities, including making false
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November 20, 2018, when the SEC served a subpoena upon Fallcatcher Inc., seeking records,
including records regarding Company 1, other insurance companies, and Fallcatcher investors.
(Id.)
In February 2019, the SEC subpoenaed Defendant to give a deposition. Defendant
appeared and gave false testimony during the deposition, in which he claimed, among other
things, that he had received the LOI for Company 1 from a consultant he hired (D.V.V.) and that
the consultant had since died. (Id. at ¶28.) In March 2019, Defendant gave the SEC an email
that purported to show that the LOI from Company 1 was legitimate and had been sent to his
Gmail account on January 24, 2018 from an account used by D.V.V. (Id. at ¶29.) The email,
however, was fraudulent in a number of ways, including:
• 	The Gmail account used to send the email did not exist;
• 	The Gmail account resembled the legitimate email account of D.V.V.;
• 	The investigators executed a search warrant on Defendant’s Gmail account in
June 2019, and the January 24, 2018 email was not found.
• 	Defendant and D.V.V. had discussed Fallcatcher, but email and phone records
show that these discussions began in March 2018;
• 	The January 24, 2018 email concluded with the salutation “Thanks H.”
However, D.D.V., who died in May 2018, did not go by “H,” and the email does
not have the distinctive formatting used by D.D.V.
(Id. at ¶30, n.7.)
statements of material fact or omitting a material fact in the information provided to investors.
(Id.)
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Defendant did not stop his obfuscatory ways there. In April 2019, Fallcatcher’s Board of
Directors, including Defendant, signed a Board Resolution requiring Fallcatcher to provide three
(3) business days’ notice to SEC counsel before disbursing any funds raised from investors to
prevent the unauthorized spending of investor funds. (PSR ¶31.) But, on April 29, 2019,
Defendant caused Fallcatcher to transfer approximately $233,000 to himself, without providing
the agreed-upon notice to SEC counsel. (Id.) On May 22, 2019, in response to the authorized
transfer, the SEC filed a complaint against Defendant and Fallcatcher in the Eastern District of
Pennsylvania.2 (Id. at ¶32.) Simultaneously, the SEC was granted a temporary restraining order
to prevent Defendant and Fallcatcher from making any further transfers, among other things.
(Id.) On June 18, 2019, a preliminary injunction in favor of the SEC was entered. On February
26, 2020, the Court entered a final order finding Defendant personally liable for $1,901,643.66
and Fallcatcher liable for $2,295,320.87 in disgorgement. (Id. at ¶36.)
D. 	The Present Criminal Case
In the instant criminal case, as noted above, a grand jury returned an eight-count
Indictment against Defendant. On May 13, 2025, Defendant pled guilty to all charges in the
Indictment, pursuant to a written plea agreement. (PSR ¶2.) The parties agreed, pursuant to
Federal Rules of Criminal Procedure 11(c)(1)(C), that a sentence of imprisonment between forty-
six (46) and seventy-eight (78) months is the appropriate disposition of this case. (Id. at ¶4.)
i. 	Fraud Loss Calculation in the Presentence Report
The Government and Defendant dispute how to calculate the “loss” attributable to
Defendant as that word is used in the Sentencing Guidelines Manual. Section 2B1.1 of the
2 	The case is titled: Securities & Exchange Commission v. Henry Ford f/k/a Cleothus Lefty
Jackson and Fallcatcher, Inc., 2020 WL 1074424 (E.D. Pa. Jan. 30, 2020). The complaint
alleged that between August and September 2018, the defendants violated federal securities
law.
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Sentencing Guidelines is the pertinent provision on “loss” that applies to Defendant’s fraud
offenses. This Section initially sets Defendant’s base offense level at seven (7). See U.S.S.G.
§2B1.1(a)(1) (noting that base offense level of seven (7) applies if the defendant was convicted
of an offense that has a statutory maximum term of imprisonment of 20 or more years).
Defendant does not dispute the base offense level of seven (7). Subsection 2B1.1(b)(1) next lists
enhancements to the base offense level that are dependent upon the amount of the loss.
