United States v. Howder, 17-3413
| Decision Date | 27 August 2018 |
| Docket Number | No. 17-3454,No. 17-3413,17-3413,17-3454 |
| Parties | UNITED STATES of AMERICA, Plaintiff-Appellee, v. CHRISTOPHER J. HOWDER and JASON J. KEATING, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Sixth Circuit |
NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 18a0443n.06
CLAY, Circuit Judge. Defendants Christopher J. Howder and Jason J. Keating pleaded guilty to numerous counts of mail and wire fraud, in violation of 18 U.S.C. § 1341, 18 U.S.C. § 1343, and 18 U.S.C. § 1349. Howder was sentenced to 84 months' imprisonment. Keating was sentenced to 108 months' imprisonment. Both defendants appeal their sentences. For the reasons set forth below, we AFFIRM Defendants' sentences.
In March 2009, the federal government launched the Home Affordable Modification Program ("HAMP") to provide mortgage lenders with financial incentives to help distressed homeowners stay in their homes. In 2011, Jason Keating invited his old friend Christopher Howder to be the "underwriting manager" at an operation called "Making Homes Affordable USA" ("MHAUSA"), which was operated primarily out of Toledo, Ohio. Keating was the self-described "President" of this operation.
Keating, Howder, and others presented themselves as people who could assist distressed homeowners in obtaining loan modifications that would reduce homeowners' monthly mortgage obligations. MHAUSA ran an "origination strategy" called the "Home Saver Program," under which clients were directed to deposit their mortgage payments into an escrow account at MHAUSA and "were told this money was to be used for modification purposes for any arrearages that needed to be paid prior to approval." (R. 106, Howder Change of Plea Tr., PageID # 3800.) But MHAUSA did not help distressed homeowners; it exploited them.
The scheme was to "convinc[e] at risk home owners to submit their mortgage payments to Keating's escrow account without telling the home owners there was no escrow account and the funds were for personal use." Eventually, Howder broke with Keating, but he continued serving his own clients in the same manner, asking them to make payments into an "escrow fund," that was, in truth, a bank account from which he made daily cash withdrawals to fund his $250-$300/day OxyContin habit.
On March 5, 2015, Howder and Keating were each charged with one count of wire fraud, in violation of 18 U.S.C. § 1344, in connection with the home mortgage remodification business in which they both participated. Shortly thereafter, on April 2, 2015, the government filed a Superseding Indictment, charging Keating and Howder with 34 counts, alleging various fraud offenses. Count 1 charged both defendants with conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 1349, 18 U.S.C. § 1341, and 18 U.S.C. § 1343; Counts 3, 4, and 6 charged both defendants with mail fraud, in violation of 18 U.S.C. § 1341; and Counts 21-26 charged bothdefendants with wire fraud, in violation of 18 U.S.C. § 1343. Additionally, Keating was charged individually in Counts 2, 5, 7, 8, 11-16, 18, and 19 with mail fraud and in Counts 27-34 with wire fraud. And Howder was charged individually in Counts 9, 10, and 17 with mail fraud and in Count 20 with wire fraud.
Both defendants pleaded guilty without a plea agreement. On April 18, 2016, Howder pleaded guilty to all 14 counts with which he was charged, including one count of Conspiracy to Commit Mail & Wire Fraud, 6 counts of Mail Fraud, Aiding & Abetting, and 7 counts of Wire Fraud, Aiding & Abetting. He was referred to the probation office for the preparation of a Presentence Investigation Report ("PSR"). Howder submitted objections to the initial draft PSR on October 19, 2016. Specifically, Howder objected to the scope of the jointly undertaken criminal activity reflected in the PSR and its effect on calculating the loss amount, as relevant to the application of USSG § 2B1.1(b)(1) enhancements. He further objected to the application of USSG § 2B1.1(b)(2)(C), an enhancement applied when twenty-five or more victims suffered substantial financial hardship.
As for Keating, he ultimately pleaded guilty to 26 of the 30 counts with which he was charged, including one count of Conspiracy to Commit Mail and Wire Fraud, 12 counts of Mail Fraud, Aiding & Abetting, and 13 counts of Wire Fraud, Aiding & Abetting. He was also referred to the probation office for the preparation of a PSR.
