In the Courts

Fifth Circuit Holds That Actual Loss Should be Used to Calculate Sentence for Mortgage Fraud Scheme

The Fifth Circuit Court of Appeals held in United States v. Goss, — F.3d —-, No. 07-60699, 2008 WL 4951592 (5th Cir. Nov. 21, 2008) that the market value of homes that served as collateral in a mortgage fraud scheme should have been deducted from any losses committed as a result of the fraud. Defendant-appellant Toby Goss, a mortgage lender, was convicted of conspiring to commit mail and wire fraud by preparing and submitting false documents to induce lenders to make over $2 millions in loans to 35 borrowers who may not have qualified for the loans otherwise. Under the Sentencing Guidelines, Goss's punishment would be determined, to a large degree, by the amount of loss to the victims of the offense, which in this case, would be the value of the mortgages. The government argued that Goss's intended loss exceeded the actual loss, which meant using the full value of the loans with no discount for the value of the homes which served as collateral.

Goss objected to the government's position and argued that the collateral should be deducted from the value of the loans.

The court vacated Goss's 57-month sentence and remanded for resentencing. The decision required the Court of Appeals to reconcile the practice likely preferred by the Sentencing Guidelines, which suggest that a deduction was proper, with circuit precedent that suggested that the collateral should not be credited against the value of the mortgages.

D.C. Circuit Upholds Restitution Requirement in Fraud Case

In United States v. Anderson, 545 F.3d 1072 (D.C. Cir. 2008), the D.C. Circuit Court of Appeals held that a drafting error in a plea agreement did not preclude a restitution award when the parties clearly intended that restitution be awarded. Walter Anderson pled guilty to two counts of evading federal income taxes and one count of first degree fraud in the District of Columbia. The district court sentenced Anderson to 108-months' imprisonment and ordered him to pay the District of Columbia more than $22 million in restitution, but denied the government's request for restitution to the United States.

On appeal, Anderson argued that his sentence violated the Ex Post Facto Clause of the U.S. Constitution because the 2001 edition of the Guidelines was used to calculate his sentence, rather than the 2000 version. The 2000 edition of the guidelines would have given Anderson a more lenient advisory guideline range. The Court of Appeals quickly dismissed Anderson's argument because the plea agreement stipulated that the district court would use the 2001 edition of the Guidelines, and the sentencing judge stated that the 71-month sentence calculated under the 2000 edition was not sufficient punishment.

Second Circuit Affirms Substantial Downward Booker Variance

The Second Circuit Court of Appeals affirmed the lenient sentence given to Richard Adelson, the former Chief Operating Officer and President of Impath, for securities fraud. See United States v. Adelson, Nos. 06-2738, 06-3179, 2008 WL 5155341 (2d Cir. Dec. 9, 2008) (summary order). U.S. District Judge Jed Rakoff had sentenced Adelson in 2006 to 42 months' imprisonment, rather than imposing the life sentence recommended by the Sentencing Guidelines.

The government's principal claim on appeal was that the district court discarded the Guidelines in favor of the sentencing judge's personal view of the seriousness of Adelson's offense. In an unpublished opinion, the Second Circuit rejected that contention and explained that the post-Booker case law required the Court of Appeals to defer to the judgment of the sentencing judge. The Second Circuit concluded that Judge Rakoff properly calculated Adleson's advisory guideline range and that he considered the relevant sentencing factors in Section 3553(a) of Title 18.

Fifth Circuit Holds That Actual Loss Should be Used to Calculate Sentence for Mortgage Fraud Scheme

The Fifth Circuit Court of Appeals held in United States v. Goss, — F.3d —-, No. 07-60699, 2008 WL 4951592 (5th Cir. Nov. 21, 2008) that the market value of homes that served as collateral in a mortgage fraud scheme should have been deducted from any losses committed as a result of the fraud. Defendant-appellant Toby Goss, a mortgage lender, was convicted of conspiring to commit mail and wire fraud by preparing and submitting false documents to induce lenders to make over $2 millions in loans to 35 borrowers who may not have qualified for the loans otherwise. Under the Sentencing Guidelines, Goss's punishment would be determined, to a large degree, by the amount of loss to the victims of the offense, which in this case, would be the value of the mortgages. The government argued that Goss's intended loss exceeded the actual loss, which meant using the full value of the loans with no discount for the value of the homes which served as collateral.

Goss objected to the government's position and argued that the collateral should be deducted from the value of the loans.

The court vacated Goss's 57-month sentence and remanded for resentencing. The decision required the Court of Appeals to reconcile the practice likely preferred by the Sentencing Guidelines, which suggest that a deduction was proper, with circuit precedent that suggested that the collateral should not be credited against the value of the mortgages.

D.C. Circuit Upholds Restitution Requirement in Fraud Case

In United States v. Anderson , 545 F.3d 1072 (D.C. Cir. 2008), the D.C. Circuit Court of Appeals held that a drafting error in a plea agreement did not preclude a restitution award when the parties clearly intended that restitution be awarded. Walter Anderson pled guilty to two counts of evading federal income taxes and one count of first degree fraud in the District of Columbia. The district court sentenced Anderson to 108-months' imprisonment and ordered him to pay the District of Columbia more than $22 million in restitution, but denied the government's request for restitution to the United States.

On appeal, Anderson argued that his sentence violated the Ex Post Facto Clause of the U.S. Constitution because the 2001 edition of the Guidelines was used to calculate his sentence, rather than the 2000 version. The 2000 edition of the guidelines would have given Anderson a more lenient advisory guideline range. The Court of Appeals quickly dismissed Anderson's argument because the plea agreement stipulated that the district court would use the 2001 edition of the Guidelines, and the sentencing judge stated that the 71-month sentence calculated under the 2000 edition was not sufficient punishment.