Specifically, that subsection reads in part:
(b) Specific Offense Characteristics
(1) If the loss exceeded $6,500, increase the offense level as follows:
Loss (Apply the Greatest) 	Increase in Level
(A) $6,500 or less 	no increase
(B) More than $6,500 	add 2
(C) More than $15,000 	add 6
… 	…
(I) More than $1,500,000 	add 16
(J) More than $3,500,000 	add 18
(K) More than $9,500,000 	add 20
In the Presentence Report (“PSR”), the Probation Officer set the applicable fraud
loss at $4,964,775.79. (PSR ¶48.) Since the loss exceeded $3,500,000, but was less than
$9,500,000,” eighteen (18) offense levels were added. (Id.); U.S.S.G. § 2B1.1(b)(1)(J).
More precisely, the calculation of Defendant’s total offense level as set forth in the
Presentence Report reads as follows:
47. 	Base Offense Level: The guideline for a violation of
18 U.S.C. § 1343 is USSG §2B1.1. Since the offenses of conviction
have a statutory maximum term of imprisonment of 20 years,
the base offense level is seven. USSG § 2B1.1(a)(1). 	7
48. 	Specific Offense Characteristics: The defendant defrauded the victims
out of $4,964,775.79. Since the loss exceeded $3,500,000, but was less
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than $9,500,000, [eighteen (18) levels are added].
USSG § 2B1.1(b)(1)(J). 	+18
49. 	Specific Offense Characteristics: The defendant’s fraudulent
conduct involved 61 victims. Since the offense involved ten or
more victims, two levels are added. USSG § 2B1.1(b)(2)(A)(i). 	+2
***
52. 	Adjustment for Obstruction of Justice: Since the defendant
willfully obstructed or impeded, or attempted to obstruct or impede,
the administration of justice with respect to the investigation,
prosecution, or sentencing of the instant offense of conviction, and
the obstructive conduct related to the defendant’s offense of
conviction or any relevant conduct; or a closely related offense;
therefore, two levels are added. USSG § 3C1.1. 	+2
53. 	Adjusted Offense Level (Subtotal): 	29
***
55. 	Acceptance of Responsibility: The defendant has clearly
demonstrated acceptance of responsibility for the offense.
Accordingly, the offense level is decreased by two levels.
USSG § 3E1.1(a). 	-2
56. 	Acceptance of Responsibility: The defendant has assisted the
authorities in the investigation or prosecution of the defendant’s
own misconduct by timely notifying authorities of the intention
to enter a plea of guilty. Accordingly, the offense level is decreased
by one additional level. 	-1
57. 	Total Offense Level: 	263
(PSR ¶¶47–57.) Based on an Offense Level of 26 and Defendant being in Criminal
History Category II, the Probation Officer set the applicable guideline range at seventy-
two (72) to eighty-seven (87) months.
3 	Defendant does not object to the two enhancements described in paragraphs 49 and 52 of the
Presentence Report.
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On October 29, 2025, the Court began the sentencing hearing. At the hearing and in his
Sentencing Memorandum (Doc. No. 84 ), Defendant Ford objected to the loss amount used in
Paragraph 48 and argued that no loss should be attributable to him under § 2B1.1 because: (1)
the SEC returned approximately $2,869,295.41 to the investor victims, which amount should be
deducted from the total amount of $4,964,775.79 raised by the fraud scheme; and (2) the
remainder of the investment funds totaling $2,095,480.38 were used for “legitimate business
expenses,” and, for this reason, also should not be included in the total “loss” amount. The
Government disagreed with both objections to the calculation of loss by Defendant. After oral
argument by counsel at the October 29, 2025 sentencing hearing on the correct calculation of
loss in this case, the Court allowed the parties to submit supplemental briefing on this issue,
which the parties timely filed. (See Doc. Nos. 83, 84.)
For the following reasons, the Court finds that under § 2B1.1 of the Sentencing
Guidelines: (1) the money returned to the victims by the SEC is not included in the amount of
“actual loss”; and (2) the remainder of investment funds apparently used for “legitimate business
expenses” are not excluded from “actual loss.”4
III. 	ANALYSIS
As noted above, Defendant Ford has two objections to the Probation Officer’s calculation of
loss in the Presentence Report. In calculating “loss,” the Probation Officer used the 2024
Sentencing Guidelines Manual because the Presentence Report is dated October 25, 2025 and
that Manual was in effect on the date of sentencing, which started on October 29, 2025. But
before addressing Defendant’s two objections to the loss calculation by the Probation Officer, a
4 	As noted, infra, the Court will use the 2018 edition of the United States Sentencing Guidelines
Manual in this case.
