United States v. Michael Sheneman
2012 U.S. App. LEXIS 11022
| 7th Cir. | 2012Background
- Sheneman and Jeremie executed a mortgage fraud scheme involving control of rental properties and false promises to buyers to induce purchases.
- Sixty properties were sold to four buyers with little real estate experience; many homes were dilapidated and not as promised.
- Jeremie falsified loan applications and Sheneman aided by inflating buyers’ assets and concealing finances; loans were funded by interstate wires.
- After closings, buyers faced repairs, vacancies, and foreclosures; lenders suffered substantial losses across the sixty properties.
- Sheneman was convicted on four counts of wire fraud; the district court applied multiple sentencing enhancements, including loss >$1 million and sophisticated means, resulting in a 97-month sentence.
- On appeal, Sheneman challenged the sufficiency of the evidence and two sentencing enhancements; the Seventh Circuit affirmed the conviction and sentence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of wire fraud evidence | United States: evidence shows a scheme to defraud, intent to defraud, and use of interstate wires. | Sheneman: no proof he participated with intent; he was an unwitting participant. | Conviction affirmed; evidence supports all elements |
| Loss amount for sentencing enhancement | United States: lenders’ losses exceed $1 million; Jeremie’s misconduct foreseeable and attributable. | Sheneman: Jeremie’s acts, not Sheneman’s, caused losses; losses should not be attributed to him. | Properly applied; lenders’ losses held attributable under joint undertaking |
| Sophisticated means enhancement | United States: scheme was intricate and showed planning beyond a garden-variety fraud. | Sheneman: scheme was ordinary real estate flipping, not sophisticated. | Properly applied; scheme deemed notably intricate |
Key Cases Cited
- Schmuck v. United States, 489 U.S. 705 (Supreme Court 1989) (wire fraud requires use of wires as part of execution of the fraud)
- Turner v. United States, 551 F.3d 657 (7th Cir. 2008) (wire use need not be essential; may be part of execution)
- United States v. Green, 648 F.3d 569 (7th Cir. 2011) (sophisticated means; planning/complexity considerations)
- United States v. Salem, 657 F.3d 560 (7th Cir. 2011) (scope of jointly undertaken criminal activity and foreseeability)
- United States v. Knox, 624 F.3d 865 (7th Cir. 2010) (upholding sophisticated means in mortgage fraud contexts)
- United States v. Snow, 663 F.3d 1156 (10th Cir. 2011) (example of sophisticated means in mortgage fraud)