United States v. Haywood, 13–3815.
| Decision Date | 26 January 2015 |
| Docket Number | No. 13–3815.,13–3815. |
| Citation | 777 F.3d 430 |
| Parties | UNITED STATES of America, Plaintiff–Appellee, v. Frederic S. HAYWOOD, Defendant–Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Jason A. Yonan, Attorney, Office of the United States Attorney, Chicago, IL, for Plaintiff–Appellee.
Joshua Sachs, Attorney, Law Office of Joshua Sachs & Associates, Evanston, IL, for Defendant–Appellant.
Before BAUER, MANION, and WILLIAMS, Circuit Judges.
Fred Haywood, with help from others, processed bogus applications for mortgage loans and caused $1.4 million in losses to the lenders. He pleaded guilty to wire fraud, 18 U.S.C. § 1343, and was sentenced to 151 months' imprisonment. On appeal Haywood argues that part of the loss should have been excluded in calculating his offense level under the sentencing guidelines. Haywood explains that he disclosed part of his fraud during proffer sessions protected by U.S.S.G. § 1B1.8. He also contends that the district court improperly applied a 4–level, aggravating-role adjustment under U.S.S.G. § 3B1.1(a). We affirm the judgment.
Haywood worked for several mortgage brokers between July 2001 and June 2007, and during that time he and at least 10 others (including his 5 codefendants) defrauded financial institutions that made loans to the brokerages' clients. As a “loan officer” or “loan processor” for his employers, Haywood was tasked with preparing loan applications and assembling supporting documents on behalf of home buyers needing financing. But many applications that Haywood prepared were chock-full of lies. He corroborated them with phony or altered documents, including property appraisals, cashier's checks (altered to make it appear that the buyers had made down payments), W–2 forms, pay stubs, and statements from landlords or property-management companies verifying that buyers who didn't already own a home were paying rent. Sometimes Haywood inflated the purchase price, causing the buyer to borrow more than necessary and allowing him to divert the excess to himself at closing. Sometimes the “buyers” themselves participated in the frauds, since they never intended to occupy the homes or repay the loans. Instead, they were being paid by Haywood to lend their names (and good credit) to secure fraudulent loans. Overall, Haywood admitted arranging 65 fraudulent loans.
Many of the phony rent verifications came from “New Christian Property Management,” one of several shell companies incorporated by Haywood. (He used that company also to funnel loan proceeds to himself.) Codefendant Steve Young, a fellow loan officer at one of the brokerages, created a variety of sham documents to meet Haywood's specifications. Codefendant Sumira Persuad supplied many of the inflated appraisals. Codefendant DeAngelo McMahan, another loan officer, helped gather documents for Haywood's loan applications. Haywood also paid at least five unindicted “bird dogs” to find “buyers” who would willingly apply for fraudulent loans.
In July 2007, before federal authorities had filed charges, an FBI special agent and three other federal agents interviewed Haywood (with his lawyer and a federal prosecutor present). Haywood admitted that at least 20 times from 2003 through 2005 he had given lenders false information about loan applicants' income, employment, and assets. But, as evidenced by the FBI agent's report of that interview, Haywood falsely denied much of his illegal activity, and apparently he did not share details about specific fraudulent loans. It was nearly 18 months later, in December 2008, that federal authorities charged Haywood. He executed a plea agreement and pleaded guilty to a single count of wire fraud in April 2012.
An FBI special agent discussed the case with the probation officer who prepared Haywood's presentence investigation report. That report reflects that the agent told the probation officer that Haywood had given truthful information during “two proffer interviews” conducted before he signed the plea agreement. In their plea agreement the parties stipulated that Haywood was responsible for 65 fraudulent loans (each one listed in “Attachment A” to the plea agreement) with a combined loss of $1,447,270. The plea agreement also states, in a section titled “Offense Level Calculation,” that a 16–level increase would apply under U.S.S.G. § 2B1.1(b)(1)(I) “because the loss amount of $1,447,270 exceeds $1,000,000 but is less than $2,500,000.” The plea agreement says nothing about the proffer interviews, about Haywood cooperating, or about U.S.S.G. § 1B1.8.
The probation officer relied entirely on the plea agreement in recommending that the loss amount used for guidelines purposes include the entire $1,447,270. In the presentence investigation report, the probation officer calculated a guidelines imprisonment range of 151 to 188 months, based on a total offense level of 29 and a criminal history category of VI. That offense level includes the 16–level increase under § 2B1.1(b)(1)(I) for a loss between $1 million and $2.5 million. The Level 29 also includes a 4–level increase under U.S.S.G. § 3B1.1(a), which applies to “an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive.” The probation officer reasoned that the scheme involved at least five participants, that Haywood was “culpable in all aspects,” and that he served as an organizer exerting “a guiding influence over” the other participants.
Three days before sentencing, new counsel for Haywood filed—late—a sentencing memorandum. Counsel objected to the 16–level increase under § 2B1.1(b)(1)(I). According to counsel, “three deals involving 5121 S. Union, 2130 S. Trumbull, and 5721 S. Hermitage with a total loss value of $486,000” should be excluded from the guidelines loss because, counsel asserted, the government had first learned about those frauds “during various proffer sessions.” Counsel insisted that the guidelines loss would be $917,000 after subtracting $486,000, which would lead to an upward adjustment of 14 levels, not 16, see U.S.S.G. § 2B1.1(b)(1)(H). In addition, counsel also objected that Haywood wasn't an organizer or leader and, thus, shouldn't receive a 4–level increase under § 3B1.1(a).
In Haywood's sentencing memorandum, defense counsel supplied no details about the objection to the probation officer's loss calculation, not even the dates or individual losses corresponding to the three addresses, all in Chicago. And, in fact, counsel's math does not add up. Subtracting $486,000 from the agreed total loss of...
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