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discussion of the changes to the calculation of “loss” in the Sentencing Guidelines is necessary to
place the two objections in proper context.
A. “Loss” as Described in the United States Sentencing Guidelines and
United States v. Banks
i. 	2018 United States Sentencing Guidelines Manual
The relevant story on “loss” under § 2B1.1 of the Sentencing Guidelines begins with the
2018 Guidelines Manual because that is the Manual that was in effect at the time of Defendant’s
offense conduct, which occurred in 2018 and 2019. In this Manual, the Guideline and a pertinent
Commentary to the Guideline reads as follows:
§2B1.1. 	Larceny, Embezzlement, and Other Forms of Theft; Offenses
Involving Stolen Property; Property Damage or Destruction; Fraud
and Deceit; Forgery; Offenses Involving Altered or Counterfeit
Instruments Other than Counterfeit Bearer Obligations of the United
States.
(a) Base Offense Level:
(1) 	7, if (A) the defendant was convicted of an offense referenced to
this guideline; and (B) that offense of conviction has a statutory
maximum term of imprisonment of 20 years or more.
(2) 	6, otherwise.
(b) Specific Offense Characteristics
(1) If the loss exceeded $6,500, increase the offense level as follows:
***
U.S.S.G. §2B1.1(a)–(b). [The Offense Level for the ranges of the financial loss is set forth
above.]
Most importantly, in the 2018 Manual, loss was not defined in the § 2B1.1 Guideline text
itself. Instead, it was defined in the Guidelines’ Commentary, in Application Note 3. “Loss” was
defined as follows:
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3. 	Loss Under Subsection (b)(1).—This application note applies to the
determination of loss under subsection (b)(1).
(A) 	General Rule.—Subject to the exclusions in subdivision (D), loss
is the greater of actual loss or intended loss.
(i) 	Actual Loss.—“Actual loss” means the reasonably
foreseeable pecuniary harm that resulted from the offense.
(ii) 	“Intended Loss.—“Intended loss” (I) means the pecuniary
harm that the defendant purposely sought to inflict; (II)
included intended pecuniary harm that would have been
impossible or unlikely to occur (e.g., as in a government
sting operation, or an insurance fraud in which the claim
exceeded the insured value).
***
U.S.S.G. § 2B1.1, Note (3)(A)(i)–(ii). Additionally, the Commentary included another section
that permitted credits against loss. See U.S.S.G. § 2B1.1, Note (3)(E). Specifically, Note
(3)(E)(i) provided:
(E) Credits Against Loss.—Loss shall be reduced by the following:
(i) 	The money returned, and the fair market value of the property
returned and the services rendered, by the defendant or other
persons acting jointly with the defendant, to the victim before the
offense was detected. The time of detection of the offense is the
earlier of (I) the time the offense was discovered by a victim or
government; or (II) the time the defendant knew or reasonably
should have known that the offense was detected or about to be
detected by a victim or government agency.
U.S.S.G. § 2B1.1, Note (3)(E)(i).
ii. 	Third Circuit Court of Appeals Decision United States v. Banks
The next event on “loss” relevant here occurred on November 30, 2022, when the Third
Circuit Court of Appeals decided United States v. Banks. 55 F.4th 246 (3d Cir. 2022). In that
seminal decision, the court addressed the proper application of the Sentencing Guidelines’ loss
enhancement in a wire fraud case, holding that the Sentencing Guidelines’ enhancement based on
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“intended loss,” as described in the Guidelines’ Commentary, improperly expanded the statutory
term “loss,” as used in the guideline itself, which covered only “actual loss.” Consequently,
“intended loss” was no longer included in the term “loss” in §2B1.1. Banks, 55 F.4th at 250.
In Banks, the defendant had been convicted by a jury on multiple counts of wire fraud for a
scheme in which he made fraudulent electronic deposits into accounts at Gain Capital Group, a
financial institution, from accounts with insufficient funds. Id. at 251. Although the defendant
attempted to withdraw approximately $264,000 from those accounts, Gain Capital intercepted
every transaction before funds left its control, resulting in no actual loss to the bank. Id.
At sentencing, the District Court held that Section 2B1.1(b)(1)(G) of the Sentencing
Guidelines, which provides for enhanced offense levels based on the amount of “loss,” included
not just “actual loss”, but also “intended loss.” Id. at 253. This decision resulted in a twelve (12)
level increase in Defendant’s offense level, which significantly increased his advisory sentencing
guideline range. Id.
