U.S. v. Baum

• Decision Date: 10 February 2009
• Docket Number: No. 07-6257.,07-6257.
• Citation: 555 F.3d 1129
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Brandon L. BAUM, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

555 F.3d 1129

UNITED STATES of America, Plaintiff-Appellee, v. Brandon L. BAUM, Defendant-Appellant.

No. 07-6257.

United States Court of Appeals, Tenth Circuit.

February 10, 2009.

Thomas D. McCormick, Oklahoma City, OK; Jill M. Wichlens, Assistant Federal Public Defender, (Raymond P. Moore, Federal Public Defender, with her on the brief), Denver, CO, for Appellant.

Susan Dickerson Cox, Assistant United States Attorney, (John C. Richter, United States Attorney, with her on the brief), Oklahoma City, OK, for Appellee.

Before HARTZ, McWILLIAMS, and McCONNELL, Circuit Judges.

HARTZ, Circuit Judge.

Brandon L. Baum was convicted on six counts of wire fraud, see 18 U.S.C. § 1343, and seven counts of money laundering, see id. § 1957. These convictions arose from Mr. Baum's orchestration of a scheme to defraud mortgage lenders by arranging for borrowers to provide false information to qualify for loans to purchase homes at artificially inflated prices. On appeal he argues (1) that the evidence at trial was insufficient to establish his fraud; and (2) that the district court miscalculated his total offense level under the United States Sentencing Guidelines (U.S.S.G.) by using the amount by which the home prices were inflated as the measure of his intended loss to the lenders. We have jurisdiction under 28 U.S.C. § 1291 and affirm.

I. BACKGROUND

A. The Offenses

Mr. Baum and six codefendants were charged in a 14-count indictment in the United States District Court for the Western District of Oklahoma. Thirteen counts alleged criminal conduct by Mr. Baum in representing the buyers of six homes in the Oak Tree subdivision of Edmond, Oklahoma, between 2003 and 2005.

For each of the six purchases Mr. Baum acted as the real-estate agent for the buyer, who was seeking a home loan in the subprime market because of weak credit. The buyer generally could not afford the down payment required by the lender (from 5% to 15% of the cost of the home), so the buyer borrowed that money from Mr. Baum and his associates. Mr. Baum's client agreed to buy the home at the seller's listed price, which often had been reduced over time as the home failed to sell; but Mr. Baum and his client obtained the consent of the seller and the seller's agent to list an inflated price on the purchase contract. The price inflation did not benefit the seller because Mr. Baum prepared an addendum to the purchase contract requiring the seller to pay the excess over the listed price to a named company for remodeling or repairing the home. Apparently unbeknownst to the seller, the company was merely a bank account used to funnel the money to provide cash to the purchaser and to pay Mr. Baum and his associates for their services and for advancing the down payment.

The mortgage lender, of course, was not informed of the true nature of the transaction. The purchase-contract addendum regarding the "remodeling" or "repair" payment was not disclosed, so the lender would be led to believe that the purchase price on the contract (which apparently was supported by an appraisal) was solely for the home itself. Also, the loan application falsely represented that the buyer had not borrowed money to make the down payment, and usually contained false information regarding the purchaser's income and assets.

B. Sentencing

Mr. Baum's base offense level under the Sentencing Guidelines was 7. See U.S.S.G. § 2B1.1(a). The district court added 4 levels for his role as a leader of the scheme, see id. § 3B1.1(a), and an additional 2 levels for obstruction of justice, based on his false testimony at trial and intimidation of witnesses, see id. § 3C1.1. The court also added 16 levels because the loss intended by Mr. Baum was more than $1,000,000. See id. § 2B1.1(b)(1)(I). In computing the intended loss, the court took into account not only the six mortgage loans underlying Mr. Baum's convictions, but also 15 uncharged loans that involved similar misconduct. See id. § 1B1.3(a)(2) (in setting offense level, court should consider all acts that were part of fraudulent scheme). The court then arrived at an intended loss of $1,393,243.10 by adding the amounts by which the inflated price of each home (the price stated in the purchase agreement) exceeded the actual sales price.

With a total offense level of 29 and a criminal-history category of 1, Mr. Baum's guidelines sentencing range was 87 to 108 months. See id. ch. 5, pt. A. The district court sentenced Mr. Baum to 87 months' imprisonment.

II. DISCUSSION

A. Sufficiency of the Evidence

We review the evidence de novo to determine whether a reasonable jury, viewing the evidence in the light most favorable to the prosecution, could find Mr. Baum guilty beyond a reasonable doubt. See United States v. Gallant, 537 F.3d 1202, 1222 (10th Cir.2008).

