United States v. Love

• Decision Date: 24 May 2012
• Docket Number: 11–1617,Nos. 10–2879,11–1625.,s. 10–2879
• Citation: 680 F.3d 994
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Leslie LOVE and Bobbie Brown, Jr., Defendants–Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

680 F.3d 994

UNITED STATES of America, Plaintiff–Appellee,

v.Leslie LOVE and Bobbie Brown, Jr., Defendants–Appellants.

Nos. 10–2879, 11–1617, 11–1625.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 18, 2012.

Decided May 24, 2012.

Daniel E. May (argued), Attorney, Office of the United States Attorney, Chicago, IL, for Plaintiff–Appellee.

Johanna M. Christiansen (argued), Attorney, Jonathan E. Hawley, Federal Public Defender, Office of the Federal Public Defender, Peoria, IL, for Defendant–Appellant in No. 10–2879.

Sheldon B. Nagelberg (argued), Attorney, Sheldon Bart Nagelberg, Chicago, IL, for Defendant–Appellant in Nos. 11–1617 and 11–1625.

Before BAUER, MANION, and WOOD, Circuit Judges.

MANION, Circuit Judge.

This case involves the criminal appeals of two defendants: Bobbie Brown, Jr., the mastermind of a large mortgage fraud scheme, and one of his accomplices, Leslie Love. Brown's scheme occurred in two different real estate markets, Las Vegas and Chicago, and involved recruiting many lawyers, accountants, loan officers, bank employees, realtors, home builders, and home buyers to further a plan where residential properties were purchased at inflated sales prices by insincere buyers with fraudulent loan applications. The money accumulated by Brown through his scheme generally consisted of the difference between the inflated sales price and the actual value of the property. Later, when the properties were resold at lower prices or went into default, the financial institutions that made the mortgage loans suffered combined losses of at least $32 million.

Brown, Love, and 31 other accomplices were apprehended and charged with a host of fraud counts. Brown and Love both pleaded guilty to fraud; Brown was sentenced to 260 months' imprisonment, and Love to 66 months' imprisonment. Their cases have now been consolidated on appeal, and Brown and Love challenge different aspects of their respective sentences. Love contests the number of victims used to calculate his sentencing guidelines; his position has merit, and so we vacate his sentence and remand for resentencing. Brown contests the loss calculation used for his guidelines range and argues that his sentence is unreasonable; his argument is unpersuasive, and we thus affirm his sentence.

I. Background

Between August 2004 and May 2008, Brown ran an elaborate scheme to defraud mortgage lenders by duping those lenders into issuing approximately 150 fraudulent mortgage loans. Brown used several businesses that he owned in order to conduct his scheme, and he operated in two real estate markets, Chicago and Las Vegas. Brown was the mastermind behind the plan, and he recruited or directed dozens of individuals to further the scheme: lawyers, accountants, loan officers, bank employees, realtors, home builders, and nominee buyers. Of his accomplices, 32 people were apprehended and criminally charged.

To operate his scheme, Brown first recruited individuals to be the nominee buyers of new or newly renovated residential properties. Brown told the nominees that they would not have to put any money down for the purchase, that they would not have to make any mortgage payments, and that their names would be removed from the mortgage and title within 12 months—the properties would either be sold within that period, or Brown himself would personally purchase the properties from the nominees. Brown paid each nominee approximately $15,000 to $50,000 for every property the nominee purchased.

Brown also colluded with the home builders and the sellers of these residential properties, prompting them to sell their properties to Brown's nominees at inflated prices. In particular, Brown convinced the builders and sellers to appraise their properties at a value at least 10% higher than the actual value of the property.

Brown then recruited loan officers to prepare and submit fraudulent loan packages to the lending financial institutions. The loan applications contained false statements and omissions; they inflated the nominees' income and assets; they understated the nominees' liabilities; and they failed to disclose the nominees' intentions about not residing at the property, their relationships with Brown, and the fact that the nominees had purchased other residences and had obtained other mortgages. The loan officers who prepared the fraudulent loan applications received kickbacks from Brown for their services, and as with the nominees, the relationships between these loan officers and Brown were not disclosed to the lenders.