On appeal, the Third Circuit rejected the use of “intended loss” for purposes of the § 2B1.1
loss enhancement when the actual loss is zero, holding that the guidelines’ commentary
impermissibly broadened the plain meaning of “loss” in the guideline itself and could not be
used to justify the enhancement where the victim suffered no actual financial harm.
In reaching its decision, the Court in Banks relied heavily on the United States Supreme
Court’s decision in Kisor v. Wilkie, to determine whether it was required to defer to the
Sentencing Guidelines’ Commentary defining “loss” as including “intended loss.” 588 U.S. 558
(2019). Specifically, the Court emphasized:
A court must exhaust all the ‘traditional tools’ of construction, and determine that
a regulation is ‘genuinely ambiguous.’ Under Kisor, then, a court must consider
the ‘text, structure, history, and purpose of a regulation, in all the ways it would if
it had no agency to fall back on.’
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Id. at 255–56 (citations omitted).
After careful analysis by the Third Circuit, in which it examined the ordinary meaning of
the word “loss” by consulting several dictionary definitions, it found that “loss” in §2B1.1
unambiguously refers to actual pecuniary harm. Further, the Court determined that “in the
context of a sentence enhancement for basic economic offenses, the ordinary meaning of the
word ‘loss’ is the loss the victim actually suffered.” Id. at 258. Therefore, the Court concluded
that the Commentary, by including “intended loss,” improperly expanded the definition of “loss”
and, thus, “accord[ed] the [C]ommentary no weight.” Id. at 256–58. This reasoning was central
to the court’s decision to vacate Defendant Banks’s sentence and remand for resentencing
without applying the loss enhancement for “intended loss.”
iii. 	2024 United States Sentencing Guidelines Manual
In view of Banks and the disagreement with its holding by other courts, the United States
Sentencing Commission proposed amendments to the Sentencing Guidelines and, effective
November 1, 2024, moved “intended loss” to the definition of loss in the Guideline text itself.
The Guideline under § 2B1.1 now reads as follows:
§ 2B1.1. 	Larceny, Embezzlement, and Other Forms of Theft; Offenses
Involving Stolen Property; Property Damage or Destruction; Fraud
and Deceit; Forgery; Offenses Involving Altered or Counterfeit
Instruments Other than Counterfeit Bearer Obligations of the United
States.
(a) Base Offense Level:
(1) 	7, if (A) the defendant was convicted of an offense referenced to
this guideline; and (B) that offense of conviction has a statutory
maximum term of imprisonment of 20 years or more.
(2) 	6, otherwise.
(b) Specific Offense Characteristics:
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(1) If the loss exceeded $6,500, increase the offense level as follows:
U.S.S.G. § 2B1.1(a)–(b). [The Offense Level for the ranges of financial loss is set forth
above.]
***
*Notes to Table:
(A) 	Loss.—Loss is the greater of actual loss or intended loss.
(B) 	Gain.— The Court shall use the gain that resulted from the offense as
an alternative measure of loss only if there is loss but it reasonably cannot
be determined.
(C) For purposes of this guideline—
(i) 	“Actual loss” means the reasonably foreseeable pecuniary
harm that resulted from the offense.
(ii) 	“Intended loss” (I) means the pecuniary harm that the
defendant purposely sought to inflict; (II) included intended
pecuniary harm that would have been impossible or
unlikely to occur (e.g., as in a government sting operation,
or an insurance fraud in which the claim exceeded the
insured value).
***
U.S.S.G. § 2B1.1(b)(1)(A)–(C)(ii) (2024 Guidelines Manual). Additionally, the Commentary
still contains the section identical to the one in the 2018 Manual that permits credits against loss
in certain circumstances. § 2B1.1, Note (3)(D) provides:
(D) Credits Against Loss.—Loss shall be reduced by the following:
(i) 	The money returned, and the fair market value of the property
returned and the services rendered, by the defendant or other
persons acting jointly with the defendant, to the victim before the
offense was detected. The time of detection of the offense is the
earlier of (I) the time the offense was discovered by a victim or
government; or (II) the time the defendant knew or reasonably
should have known that the offense was detected or about to be
detected by a victim or government agency.
