United States v. Peter Morris
2014 U.S. App. LEXIS 4776
| 9th Cir. | 2014Background
- Morris applied for three mortgages in 2007 to buy three Riverside, CA properties using falsified assets, employment, income, and marital status.
- He provided banks with forged documents and did not disclose loans from the other lenders.
- All three banks approved; Morris purchased all three properties.
- He made one mortgage payment; two banks foreclosed and sold at a loss; the third sold at a loss in a short sale.
- In 2011 Morris pled guilty to wire fraud and false loan statement; district court sentenced 63 months using a loss calculation based on $1,033,500.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| How is loss measured under § 2B1.1 in mortgage fraud? | Morris urges using actual loss as foreseeability-based. | US relies on collateral credits and two-step method. | Adopt two-step method; initial loss is actual or intended, then deduct collateral recovery. |
| Can collateral recovery be subtracted regardless of foreseeability? | Morris contends foreseeability applies to collateral too. | Credits against loss apply to collateral recoveries, not foreseeability. | Collateral value credited against initial loss regardless of foreseeability. |
Key Cases Cited
- United States v. Crowe, 735 F.3d 1229 (10th Cir. 2013) (credits against loss for collateral recovery applied in mortgage fraud)
- United States v. Wendlandt, 714 F.3d 388 (6th Cir. 2013) (two-step loss calculation in mortgage fraud)
- United States v. Turk, 626 F.3d 743 (2d Cir. 2010) (rejects approach conflating initial loss with collateral credits)
- United States v. Mallory, 709 F. Supp. 2d 455 (E.D. Va. 2010) (supports two-step loss calculation; collateral credit without foreseeability)
- United States v. Parish, 565 F.3d 528 (8th Cir. 2009) (rejected as contrary to plain language of guidelines)