United States v. Fatani

In United States v. Fatani, 125 F.4th 755 (5th Cir. 2025), the Fifth Circuit affirmed the defendant’s conviction and sentence for wire fraud based on his involvement in a fraudulent Paycheck Protection Program (“PPP”) loan scheme.

Background: Fatani was charged with conspiracy to commit wire fraud, wire fraud, and engaging in a monetary transaction with criminally derived property. He proceeded to trial, where he was convicted on all three counts, and he was later sentenced to spend 36 months in prison.

At trial, the evidence showed that one of Fatani’s codefendants submitted fraudulent PPP loan applications for other people’s businesses. The conspirators would fill the loan applications with false payroll information and attach fraudulent supporting documents. For any PPP loans that were funded, the fraudulent borrower would keep the majority of the funds, with the rest going to the conspirators responsible for preparing the false applications.

Fatani was one of the fraudulent borrowers, and conspirators used his company to submit a fraudulent PPP loan application that claimed certain payroll expenses and a number of employees, even though the company had neither employees nor payroll. Fatani’s loan was funded in the amount of $511,250, which arrived in his company’s bank account.

Following that deposit, “four major transactions occurred.” First, Fatani wrote a check for nearly $100,000 to a company controlled by other conspirators. Second, Fatani wrote “approximately 44 fictitious payroll checks” totaling about $155,000. Third, a $100,000 check was issued to a company whose owner did not know or interact with Fatani, and the lead conspirator ultimately used those funds. Fourth, a $100,000 check was issued to another company controlled by Fatani and three of his family members.

Holding 1: The evidence was sufficient to convict Fatani of wire fraud.

Fatani argued that the Government had failed to show that the third check described above (and the resulting wire) were in furtherance of a scheme to defraud. He argued that the scheme to defraud was complete when his company received the $511,250 deposit funding the PPP loan, so in his view, the later check could not have been an essential part of the scheme. He noted that a scheme to defraud is complete “when the persons intended to receive the money had received it irrevocably” (cleaned up).

For wire fraud, however, “the wire communication need not be an essential element of a scheme to defraud but may instead be incident to an essential part of the scheme, or a step in the plot” (cleaned up). Instead, the question is whether the defendant conceived of the wire as part of the execution of the scheme. And here, the lead defendant was a person intended to receive money, and the jury was free to infer from the evidence that “the division of proceeds between [that man] and Fatani was an essential part of the scheme to defraud.”

Holding 2: The 36-month prison sentence was not substantively unreasonable.

Fatani argued that the “loss table used for fraud offenses” in USSG § 2B1.1 should not receive judicial deference because it is not based on empirical data. That argument, however, is foreclosed in the Fifth Circuit. See United States v. Simpson, 796 F.3d 548, 560 (5th Cir. 2015).

The Fifth Circuit also rejected Fatani’s argument that the district court failed to adequately account for mitigating factors in his case. On appeal, it was enough for the court to see that the district court had “heard the parties’ positions on an appropriate sentence, including the defense’s arguments about Fatani’s lack of criminal history and family ties, and heard Fatani’s allocution.”

Note: Our firm represented one of Fatani’s codefendants in the district court proceedings.