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U.S.S.G. § 2B1.1, Note (3)(D)(i) (2024 Guidelines Manual).5
B. The 2018 Guidelines Manual Will Be Used at Sentencing, and “Actual Loss” to the
Victims Does Not Include the Money Returned by the SEC
First, in view of the holding in Banks, Defendant argues that the $2,869,295.41 returned to
the investor victims by the SEC should not be included in the total loss calculation under §2B1.1
because to do so improperly expands the amount of actual loss under this Section. Defendant
also argus that the 2018 Guidelines Manual must be used at his sentencing or else the Ex Post
Facto clause, would be violated. 6 The Court agrees with Defendant on both arguments.
As an initial matter, unlike the use of the 2024 Guidelines Manual used by the Probation
Officer, the Court must use at sentencing the 2018 Guidelines Manual because use of the 2024
Guidelines Manual would violate the Ex Post Facto Clause.7 An Ex Post Facto violation arises
when a defendant is sentenced under a Guidelines Manual that would result in a higher
sentencing range than the Guidelines Manual in place at the time of the offense. See Peugh v.
United States, 569 U.S. 530, 533 (2013). The use of the 2018 Guidelines Manual is required for
the following reasons.
This Court is bound by the Third Circuit’s 2022 decision in Banks, which makes clear that
“loss” does not include “intended loss” as described in the Commentary, because “intended loss”
5 	In the 2018 Guidelines Manual, the provision for “Credits Against Loss” is set forth in §2E1.1.
In the 2024 Guidelines Manual, this provision has been moved to § 2D1.1.
6 	U.S. Const. Article I, § 9.
7 	Generally, as noted above, courts are required to use the Guidelines Manual in effect on the date
that a defendant is sentenced. U.S.S.G. §1B1.11(a). However, “[i]f the court determines that
use of the Guidelines Manual in effect on the date that the defendant is sentenced would violate
the Ex Post Facto clause of the United States Constitution, the court shall use the Guidelines
Manual in effect on the date that the offense of conviction was committed.” U.S.S.G. §
1B1.11(b)(1).
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expands the definition of “loss” as used in § 2B1.1. See Banks, 55 F.4th at 258. The Banks
holding has broad implications and would apply to any change in the definition of “loss” that
would expand its definition beyond actual loss to the victims. In this regard, “loss” means
“actual loss” – the financial harm suffered by the victims. Similar to the financial institution in
Banks, which intercepted every transaction before funds left its control, here, the SEC was able
to retrieve and return a large portion of the funds paid by the investor victims. As a result, the
victims did not actually lose the returned funds.
The Government argues that because Defendant’s misrepresentations successfully resulted in
investors transferring approximately $4.9 million to Fallcatcher Inc., Defendant caused “actual
loss” in that amount once the funds were out of the victims’ possession. (Doc. No. 83 at 5–6.)
However, the Court cannot ignore the fact that a portion of the investor’s money—even though,
and as emphasized by the Government, was out of their possession for an approximate thirty (30)
month period—was in fact returned. At most, Defendant intended to cause that loss. But, as
explained above, Banks controls and would preclude reliance on “intended loss” for conduct
occurring before the November 1, 2024 amendments to § 2B1.1. If the Court were to include
“intended loss,” as permitted under § 2B1.1 of the 2024 Guidelines Manual, Defendant Ford
would face a higher sentencing range, which would violate the Ex Post Facto Clause.
Next, the Government argues that the Guidelines’ Commentary, Note 3(E)(i) (2018
Guidelines Manual) 8, and even the Guidelines’ Commentary, Note 3(D)(i) (2024 Guidelines
Manual), supports its argument that Defendant Ford should not receive “credit” for money
8 	Unlike “intended loss,” which was moved after Banks to the text of § 2B1.1, Commentary Note
(3)(E)(i) was not moved to the text of § 2B1.1, and, as of November 1, 2024, is still in the
Commentary.
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returned to the investor victims by the SEC because that provision only allows a defendant to
receive credit for money refunded if he, or other persons acting jointly with him, did so before
the scheme was detected or about to be detected by a victim or government agency. (See Doc.
No. 83 at 11–13.) Because the $2,869,295.41 was not returned to the investor victims by
Defendant Ford or those acting jointly with him, but was returned by the SEC through money it
recovered, the Government asserts that no credit should be applied. See Banks, 55 F.4th at 258.
