United States v. Joseph
705 F. App'x 711
10th Cir.2017Background
- Gabriel Joseph controlled two LLCs and arranged a fraudulent self-sale of a Park City property (Red Hawk): SCIPC bought for $3.4M and Joseph contracted to buy five days later for $7M.
- Joseph obtained a WaMu mortgage ($4,959,586.88) and a line of credit ($699,771) based on the inflated $7M price, concealing his control of the seller and misrepresenting income/intended occupancy.
- WaMu later foreclosed; the loan had an outstanding principal ~ $5,690,725 when the property ultimately sold for $1.5M after WaMu’s failure and FDIC/JP Morgan transactions.
- Joseph was convicted by a jury of wire fraud, money laundering, false statements to a bank, and failure to file tax returns; the district court applied an 18-level loss enhancement and a 2-level gross-receipts enhancement, producing a 78-month Guideline sentence.
- The district court had earlier dismissed a consolidated indictment without prejudice for a Speedy Trial Act violation; the issue whether misdemeanor counts should have been dismissed with prejudice was later raised on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper loss calculation under USSG §2B1.1 | Joseph: No cognizable loss to WaMu/FDIC because bank collapse and downstream gains mean no net loss; general formula misapplied | Court/Govt: Loss measured as outstanding loan balance minus foreclosure sale price; FDIC/receivership does not negate foreseeable pecuniary harm | Affirmed: $4,190,725 actual loss (loan balance ~ $5.69M minus $1.5M sale); general formula proper and supported by record |
| Use of gain as alternative measure | Joseph: Court improperly relied on gain when loss not established | Court: Statement about gain was an alternative; loss was properly found, so alternative comment harmless | Affirmed: Court’s stray statement about gain did not require reversal because loss was proven |
| Foreseeability and causation of lender loss | Joseph: FDIC seizure/intervening events mean loss was not foreseeable/caused by him | Court/Govt: Default and foreclosure occurred before bank failure; FDIC stepped into lender’s shoes; foreseeability of pecuniary harm established | Affirmed: Factual findings on foreseeability and causation not clearly erroneous |
| Gross-receipts enhancement under USSG §2B1.1(b)(16)(A) | Joseph: Funds satisfied corporate obligations; corporate form should block individual enhancement (cites Colton, Castellano) | Court/Govt: Joseph personally received > $1M when Annuit Coeptis transferred $2,000,020 into his personal account; indirect receipt still counts | Affirmed: Enhancement proper because Joseph individually derived over $1M |
| Dismissal with prejudice for Speedy Trial Act violation | Joseph: Misdemeanor counts were not "serious" and should have been dismissed with prejudice | Government: District court considered seriousness; Joseph failed to argue misdemeanor-seriousness below | Held: Waived on appeal under STA-preservation rules; court may not review unraised STA arguments |
Key Cases Cited
- United States v. Smith, 705 F.3d 1268 (10th Cir. 2013) (approving use of general formula: actual loss minus collateral value)
- United States v. James, 592 F.3d 1109 (10th Cir. 2010) (explaining downstream lender gains/losses offset and irrelevance of number of lenders)
- United States v. Crowe, 735 F.3d 1229 (10th Cir. 2013) (foreseeability of potential pecuniary harm from fraud regardless of market declines)
- United States v. Haddock, 50 F.3d 835 (10th Cir. 1995) (acquirer of failed bank can be a victim entitled to restitution)
- United States v. Castellano, 349 F.3d 483 (7th Cir. 2003) (corporate receipts may not be attributed to individual when individual did not derive >$1M)
- United States v. Colton, 231 F.3d 890 (4th Cir. 2000) (rejecting gross-receipts enhancement where corporate deposits did not result in individual receipt over threshold)
- O’Melveny & Myers v. FDIC, 512 U.S. 79 (1994) (FDIC as receiver steps into the shoes of failed institution)
- United States v. Loughrin, 710 F.3d 1111 (10th Cir. 2013) (preservation rule: STA arguments not raised below cannot be reviewed on appeal)