U.S. v. Sloan

• Decision Date: 11 October 2007
• Docket Number: No. 05-3310.,05-3310.
• Citation: 505 F.3d 685
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Keith SLOAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

505 F.3d 685

UNITED STATES of America, Plaintiff-Appellee, v. Keith SLOAN, Defendant-Appellant.

No. 05-3310.

United States Court of Appeals, Seventh Circuit.

Argued April 13, 2006.

Decided October 11, 2007.

Melissa Childs (argued), Office of the United States Attorney, Chicago, IL, for Plaintiff-Appellee.

Carl P. Clavelli (argued), Chicago, IL, for Defendant-Appellant.

Before COFFEY, KANNE and WILLIAMS, Circuit Judges.

COFFEY, Circuit Judge.

After being charged with three counts of mail fraud, an aspiring young lawyer named Keith Sloan entered into a plea agreement with the government that allowed him to plead guilty to a single misdemeanor count of making a false statement to the Department of Housing and Urban Development (HUD) (rather than face the three felony counts he was originally charged with), in exchange for his promise to cooperate and testify against his co-defendants in the fraudulent real estate financial scheme in which he had been a willing and ongoing participant. Somehow, satisfied with the defendant's cooperation, the government did not recommend incarceration, and the judge sentenced him to a term of three years of probation, and at the same time imposed joint and several liability with ten of his codefendants for $638,396.47 in restitution¹ and 200 hours of community service. The government obtained an order of garnishment in order to collect the restitution from Sloan who has appealed the order. WE AFFIRM.

On July 25, 2000, a federal grand jury returned a sixteen-count indictment charging Sloan and his nineteen co-defendants with a scheme to defraud HUD and a number of other private mortgage lenders. Three of the counts charged Sloan with the commission of mail fraud felonies in violation of 18 U.S.C. § 1341. Sloan had graduated from the Northern Illinois University Law School just prior to the date of sentencing (January 31, 2002). Thus, with his being allowed to plead guilty to a misdemeanor (rather than three felonies), for reasons unexplained, the defendant was allowed to be admitted to practice law in Illinois.² After the completion of Sloan's probation, during which time he had made only a pittance of a payment on the restitution ordered, the government secured an order of garnishment in hopes of collecting the outstanding balance of $3,886,004.94 (an amount which included accrued interest) of the restitution previously ordered from him on the joint and several liability premise. Sloan, the defendant-appellant, challenged the order arguing, for the first time, that the order of restitution was entered without statutory authorization. Furthermore, it should be made clear that he did not challenge the restitution order at the time of sentencing. The district court denied his objection and entered an order of continuing garnishment. Sloan appeals.

Because a garnishment order is a final appealable order, see United States v. Mays, 430 F.3d 963, 965 (9th Cir.2005) ("A `final decision' generally is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment."), cert. denied, 546 U.S. 1207, 126 S.Ct. 1416, 164 L.Ed.2d 113 (2006), quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 89 L.Ed. 911 (1945); Central States, Southeast and Southwest Areas Pension Fund v. Express Freight Lines, Inc., 971 F.2d 5, 6 (7th Cir.1992) ("A contested collection proceeding will end in a judgment or a series of judgments granting supplementary relief to the plaintiff [in this garnishment case, the government]. The judgment that concludes the collection proceeding is the judgment from which the defendant can appeal."), this court has jurisdiction to hear the appeal. See 28 U.S.C. § 1291 ("The courts of appeals (other than the United States Court of Appeals for the Federal Circuit) shall have jurisdiction of appeals from all final decisions of the district courts of the United States. . . ."); United States v. Rand, 403 F.3d 489, 493 (7th Cir.2005) ("28 U.S.C. § 1291 . . . provides for appeals from final orders of the district courts") Because the order of garnishment is valid, we affirm.

I. BACKGROUND

Keith Sloan came in contact with his codefendant Robert Voltl, a practicing attorney, while Sloan was a student on summer break from undergraduate studies at Purdue University and was employed as a part-time pro shop attendant at a golf course in Dundee, Illinois. In May of 1993, Sloan advised Voltl that he had completed a paralegal program at Roosevelt University in Schaumburg, Illinois.³ He inquired about the possibility of employment in Voltl's law office in Chicago, Illinois. Voltl hired him as a full-time paralegal⁴ in May of 1993. He continued in that capacity until he entered law school in 1998.