"To convict a defendant of wire fraud under 18 U.S.C. § 1343, the government must show (1) a scheme or artifice to defraud or obtain property by means of false or fraudulent pretenses, representations, or promises, (2) an intent to defraud, and (3) ... use of interstate wire ... communications to execute the scheme." Id. at 1228 (internal quotation marks omitted). The wire transfer for each wire-fraud count was the transfer of money from the mortgage lender to the title company handling the closing.

To prove money laundering under 18 U.S.C. § 1957, "[t]he government must prove five elements: that the defendant (1) engaged or attempted to engage, (2) in a monetary transaction, (3) in criminally derived property, (4) knowing that the property is derived from unlawful activity, and (5) that the property is, in fact, derived from specified unlawful activity." United States v. Lake, 472 F.3d 1247, 1260 (10th Cir.2007) (internal quotation marks omitted). Specified unlawful activity is defined to include wire fraud. See id. (noting that "[s]pecified unlawful activity" is "any of a number of offenses listed in 18 U.S.C. § 1956(c)(7), ... includ[ing] wire fraud" (internal quotation marks omitted)). And criminally derived property includes property (such as money) acquired through wire fraud. See id. The "monetary transactions" in this case were the transfers of loan proceeds from the make-believe contractors to Mr. Baum and others.

Mr. Baum's sole challenge to his money-laundering convictions is that the government did not prove wire fraud, so there was no unlawful or criminally derived property. Because this challenge therefore depends on the merits of his challenge to the wire-fraud convictions, it need not be discussed separately.

Mr. Baum challenges his wire-fraud convictions on the grounds that (1) all the financial arrangements in the six transactions were fully disclosed; (2) the inflated home values were based on subjective appraisals and therefore cannot form the basis of a wire-fraud conviction; and (3) the failure to have remodeling or repair work done on the homes, despite the requirements of the purchase-contract addenda, amounts merely to a breach of contract, not a crime.

We question whether we have a duty to consider Mr. Baum's challenge to the sufficiency of the evidence of guilt. Although the trial transcript fills 11 volumes, his opening brief, which is the only one of his briefs on appeal to raise the issue, devotes only five pages to a statement of the case, statement of the facts, summary of the argument, and argument. The argument contains no reference to the trial record, and, aside from his citation to his own testimony, the only reference to the record in the statement of facts is a string cite to 15 excerpts, consisting almost entirely of his cross-examination of various government witnesses, without any description of what was elicited in each excerpt. No attempt was made to explain why the incriminating evidence (which one would expect to find in the direct testimony of the government witnesses) would not suffice to establish guilt. Such a presentation requires the court "to scan volumes aimlessly" in a search for what was established at trial. Aquila, Inc. v. C.W. Mining, 545 F.3d 1258, 1268 (10th Cir.2008). It may well be "within our power as a court to refuse to consider an argument in these circumstances." Id.

In any event, Mr. Baum's arguments fail on their merits. With respect to his first two contentions, there was extensive evidence that the mortgage lenders were not fully informed about the financial transactions regarding the home purchases. And even if the appraisals were totally legitimate, the phony sales prices, undisclosed addenda, and false information about the borrowers' finances would easily support the verdicts.

Finally, Mr. Baum's third argument— that failure to have the remodeling or repair work done was simply a breach of contract, not a crime—misses the point. Mr. Baum's guilt did not turn on whether such work occurred. The fraud (or at least the aspect of the fraud to which the addenda were relevant) was that the mortgage lender was led to believe that it was lending money to purchase a home for $X, not to purchase a home for $X-Y and then undertake $Y worth of remodeling or repairs. As an officer of one lender testified, she would question the accuracy of an appraisal if it exceeded the actual sales price. And representatives of each lender testified that the loans would not have been approved had they known of the addenda.

Accordingly, we hold that the evidence at trial was sufficient to establish Mr. Baum's fraud, and therefore we reject his challenges to his fraud and money-laundering convictions.

B. Sentencing

Under the Sentencing Guideline for various property offenses, including theft, embezzlement, and fraud, the offense level is increased based on the loss. See U.S.S.G. § 2B 1.1(b). In general, "loss is the greater of actual loss or intended loss." Id. § 2B1.1 cmt. n. 3(A). The probation office's presentence report (PSR) calculated what it termed the "Intended loss/Actual loss" in this case as $1,393,243.10. R. Vol. 14...