U.S. v. Confredo

• Decision Date: 10 June 2008
• Docket Number: Docket No. 06-3201-cr.
• Citation: 528 F.3d 143
• Parties: UNITED STATES of America, Appellee, v. Gary J. CONFREDO, Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

528 F.3d 143

UNITED STATES of America, Appellee, v. Gary J. CONFREDO, Defendant-Appellant.

Docket No. 06-3201-cr.

United States Court of Appeals, Second Circuit.

Heard: February 5, 2008.

Decided: June 10, 2008.

James H. Feldman, Ardmore, Penn. (Peter Goldberger, Law Offices of Alan Ellis, Ardmore, Penn., on the brief), for Defendant-Appellant.

Robin W. Morey, Asst. U.S. Atty., New York, N.Y. (Michael J. Garcia, U.S. Atty., Celeste L. Koeleveld, Asst. U.S. Atty., New York, N.Y., on the brief), for Appellee.

Before: NEWMAN, WINTER, and PARKER, Circuit Judges.

JON O. NEWMAN, Circuit Judge.

This sentencing appeal primarily concerns a loss calculation under the provision of the Sentencing Guidelines governing an "intended loss" for fraud offenses. See U.S.S.G. § 2F1.1 (1997). The appeal also presents a challenge to an enhancement for offenses committed while released on bail. See id. § 2J1.7. Gary Confredo appeals from the June 29, 2006, amended judgment of the District Court for the Southern District of New York (Leonard B. Sand, District Judge) sentencing him to imprisonment for 205 months following his plea of guilty to various offenses involving fraudulent loan applications. We remand for reconsideration of the intended loss amount.

Background

Criminal conduct and guilty plea. Doing business through an entity called Granite Financial Services, Confredo and his associates coordinated the submission of more than 200 fraudulent loan applications to New York City area banks, including approximately 100 applications seeking in excess of $21 million from Citibank, N.A., on behalf of hundreds of small businesses who were his customers. Confredo's customers knew that the loan applications were fraudulent.

To carry out the scheme, Confredo exploited his educational training in finance and his experience as a former loan officer for a bank; he knew what banks looked for when deciding whether to extend a business loan; and he drafted or procured the drafting of the fictitious loan applications, tax returns, financial statements, and other supporting documents accordingly. On paper, the loan applicants were well-established and profitable businesses; in reality, many of them were not even going concerns but merely vehicles concocted by Confredo and his associates for the sole purpose of securing loans for their customers.

The majority of Confredo's customers were not credit-worthy, and would not have obtained loans without the false information supplied to the banks by Confredo and his associates. Defense counsel alleged at a proceeding before Judge Sand in May 2006, without dispute from the Government, that in the majority of instances, individuals and/or institutions with good credit co-signed the loan applications. However, there is no indication that any of the approximately $12 million in loans that were ultimately granted were secured by bona fide assets pledged as collateral.

For the services provided by Confredo and his co-conspirators, Granite Financial Services received a fee that typically amounted to between ten and fifteen per cent of the loan amount. Customers paid a portion of the fee up front; if the bank denied a customer's loan application, Confredo or his associates would sometimes return the customer's payment and sometimes retain it. The presentence report ("PSR") estimates that, after payments to his associates and staff, Confredo's personal share of the proceeds from the scheme was "approximately $2,276,467."

While on bail following his arrest, Confredo purported to give truthful information during proffer sessions with the Government, but the Government became suspicious and enlisted a cooperator to meet with Confredo and record their discussion. During that meeting, Confredo told the cooperator that he was still arranging fraudulent loan deals while on bail, had been lying during the proffer sessions, and had been involved in loan sharking.

In light of his post-arrest criminal conduct and his discussion with the cooperator, the Government presented additional evidence to the grand jury, which returned a superseding indictment (the "indictment") in October 1998, certain counts of which related to offenses Confredo had committed while released on bail.

In February 1999, pursuant to a plea agreement, Confredo pled guilty to one count of bank fraud (18 U.S.C. § 1344), two counts of false statements on a loan application (18 U.S.C. § 1014), one count of false statement to a federal law enforcement officer (18 U.S.C. § 1001), and one count of witness tampering (18 U.S.C. § 1512(b)(3)). The last four offenses were committed after Confredo's initial arrest and release in November 1997. The plea agreement includes no stipulations as to amount of loss or the applicable sentencing range under the Sentencing Guidelines.

