UNITED STATES of America, Appellee, v. Marc D. FOLEY, Defendant, Appellant.
Nos. 13-1048, 13-1118.
United States Court of Appeals, First Circuit.
April 1, 2015.
IV.
For the foregoing reasons, we affirm.
Ross B. Goldman, Criminal Division, Appellate Section, United States Department of Justice, with whom Carmen M. Ortiz, United States Attorney, Victor A. Wild and Veronica M. Lei, Assistant United States Attorneys, Mythili Raman, Acting Assistant Attorney General and Denis J. McInerney, Deputy Assistant Attorney General, were on brief, for appellee.
Before LYNCH, Chief Judge, TORRUELLA and HOWARD, Circuit Judges.
HOWARD, Circuit Judge.
Marc Foley appeals his conviction and sentence for 33 counts of wire fraud and five counts of money laundering arising from his role in a mortgage fraud scheme. Foley challenges the sufficiency of the evidence as to 28 of the wire fraud counts and all of the money laundering counts, argues that the district court abused its discretion in three of its evidentiary rulings, and alleges that the prosecutor engaged in misconduct in his closing statement. Foley also disputes the procedural and substantive reasonableness of his 72-month sentence and the district court‘s methodology in ordering restitution of nearly $2.2 million. We find no error in Foley‘s conviction and sentence, except that we vacate in part the district court‘s restitution order.
I.
At the center of this case is a 24-unit apartment building at 135 Neponset Avenue in Dorchester, Massachusetts (the “Neponset Building“), purchased and converted into a condominium form of ownership by Elizabeth (Lisa) Reed in December 2006. Reed was the owner of Mass Lending, LLC, a mortgage brokerage firm, in which capacity she frequently worked with Foley, a real estate lawyer, on loan closings. Foley also prepared the condominium conversion documents for the Neponset Building.
Reed financed the purchase of the Neponset Building with a short-term “hard money” loan, pursuant to which she paid a private lender $100,000 in exchange for a ten-day loan of $2.6 million. Needing to recoup her investment at once to repay the loan, Reed took three steps to generate immediate sales of condominium units. First, she rewarded buyers with kickbacks for their purchases. Second, she directed her employees at Mass Lending to submit falsified mortgage loan applications on the buyers’ behalf, misrepresenting the buyers’ incomes, employment, and assets in order to obtain loans covering 90 to 95
Either Foley or his associate, Sean Robbins, served as the closing attorney and settlement agent at each of the loan closings, which took place from December 19, 2006 to January 12, 2007. In that role, Foley and Robbins were responsible for preparing HUD-1 settlement statements (“HUD-1s“)—documents certified by the buyer, seller, and settlement agent and indicating to the lender, inter alia, the amount of funds collected from the buyer at the closing.1 Each of the 33 submitted HUD-1 forms at issue in this case—seven of which were not signed by the settlement agent—indicated that the buyer had made a down payment at the loan closing. In fact, however, no such payments were ever made.
Upon receipt of the HUD-1 forms, lenders would wire funds to Foley‘s Interest on Lawyers Trust Account (“IOLTA“). Foley would then disburse those funds to Reed, writing Reed a check for the amount denoted “Cash to Seller” on the HUD-1, less the amount of the buyer‘s supposed down payment (denoted “Cash from Borrower” on the HUD-1). To avoid potential liability to Reed over the remaining proceeds, Foley directed Reed to sign a “disbursement authorization” form for each of the loan closings, reducing Reed‘s sale proceeds by the amount of the purported down payment.2 When a lender required additional proof of a buyer‘s down payment, Foley instructed Reed to prepare bogus checks indicating that the buyer had actually brought funds to the closing. Foley then directed his paralegal to draw a check from his IOLTA in the amount due from the borrower and to later redeposit that check as “cash from buyer,” creating the illusion that Foley had received money from the borrower.
Foley was charged with 33 counts of wire fraud,
II.
A. Sufficiency of the Evidence
1. Wire Fraud
Foley first contends that the evidence was insufficient as to all but five of the 33 wire fraud counts. With respect to the seven counts arising from unsigned HUD-1 forms, Foley contends that without a signature there was no misrepresentation and thus no wire fraud. Because two lending companies, Taylor, Bean & Whitaker and Fremont, nevertheless extended loans based on these unsigned HUD-1 forms, Foley further argues that there was also insufficient evidence as to the 21 counts involving signed HUD-1s sent to these companies, reasoning that the presence or absence of a signature was not material to the lenders’ decisionmaking.