The original felony indictment charged him with a fraud scheme, commencing in the month of August 1995, and continuing until at least January of 1998. Sloan and his nineteen co-defendants perpetrated and perpetuated a scheme to defraud HUD. The initial step in the scheme was to purchase a piece of property by paying the full sales price without having to borrow funds against the value of the property (first purchase). Brian Parr and several other co-defendants, in the fraudulent scheme, went in search of parcels of real estate to purchase with the intention of reselling them to second purchasers they recruited. A number of the defendants continued to recruit other "straw purchasers"⁵ to buy these properties immediately after their initial purchase at fraudulently inflated prices. The straw purchasers, in turn, received cash payments from a number of the named defendants in exchange for allowing the defendants to use their individual credit histories. Other second purchasers were told that they could purchase residences with "no money down" and receive cash back at closing.

In order to facilitate the second purchases, many of the named defendants, including Sloan as well as various agents and representatives of the innocent lenders, actually participated in the creation of the fraudulent documents used on behalf of the second purchasers in support of the inflated second purchase prices. These fraudulent documents were submitted to lenders during the mortgage application and approval process with the intent of ensuring that the second purchasers would qualify for mortgage loans from lenders. Two of the defendants, Tamara Smith and Nancy Zimmerman, had the duty of creating the fraudulent real estate appraisals in support of the second purchase prices. The inflated appraisals were also submitted to the lenders with the purpose of ensuring that the inflated mortgage loans would be issued.

A number of the defendants assisted in the closings during the second real estate purchase transactions by arranging for the parties on both sides of the closings to be represented by Robert Voltl even though there was an obvious conflict of interest. Voltl facilitated the completion of both the first and second purchases by scheduling the second purchase closing at an earlier time so that the proceeds from the sale could be used to make the first purchase. In this way the defendants used the proceeds from the mortgage loans to finance properties for second purchasers even though the first purchaser had not yet acquired the title. Occasionally, after the completion of the two purchases, combinations of defendants would enable the refinancing of the very same property by the creation of other fake documents to accompany the inflated appraisals.

Throughout the scheme the defendants profited from the difference between the inflated second purchase price and the initial purchase price (the spread). The spread often exceeded $100,000.00 per piece of real estate. These proceeds funded illegal payments to the defendants such as Tamara Smyth and Nancy Zimmerman for their participation in the fraudulent purchase and resale scheme. The defendants persuaded the lending companies to issue inflated mortgage loans on at least seventy-seven properties in the Chicago area. The loans exceeded ten million dollars of which more than three million dollars were insured by HUD⁶ and the Federal Housing Administration (FHA).⁷

Each of the twenty defendants in this fraudulent enterprise performed his or her own particular role which was connected somehow with his or her respective employment responsibilities. Robert Voltl, with the assistance of Keith Sloan and co-defendant Sandra Lesniewski (another paralegal in the firm), knowingly prepared materially false and misleading documents dealing with the sales of the properties for presentation to the lenders at closing. After fraudulently obtaining these monies from the lenders, Voltl, along with Sloan and Lesniewski, wrote checks from his own client trust account to various payees in order that he might fund the first "cash" purchase and also to compensate his co-schemers.

Sloan, at the direction of Voltl, regularly attended the real estate closings, notarized the documents and prepared all necessary documents, as well as signing the necessary checks on behalf of Voltl. As an example, during the closing process on the property being sold to Edward Scott Ellis, Sloan knowingly and fraudulently notarized the signatures of Ellis and his wife (while neither of them was in his presence) on the lender's Articles of Agreement, which also falsely stated that they had sold their home.⁸ Based on the documents notarized by the defendant Sloan, Ellis was approved for a HUD-insured loan in the amount of $158,000. Within months after the closing, Ellis stopped making mortgage payments, resulting in a net loss on this property to the United States of approximately $173,211.62.

Under the direction of Voltl, Sloan assisted in handling real estate closings for a co-defendant named Brian Parr. Also, on other occasions, Sloan often notarized the signatures on the closing documents in spite of the fact that the parties were not physically present...