United States v. Anchor Mortgage Corp.
2013 U.S. App. LEXIS 5552
| 7th Cir. | 2013Background
- Anchor Mortgage Corp. and CEO Munson allegedly lied to obtain federal loan guarantees for 11 loans; district court imposed penalties and treble damages under the False Claims Act.
- Two fraud theories were identified: bogus down‑payment certificates (fabricated equity) and improper referral-fee payments to Casa Linda Realty.
- The district court inferred knowledge of falsity, imputing it to Anchor via Busano, a branch head, who certified the information despite knowing its falsehood.
- Munson claimed he believed referral arrangements were proper under regulatory allowances for joint ventures, but acknowledged the paperwork and actual payments undermined that defense.
- The central damages issue: whether to treble net losses (net trebling) or gross amounts (gross trebling) under §3729(a)(1), and how to treat collateral value and sale proceeds.
- The district court used gross trebling and set off collateral values; court of appeals remanded to compute under net trebling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Net vs. gross trebling under §3729(a)(1) | Government endorses gross trebling for all claims. | Net trebling should apply, per Bornstein and related authority. | Net trebling governs; remand to recalculate under net approach. |
| Imputation of knowledge to Anchor via Busano | Busano's knowledge constitutes Anchor's knowledge under agency doctrine. | Anchor should not be bound by Busano's private knowledge beyond his role. | Busano's knowledge imputes to Anchor; estops disbelief of falsity. |
| Munson's knowledge of falsity (referral payments) and false statements | Munson knew no controlled arrangement existed and thus knew statements were false. | Munson believed regulatory compliance permitted the arrangement; he lacked full awareness of falsity. | Munson knew statements were false; liability for false claims affirmed. |
| Damages calculation for unsold collateral | Value of collateral should reduce damages under net trebling; subtract unsold collateral value. | Check only realized proceeds to adjust damages; value of unsold collateral ignored or miscomputed. | Remand to recalculate using net trebling and proper collateral valuation for unsold properties. |
Key Cases Cited
- Prime Eagle Group Ltd. v. Steel Dynamics, Inc., 614 F.3d 375 (7th Cir. 2010) (agency knowledge imputing to a corporation based on employee actions)
- Anderson v. Bessemer City, 470 U.S. 564 (1985) (clear error standard for district court findings)
- Bornstein v. United States, 423 U.S. 303 (1976) (net vs gross trebling; footnote 13 on damages measure)
- Feldman v. Gorp, 697 F.3d 78 (2d Cir. 2012) (net trebling adopted by appellate courts)
- United Technologies Corp., 626 F.3d 313 (6th Cir. 2010) (net trebling approach in FCA context)
- Science Applications International Corp., 626 F.3d 1257 (D.C. Cir. 2010) (net trebling guidance in FCA matters)
- Commercial Contractors, Inc. v. United States, 154 F.3d 1357 (Fed. Cir. 1998) (net trebling approach in FCA context)
- Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) (monopolistic overcharge framework informing loss measurement)
- Elder v. Holloway, 510 U.S. 510 (1994) (preservation of legal issues despite omissions)