Although the parties do not dispute that Foley moved for acquittal on the wire fraud counts under Fed.R.Crim.P. 29 both at the close of the government‘s case and after the trial, they nevertheless disagree as to the proper standard of review for this claim. Under our precedent, although a general sufficiency-of-the-evidence objection preserves all possible sufficiency arguments, a motion raising only specific sufficiency arguments waives unenumerated arguments. United States v. Lyons, 740 F.3d 702, 716 (1st Cir.2014); United States v. Marston, 694 F.3d 131, 134 (1st Cir. 2012). We have suggested that a general sufficiency objection accompanied by specific objections preserves all possible sufficiency objections. See Marston, 694 F.3d at 135 (finding “good reason in case of doubt” to treat such motions as general, because “[i]t is helpful to the trial judge to have specific concerns explained even where a general motion is made; and to penalize the giving of examples, which might be understood as abandoning all other grounds, discourages defense counsel from doing so and also creates a trap for the unwary defense lawyer“).4
At the close of the government‘s case, Foley‘s counsel moved for judgment of acquittal on all counts. Defense counsel then proceeded to state: “But in reality, Judge, there is one very serious issue. And that is the government has failed to establish that the District of Massachusetts is the proper venue for this prosecution.” Foley‘s post-trial motion for acquittal in turn stated that “[a] judgment of acquittal should be granted on Counts 1-33 [i.e., the wire fraud counts] as the government failed to prove proper venue in the District of Massachusetts.” Neither of those motions are the type of “general motion accompanied by examples” contemplated in Marston. Neither motion raised any issue other than venue, and although the oral motion at the close of evidence might with some imagination be interpreted as treating venue as merely “one very serious issue” of many, the post-trial motion is not susceptible even to such liberal reading. We therefore treat Foley‘s signature-based sufficiency challenge as unpreserved, and review for clear and gross injustice only. Id. at 134; see also United States v. Upham, 168 F.3d 532, 537 (1st Cir.1999), cert. denied, 527 U.S. 1011, 119 S.Ct. 2353, 144 L.Ed.2d 249 (1999). We conclude that Foley‘s claim fails to meet that stringent standard, which we have described as a particularly exacting variant of plain error review, although our conclu-
The elements of wire fraud under
HUD-1 forms contain a signature block beneath the following certification by the settlement agent: “The HUD-1 Settlement Statement which I have prepared is a true and accurate account of this transaction. I have caused or will cause the funds to be disbursed in accordance with the statement.” By Foley‘s account, “the government‘s case was that Mr. Foley‘s signature was the fraud,” such that the only relevant statement was “the certification on the HUD-1 that Mr. Foley had collected cash from the buyer at the closing.”5
The prosecution did indeed allude in both its opening and closing arguments to the significance of the settlement agent‘s signature, stating, e.g., that “by signing the HUD-1s for these loans, the defendant certified to the mortgage company that he did collect the funds” and that the “HUD-1 when it said I have or will disburse in accordance with this HUD-1 is patently false.” Nevertheless, the government advanced a broader theory than Foley suggests. Signed or unsigned, each of the HUD-1s misrepresented the amount of “cash from borrower,” falsely indicating that the borrower had brought some amount of cash to the closing when in fact no funds were ever transferred. In its closing argument, the prosecution accordingly described the HUD-1 form as
a lie to the mortgage company when it was sent to the lender to get the funds released. It was a lie about what was collected from the borrowers, and it was a lie about what was paid to the seller. [Foley] had those false HUD-1s sent to the clients. The lenders’ money was released based on those lies.
That theory was amply supported by trial evidence showing that after each closing, Robbins gave Foley‘s paralegal the unsigned HUD-1s to be sent to the lenders, which in turn accepted the forms and funded the loans.
We accordingly reject Foley‘s contention that the government‘s case rested solely on the stroke of a pen. To the extent that Foley takes issue more broadly with what he characterizes as the government‘s “claim[] that the mere submission of an unsigned HUD-1 to a lender can be a fraudulent misrepresentation even though there is a required certification on the
Foley‘s secondary argument that the lenders’ acceptance of unsigned HUD-1s in turn demonstrates a lack of materiality as to the signed forms rests on the same misguided premise that the signature was the sole misrepresentation. As we have explained, both the signed and unsigned HUD-1s falsely indicated the receipt of “cash from borrower.” That the loan companies were apparently willing to extend loans based on unsigned HUD-1s hardly compels the additional inference that the loans would still have been extended even without the misrepresentations as to the receipt of down payments. On the contrary, Foley himself acknowledges the testimony of three lending company employees that the loans would not have closed if the lenders had known that the “cash from borrower” was in fact never obtained. That was more than enough evidence for the jury to conclude that these misrepresentations were material to the lenders’ decisions.
2. Money Laundering
Foley also attacks his five money laundering convictions under
Justice Stevens, concurring, disagreed with the plurality‘s broad application of the rule of lenity and focused instead on the merger issue. With respect to the illegal gambling statute, Justice Stevens stated that “[t]he revenue generated by a gambling business that is used to pay the essential expenses of operating that business is not ‘proceeds’ within the meaning of the money laundering statute,” because “[a]llowing the Government to treat the mere payment of the expense of operating an illegal gambling business as a separate offense is in practical effect tantamount to double jeopardy.” Id. at 527, 128 S.Ct. 2020 (Stevens, J., concurring). Justice Stevens suggested, however, that the Court “need not pick a single definition of ‘proceeds’ applicable to every unlawful activity,” thereby implying that the “profits” definition is only warranted in the context of crimes creating such merger problems. Id. at 525, 128 S.Ct. 2020.