However, this Commentary does not help the Government for a very simple reason:
application of Notes 3(E)(i) and 3(D)(i) improperly expand the definition of “loss.” The holding
in Banks, as noted above, prevents a court, when “loss” is an issue, from using the Commentary
if it would expand the definition of loss beyond its plain definition, which is the loss the victim
actually suffered. See Banks, 55 F.4th at 258. In that situation, the Commentary has no weight.
See id.; see also United States v. Fecondo, No. 22-cr-00011, 2023 U.S. Dist. LEXIS 203320
(E.D. Pa. Nov. 14, 2023) (“…the Sentencing Commission’s interpretation of the Guidelines, as
set forth in the Commentary, is entitled to deference so long as it does not improperly expand the
Guideline and remains within the outer bounds of permissible interpretation.”) (citing United
States v. Mercado, 81 F.4th 352, 359 (3d Cir. 2023)).
In this regard, an ambiguity is created by the Government’s argument. Since “loss” as used
up until November 1, 2024 only included “actual loss,” by arguing that the money returned by
the SEC to the victims should be included in “actual loss,” the Government is changing the
definition of “loss.” No loss occurred because the money was returned. The same is true by
noting that the victims did not have access to the money returned by the SEC for thirty (30)
months. Putting a temporal component on the definition of loss also changes the meaning of the
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“loss” as defined in Banks and creates an ambiguity. After Banks and until November 1, 2024,
“loss” is “actual loss” – nothing more and nothing less. And that is what should occur here.9
Furthermore, it should be noted that the Commentary in Notes (3)(E)(i) and 3(D)(i), when
applied, also amends the definition of “actual loss” by putting a condition or temporal
component on it by eliminating from actual loss the money returned “by the defendant or other
persons acting jointly with the defendant, to the victim before the offense was detected.”
U.S.S.G. § 2B1.1, Note (3)(E)(i). However, while this note or regulation has a noble purpose—
to encourage fraudsters or thieves to return the proceeds of their fraud or theft at the earliest
possible time before being caught, and not to reward them for returning proceeds after the
offense was detected—it expands the definition of “loss.” 10 This condition or temporal
9 	Again, Banks dealt with “intended loss,” and because “intended loss” was defined in the
Commentary rather than in the Guidelines’ text, the Third Circuit held that the definition of
“intended loss” is afforded no weight. As explained, supra, the holding in Banks would also
apply to other Commentary that would expand the definition of “loss.”
10 More specifically, § 2B1.1, Note 3(E)(i) was adopted on November 1, 2001, in Amendment 617
of 	the 	Sentencing 	Guidelines. 	Regarding 	“time 	of 	detection,”
the Commission gave the following reasoning for adopting this provision:
The loss definition also provides for the exclusion from loss of certain economic
benefits transferred to victims, to be measured at the time of detection. 	This
provision codifies the “net loss” approach that has developed in the case law, with
some modifications made for policy reasons. This crediting approach is adopted
because the seriousness of the offense and the culpability of a defendant is better
determined by using a net approach. 	This approach recognizes that the offender
who transfers something of value to the victim(s) generally is committing a less
serious offense than an offender who does not.
The amendment adopts “time of detection” as the most appropriate and least
burdensome time for 	measuring the value of the transferred benefits. The
Commission determined that valuing such benefits at the time of transfer would be
especially problematic in cases in which the offender misrepresented the value of
an item that is difficult to value. Although the time of detection standard will allow
some fluctuation in value which may inure to the defendant’s benefit or detriment,
the Commission determined that, because the time of detection is closer in time to
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component results in the actual loss being increased beyond the actual harm to the victims
because, as in this case, the SEC returned a portion of the money fraudulently obtained. Since
the text of § 2B1.1 (pre-2024 Guidelines) includes only actual loss, the Commentary cannot
transform money that victims did not actually lose into a “loss” simply because it was retuned by
a third-party and not a defendant or his confederates after detection of the offense. Therefore,
Notes 3(E)(i) or 3(D)(i) of the Commentary do not apply and cannot be used to foreclose
Defendant from receiving a credit for the money returned to the victims by the SEC.11
the sentencing and occurs at a point when the authorities are aware of the
criminality, its use generally would make it easier to determine a more accurate
value of the benefit.
The definition of “time of detection” was adopted because there may be situations
in which it is difficult to prove that the defendant knew the offense was detected
even if it was already discovered. In addition, the words “about to be detected” are
included to cover those situations in which the offense is not yet detected, but the
defendant knows it is about to be detected. In such a case, it would be inappropriate
to credit the defendant with benefits transferred to the victim after that defendant’s
awareness.
