United States v. Knox
2010 U.S. App. LEXIS 23285
| 7th Cir. | 2010Background
- Knox orchestrated a multifaceted real estate flipping scheme in central Illinois from 1998 to 2005 using fraudulent appraisals to inflate property values and induce inflated mortgage loans.
- He caused buyers to purchase at inflated prices and told sellers he would sell at the asking price, while concealing true values and misrepresenting loan terms to lenders.
- Wiese provided phony appraisals; Ciota assisted in finding buyers; Knox recruited others, including Miller and Schneider, to facilitate closings and fund disbursements.
- The scheme involved more than 150 fraudulent transactions, causing over $7 million in fraudulent mortgages and about $4.7 million in losses to lenders.
- Knox pleaded guilty to multiple counts; at sentencing the district court applied enhancements for sophisticated means, number of victims, gross receipts, and organizer role, which Knox challenged on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sophisticated means enhancement valid? | Knox | Knox | Enhancement upheld: scheme was intricate and coordinated. |
| Victims count for enhancement? | Knox | There were at least ten victims, more than ten transactions. | Enhancement upheld: over ten victims established. |
| Gross receipts >$1 million? | Knox | Spreadsheets and records unreliable? | Enhancement upheld: more than $1 million in gross receipts shown. |
| Organizer/leader adjustment valid? | Knox | Four participants, not five; no leadership role. | Adjustment upheld: Miller considered participant for extensiveness; Knox as organizer proper. |
| Waiver of loss calculation challenge? | Knox | Objected, then withdrew; waiver should preclude review. | Waiver valid; challenge to loss calculation not reviewable. |
Key Cases Cited
- United States v. Wayland, 549 F.3d 526 (7th Cir. 2008) (sophisticated means requires more than garden-variety fraud)
- United States v. Rettenberger, 344 F.3d 702 (7th Cir. 2003) (intricate maneuvers required to fool multiple insurers)
- United States v. Jenkins, 578 F.3d 745 (8th Cir. 2009) (illustrates sophisticated means considerations)
- United States v. Wu, 81 F.3d 72 (7th Cir. 1996) (sophisticated means through falsified records)
- United States v. Arnaout, 431 F.3d 994 (7th Cir. 2005) (avoidance of invalid victim count in multi-victim schemes)
- United States v. Statham, 581 F.3d 548 (7th Cir. 2009) (reliance on credible sentencing evidence)
- United States v. Kincaid, 571 F.3d 648 (7th Cir. 2009) (waiver/forfeiture distinctions in sentencing challenges)
- United States v. Jaimes-Jaimes, 406 F.3d 845 (7th Cir. 2005) (forfeiture vs. waiver deferral in sentencing)