We have suggested in dicta that Justice Stevens‘s narrower opinion controls, such that the definition of “proceeds” is only limited to profits where the broader “receipts” definition would give rise to a merger issue. See United States v. García-Pastrana, 584 F.3d 351, 380 (1st Cir. 2009) (noting “some question as to the holding of Santos, since Justice Stevens, the fifth and deciding vote, suggested in concurrence that the holding may vary by offense and the legislative history,” and questioning Santos‘s applicability to a case that did not present merger problems); United States v. Levesque, 546 F.3d 78, 82 (1st Cir.2008) (describing Santos as limiting “proceeds” to profits “at least when the predicate offense is an illegal lottery operation“); see also, e.g., United States v. Van Alstyne, 584 F.3d 803, 814 (9th Cir. 2009) (“We therefore view the holding that commanded five votes in Santos as being that ‘proceeds’ means ‘profits’ where viewing ‘proceeds’ as ‘receipts’ would present a ‘merger’ problem of the kind that troubled the plurality and concurrence in Santos.“); United States v. Kratt, 579 F.3d 558, 562 (6th Cir.2009) (same). Other circuits have construed Santos even more narrowly. See, e.g., United States v. Thornburgh, 645 F.3d 1197, 1209 (10th Cir.2011) (“[‘P]roceeds’ means ‘profits’ for the purpose of the money laundering statute only where an illegal gambling operation is involved.“); United States v. Demarest, 570 F.3d 1232, 1242 (11th Cir.2009) (same).
As an initial matter, given the ambiguity of Santos‘s holding and the lack of clear guidance in our cases, we doubt that any misapplication of Santos by the district
The money laundering counts against Foley were based upon the transfer of money obtained from the fraudulent loan closings. Four of the counts arose from checks drawn on Foley‘s IOLTA account and deposited into Elizabeth Reed‘s bank account; the fifth count arose from a check drawn on Foley‘s IOLTA account and used to make a payment on Reed‘s behalf to Capital Trust LLC, which had loaned Reed the money to buy the Neponset Building. Foley avers that his case implicates the merger issues contemplated by Justice Stevens in Santos and that “proceeds” in this case must accordingly be limited to the profits of the wire fraud scheme, but he fails to elaborate why, in his estimation, “the transferred funds were not profits.” Nevertheless, even setting aside the issue of appellate waiver, see United States v. Zannino, 895 F.2d 1, 17 (1st Cir.1990), and accepting arguendo Foley‘s conclusory premise that the transferred funds were not “profits” of the wire fraud, we find no merger problem and thus no basis for limiting “proceeds” to profits in the first place.
Foley likens this case to Van Alstyne, a mail fraud case in which the Ninth Circuit held that distribution payments made to investors in the defendant‘s Ponzi scheme
So, too, in this case. The crime of wire fraud was complete upon Foley‘s receipt of the mortgage loan funds, and the subsequent transfer of funds to Reed did not represent payment of an expense of carrying on the fraud.8 We thus find no merger
B. Evidentiary Issues
Foley next sets his sights on three of the district court‘s adverse evidentiary rulings. Foley preserved all three challenges; our review is accordingly for abuse of discretion. United States v. Muñoz-Franco, 487 F.3d 25, 62 (1st Cir.2007).
1. Robbins‘s Testimony
Sean Robbins testified on direct examination that he had pleaded guilty to 24 counts of misprision of a felony. When asked to define “misprision,” Robbins responded:
Misprision means that I had knowledge of crimes committed by Mr. Foley at the Law Office of Marc Foley; namely, mortgage fraud. It means I didn‘t report those crimes to the authorities, and it also means that I concealed those crimes by having disbursement authorizations signed by Lisa Reed, which were essentially an agreement to conceal the nature of the transaction from the lenders.
Defense counsel immediately objected and moved to strike this testimony. The district court denied this motion.
