Case Information
*1 Before B AUER R OVNER , Circuit Judges, R ANDA , [*] District Judge.
B AUER Circuit Judge.
On October Harold N. Rosen pleaded guilty seven counts wire fraud perpetra tion fairly elaborate fraud scheme, centered around development of an affordable housing project was be built in East St. Louis, Illinois. Rosen now appeals district court’s calculation of amount, determination that was an organizer or leader of criminal activity, and reasonableness of sentence. We affirm.
I. BACKGROUND
Rosen, owner of Kully Construction, LLC, submitted a development plan city of East St. Louis (“the City”) to develop affordable housing project known as Bowman Estates. The project was be constructed through a combina tion of private and public investment and be developed by Kully Construction and Rosen. The project’s plans called for a $5,624,050 development, approved by council, that allowed contribution $800,000 federal grant funds, $1,124,810 in Tax Increment Financing (“TIF”), a contribu tion $3,699,240 private funding Kully Construction, as condition receiving public financing funds.
To obtain this contract, lied nearly every turn. First, submitted development plan City. The proposal almost entirely fictitious. The plan falsely stated Kully Construction had over twenty years experience in completing successful housing projects. The plan named Tracy Hawkins as CEO Kully Construction lauded her more than ten years’ housing development experience; reality, Hawkins secretary part time hairdresser. plan falsely asserted seasoned project manager over twenty years experience major housing projects; truth, never worked developer. ‐
There was even a news article published in the St. Louis Post Dispatch on March 2006, supporting Rosen’s business proposal affirming his credentials. The article recounted how Rosen obtained a forty ‐ million ‐ dollar contract with the Philippine Government to develop a trash ‐ to ‐ energy power plant. Rosen claimed he became involved in the business of converting trash into usable power as result his deep ‐ rooted sympathy the children exposed garbage dumps Philippines. The article also noted that was awarded twenty ‐ five year contract, conclusion of which he would turn plant over Philippine Govern ‐ ment. now admits he no such investment the Philippines entire story concocted hopes bolstering his reputation successful developer.
A. Scheme Substitute Prefab Modular Housing for New Construction
Duped by his ploy, City contracted with the construction thirty ‐ two unit housing project. After meeting consultant July however, brought to attention project underfunded by approxi mately $2.7 million dollars projected rental income inadequate support anticipated expenses. Rosen concealed under funding problem from City, and instead addressed issue offering “upgrade” project—from thirty two units fifty ‐ six units—at addi tional cost. misrepresented could increase scope project so anticipated income additional twenty four rental units would appear to support projected expenses. East St. Louis Financial Advisory Authority (“FAA”) questioned how could ‐ increase the scope of the project without increasing the construction expenses. told the FAA construction costs fallen so significantly, due to the recent economic downturn, allowed him to add twenty ‐ four more units the project additional costs.
Of course could actually build fifty ‐ six unit property for the same cost thirty two unit property. In order make up the difference, chose substitute less expensive prefab modular housing units place the new construction contracted development agreement—without notifying or receiving approval from the FAA, East St. Louis Planning Commission, or City Council. To prevent FAA from discovering he tended substitute prefab modular housing, sent the FAA two facsimile transmissions misrepresenting plans for construction project. The first fax, dated June 16, contained itemized list materials and expenses related construction housing units. The list was created manufacturer prefab modular housing units. Rosen, however, removed manufacturer’s name, address, phone number, fax number from document prevent FAA discovering planned to substitute prefab modular housing. The second fax sent on June outlined construction timeline the project. timeline listed anticipated completion date each phase new construction, including framing exterior walls, plumbing, insulation, drywall, painting. Of course none these phases construction would occur prefab modular housing completely manufactured off site then shipped project’s location. *5 No.
B. Scheme to Fraudulently Obtain Private Financing The terms of agreement between Rosen and City required Rosen to obtain $3,699,240 private funding toward completion project. The FAA granted approval for project subject to condition Rosen verify that Kully Construction actually obtained private financing through a commercial loan submitting copy closing docu ‐ ments. As neither Rosen nor Kully Construction were credit worthy, Rosen solicited his accounting firm create false financial statements and tax returns exaggerate his income and assets.