The loss calculation. The PSR calculated the loss amount to be the "total amount requested in [the] various loan applications" involved in Confredo's scheme, which it estimated to be $24.2 million. Citibank was the target of the majority of the fraudulent applications (more than 100), and it loaned approximately $11 million to Confredo's customers. The PSR noted that the actual loss to the banks was "extremely difficult to ascertain due to the amount of loans involved, the continual loan payments received by the banks from the customers of the loans and the negotiations of settlement agreements between the banks and these customers." But the Probation Office did obtain loss statements from a few banks. One Citibank official reported payments of about $2.5 million, and hence an expected actual loss of $8.5 million; but another Citibank official reported a total loss of $9.5 million. The combined actual loss reported by the other banks from whom the Probation Office obtained statements was slightly higher than $1 million. Confredo did not file any objections to the PSR.

The first sentencing. Using the 1997 Guidelines, applicable to Confredo's offense conduct, Judge Sand began with a base offense level of 6, see § 2F1.1(a)¹, added 12 levels not challenged on this appeal, added 16 levels for an intended loss of more than $20 million but less than $40 million, see § 2F1.1(b)(1)(Q), and added 3 more levels because four counts of Confredo's conviction involved offenses he committed while on release after his arrest, see § 2J1.7. The adjusted offense level of 37 in Criminal History Category I yielded a sentence range of 210 to 262 months.²

With respect to the loss enhancement, the Government argued, and the probation officer agreed, that Judge Sand should determine the enhancement based on the intended loss attributable to Confredo's conduct, which they contended was represented by the combined face value of the loan applications, $24.2 million. Confredo conceded that the actual loss caused by his scheme was in excess of $10 million, but less than $20 million.³ Judge Sand ruled that intended, rather than actual, loss was the proper measure of the amount of loss under U.S.S.G. § 2F1.1(b)(1)(Q), and that the amount of the intended loss was the total of all the loan applications. Judge Sand also adopted the PSR's restitution recommendation, ordering restitution in the amount of $9,338,479.81.

Although Confredo did not dispute the amount of intended loss for purposes of determining the appropriate loss enhancement, defense counsel did discuss the amount of loss at the first sentencing in the context of Confredo's request for a downward departure. Among the grounds advanced to justify a departure was a claim that the amount of loss calculation overstated the true amount of loss for various reasons, including Confredo's alleged "intention . . . that the loans would be paid for the most part."

The three-level enhancement for offenses committed while on release was not discussed at the first sentencing, but is challenged on appeal under Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000), decided after the sentencing.

Judge Sand denied Confredo's request for a downward departure and orally announced a sentence of 262 months, which was the top of the applicable Guidelines range. Judge Sand also entered 262 months as the total term of imprisonment on the judgment form. However, Judge Sand's distribution of the sentence among Confredo's five counts of conviction yielded a total of only 230 months, as reflected in the summary order disposing of Confredo's prior appeal. See United States v. Confredo, 1 Fed.Appx. 68, 70 (2d Cir. 2001) ("Confredo I"). In addition, with respect to the four counts to which the section 2J1.7 enhancement applied, Judge Sand did not apportion the sentence between the underlying offenses and the enhancement, as required by 18 U.S.C. § 3147.

First appeal. Confredo appealed, raising numerous claims. As to two of the issues raised on the first appeal — the confusion about whether the total sentence was 230 or 262 months, and the absence of a section 3147 apportionment — the Government conceded that a remand for resentencing was necessary. As additional grounds for resentencing, Confredo presented the two claims that are the subject of this appeal: (1) the District Court's loss calculation was erroneous; and (2) the section 2J1.7 enhancement was unlawful under Apprendi, decided after the first sentencing, because the indictment did not charge that he had committed offenses while on release.

On the first appeal, we remanded for resentencing on the first two grounds just discussed. See Confredo I, 1 Fed.Appx. at 70. As to Confredo's Apprendi claim, we declined to consider it, stating, "We find it more appropriate to allow the district court to consider it in the first instance on remand." Id. at 71 n. 3. As to Confredo's claim regarding the loss amount, we noted that Confredo "did not object to the loss calculation in the presentence report or object to the district court's loss calculation at sentencing." Id. at 71. However, because the loss...