United States v. Howard, 2015 U.S. App. LEXIS 7062

Background

Roger Howard pleaded guilty to three counts of wire fraud and one count of money laundering for orchestrating mortgage-fraud schemes that involved inflating borrower income/assets, obtaining inflated appraisals, and receiving kickbacks; all borrowers defaulted.
District court calculated loss under USSG § 2B1.1 as $8,961,191.18 (offense level tied to >$7M loss) and ordered restitution of $8,862,191.18 to noteholders identified as victims when properties entered foreclosure.
Howard appealed, arguing (1) the district court miscomputed guideline loss and (2) restitution was awarded without proof of actual losses to alleged victims.
The Tenth Circuit reviewed the guideline-loss calculation largely for plain error (because some objections were not raised below) and restitution for abuse of discretion with mixed standards for factual findings.
The court affirmed the USSG § 2B1.1 loss calculation (following circuit precedent treating total loss as unpaid principal minus foreclosure recovery, irrespective of transfers) but reversed the restitution order and remanded for redetermination of actual losses to downstream noteholders to avoid unlawful windfalls.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Guideline loss under USSG § 2B1.1	Government: total loss = mortgage unpaid balance minus foreclosure recovery; downstream transfers irrelevant	Howard: certain loan amounts lacked reliable proof; interest should reduce loss; exclude downstream purchaser losses bought after default	Affirmed: court used binding Tenth Circuit method; objections not preserved so reviewed for plain error and failed
Inclusion of specific second-mortgage amounts	Government relied on UTLS printouts to prove balances/noteholders	Howard: printouts misidentified first-mortgage holders and thus were unreliable for second-mortgage amounts	Affirmed: factual-admissibility challenge not raised below; plain-error relief unavailable for unpreserved factual disputes
Restitution calculation to downstream noteholders under MVRA	Government: restitution based on unpaid principal minus foreclosure proceeds (same as guideline loss)	Howard: MVRA requires actual out-of-pocket loss to each victim; downstream buyers may have paid less than unpaid balance, so using unpaid balance yields a windfall	Reversed: restitution vacated and remanded; court must determine each victim’s actual loss (e.g., purchase price paid), or decline restitution if record insufficient
Burden/evidence for restitution	Government: presentence figures sufficient absent victim response	Howard: government must prove victim’s pecuniary loss by preponderance; cannot rubber-stamp claims	Held for Howard: government failed to prove actual losses for downstream noteholders; district court must permit further evidence or hearings on remand

Key Cases Cited

United States v. Crowe, 735 F.3d 1229 (10th Cir.) (actual loss in mortgage fraud = unpaid loan balance offset by collateral value)
United States v. Smith, 705 F.3d 1268 (10th Cir.) (foreseeable downstream lenders can be victims for sentencing loss but total loss = mortgage balance minus foreclosure price)
United States v. Lewis, 594 F.3d 1270 (10th Cir.) (factual sentencing disputes not raised below ordinarily do not qualify for plain-error relief)
United States v. Ferdman, 779 F.3d 1129 (10th Cir.) (MVRA forbids restitution that unjustly enriches victims; courts may not rubber-stamp unsupported victim claims)
United States v. Yeung, 672 F.3d 594 (9th Cir.) (downstream purchaser’s actual loss depends on purchase price, not unpaid principal)
United States v. Chaika, 695 F.3d 741 (8th Cir.) (restitution for secondary-market purchasers turns on purchase price and other factors)
United States v. Beacham, 774 F.3d 267 (5th Cir.) (follows Chaika and Yeung on limiting restitution to actual loss of note purchasers)
United States v. Goode, 484 F.3d 676 (10th Cir.) (distinguishes sufficiency review at trial from sentencing challenges)