United States v. Cloud
2012 U.S. App. LEXIS 10946
4th Cir.2012Background
- Cloud led a mortgage-fraud conspiracy from 1999 to 2005 involving at least fourteen coconspirators, including brokers, attorneys, an appraiser, a bank insider, and his wife.
- He recruited buyers with good credit, offered no-money-down investments, assisted with closings, and flipped properties to profit, with profits shared with buyers.
- The scheme involved falsified loan applications, misleading HUD-1 forms, forged signatures, and undisclosed cash kickbacks to buyers and recruiters.
- Many properties later foreclosed; the government presented witnesses detailing payments to recruiters and buyers and substantial losses to lenders and communities.
- Cloud was convicted on multiple counts including mortgage-fraud conspiracy, mail fraud, bank fraud, money-laundering conspiracy, and money laundering; he challenged evidentiary rulings, loss calculations, and a reimbursement order for court-appointed counsel.
- On appeal, the Fourth Circuit affirmed evidentiary rulings and loss calculation, reversed several money-laundering counts under Santos and Halstead, affirmed Count 27 (money-laundering conspiracy), and vacated the reimbursement order, remanding for resentencing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of victim-impact and hearsay evidence | Cloud claims victim-impact/hearsay was improper and prejudicial. | Cloud argues the evidence was irrelevant/prejudicial and inadmissible. | Harmless error; no reversible prejudice |
| Merger problem for money laundering convictions | Counts 28-33 payments to coconspirators were proceeds; no merger problem. | Payments are the essential expenses of the underlying fraud, creating a merger problem under Santos/Halstead. | Counts 28-33 reversed due to merger problem; Count 27 affirmed |
| Count 27 sufficiency of evidence | Conspiracy to commit money laundering supported by profits and ongoing scheme. | Insufficient evidence under merger framework or broader theory. | Count 27 upheld; sufficient evidence |
| district court's loss calculation | Intended loss and collateral loss properly calculated | Loss figures not adequately tied to Cloud's intent and foreseeability | Loss determination affirmed as reasonable; any error harmless |
| Attorney-fee reimbursement under CJA | Reimbursement appropriate if funds are available | District court failed to make required eligibility/availability findings | Reimbursement order vacated and remanded for resentencing |
Key Cases Cited
- United States v. Santos, 553 U.S. 507 (2008) (proceeds meaning and merger problem in money laundering)
- United States v. Halstead, 634 F.3d 270 (4th Cir. 2011) (merger analysis for money laundering in multi-part schemes; profits/proceeds distinction)
- United States v. Copple, 24 F.3d 535 (3d Cir. 1994) (victim-impact relevance to intent in fraud cases; harmless error review)
- United States v. Alerre, 430 F.3d 681 (4th Cir. 2005) (standard for reviewing Rule 29 motions; substantial evidence standard)
- United States v. Moore, 666 F.3d 313 (4th Cir. 2012) (CJA reimbursement requires specific funds/assets identified as available)