In addition to all of this, Brown recruited bank employees to create false verifications of deposit in order to support the false claims made in the nominees' loan applications regarding their financial statuses. He recruited employees from his companies to create false verifications of employment and false verifications of rent and leases for the nominees. He recruited accountants to create false letters alleging that the accountants had prepared tax returns for the nominees. Finally, he recruited attorneys privy to the scheme to represent the nominees at real estate closings and to ensure that the closings went smoothly.

Through the Chicago scheme, Brown obtained approximately 150 fraudulent mortgage loans, totaling more than $95 million in loan proceeds from the victim lenders. The Las Vegas scheme resulted in approximately 33 fraudulent loans totaling about $16 million.

In June 2008, in two separate indictments—one for the Las Vegas scheme and one for the Chicago scheme—Brown was charged with multiple counts of wire fraud, bank fraud, mail fraud, and identity theft. In January 2010, he entered a plea of guilty in the Las Vegas case without a written plea agreement with the government; in April 2010, he entered a guilty plea in the Chicago case through a plea agreement. The two cases were consolidated for sentencing purposes. In March 2011, the district court conducted a sentencing hearing: Brown was sentenced to 216 months' imprisonment for the Las Vegas scheme and 240 months' imprisonment for the Chicago scheme, to run concurrently. The district court also imposed a restitution amount of more than $32.2 million. Brown's appeal is now before us; he does not contest his conviction, but he does challenge his sentence.

The other appeal before us is that of one of Brown's co-defendants, Leslie Love. Love was involved in Brown's Chicago scheme from spring 2005 to fall 2006, and participated in several fraudulent loan transactions. Love was charged with multiple counts of fraud. Following a plea agreement, he pleaded guilty to one count of mail fraud. Love was sentenced to 66 months' imprisonment and ordered to pay more than $7.1 million in restitution. Love now appeals his sentence.

II. Love's Appeal

We begin with Love's case. In order to calculate his sentencing guidelines, Love was found to be associated with the fraudulent transactions for 18 different real estate properties, and thus he was held responsible for a total loss of more than $7.1 million. The sentencing judge also found that the loss affected more than ten victims—namely, the financial institutions swindled by the fraudulent loan transactions. As a consequence, the court imposed the two-level sentencing enhancement under U.S.S.G. § 2B1.1(b)(2)(A)(i), for offenses with more than ten victims. Love's final total offense level was 33, which corresponded to an applicable sentencing guidelines range of 135 to 168 months. After discussing the 18 U.S.C. § 3553(a) sentencing factors, the district court ruled that there were mitigating factors in Love's case and that the suggested guidelines range was not fair. Consequently, the court imposed a sentence of 66 months.

Love appeals his sentence on the ground that the district court erroneously applied the two-level enhancement for an offense with more than ten victims—Love argues that there were only seven victims associated with his offense. Love contends that this error was not harmless, even though he received a below-guidelines sentence, because there is no indication that the district court would have imposed the sentence had it calculated the guidelines correctly without the two-level enhancement. Therefore, Love argues, the error should be corrected and his case should be remanded for resentencing. Love also notes that the judgment makes his restitution of approximately $7.1 million payable to “Peoples Choice Home Loan,” but that this is incorrect—instead, the judgment should be corrected, with the appropriate portion of the restitution designated to each of the seven victim lenders.

“We review the procedures followed by the district court in sentencing de novo.” United States v. Glosser, 623 F.3d 413, 418 (7th Cir.2010). In this case, the government agrees with Love's argument on appeal and concedes that there was an error in calculating the number of victims—there were only seven victims associated with Love's offense, not more than ten. Thus, Love's final total offense level should have been 31, not 33, for a sentencing guidelines range of 108 to 135 months, instead of 135 to 168 months. Even though Love received a sentence that was significantly below the guidelines range, the range on which his sentence was based was erroneously calculated. Such an error is not harmless because it is impossible to know whether the district court would have imposed the same sentence had it not committed this procedural error. See Glosser, 623 F.3d at 419–20. We therefore vacate Love's sentence and remand for resentencing using the correct guidelines range. Additionally, the judgment should be corrected with the appropriate amount of restitution properly designated to the seven victim lending institutions.

III. Brown's Appeal

We now turn to Brown's appeal. Brown objects to two aspects of his sentencing: (1) he challenges the district court's loss calculation and his resulting sentencing guidelines range; and (2) he argues that his...