Foley contends that the district court abused its discretion in failing to strike this testimony as unfairly prejudicial under
We have made clear that “the fact of [a witness‘s] guilty plea and the plea agreement properly may be elicited to dampen the effect of an anticipated attack on the witness‘s credibility.” United States v. Dworken, 855 F.2d 12, 30 (1st Cir.1988); see also United States v. Richardson, 421 F.3d 17, 40-41 (1st Cir.2005). We have accordingly upheld the admission of evidence concerning a co-conspirator‘s guilty plea, even though it similarly invites an inference of the defendant‘s guilt, when such evidence is accompanied by appropriate limiting instructions. See Dworken, 855 F.2d at 29-30; see also United States v. Gaev, 24 F.3d 473, 479 (3d Cir.1994) (“Conspiracy by definition requires the participation of more than one party, and the jury may take a guilty plea by a coconspirator as evidence of the defendant‘s guilt, an impermissible inference. Yet the testimony of a co-conspirator often cannot
Here, as in Richardson, Dworken, and Gaev, the district court provided an appropriate limiting instruction in its final charge to the jury:
Both [Reed and Robbins] testified that they have previously pled guilty to committing crimes related to the criminal activity charged in the indictment. The fact that these witnesses entered a guilty plea is not a factor that you may consider in assessing the guilt or innocence of Mr. Foley. Each of these witnesses may be presumed to have acted after an assessment of his or her own best interests, for reasons that are personal to the witness, but that fact has no bearing on guilt in this case. The guilty plea may only be considered by you in assessing the credibility of these witnesses’ testimony.
Foley avers that this instruction was inadequate because it did not specifically “inform the jury that they were to disregard Mr. Robbins‘s personal and professional belief, as an attorney, that Marc Foley had committed mortgage fraud.” But Foley never requested such an alternative instruction, and in any event we think that the challenged testimony fell within the instruction‘s general prohibition on considering Robbins‘s guilty plea as evidence of Foley‘s guilt. Robbins did not testify outright that he knew or believed that Foley committed mortgage fraud; rather, he testified to pleading guilty to misprision of a felony, which, in his words, “meant that [he] had knowledge of crimes committed by Mr. Foley at the Law Office of Marc Foley; namely, mortgage fraud.” As we have suggested supra, this testimony is akin to the testimony of a co-conspirator concerning the fact of his guilty plea, which raises similar concerns as to the jury‘s assessment of the defendant‘s guilt. See Gaev, 24 F.3d at 479. Given the limiting instruction, we find no abuse of discretion in the admission of Robbins‘s testimony regarding his guilty plea.
2. Cross-Examination on Maximum Penalty
After Robbins testified about his guilty plea on direct examination, Foley twice sought to elicit information on cross-examination concerning the maximum statutory penalty that Robbins faced for misprision of a felony. After the district court sustained the government‘s objection to this questioning, Foley moved for a jury instruction on the relative penalties for misprision of a felony and wire fraud, which the court denied.
Foley contends that this evidence was “absolutely vital” to the jury‘s assessment of Robbins‘s credibility, because the jury was unaware that by pleading guilty to misprision of a felony and avoiding wire fraud charges, Robbins had “dramatically reduced” his “statutory exposure ... on each count by 85 percent.” But Foley himself concedes that the jury was aware that Robbins “was expecting to receive leniency in exchange for his testimony.” More detail concerning the respective statutory maxima of the two crimes was neither necessary nor even particularly relevant given that the statutory maximum is rarely probative of the penalty a defendant will receive. See United States v. Mulinelli-Navas, 111 F.3d 983, 987-88 (1st Cir. 1997) (finding no abuse of discretion where the district court limited cross-examination concerning witnesses’ maximum potential sentences; “[t]he jury could infer from the circumstances that the accomplices had avoided being charged with offenses carrying greater sentences by testifying in the government‘s case,” and information concerning potential sentences could have confused the jury by presenting it with the
3. Foreclosure Evidence
Foley also takes issue with the admission of evidence concerning foreclosures of properties on which the lending companies lost money, which he contends “was irrelevant and highly inflammatory because foreclosures have reduced property values throughout the country and are blamed for the recent economic recession.”
Although Foley is correct that loss is not an element of wire fraud, we have recognized loss as probative of “a defendant‘s knowledge or intent to commit fraud.” Muñoz-Franco, 487 F.3d at 62. “Thus, while an ultimate purpose of either causing some financial loss to another or bringing about some financial gain to oneself is not the essence of fraudulent intent, the knowledge that one‘s actions are, in fact, bringing about such losses may demonstrate one‘s intent to commit fraud.” Id. (internal quotation marks omitted); see also, e.g., United States v. Foshee, 606 F.2d 111, 113 (5th Cir.1979) (“Fraudulent intent is supported by proof that [s]omeone was actually victimized by the fraud.” (internal quotation marks omitted)).
At Foley‘s trial, former employees of the lending companies testified that but for the misrepresentations that buyers had brought money to the loan closings, the lenders would not have funded the mortgage loans. The jury could therefore infer that the lenders’ losses were a direct consequence of Foley‘s mendacity and that Foley‘s misrepresentations were intentional. Moreover, any prejudice resulting from this evidence was relatively nugatory, as the testimony focused on the financial consequences to the lending companies rather than on the more palpable consequences for homeowners. The district court therefore did not abuse its discretion in declining to exclude this evidence as irrelevant or unfairly prejudicial.
C. Prosecutorial Misconduct
Foley alleges two instances of prosecutorial misconduct during closing argument. As Foley objected to both remarks below, our review is de novo. United States v. Ayala-García, 574 F.3d 5, 16 (1st Cir. 2009).
