United States v. Courtney

• Citation: 76 F.Supp.3d 1267
• Decision Date: 15 December 2014
• Docket Number: No. CR 11–2860–001 JB.,CR 11–2860–001 JB.
• Parties: UNITED STATES of America, Plaintiff, v. Keith Michael COURTNEY, Defendant.
• Court: U.S. District Court — District of New Mexico

76 F.Supp.3d 1267

UNITED STATES of America, Plaintiff
v.
Keith Michael COURTNEY, Defendant.

No. CR 11–2860–001 JB.

United States District Court, D. New Mexico.

Signed Dec. 15, 2014.

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Damon P. Martinez, United States Attorney's Office, Mary L. Higgins, Stephen R. Kotz, Fred J. Federici III, Assistant

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United States Attorneys, Albuquerque, NM, for Plaintiff.

Billy R. Blackburn, Paul Linnenburger, Albuquerque, NM, Adrienne Wisenberg, Barnes & Thornburg LLP, Solomon Wisenberg, Nelson Mullins Riley & Scarborough LLP, Washington, D.C., for the Defendant.

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on: (i) the Defendant's Objections to August 28, 2013 Redisclosed Presentence Investigation Report, filed October 2, 2013 (Doc. 151)(“Objections”); (ii) the Sentencing Memorandum of Keith Michael Courtney, filed October 3, 2013 (Doc. 152)(“Sentencing Memo.”); and (iii) the Letter from Keith Michael Courtney to the Court, filed October 9, 2013 (Doc. 156)(“Courtney Letter”). The Court held a hearing on October 9, 2013. The primary issues are: (i) whether Defendant Keith Michael Courtney was an organizer of criminal activity, thus triggering a 2–level increase under U.S.S.G. § 3B1.1(c) ; (ii) whether Courtney used a special skill to commit his crimes, thus triggering a 2–level increase under U.S.S.G. § 3B1.3 ; (iii) whether Courtney used sophisticated means to commit wire fraud, thus triggering a 2–level increase under U.S.S.G. § 2B1.1(b)(10)(C) ; (iv) whether Courtney has clearly demonstrated acceptance of responsibility for his offense, thus triggering a 2–level decrease under U.S.S.G. § 3E1.1(a) ; and (v) whether the Court should vary Courtney's sentence from the Guidelines sentencing range. The Court concludes that Courtney was an organizer of the fraud scheme, that he used sophisticated means to commit wire fraud, and that he has not clearly demonstrated acceptance of responsibility for his offense; the Court cannot properly apply a special-skill enhancement, because such an enhancement cannot be imposed in conjunction with an aggravating role enhancement, which Courtney merits. Courtney's total offense level is thus 25, and his criminal history category is I, indicating a Guidelines sentencing range of 57–71 months. The Court will vary downward from this range, however, and impose a sentence of 24–months imprisonment; the Court will also impose three years of supervised release. The Court, thus, sustains the Objections in part and overrules them in part, and grants in part and denies in part the relief that the Sentencing Memo. and the Courtney Letter request.

FACTUAL BACKGROUND

From approximately November, 2006, to September, 2007, Courtney and Co–Defendant Jason Johns operated an elaborate scheme to fraudulently obtain money from mortgage lending institutions. See Second Amended Presentence Investigation Report ¶ 32, at 12 (disclosed August 28, 2013)(“PSR”). Courtney was part-owner of construction and mortgage/lending companies, and Johns was one of Courtney's loan officers. See PSR ¶ 32, at 12. The scheme involved using straw buyers to purchase two houses that Courtney had built and that Courtney's mother owned; Johns used his knowledge as a loan officer to generate the loan applications, secure no-document loans, obtain the straw buyers' signatures, and submit the applications to prospective lenders.See PSR ¶ 32, at 12. Courtney used his knowledge as the part-owner of the businesses and made the transactions possible by acting as the real estate broker for the buyers, signing the closing documents on behalf of his mother under a power of attorney. See PSR ¶ 32, at 12. Courtney also promised

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to pay the mortgages on both homes on behalf of the straw buyers. See PSR ¶ 32, at 12.

Courtney and Johns solicited a total of $1,601,825.80 in fraudulent loans, of which $772,265.17 they never repaid. See PSR ¶ 33, at 12. Courtney appears to have intended to pay off all the loans, but his businesses went south and, on September 11, 2008, Courtney declared Chapter 13 bankruptcy.¹ See PSR ¶ 33, at 12. Courtney recruited others into his scheme—including the straw buyers and his mother—but, other than Johns, their level of knowledge of and culpability for the fraud remains unestablished. See PSR ¶ 33, at 12.

