United States v. Harold Rosen
2013 U.S. App. LEXIS 16875
| 7th Cir. | 2013Background
- Harold N. Rosen, owner of Kully Construction, entered a development agreement with East St. Louis to build Bowman Estates, a supposed $5.6M affordable housing project that required $3,699,240 in private financing as a condition for receiving public funds.
- Rosen fabricated credentials and project documents, substituted off‑site prefab modular units without approval, and removed manufacturer identifiers from materials to conceal the substitution.
- He procured falsified tax returns and financial statements to try to obtain private financing, submitted fraudulent loan/closing documents (including paying a broker to create fake closing papers), and submitted fraudulent reimbursement requests to the City; actual public reimbursements received totaled $66,449.04.
- Rosen forged lien waivers and admitted to investigators; he also attempted to sell the troubled project to a third party while concealing the federal investigation and project defects.
- Indicted on nine counts of wire fraud, Rosen pleaded guilty to seven counts. At sentencing the district court (1) calculated intended loss as $1,924,810 (public funds Rosen was approved to receive), (2) applied a four‑level § 3B1.1(a) organizer/leader enhancement, and (3) imposed a below‑Guidelines sentence of 48 months. Rosen appealed.
Issues
| Issue | Plaintiff's Argument (Rosen) | Defendant's Argument (Government) | Held |
|---|---|---|---|
| Appropriate measure of "intended loss" under U.S.S.G. §2B1.1 | Court erred by using the amount of public funding Rosen could have received; that assumes speculative future steps and overstates loss since Rosen was never eligible to receive funds without private financing | "Intended loss" includes pecuniary harm the defendant intended or probably expected; measure may include funds the scheme sought to obtain | Affirmed: intended loss may be measured by the public funds Rosen stood to obtain ($1,924,810); not speculative given Rosen's purposeful scheme (citing Schneider) |
| Applicability of §3B1.1(a) leadership/organizer enhancement | Enhancement improper because Rosen’s associates were hired for discrete tasks, not part of a unified criminal enterprise; Rosen lacked ongoing control over a cohesive group | Rosen was the mastermind who recruited, directed, and compensated multiple participants and controlled the scheme’s operation | Affirmed: district court did not clearly err applying the four‑level organizer/leader enhancement |
| Procedural correctness of sentencing (order of analysis / downward departure) | District court procedurally erred by addressing a downward departure for intended loss contemporaneously with calculating the Guidelines range | District court followed proper steps, considered objections, calculated range, considered departure and §3553(a) factors, and provided adequate rationale | Affirmed: no procedural error; record adequately supports review |
| Substantive reasonableness of 48‑month sentence under §3553(a) | Sentence unreasonable because intended loss overstates seriousness given low realistic chance of obtaining full public funds; court undervalued Rosen’s age/health/family | District court considered variance between intended and actual loss, Rosen’s mitigation, and imposed a below‑Guidelines but substantive sentence reflecting seriousness | Affirmed: sentence is substantively reasonable and district court meaningfully considered §3553(a) factors |
Key Cases Cited
- United States v. Schneider, 930 F.2d 555 (7th Cir. 1991) (loss includes intended/probable loss when scheme is interrupted)
- United States v. Wasz, 450 F.3d 720 (7th Cir. 2006) (organizer enhancement may apply when defendant marshals others to execute fraud)
- United States v. Vasquez, 673 F.3d 680 (7th Cir. 2012) (factors for §3B1.1 include decisionmaking authority, recruitment, and control)
- Gall v. United States, 552 U.S. 38 (2007) (sentencing review requires consideration of Guidelines and §3553(a) factors)
- Rita v. United States, 551 U.S. 338 (2007) (presumption of reasonableness for within‑Guidelines sentences)
- United States v. Portman, 599 F.3d 633 (7th Cir. 2010) (district court may consider realistic possibility of loss when varying from Guidelines)