On October 24, 2016, the district court held a hearing to address Defendants' objections to their PSRs. Both defendants objected to the loss amount attributed to them for the period of joint activity and to the proposed six-level enhancement for 25 or more victims incurring substantial financial hardship. On December 5, 2016, the court held a second hearing to address these objections and take victim impact statements. The government presented nine victims, twoof whom appeared in person and made verbal statements and seven who appeared via telephone. Three victims said that both Keating and Howder were the points of contact for their mortgage loan remodifications that were part of the scheme to defraud charged in this case. Three other victims stated that Keating alone was their main contact for their loan remodifications. In addition to receiving the victim impact testimony and addressing sentencing enhancements, the court discussed restitution and ordered the preparation of final PSRs. At the conclusion of this hearing, the judge advised counsel for Defendants that he would strongly consider a six-level enhancement for each defendant pursuant to USSG § 2B1.1(b)(2)(C) because the fraudulent activity resulted in substantial financial hardship for 25 or more victims.
On February 28, 2017, final PSRs were submitted for Howder and for Keating. The reported offense conduct alleged that Howder and Keating were primary conspirators in the mortgage loan remodification scheme that ran from 2010 to 2015. The PSRs calculated the guideline ranges for both defendants as follows: 7 levels for the base offense (USSG § 2B1.1), plus 16 levels for a total loss amount of $1,842,894.87 (USSG § 2B1.1(b)(1)(I)), plus 6 levels for offense conduct that resulted in substantial financial hardship to 25 or more victims (USSG § 2B1.1(b)(2)(C)), resulting in a total offense level of 29. After deducting 3 levels for acceptance of responsibility, the total offense level for each defendant was 26. Keating's criminal history was a Category III, resulting in a guideline range of 78-97 months. Howder's criminal history was a Category IV, making his guidelines range 92-115 months.
Both Keating and Howder filed Sentencing Memoranda continuing to object to the PSR's loss calculation and substantial financial harm enhancement. Howder's Sentencing Memorandum also maintained his objection to the scope of the jointly undertaken criminal activity alleged in the PSR, citing witness interviews that, he claims, "barely mentioned Mr. Howder or did not mentionhim at all." (Brief for Appellant Howder at 7-8 .) His memorandum also focused on his recovery from an extensive OxyContin habit and his successful maintaining of a job at a home remodeling company. In Keating's memorandum, he objected to receiving a Criminal History Category of III, arguing that a Category of II was more appropriate because one of the convictions counted in the original calculation had been vacated and amended since the drafting of the original PSR. The government filed a Sentencing Memorandum with respect to Keating but did not file one for Howder.
On April 3, 2017, the court held Howder's sentencing hearing. At the hearing, the government agreed that the revised loss amount of $561,862.80, attributed solely to Howder, reflected a 14-level enhancement under § 2B1.1(b)(1)(H), reducing his total offense level from 26 to 24. Combined with a Criminal History Category of IV, Howder's sentence range was 77-96 months. Howder objected to this calculation, arguing that the court should have applied a 4-level enhancement under USSG § 2B1.1(b)(2)(B), instead of the 6-level enhancement under § 2B1.1(b)(2)(C). At issue was the number of victims attributable to Howder's conduct for which the court could find evidence of "serious financial harm." After hearing argument from both sides, the court found that the six-level enhancement applied and noted Howder's objection. The court then sentenced Howder to a within-Guidelines sentence of 84 months on each count, to be served concurrently. The court said of Howder's conduct that it was "morally reprehensible to an almost unimaginable degree," and cited the vulnerability of the victims, the sanctity of the home, and the need for punishment and deterrence as reasons for applying a sentence toward the middle of the guidelines range. The court also ordered Howder to pay $587,799.80 in restitution.
On April 4, 2017, the court held a sentencing hearing for Keating. The court granted Keating's request to reduce his Criminal History Category to II. This brought him to a guidelines range of 70-87 months. The court then applied a "substantial upward variance," based in part on its determination that Keating was "the defacto [sic] leader of this operation." The court sentenced Keating to 108 months on each count, to be served concurrently. Keating was also ordered to pay $1,183,025.88 in restitution.
On April 21, 2017, Howder timely filed a Notice of Appeal. On April 28, 2017, Keating did the same.
"In reviewing a district court's...
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