PROCEDURAL BACKGROUND

A jury convicted Courtney of Wire Fraud and Aiding and Abetting under 18 U.S.C. § 1343 and 18 U.S.C. § 2. See Indictment, filed November 9, 2011 (Doc. 2); Verdict, filed March 27, 2013 (Doc. 109). The United States Probation Office (“USPO”) disclosed the PSR on August 28, 2013.² The USPO calculates the base offense level to be 7 pursuant to U.S.S.G. § 2B1.1. See PSR ¶ 44, at 7. The USPO applies a 14–level increase pursuant to U.S.S.G. § 2B1.1(b)(1)(H), because the total loss amount for which Courtney is responsible is $772,265.17. See PSR ¶ 45, at 15. The USPO also applies a 2–level increase pursuant to U.S.S.G. § 2B1.1(b)(10) for use of sophisticated means, because the case involved an elaborate mortgage-fraud scheme, which, the USPO contends, constitutes the use of sophisticated means. See PSR ¶ 46, at 15. The USPO additionally applies a 2–level increase pursuant to U.S.S.G. § 3B1.1 for his role in the offense, because Courtney was a part-owner of three companies involved in the scheme, because he recruited the straw buyers upon which the scheme depended and acted as their point of contact, and because Courtney's mother used the loan proceeds to pay off her own mortgage and construction loans. See PSR ¶ 48, at 15. The USPO last applies a 2–level adjustment for use of a special skill, because Courtney used his knowledge as part-owner of mortgage/lending companies, and because he acted as a real estate broker for the buyers, signing the closing documents on his mother's behalf under a power of attorney and directing the proceeds. See PSR ¶ 49, at 15. The USPO explicitly recommends that the Court not apply a reduction under U.S.S.G. § 3E1.1 for acceptance of responsibility. See PSR ¶ 53, at 16. Taken together, the PSR calculates Courtney's total offense level to be 27. See PSR ¶ 54, at 16. The PSR calculates his criminal history to be I, based on a total of zero criminal history points. See PSR ¶ 58, at 16. A total offense level of 27 and criminal-history category of I produces a Guideline imprisonment range of 70–87 months. See PSR ¶ 87, at 23.

In his Objections, Courtney objects to the PSR's statements that he was a real estate broker for the buyers, arguing that he was a broker only for his mother, the seller. See Objections at 2. Further, Courtney objects to the PSR's special-skills enhancement, arguing that he did not use any special skills as a real estate

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broker to significantly facilitate the alleged crimes, and, further, that he cannot receive both the special-skills enhancement and the aggravating role enhancement. See Objections at 3–12. Courtney also objects to the PSR's application of the sophisticated means enhancement, arguing that mortgage schemes that would justify application of that enhancement are far more complex than those in this case. See Objections at 12–17. In his view, “there must be something more intricate and complex than the mere commission of the crime at issue to warrant the enhancement.” Objections at 13. As an example, Courtney cites United States v. Weiss, 630 F.3d 1263 (10th Cir.2010) ; in that case, the Tenth Circuit upheld the district court's application of the sophisticated means enhancement where the defendant had engaged in complex financial calculations and generated multiple false credit letters to fraudulently obtain loans for ineligible buyers under the Fair Housing Act. See United States v. Weiss, 630 F.3d at 1267–68, 1278–79. Citing United States v. Weiss and cases like it, Courtney argues that, because the Tenth Circuit has upheld application of the sophisticated means enhancement to schemes arguably more complex than the ones he used, the Court should not apply the enhancement here; according to him, the allegations here “do not evidence the level of deceit and calculated action that the Tenth Circuit and others have pointed to as sufficient to substantiate the Sophisticated Means enhancement.” Objections at 14–17.

Courtney also objects to the PSR's application of the aggravating role enhancement. See Objections at 18–22. Courtney first points out that the PSR does not specify which of the four aggravating roles listed in U.S.S.G. § 3B1.1 he played and suggests that that alone should cause the Court to deny the enhancement, citing no authority for that proposition. See Objections at 19. To the substance of the enhancement, Courtney argues that the Tenth Circuit has interpreted “leader” in U.S.S.G. § 3B1.1 to require a degree of control over others. Objections at 18–19. In Courtney's view, there is no evidence that he exercised the degree of control required, and, further, he points to Johns' role in “recruiting the borrowers; preparing and submitting loan applications,...