On November 10, 2009, faxed his newly created fictitious tax return Amerisource Funding, support application for private financing project. The submitted tax return falsely stated owned a separate business with gross sales $2,014,019, had an ordinary business income $272,572, total assets of $898,991. On November 2009, again had accoun tant send Amerisource similarly false fraudulent financial statements, balance statements, statements retained earnings for tax years 2007. then supplied series letters that
purported verify Kully Construction obtained private financing developer’s contribution Project. FAA accepted “commitment letter” MDE Capital verification private financing so construction could begin project. On June FAA passed FAA Resolution 09–0623–89, which granted approval project, subject condition actually close a commercial loan and provide proof loan closing to FAA. In reality, Rosen had not obtained a commitment to lend from MDE Capital, as he had represented; rather, MDE Capital refused do business with Rosen after he requested representative provide him with a fraudulent closing document. Even without private financing, however, Rosen moved ahead on development project, and began incurring costs, including purchasing and clearing land proposed construction site.
Meanwhile, still representing City that had obtained private financing through MDE Capital, he continued secretly, unsuccessfully, seek private financ ing through other financial institutions. When FAA tried to confirm actually closed commercial loan with MDE Capital, responded supplying FAA closing documents different lender, First Monetary Group, Inc. documents represented had fulfilled obligation falsely evidenced existence a $3,699,240 line credit.
Unbeknownst FAA, First Monetary Group financial lender; rather is brokerage service matches potential borrowers actual lenders. paid First Monetary Group $30,000 create closing document would satisfy FAA’s requirements. truth, no loan closed, line credit established, no private funds were available Rosen.
C. Fraudulent Reimbursement next phase scheme occurred when duped the into reimbursing him for construction costs with public funds. According to the terms the development agreement, public funds were be used reimburse eligible expenses that were actually paid by the developer. The development agreement required evidence support each request for reimbursement (e.g., bills, contracts, invoices, lien waivers) verify that each expense was legitimate eligible for reimbursement.
On September Rosen submitted request for reimbursement falsely asserted Kully Construction had paid each itemized expenditures listed on invoice. Among itemized expenses listed was $40,000 expenditure supposedly paid subcontractor clearing land on construction site. In reality, paid only $3,000 clear acreage. then forged signature subcontractor lien waiver, which submitted to falsely corroborate subcontractor had been paid full, when truth subcontractor had performed work but still owed payment. After reviewing documentation submitted reimbursement request, FAA determined there evidence support Kully Construc tion’s claim actually paid subcontractor $40,000, FAA refused reimburse expense. total, made three “draw requests” reimburse ment expenses incurred by Kully Construction—$47,036.15, $60,449.04, $21,000. actually reimbursed $66,449.04 City.
D. The Investigation
In December 2009, a search warrant was executed for home. During investigation Rosen was interviewed three times federal agents, over course which he admitted to forging a lien waiver, submitting falsified billing invoices and lying to investigators. September 2010, Rosen, now fully aware that he was
subject a federal criminal investigation, met with an aspiring developer named Cheryl Pratt. Rosen told Pratt he retiring due to health concerns and that looking a new developer to take over project. Rosen, however, did not mention that project subject federal criminal investigation. Rosen further told Pratt $1.9 million dollars public financing would be transferred to her and she would be taking over “fully functional, fully feasible project” “ready to go.”
Relying on these misrepresentations, Pratt agreed pay Rosen $100,000 acquire land, architectural plans, engineering plans, construction plans, environmental studies. Pratt gave Rosen an initial $6,000 earnest money and scheduled formal closing October 2010. failed turn over plans Pratt closing, but she gave additional $44,000, withheld remaining $50,000 until provided her missing documentation.
On October dropped off box documents Pratt’s office she issued check for remaining $50,000. Pratt reviewed documents, how ever, learned substitute prefab modular housing lieu site construction was required under terms contract. Pratt also discovered had not passed ordinance transferring $1.9 million dollars public funding from Rosen to her. Shortly after, Pratt received a call from engineering firm informing her Rosen did not have authority to use or transfer engineering plans had not yet paid the engineering firm. Pratt then contacted her bank and stopped payment her $50,000 check before was cashed.