1. Characterization of Robbins‘s Testimony
Foley first claims that the prosecutor misstated the testimony of Sean Robbins in his closing argument. Although “[t]he law is clear that a prosecutor‘s reliance (or apparent reliance) upon matters not in evidence is improper,” United States v. Auch, 187 F.3d 125, 129 (1st Cir.1999), we find no inaccuracy in the challenged remarks and thus no misconduct.
On direct examination, Robbins testified that he had “expressed concern” to Foley in March 2007 “over how the
Ostensibly based on this testimony, the prosecutor stated the following in his closing argument:
[R]emember that conversation when the defendant and Sean Robbins in March were going to get coffee? Remember what Sean Robbins told you? He was still bothered by the whole thing. He knew it was wrong, and he was bothered by it, and that‘s the conversation in which defendant Foley said, I knew by the second week there were no checks.
Now, I submit to you that the evidence in this case and what you know from the evidence is from day one Mr. Foley knew there were not going to be any checks. But at a minimum, he has admitted to Sean Robbins that he knew there were no checks from at least the second week.
In his own closing argument, defense counsel responded:
Mr. Wild [the prosecutor] tells you during his closing argument that Sean Robbins testified that Mr. Foley told him in March that he had known in December that no checks were forthcoming.... I respectfully submit to you ... Mr. Robbins never testified that Mr. Foley had told him in December that he knew no checks were forthcoming.... Neither Mr. Robbins nor Ms. Molinari ever testified that Mr. Foley ever indicated between December 19th and January 12th that no checks would be brought to the law office at the conclusion of the closings.
The prosecutor then stated in rebuttal:
You were told that Mr. Robbins didn‘t testify about that conversation on the way to get coffee in March and what Mr. Foley said to him. If you took notes, I would suggest you look near the end of Mr. Robbins’ testimony. I believe it‘s on Ms. Lei‘s redirect questioning of him. Look for what was said there.
Following the government‘s rebuttal, Foley objected that the prosecutor had “misstated the evidence and added evidence to the case” by stating that “Mr. Robbins testified that Mr. Foley knew in December of 2006 that no funds would be forthcoming.“. The district court expressed its concern at that time “about the reference to when Mr. Robbins supposedly got an admission from Mr. Foley as to whether he knew and when he knew that the funds were not forthcoming.” Accordingly, the court instructed the jury that the lawyers’ statements were not evidence and that the jury‘s memory of the evidence controlled, using this particular dispute as an illustration.
After the verdict, Foley moved for a new trial on the basis of the government‘s alleged misrepresentation, which he claimed was fatal to his defense that he believed in good faith that checks were forthcoming. Finding no inaccuracies in the government‘s closing and rebuttal, the district court denied the motion. The court found the prosecutor‘s statement that “Foley
We agree with the district court‘s cogent analysis. Contrary to Foley‘s assertions, the government did not indicate that “Mr. Foley told Mr. Robbins that he knew by the second week that no checks were forthcoming,” only that Foley knew by the second week that “there were no checks,” in keeping with Robbins‘s testimony that Foley had “found out that no checks had come.” In proceeding to suggest that Foley knew “from day one” that no checks were forthcoming, the prosecutor relied on different evidence, as his next remark implied: “But at a minimum, [Foley] has admitted to Sean Robbins that he knew there were no checks from at least the second week.” The government‘s argument was thus that even if the jury did not infer from the other “evidence in this case” that Foley knew all along that no checks were forthcoming, Robbins‘s testimony indicated that Foley at least knew by the second week that no checks had come. That is in no way a mischaracterization of Robbins‘s testimony.11
2. Instruction to Hold Foley Accountable
Foley also avers that the prosecutor engaged in misconduct by instructing the jury to hold Foley accountable. In his closing argument, Foley‘s lawyer asserted both a good faith defense premised on Reed‘s deceitfulness and a materiality defense premised on the lenders’ willingness to advance loans despite their “total disregard for the truthfulness of the information in the applications.” Defense counsel posed the following rhetorical question to the jury:
Will you permit subprime lenders ... and the executives who ran those firms into the ground while making millions of dollars to continue to portray themselves as victims of mortgage fraud, or will you declare that [the prosecutor] and his team have fallen for a great misdirection campaign, joining forces with subprime members ... to go after closing lawyers, glorified paper pushers like Mr. Foley?
In rebuttal, the prosecutor responded:
Ultimately, what you heard in a fairly lengthy talk with you was that everybody should be held responsible except Mr. Foley. All of those lenders ought to be held responsible, but not Mr. Foley. All of those loan processors ought to be held responsible, but not Mr. Foley. Lisa Reed ought to be held responsible, and she is, but not Mr. Foley. Sean Robbins ought to be held responsible, and he is. But not Mr. Foley.
