Article

Note: Fields Real Estate Securities Corporation (Applicant) obtained an LC in the amount of US$83,800 from Regions Bank (Issuer) in favor the City of Aiken, South Carolina, U.S.A., (Beneficiary) in order to make improvements on commercial lots. As security, Issuer required Robert Fields (Applicant's Principal) to provide a mortgage on real property. Applicant's Principal provided a mortgage on lots belonging to his brother's business. When Applicant failed to complete the improvements by Beneficiary's deadline, Beneficiary drew upon the LC for its full value and was paid. When Issuer sought reimbursement, it foreclosed on the property. When it obtained a foreclosure order, it learned that Applicant's Principal had forged his brother's signature and was not authorized to act on behalf of his brother's business.

Applicant's Principal was charged and convicted of a U.S. federal crime for making a false loan and credit application. In testimony about the sentencing, the probation officer estimated that Issuer's loss "did not result from [Applicant's Principal's] actions, but from [Issuer's] failure to have the line of credit collateralized and then demand immediate payment from [Applicant] after making payment to [Beneficiary]." The district court sentenced Applicant's Principal to twelve months imprisonment.

On appeal, the United States Court of Appeals for the Fourth Circuit, Niemeyer, Motz, and Duncan, JJ., vacated the sentence and remanded the case for a recalculation of the sentence. Applicant's Principal had argued that he was sentenced using outdated sentencing guidelines that increased his sentence. The appellate court ruled that the sentence should be calculated under current sentencing guidelines and the new standard applied if it is favorable to Applicant's Principal.

[JEB/dep]

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