U.S.S.G., Appendix C, Volume II, Amendment 617.
This historical background does not overcome the ambiguity that arises from the requirement
in Banks that “loss” means “actual loss” in §2B1.1. Using the “time of detection” language in
the Commentary Note to calculate “actual loss” would result in money recovered by victims
not being included in “actual loss.”
11 The Government argues that under the Court’s interpretation of Banks and the Commentary
Note on “Credits Against Loss,” a wealthy person, as opposed to a person of lesser means, has
the ability to refund proceeds fraudulently obtained after the fraud is detected and in doing so
can lessen their loss calculation under § 2B1.1. This is correct and a consequence of the holding
in Banks, as discussed above, which this Court is required to follow. The remedy, however, is
not to redefine “loss” by imposing on it a temporal component or other condition, such as the
date of detection of the offense by a defendant or his confederates. 	The remedy is for the
Sentencing Commission to propose another amendment to § 2B1.1, moving Note 3(D)(i) of the
Commentary to the text of the Guideline itself. 	This may be true of other Notes in the
Commentary to § 2B1.1.
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All this being said, if the money returned by the SEC is not included in actual loss, an
argument can be made that it can be construed as “intended loss,” for which Defendant Ford
would be responsible under the Guidelines Manual effective November 1, 2024. But to use this
Manual would increase his potential sentence, a violation of the Ex Post Facto Clause. As such,
the 2018 Guidelines Manual will be used at the final sentencing of Defendant Ford to overcome
any Ex Post Facto concerns. And finally, as explained above, because the victim investors had
the money fraudulently taken from them returned by the SEC, the actual loss under § 2B1.1
would not include the amount of those funds.
C. Defendant is Not Entitled to Credit for Any Alleged “Legitimate Business Expenses”
Incurred by Fallcatcher Inc.
Defendant’s second objection to the loss calculation is that because the balance of the money
obtained from the investor victims that was not returned was used for “legitimate business
expenses,” Defendant should be given credit against “loss” for this amount. This argument is
unavailing.
Defendant paints a narrative that he is entitled to a credit for the returned money because
Fallcatcher Inc. was a legitimate company, and the money was used for legitimate expenses.
(See PSR at 45; see also Doc. No. 84 at 4–6.) But while a defendant in certain situations may
receive a credit for expenses he incurred while providing “legitimate” services amid his
fraudulent conduct, he may not receive a credit for money spent perpetuating a fraud. See
United States v. Scarfo, 41 F.4th 136, 213 (3d Cir. 2022) (citing United States v. Blitz, 151 F.3d
1002, 1012 (9th Cir. 1998)).
As noted earlier, at Defendant’s initial sentencing hearing on October 29, 2025, his defense
counsel argued that “[t]he money that was spent by the appropriately elected board” of
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Fallcatcher “was done to promote the business.” (TR 38 ¶¶9–12.) Defense counsel further
asserted that while Defendant Ford may have made “misrepresentations to get the funding and
the resources needed,” the funding was then “faithfully allocated” for the intended benefit of all
shareholders to pay salaries, professional fees, etc. to grow the business. (TR 40 ¶¶3–4; see PSR,
Appx A.) Most notably, however, defense counsel acknowledged that because Fallcatcher Inc. is
a startup business without any income, any assertion that the investors would benefit from this
use of the fraudulently obtained funds is purely speculative. (TR 41 ¶¶9–16.) The only benefit
that could come into play here would be the appreciation of the price of the Fallcatcher shares
investors purchased if the company succeeded, a highly speculative prospect at best. But it is
undisputed that Fallcatcher had no money left over to return to the victims after the SEC
recovered what it could. And although defense counsel argued at the sentencing hearing that the
victims as shareholders would benefit through an appreciation of their shares had the company
succeeded, the fraud continued after the so-called legitimate company was set up. In short, the
prospect of a startup company without any income, which was being used as a front to lure
unsuspecting investors and to engage in fraud by one of its major founders, succeeding is entirely
speculative. (TR 38 ¶¶13–23.)