The argument is that there was a very large scale across the industry in the go-go days, a lot of fraud, and people ought to be held responsible for that. Like the executives ought to be held responsible, and counsel made a big point of how they were held responsible. They were prosecuted. Then he tells you you have to stop letting those people be victims.
Well, which is it, Mr. Goldstein [defense counsel]? They‘re responsible, and they got prosecuted, or they‘re victims? You can‘t argue it both ways. The fact is they are among the people who have been prosecuted out of the mortgage fraud in this country. And now it‘s time for Mr. Foley to be held accountable by you on the charges in the indictment based on all he knew and what he did.
Following rebuttal, Foley objected to the remark that it was “time for Mr. Foley to be held accountable by you.” The government responded that this commentary was permissible as “a direct response to what [defense] counsel had gone on at length about who else was responsible and ought to be held responsible,” and the district court agreed.
We, too, find no impropriety in these remarks. As the government recognized below, we have “typically cede[d] prosecutors some latitude in responding to defense counsel,” distinguishing between “[t]he Government‘s response to statements made by defendant‘s counsel” and “statements made by the Government without provocation.” United States v. Skerret-Ortega, 529 F.3d 33, 40 (1st Cir. 2008) (internal quotation marks omitted) (citation omitted). Given Foley‘s strategy of shifting blame to Reed and to the lenders, the government‘s rebuttal was within the latitude we recognized in Skerret-Ortega.12
III.
We now turn to the array of arguments Foley raises as to the reasonableness of his sentence and the calculation of restitution.
A. Sentence
1. Procedural Reasonableness
Foley first challenges the procedural reasonableness of his sentence, contending that the district court miscalculated the loss caused by Foley and improperly im-
i. Loss Calculation
Deeming Foley responsible for an actual loss of $3,239,204, the district court applied an 18-level enhancement under
In Appolon, another mortgage fraud case, we stated that “actual loss is always the difference between the original loan amount and the final foreclosure price (less any principal repayments).” Id. at 67. Accordingly, we explained that “actual loss usually can be calculated by subtracting the value of the collateral—or, if the lender has foreclosed on and sold the collateral, the amount of the sales price—from the amount of the outstanding balance on the loan.” Id. (internal quotation marks omitted) (citation omitted); see also
Foley attempts to distinguish Appolon, pointing out that the defendants in that case personally prepared fraudulent loan applications on behalf of straw buyers and created separate HUD-1 forms for each property, one with the actual sales price and one with the inflated price from the fraudulent loan application. Moreover, the Appolon defendants were themselves directly responsible for permitting the mortgage loans to default. On those facts, we rejected the Appolon defendants’ argument that the “substantial disparity be-
By contrast, Foley asserts that unlike the scheme in Appolon, “[t]he goal of this enterprise was for it to succeed.” He points out, inter alia, that the condominiums were priced according to independent appraisals rather than artificially inflated as in Appolon, and that some of the buyers testified that they made mortgage payments on the properties. Moreover, Foley himself was not involved in the submission of fraudulent loan applications and the payment of kickbacks to buyers; his only role was to orchestrate the fraudulent loan closings.
This may be a closer case than Appolon, but we ultimately find Foley‘s distinctions unpersuasive. Like the defendants in that case, Foley was a savvy “veteran[] of the real estate industry.” Id. He may not have known that the borrowers’ loan applications were falsified, but he knew that the borrowers had not brought funds to the loan closings and, even more importantly, concealed this fact in the submitted HUD-1 forms. As the evidence at trial established, the lenders would not have extended loans but for this misrepresentation because, as one lending company employee testified, a borrower‘s down payment “lessens the risk of the lender.” The very act of misrepresentation thus implies Foley‘s awareness that the lenders would not have advanced the funds to borrowers with no skin in the proverbial game. Given Foley‘s professional experience, it strains credulity for him to suggest that he was unaware of the reason why. Foley knew or should have known that these non-paying borrowers presented a greater risk of default; therefore, foreclosure was an eminently foreseeable consequence of his fraud.14
Foley claims that the district court relied on inaccurate sale prices for several of the condominiums, such that the actual loss figure should have been reduced by $17,200; that one of the condominium units was never foreclosed upon and should not be included in the loss calculation, further reducing actual loss by $67,600; that a loss of $118,104 arising from Foley‘s participation in a previous mortgage fraud scheme was not “relevant conduct” properly considered at sentencing; and that the district court failed to account for some of the borrowers’ loan principal repayments, the extent of which Foley does not specify.
As mentioned above, the district court found Foley responsible for a total loss of $3,239,204, corresponding to
ii. Sophisticated Means Enhancement
Foley also raises a preserved challenge to the district court‘s imposition of a two-level
“sophisticated means” means especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense. For example, in a telemarketing scheme, locating the main office of the scheme in one jurisdiction but locating soliciting operations in another jurisdiction ordinarily indicates sophisticated means. Conduct such as hiding assets or transactions, or both, through the use of fictitious entities, corporate shells, or offshore financial accounts also ordinarily indicates sophisticated means.
