United States v. Minas Litos
2017 U.S. App. LEXIS 2445
| 7th Cir. | 2017Background
- Three defendants indicted (2012) for wire fraud and conspiracy for schemes in Gary, Indiana that funneled defendants’ cash through buyers as purported down payments to obtain mortgage loans from Bank of America.
- Defendants caused Bank of America to fund purchases, pocketed sale proceeds (less the faux down payments), and purchasers defaulted, producing $893,015 in bank losses tied to 16 properties.
- District court credited a Bank of America declaration that it would not have made the loans had it known the true source of down payments and ordered $893,015 restitution jointly and severally against the defendants.
- Defendants conceded fraud; appellate dispute centers on whether Bank of America was an appropriate restitution “victim” given its reckless approval practices and whether restitution was permissible versus a fine under 18 U.S.C. § 3571(d).
- Court of Appeals found the bank was reckless and culpable for approving manifestly dubious loan applications without investigation, creating doubt about awarding restitution to the bank.
- Because the sentencing package must be reconsidered if restitution is vacated, the court vacated restitution and remanded for resentencing (and directed consideration of a heavy fine); it also declined to enforce one defendant’s appellate waiver as to restitution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bank of America was an appropriate MVRA restitution "victim" for $893,015 loss | Bank (plaintiff) asserted it relied on defendants’ misrepresentations and would not have issued loans if it knew true down-payment source | Defendants argued the bank’s own reckless/indifferent conduct contributed to the loss and so restitution to the bank is improper | Court: Bank was reckless and tainted; restitution to the bank is questionable—vacated and remanded for resentencing to consider alternatives (e.g., fine) |
| Whether district court properly relied on bank representative’s affidavit to establish causation for restitution | Affidavit stated bank would not have issued loans had it known true facts | Defendants challenged affidavit as insufficient to prove that bank wouldn’t have made loans absent fraud | Court: Affidavit alone inadequate to establish entitlement to restitution given bank’s reckless behavior |
| Whether fine under 18 U.S.C. § 3571(d) is a permissible alternative remedy | Government sought restitution to Bank of America | Defendants contended restitution improper and fine would be appropriate instead | Court: Directed district court to consider imposing a heavy fine (which would go to the Treasury) as alternative remedy |
| Enforceability of Litos’s appellate-waiver as to restitution | Government relied on waiver to bar Litos’s challenge | Litos argued waiver should not block review because restitution was unlawful | Court: Waiver not enforced for restitution issue (vacated restitution as to Litos) but upheld waiver as to other aspects of sentence |
Key Cases Cited
- United States v. Mobley, 833 F.3d 797 (7th Cir.) (remand for resentencing when part of sentence disturbed)
- Pepper v. United States, 562 U.S. 476 (2011) (district court may reconsider entire sentencing package on remand)
- Greenlaw v. United States, 554 U.S. 237 (2008) (principles guiding reconfiguration of sentence on remand)
- United States v. Soto, 799 F.3d 68 (1st Cir. 2015) (restitution causation and foreseeability in mortgage-fraud context)
- United States v. Ojeikere, 545 F.3d 220 (2d Cir. 2008) (MVRA restitution not denied merely because victim had greedy or dishonest motives)
- United States v. Vélez‑Luciano, 814 F.3d 553 (1st Cir. 2016) (courts may refuse to enforce appeal waivers in cases raising miscarriage of justice)
- United States v. Adams, 814 F.3d 178 (4th Cir. 2016) (limits on enforcing appeal waivers)
- United States v. Hahn, 359 F.3d 1315 (10th Cir. 2004) (appeal-waiver enforceability principles)
- United States v. Andis, 333 F.3d 886 (8th Cir. 2003) (exceptions to enforcing plea appellate waivers)
- United States v. Khattak, 273 F.3d 557 (3d Cir. 2001) (appeal-waiver jurisprudence)
- United States v. Teeter, 257 F.3d 14 (1st Cir. 2001) (waiver enforcement exceptions)
- Jones v. United States, 167 F.3d 1142 (7th Cir. 1999) (narrow circumstances where waiver does not bar appellate review)