During fall 2010, Pratt had several meetings city officials try resolve issues surrounding project. In December Pratt informed, first time, project subject federal criminal investigation, that Rosen did not actually own all land site; one parcel still owned another individual second parcel was under control Bankruptcy Trustee. Pratt then called Rosen, December told him she wanted rescind their deal have her initial $50,000 payment refunded. agreed. Predictably, however, no refund ever remitted. Pratt attempted contact approximately twenty times following months, but avail.
Pratt did not hear again until May when she received demand letter threatening sue her if she did pay second $50,000 installment payment she cancelled. Eventually, filed civil suit against Pratt. ‐
E. Proceedings Below
On January 21, 2011, a grand jury the Southern District of Illinois returned an indictment charging with nine counts of wire fraud. On October pleaded guilty counts one through seven of the indictment. Rosen’s plea agreement, Government calculated total offense level at twenty ‐ seven, based on an offense level seven, a sixteen level enhancement for loss amount, a four ‐ level increase based on Rosen’s role organizer or leader the charged offenses. Rosen, on other hand, calculated his offense level at seventeen, starting a base offense level seven a ten ‐ level enhancement for loss amount. sentenced on April 2012. The parties argued three primary issues sentencing hearing. First, Rosen objected probation officer’s calculation intended loss. Second, objected application role offense adjustment being leader or organizer criminal activity involved five or more participants or other wise extensive, pursuant U.S.S.G. 3B1.1(a).Third, the parties differed what constituted reasonable sentence in this case under 3553(a) factors.
Ultimately, district court calculated under a technical application law, intended loss figure this case approximately $4.6 million dollars. However, granted motion downward departure after determining technical application Guidelines would substantially overstate offense. court calculated amount be $1,924,810—the amount public funding approved receive 12 ‐ City. Next, district court determined be an organizer or leader of criminal activity involved five or more participants applied an additional four ‐ level en hancement.
The district court’s resolution of these issues resulted in calculation a total offense level of twenty ‐ four, which called for Guidelines range fifty ‐ one sixty ‐ three months’ imprisonment. The district court granted Rosen’s request for below ‐ Guidelines sentence, though full extent he sought. argued for leniency based upon age, medical condition, family circumstances, actual loss in this case substantially less than loss. end, district sentenced below Guidelines range sentence forty eight months’ imprisonment.
II. DISCUSSION appeals district court’s calculation in
tended loss amount under U.S.S.G. § 2B1.1, determination role offense leader or organizer, pursuant U.S.S.G. 3B1.1(a), reasonableness sentence under U.S.S.G. 3553(a).
A. Intended Loss Calculation We review court’s calculation for clear error. States v. Green , F.3d 583 (7th Cir. 2011). However, threshold questions concerning meaning “loss” methodology be used measuring loss present questions law call de novo review. United v. Wasz (7th 2006). Sentencing Guidelines provide increase offense level based upon 2101 the amount loss resulting from the offense. U.S.S.G. § 2B1.1(b). A loss is defined as either the actual or intended loss, whichever is greater. 2B1.1, cmt. n.3 (A). Further, “intended loss” refers the pecuniary harm that was intended result from the offense, including that which would have been impossible or unlikely occur. 2B1.1, cmt. n.3 (A)(i ii) (2011).
In determining the loss amount in this case, the district court found that intended loss was $1,924,810, which was amount public funding City earmarked Rosen’s affordable housing project. argues using amount public funding as intended loss amount error that expands Guidelines’ definition “intended loss” because it requires presumption he would have taken additional affirmative steps furtherance fraud. support this claim, points out he never actually eligible to receive any public funds he did meet condition his agreement City obtain private financing. argues “intended loss” amount set the is based on speculation harm the defendant might have caused had scheme persisted its intended conclusion.
We disagree calculated amount was based speculation. Rather based upon amount eligible receive scheme been successful. As we noted v. Schneider (7th 1991), “‘loss’ within meaning Guidelines includes intended, probable, or otherwise expected loss, qualification vital importance case … where fraud discovered or otherwise interrupted before victim 12 ‐ has been fleeced.” qualifies as a “true con artist.” Id. He had no intention of upholding end of agreement with City, clearly qualms about doing whatever he deemed necessary in order carry out fraudulent scheme its most lucrative end. Accordingly, we find district court did err its determination appropriate amount.