2. Substantive Reasonableness
Foley next contends that his sentence was substantively unreasonable relative to the sentences of his co-defendants and of attorneys involved in mortgage fraud schemes in Appolon and United States v. Innarelli, 524 F.3d 286 (1st Cir. 2008). We review the district court‘s sentencing decision for abuse of discretion. United States v. Floyd, 740 F.3d 22, 39 (1st Cir.2014).
Foley points out that in contrast to his 72-month sentence, “Lisa Reed, the mastermind of the scheme and the person who profited from it, received a sentence of 18 months,” while Sean Robbins was not incarcerated at all. Foley further avers that he was less culpable than the lawyer defendants in Appolon and Innarelli, both of whom also received 72-month sentences. While Foley‘s involvement was limited to the submission of false HUD-1s over the course of several weeks, the defendant in Innarelli also prepared false title documents and did so as part of a conspiracy spanning three years. Similarly, the lawyer in Appolon falsified loan applications and purchase-and-sale agreements as well as HUD-1s.
Foley‘s proffered comparisons carry little weight. First, three of these other defendants—Robbins, Reed, and the Innarelli defendant—opted to plead guilty and are therefore dissimilarly situated to Foley. See Floyd, 740 F.3d at 39. Robbins and Reed also played different roles in the conspiracy: Robbins worked largely at Foley‘s direction, while Reed, even if the “mastermind of the scheme,” was not a lawyer and therefore did not sully “the integrity and public trust in the bar,” a factor which the district court stressed in sentencing Foley.
Although the lawyer defendant in Appolon did go to trial, we do not think that his additional misrepresentations made him so much more culpable as to render Foley‘s equivalent sentence an abuse of discretion. More broadly, we reject Foley‘s premise that because we upheld a different judge‘s sentence for a more culpable defendant in an unrelated case, the same sentence is therefore an proposed congeners were sentenced by the same judge as Foley. As we stated in United States v. Saez, 444 F.3d 15, 19 (1st Cir.2006), when “different judges sentenc[e] two defendants quite differently, there is no more reason to think that the first one was right than the second.” Moreover, we recognized that such
A single judge sentencing two defendants for the same offense has the information before him and knows his own reasoning. By contrast, to make a valid comparison between defendants sentenced by different judges is far more difficult, as this case illustrates. Further, such a comparison opens the door to endless rummaging by lawyers through sentences in other cases, each side finding random examples to support a higher or lower sentence, as their clients’ interests dictate.
Id. We therefore decline to hold Foley‘s sentence to such a strict standard.
Aside from these faulty comparisons, we finally note that Foley‘s 72-month sentence is well below the Guidelines range of 108 to 135 months calculated by the district court. “It is a rare below-the-range sentence that will prove vulnerable to a defendant‘s claim of substantive unreasonableness,” and this case does not buck the trend. United States v. King, 741 F.3d 305, 310 (1st Cir.2014); see also Floyd, 740 F.3d at 39-40. Foley‘s sentence was well within the district court‘s discretion.
B. Restitution
Foley finally assigns error to the district court‘s restitution award of $2,198,204 under
The district court awarded $2,080,100 in restitution to Taylor, Bean & Whitaker in connection with the Neponset Building fraud and $118,104 to Argent Mortgage arising from Foley‘s role in an earlier mortgage fraud.16 The district court arrived at that figure by subtracting from each mortgage loan the amount recouped via foreclosure sales or, for properties that had not been resold, the 2012 property assessment values. Foley alleges several distinct errors in the district court‘s calculation and in its determination of the proper restitution recipients. The government agrees that the restitution order should be vacated and remanded in part. We address each issue in turn.
1. Restitution for Unit 5
In calculating the total loss suffered by Taylor, Bean & Whitaker, the district court included a $67,600 loss associated with Unit 5 in the Neponset Building, which had not been foreclosed upon and remained in the hands of the original buyer. The government concedes that remand is warranted. We therefore remand for further consideration as to the proper amount of restitution, if any, for this unit.
2. Repayments by Borrowers
Foley and the government also agree that the district court erred in failing to offset the original loan amounts by principal repayments made by some of the borrowers. We accordingly remand for the district court to recalculate the lenders’ loss on this basis.
3. Identity of Victim
Foley and the government further agree that remand is proper to determine whether Taylor, Bean & Whitaker is the proper recipient of restitution as to Units 2 and 22 of the Neponset Building, which were fore-
4. Calculation of Offset Value
Foley also assigns error to the district court‘s method of offsetting the original loan amount by the amount recouped at the foreclosure sale, or for units that had not been resold, the 2012 tax assessment value. Foley contends that “the loss to the lenders was set when the foreclosure was complete,” such that the loan amount should have been offset by the property‘s fair market value at the time that the lender took possession.
