United States v. Benjamin Robers
2012 U.S. App. LEXIS 19273
| 7th Cir. | 2012Background
- Robers was a straw buyer in a multi-property mortgage fraud scheme that relied on false income/asset representations and intent to reside; foreclosures followed and collateral was sold at a loss.
- District court sentenced Robers to three years’ probation and ordered $218,952.18 in MVRA restitution to two victims: MGIC (mortgage insurer) and a mortgage lender (Fannie Mae-related).
- MVRA mandatory restitution requires the court to restore victims, here by offsetting the loss with value of returned property or its equivalent in cash; dispute centers on the offset formula.
- Robers argues offset must be the fair market value of the collateral at foreclosure (date title returned), i.e., the date the property is returned; the government argues offset is based on cash proceeds actually recouped from foreclosure resale.
- Seventh Circuit adopts the cash-proceeds-after-foreclosure approach (the eventual proceeds from resale), vacates part of the award (attorney’s fees and some expenses), affirms rest of award, and remands for consistent entry.
- Court remanded for judgment consistent with opinion and vacated the portions for attorney’s fees and certain expenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| How should offset value be calculated under MVRA? | Robers: offset uses value on date property was returned (foreclosure date). | United States: offset uses cash proceeds from resale of collateral. | Offset value = cash proceeds from resale; not the foreclosed collateral’s date-of-title value. |
| Are certain line-item expenses recoverable in restitution? | Robers: some expenses are incidental/consequential and not recoverable. | Government: some related holding/advertising costs are recoverable as property damage. | Vacate attorney’s fees and ‘other expenses’ portions; other direct property-related expenses may be recoverable. |
| Is the Ninth Circuit Smith line of cases controlling for offset value? | Robers: Smith dictates offset by fair market value of collateral at title transfer. | Government: Smith misreads MVRA; offset is based on cash recouped upon resale. | Third, Eighth, and Tenth Circuits’ approach adopted; offset based on actual cash proceeds from foreclosure sale. |
| Does the MVRA aim to fully compensate victims or cap losses by market conditions? | Robers: market decline should limit liability; victims suffered broader real estate market losses. | Government: victims’ losses caused by fraud; market forces should not shift responsibility. | MVRA aims to make victims whole; robbers bears loss risk; decline in market does not negate fraud-caused losses. |
| Should the court consider additional non-cash recoveries (e.g., prejudgment interest) in restitution? | Robers: not clearly addressed; focus on cash offset. | Government: permissible to include other recoveries as part of loss. | Yeung and related authority support including actual cash recovery; other recoveries depend on context. |
Key Cases Cited
- United States v. Smith, 944 F.2d 618 (9th Cir. 1991) (offset based on collateral value at title transfer; flawed due to misreading ‘property’)
- United States v. Hutchison, 22 F.3d 846 (9th Cir. 1993) (offset based on collateral value at control/date of foreclose; later cases limit use of final sale price)
- United States v. Catherine, 55 F.3d 1462 (9th Cir. 1995) (followed Hutchison; value determined when lender took title)
- United States v. Davoudi, 172 F.3d 1130 (9th Cir. 1999) (rejected post-foreclosure sale value for offset; used earlier control date)
- United States v. Gossi, 608 F.3d 574 (9th Cir. 2010) (cited for framework on offset when collateral becomes property of lender)
- United States v. Yeung, 672 F.3d 594 (9th Cir. 2012) (guidance on framework; offset based on collateral control date and cash recovery)
- United States v. Himler, 355 F.3d 735 (3d Cir. 2004) (offset by future proceeds from sale of collateral (third circuit))
- United States v. James, 564 F.3d 1237 (10th Cir. 2009) (offset based on eventual resale price; reflects actual loss)
- United States v. Statman, 604 F.3d 529 (8th Cir. 2010) (upheld use of eventual foreclosure proceeds as offset)
- United States v. Holley, 23 F.3d 902 (5th Cir. 1994) (earlier view offset by value of collateral; rejected as conclusive)
- United States v. Boccagna, 450 F.3d 107 (2d Cir. 2006) (offset discussion in mortgage-fraud restitution; reliance on Holley/Smith noted)