B. Role ‐ In ‐ The ‐ Crime Enhancement The district court applied a four level enhancement to sentence, pursuant U.S.S.G. § 3B1.1(a), after deter mining organizer or leader a criminal activity involved five or more participants or other wise extensive. Whether defendant exercised leadership or managerial role charged offense is determination that we review clear error. United States v. Johnson , 489 F.3d 794, 796 (7th Cir. 2007). “central concern” § 3B1.1 defendant’s relative
responsibility commission offense. United States v. Vasquez , 673 F.3d 685 (7th Cir. 2012) (citing United States v. Mendoza , 576 F.3d 717 (7th Cir. 2009)). In making that determination, should consider factors such “the defendant’s decision making authority, nature participation, recruitment accomplices, claimed right a larger share fruits crime, role planning and organizing, scope illegal activity, control authority exercised over others.” Vasquez , F.3d 685 (citing U.S.S.G. 3B1.1 cmt. n.4; v. Knox (7th 2010)). order appropriately apply 3B1.1(a) adjustment defendant ʹ s sentence, “the defendant must 12 have exercised some degree control over others involved in commission offense or he must have been responsible for organizing others for purpose carrying out crime.” Vasquez 673 F.3d at 685 (citing Knox , F. 3d at 874).
Even though record clearly reflects that was the sole mastermind behind this scheme, recruited additional accomplices as he deemed necessary, he argues this enhancement in error as he was organizer a unified criminal plot. admits he “associations” with people he used further his criminal conduct, however, he argues those associates’ roles were too limited in scope objective for them be considered participants larger, cohesive criminal scheme. Presentence Report identified seven individuals who participated Rosen’s scheme. Rosen concedes he recruited each these individuals, but he argues he solicited each person only need for their individ ‐ ual services arose. Meaning each individual solicited by specific objective rather than all acting concert within larger unitary criminal scheme, did not exercise authority or control over participants.
Relying v. Wasz (7th 2006), found organizational role consisted “efforts marshal other individuals purpose executing crime” thereby satisfying 3B1.1(a). Id . 730. argues case is distinguishable Wasz here there unified scheme; rather each partici pant recruited perform specific role (such as creating fictitious tax return) there insufficient evi dence suggest all these participants were working ‐ towards same end. We disagree. In Wasz , we noted that though defendants contracted individually with each co defendant, their actions still reflected “a guiding influence over other participants offense.” Id .
Here, we agree Rosen he recruited each additional participant perform specific illegal handiwork, but does not diminish his culpability as an organizer under 3B1.1(a). Rosen alone owned Kully Construction, “development” business center this fraud scheme, alone had decision ‐ making control over every aspect this crime. Rosen chose who recruited, what purpose, solely determined each participant’s appropriate compensation. For example, Hawkins secretary solicited pose as Kully’s fictional CEO. exchange, promised her future employment company. It is clear in control this ploy all along. He recruited compensated cohorts needed bring fraudulent plan its conclusion. We find clear error district court’s determination organizer this brazen scheme deserving four level enhancement pursuant 3B1.1.(a).
C. Unreasonable Sentence final challenge reasonableness his sentence. When considering overall reasonableness a sentence, we review abuse discretion. v. Jackson (7th 2008). This review involves two step analysis. First, we ensure did make any procedural errors; if did not, then we evaluate sentence’s substantive reasonableness. Id. Here, faces 12 particularly uphill battle, given sentence is presump ‐ tively reasonable because it is below applicable Guidelines range. See United States v. Poetz , 582 F.3d 835, 837 (7th Cir. 2009).
1. Sentencing Procedures The Supreme Court has made clear a, “a district court should begin sentencing hearing calculating advisory guidelines range.” United States v. Long , 639 F.3d 293, 299 (7th Cir. 2011) (citing Gall v. United States , 552 U.S. 38, 49, 128 S.Ct. 169 L.Ed.2d 445 (2007)). district court must then subject its proposed sentence adversarial testing, hearing arguments whether advisory sentence should apply. Long , 639 F.3d at 299 (citing Rita v. United States, 551 U.S. 338, 127 S.Ct. 168 L.Ed.2d 203 (2007)). Finally, district court must evaluate § 3553(a) factors impose sen ‐ tence, providing “adequate statement judge’s reasons, consistent with 3553(a), thinking sentence has selected is indeed appropriate particular defendant.” Long at (citing v. Dean , 414 F.3d 725, (7th 2005)).