Under
At the time that Foley filed this appeal, the circuits were divided on the proper calculation of the offsetting “value ... of any part of the property that is returned” in mortgage fraud cases. Compare United States v. Robers, 698 F.3d 937, 942 (7th Cir.2012) (offsetting the amount of money received at foreclosure sale), with United States v. Yeung, 672 F.3d 594, 604 (9th Cir.2012) (offsetting the value of the property on the date the lender acquired title). The Supreme Court has since resolved the question, holding that the restitution award must be offset “by the amount of money the victim received in selling the collateral, not the value of the collateral when the victim received it.” Robers v. United States, 572 U.S. 639, 134 S.Ct. 1854, 1856, 188 L.Ed.2d 885 (2014). The Robers Court reached this conclusion by interpreting the statutory phrase “any part of the property” as “refer[ring] only to the specific property lost by a victim, which, in the case of a fraudulently obtained loan, is the money lent.” Id. at 1856. Consequently, the Court explained that “no ‘part of the property’ is ‘returned’ to the victim until the collateral is sold and the victim receives money from the sale.” Id.
Robers did not squarely resolve the proper calculation of loss when the collateral remained unsold at the time of sentencing, suggesting in dicta that “[o]ther provisions of the [restitution] statute allow the court to avoid an undercompensation or a windfall.” Id. at 1858. Among other things, the Court noted that those provisions “would seem to give a court adequate authority to count, as part of the restitution paid, the value of collateral previously received but not sold.” Id. Two concurring Justices further suggested that “[i]f a victim chooses to hold collateral rather than reduce it to cash within a reasonable time, then the victim must bear the risk of any subsequent decline in the value of the collateral, because the defendant is not the proximate cause of that decline.” Id. at 1860 (Sotomayor, J., concurring, joined by Ginsburg, J.). Seizing on these qualifications, Foley suggests in a post-Robers Fed. R.App. P. 28(j) letter that a rehearing should be ordered as to the applicability of Robers in this case.
To be sure, Robers did not address the district court‘s method of offsetting the loan amount by the 2012 tax assessment value for properties that had not yet been sold. But this approach, if anything, in-
In short, Robers vindicates rather than impugns the district court‘s methodology. We therefore find no basis for the rehearing Foley requests.
5. 343 Centre Street
Foley finally argues that the district court erred in granting $118,104 in restitution to Argent Mortgage for the loss arising from Foley‘s fraudulent purchase in November 2005 of property at 343 Centre Street in Dorchester, Massachusetts—a figure also included in the district court‘s Guidelines loss calculation.18 As detailed in Foley‘s presentence report, after purchasing this building with Reed in the name of a friend, Foley then purchased a condominium unit in the building. Foley financed the condominium purchase with a mortgage loan from Argent, and signed a HUD-1 form falsely indicating that he had brought money to the loan closing. After Foley defaulted on the loan and the condominium unit was foreclosed upon, Argent lost $118,104.
a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered including, in the case of an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity, any person directly harmed by the defendant‘s criminal conduct in the course of the scheme, conspiracy, or pattern.
Because wire fraud involves a “scheme or artifice to defraud,”
In determining the extent of the underlying scheme, we begin with the terms of the indictment. See id. at 277; see also, e.g., United States v. Turino, 978 F.2d 315, 319 (7th Cir.1992). The indictment alleged that Foley engaged in a scheme to defraud mortgage lenders “[f]rom in or about December of 2006 to in or about January of 2007 ... in connection with the financing of residential real estate purchases of condominiums at 135 Neponset Avenue in Dorchester, Massachusetts.” As part of the alleged scheme, “Foley agreed with [Reed] to act as the settlement agent, to prepare loan closing documents, and to conduct the closings of mortgage loans in the names of the straw buyers.”
Even focusing on the “broad ‘boilerplate’ language ... rather than the specific conduct alleged” in the indictment, Hensley, 91 F.3d at 277, we think the district court stretched the underlying scheme too far in extending it to the 343 Centre Street transaction. Although the participants were identical (Foley, Reed, and Robbins) and although the 343 Centre Street transaction also involved a falsified HUD-1 form representing that the buyer had brought funds to closing, Foley played a different role, acting as the fraudulent purchaser rather than as the settlement agent. More importantly, the 343 Centre Street transaction occurred over a year before the scheme for which Foley was convicted, which (according to the indictment) ran “from in or about December of 2006 to in or about January of 2007.” That is in stark contrast to Hensley, which involved a unitary scheme spanning a mere two weeks. Id. at 278. Furthermore, the indictment expressly delimited the scheme to “the financing of residential real estate purchases of condominiums at 135 Neponset Avenue.” We accordingly vacate the district court‘s award of $118,104 in restitution to Argent Mortgage.
IV.
For the foregoing reasons, we affirm Foley‘s conviction and incarcerative sentence. We affirm in part and vacate in part the district court‘s restitution order, and remand for further proceedings consistent with this opinion.