Most significantly, here, no evidence in the record firmly suggests that the investors would
receive any benefit from Defendant or Fallcatcher Inc. The record does reflect, however, that
when Defendant needed additional funding for Fallcatcher, he set up what appeared to be an
elaborate, legitimate business as part of his scheme to convince victims to invest based upon his
fraudulent misrepresentations. Simply put, as noted earlier, Defendant Ford set up Fallcatcher as
a front in order to lure his victims to invest in Fallcatcher Inc. In this regard, on August 22, 2018
Defendant emailed potential investors and stated that Fallcatcher was ready to start taking
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investor dollars. The Private Placement Memorandum was finalized on August 27, 2018, which
described Fallcatcher Inc. and its offering of 20 million shares at $.50 per share. Yet, even after
the period to purchase shares opened, Defendant Ford continued to make false representations
about Fallcatcher through emails to prospective investors. On September 9, 2018, Defendant
emailed potential investors and falsely stated that Fallcatcher Inc. would be moving forward with
a certain company and the local state government in Florida.
As the Court said at the initial sentencing hearing on October 29, 2025: “[Defendant] could
set up the most sophisticated company, private placement memorandums, [Defendant] can hire
the most honorable people under the sun to run a company, but [Defendant] can’t on the
side…[b]e luring people in by fraud to invest in that company.” (TR 35 ¶¶24–25; 36 ¶¶1–5.)
Fallcatcher was founded upon Defendant’s scheme, and the money he raised through
investors was accomplished through fraudulent means. Unlike the cases where legitimate
expenditures did result in a credit against loss, here, Defendant Ford to set up an elaborate front,
hoping his company would be successful, while also paying himself a significant amount of
money secured from the scheme. On April 29, 2019, Defendant even caused Fallcatcher to
transfer approximately $233,000 to himself. Therefore, while the money obtained from investors
apparently was used to create the appearance that it was used for a legitimate purpose, in reality
the company was just used as part of Defendant’s fraudulent scheme to lure victims into parting
with their money.
Accordingly, since the $2,095,480.38 balance was actually lost by the victims, no credit
under § 2B1.1 will be applied.
IV. 	CONCLUSION
For the foregoing reasons, the final Sentencing Guidelines applicable to Defendant Henry
Ford’s at sentencing will be as follows:
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• 	Base Offense Level: The guideline for a violation of 18 U.S.C. § 1343
is USSG § 2B1.1. Since the offenses of conviction have a statutory
maximum term of imprisonment of 20 years, the base offense level is
seven. U.S.S.G. § 2B1.1(a)(1). 	7
• 	Specific Offense Characteristics: The defendant defrauded the
victims out of $2,095,480.38. Since the loss exceeded $1,500,000,
but was less than $3,500,000, [sixteen (16) levels are added].
U.S.S.G. § 2B1.1(b)(1)(J). 	+16
• 	Specific Offense Characteristics: The defendant’s fraudulent
conduct involved 61 victims. Since the offense involved ten or
more victims, two levels are added. U.S.S.G. § 2B1.1(b)(2)(A)(i). 	+2
• 	Victim Related Adjustment: None. 	0
• 	Adjustment for Role in the Offense: None. 	0
• 	Adjustment for Obstruction of Justice: Since the defendant
willfully obstructed or impeded, or attempted to obstruct or impede,
the administration of justice with respect to the investigation,
prosecution, or sentencing of the instant offense of conviction,
and the obstructive conduct related to the defendant’s offense
of conviction or any relevant conduct; or a closely related offense;
therefore, two levels are added. U.S.S.G. § 3C1.1. 	+2
• 	Adjusted Offense Level (Subtotal): 	27
• 	Chapter Four Enhancement: None. 	0
• 	Acceptance of Responsibility: The defendant has clearly
demonstrated acceptance of responsibility for the offense.
Accordingly, the offense level is decreased by two levels.
U.S.S.G. § 3E1.1(a). 	-2
• 	Acceptance of Responsibility: The defendant has assisted the
authorities in the investigation or prosecution of the defendant’s
own misconduct by timely notifying authorities of the intention
to enter a plea of guilty. Accordingly, the offense level is
decreased by one additional level. 	-1
• 	Total Offense Level: 	24
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At Offense Level of 24, with a Criminal History Category of II, the guideline range for
imprisonment is fifty-seven (57) to seventy-one (71) months. 12
12 This final calculation of the Guidelines is within the sentencing range of forty-six (46) to
seventy-eight (78) months agreed to by the parties in the Guilty Plea Agreement made pursuant
to Federal Rules of Criminal Procedure 11(c)(1)(C).
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