Here, crux argument procedural sequence sentencing hearing improper district court failed adhere “strict” sentencing proce dures outlined U.S.S.G. 1B1.1. Specifically, argues erred when made determination he entitled downward departure regarding intended amount issue contemporaneously its determina tion applicable Guidelines range. support his contention, relies upon case which Third Circuit, 12 held that the district court procedurally erred when analyzed steps of the sentencing procedures out of order. States v. Friedman , (3d 2011). Friedman , district court began its analysis first discussing the disputed loss calculation, then discussing departure motion, then discussing two additional Guidelines disputes, then engaging some discussion the § 3553(a) factors, then stating it would impose something less than offense level twenty ‐ two before continuing its discussion 3553(a) factors. Id . Finally district court imposed thirty four month sentence, based offense level “either nineteen or twenty .” Id. Our sister circuit reasoned convoluted record in Friedman inhibited its “ability review sentence for reasonableness thus required remand.” Id.
That situation present here. A review sentenc ‐ ing transcript shows district court correctly calculated appropriate Guidelines range, granted sufficient down ‐ ward departure based upon intended loss amount this case, sufficiently considered arguments both and Government, crafted reasonable sentence based upon (a) factors. Unlike Friedman we have trouble reviewing district court’s sentence this case find no procedural error.
2. Substantive Reasonableness raises two challenges substantive reasonable ness sentence. First, argues his sentence is unreasonable loss amount calculated by overstates seriousness offense, when compared actual occurred. commen 12 12 19 ($66,449.04); when the district court granted below Guidelines sentence, which we hold be presumptively reasonable. See Rita v. United States , 551 U.S. 338, 347, 127 S.Ct. 168 L.Ed.2d 203 (2007). Therefore, we find abuse discretion, nor any support Rosen’s contention his sentence is unreasonable the amount overstates seriousness of his offense.
Second, contends court failed adequately consider mitigating factors applicable under § 3553(a). We will determine sentence be reasonable “if district court gives meaningful consideration factors enumerated in U.S.C. 3553(a), including advisory Sentencing Guidelines, arrives at sentence objectively reasonable in light statutory factors individual circumstances case.” United States v. Shannon , 518 F.3d 496 (7th Cir. 2008) (citing Gall , U.S. 49–50, 128 S.Ct. 586; v. Wachowiak (7th 2007)).
Here, contends district court did give proper weight family circumstances, advanced age, and poor health. On contrary, sentencing transcript this case illustrates district court throughly considered all appropriate 3553(a) factors crafting Rosen’s sentence. The specifically noted advanced age and failing health, but also saw crime outrageous. Rosen sought swindle an already impoverished out millions dollars public funding through elaborate fraud scheme, couched under guise creating “affordable housing” benefit residents East St. Louis. failed rebut presumption reasonableness attached sentence, such, we find abuse discretion.
III. CONCLUSION
Accordingly, we AFFIRM.
[*] Of District Court Eastern District Wisconsin, sitting designation.
tary to U.S.S.G. 2B1.1 notes that “there may be cases in which the offense level determined under this Guidelines substan tially overstates the seriousness the offense.” U.S.S.G. 2B1.1 cmt. n. 19(C). this case, the district court calculated the intended loss amount $1.9 million dollars—the amount public funding that stood receive his scheme progressed he hoped. argues that order even be eligible receive $1.9 million dollars public funding, he would need to first obtain private financing, then submit draw requests asking reimbursement. Since was unsuccessful, after multiple attempts, obtain private financing, argues that $1.9 million dollar loss amount set court is unreasonably high there little possibility scheme could have successfully progressed point. argues ploy was doomed never materialize beyond fraudulent private financing applications; actual loss amount ($66,449.04) a more accurate barometer seriousness offense. We have held “court can consider amount variance between intended loss realistic possibility loss when considering appropriate sentence.” United States v. Portman , F.3d 640 (7th Cir. 2012) (citing United v. Stockheimer (7th 1998)). This decision, however, remains sentencing judge ʹ s wide discretion, our review may only evaluate overall reasonableness sentence imposed. Id . A review record demonstrates thoroughly consid ered substantial difference between loss in this case ($1.9 million dollar) actual amount