United States v. Luis

• Decision Date: 28 August 2014
• Docket Number: No. 13–50020.,13–50020.
• Citation: 765 F.3d 1061
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Marco Manuel LUIS, Defendant–Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

765 F.3d 1061

UNITED STATES of America, Plaintiff–Appellee,

v.Marco Manuel LUIS, Defendant–Appellant.

No. 13–50020.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 6, 2014.

Filed Aug. 28, 2014.

Todd W. Burns, Burns and Cohan, San Diego, CA, for Defendant–Appellant.

Lawrence E. Spong (argued), Assistant United States Attorney; Bruce R. Castetter, Assistant United States Attorney Chief, Appellate Section Criminal Division; Laura E. Duffy, United States Attorney, United States Attorney's Office, San Diego, CA, for Plaintiff–Appellee.

Appeal from the United States District Court for the Southern District of California, Irma E. Gonzalez, Senior District Judge, Presiding. D.C. No. 3:10–cr–02967–IEG–5.

Before: RICHARD A. PAEZ, N. RANDY SMITH, and ANDREW D. HURWITZ, Circuit Judges.

OPINION

N.R. SMITH, Circuit Judge:

The Mandatory Victim Restitution Act (“MVRA”) requires a district court to order restitution when (1) a defendant commits an “offense against property,” and (2) there is a “victim.” See18 U.S.C. § 3663A(a)(1), (c)(1). We affirm the district court's determination that both requirements were met in this case.

Marco Luis pleaded guilty to two counts of conspiracy to engage in monetary transactions in property in violation of 18 U.S.C. §§ 1956(h) and 1957 for his part in the purchase of two parcels of real property with fraudulently obtained loans. Because Luis's crimes infringed on JP Morgan Chase's (“Chase”) and CitiGroup's (“Citi”) ¹ property interests, they were offenses against property. See United States v. Stephens, 374 F.3d 867, 871 (9th Cir.2004). Also, the district court did not abuse its discretion in determining that Chase was a victim, because the fraudulent nature of the loans was concealed at the time Chase purchased them. See United States v. Yeung, 672 F.3d 594, 603 (9th Cir.2012), overruled in part on other grounds by Robers v. United States, ––– U.S. ––––, 134 S.Ct. 1854, 188 L.Ed.2d 885 (2014).

We affirm the calculation of restitution owed to Citi, because the district court deducted from the base restitution amount the actual amount received in mitigation of the victim's loss. See Robers, 134 S.Ct. at 1856. However, we vacate and remand for the district court to recalculate the amount owed to Chase, because the district court applied a formula for a loan originator, although Chase had purchased the loans. See Yeung, 672 F.3d at 602.

FACTS & PROCEDURAL HISTORY

Luis and Joshua Hester, long-time friends, began investing in real property together. As a real estate agent, Luis had the know-how. As a career marijuana dealer, Hester had the cash.

In 2006, Luis and Hester purchased a parcel of real property in Rancho Santa Fe, California for $2,050,000. Luis filled out the purchasing paperwork, using Hester's girlfriend (Kelsey Wiedenhoefer) as the straw buyer. Luis falsely stated that Wiedenhoefer was self-employed and earned $420,000 per year. Luis also falsely represented Wiedenhoefer's employment history and the source of the down payment and future monthly payments. Lastly, Luis obtained a preapproval letter from Dennis O'Connor, which falsely stated O'Connor had prepared Wiedenhoefer's tax returns and could verify that she was successfully self-employed. Relying on this paperwork, Washington Mutual approved two mortgages, in the amounts of $1,640,000 and $204,7500. Thereafter, Hester made the down payment and monthly mortgage payments using Wiedenhoefer's bank account. The payments were interest only; Hester never paid any principal.

In 2007, Luis and Hester purchased ten acres of real property in Palomar, California for $560,000. Again, Luis filled out the purchasing paperwork. This time, he used Jay Hansen as the straw buyer. Luis knew that Hansen delivered marijuana to Hester's customers, but falsely stated that Hansen made $12,500 a month detailing cars. Citi issued two mortgages in the amounts of $448,000 and $112,000, making the Palomar property 100% financed. Hester provided Hansen with funds for the closing costs and monthly mortgage payments.

In December 2008, the Palomar loans went into default. In September 2009, the Rancho Santa Fe loans went into default. The fraudulent nature of these loans was discovered during a larger investigation of Hester's illegal marijuana distribution; Hansen, Hester, Wiedenhoefer, and Luis were then charged criminally in connection with the purchase of the two properties.

On March 19, 2012, Luis pleaded guilty to two counts of conspiring to engage in prohibited monetary transactions in violation of 18 U.S.C. §§ 1956(h) and 1957. On August 27, 2012, the district court sentenced him to 48 months in custody. The court also ordered restitution in the amount of $545,029.90. Luis provided this amount of loss to the district court in his sentencing memorandum.

On September 5, 2012, Luis requested the restitution order be vacated and reconsidered “based on an appropriate record, whether, to whom, and how much restitution should be ordered.” The district court granted this request and held hearings regarding restitution. Witnesses from Chase and Citi testified at the hearings.

Patrick M. Carr, vice president and controller for Chase, testified that Washington Mutual Bank originally authorized the loans on the Rancho Santa Fe property for $1,640,000 (first mortgage) and $204,750 (second mortgage). On September 25, 2008, Chase purchased Washington Mutual Bank's assets and liabilities. This purchase included a group of loans totaling about $120 billion of unpaid debt. Chase paid about $90 billion for that group of loans, which included the Rancho Santa Fe property loans. The outstanding unpaid principal balance on the Rancho Santa Fe property loans remained $1,844,750. In September 2011, Chase foreclosed on the Rancho Santa Fe property. (On the foreclosure sale date, the unpaid principal balance of the loans remained the same.) At the sale, Chase bid $1,228,815 and purchased the property.

Cynthia Swan, a business operations analyst with Citi, testified that Citi originally authorized the Palomar Mountain property loans for $448,000 (first mortgage) and $112,000 (second mortgage). Around December 2008, these loans went into default. Citi elected not to foreclose on the property. Rather, in April 2010, Citi sold the first mortgage for $230,068. At the time of the sale, the Palomar property first mortgage's unpaid principal balance was $447,977. Citi wrote off the unpaid balance of the second mortgage, $111,858.

The district court ordered $615,935 in restitution to Chase. The court subtracted the Rancho Santa Fe property foreclosure sale price ($1,228,815) from the unpaid principal balance on the first mortgage ($1,640,000), resulting in a loss of $411,185 on the first mortgage. The court added this loss to the unpaid principal balance on the second mortgage ($204,750).

The district court ordered $329,767 in restitution to Citi. The court subtracted the sale price of the first mortgage ($230,068) from the unpaid principal balance on the first mortgage ($447,977), a loss of $217,909. The court added this loss to the unpaid principal balance on the second mortgage ($111,858). Luis timely appealed the restitution order.

STANDARD OF REVIEW

“The legality of an order of restitution is reviewed de novo, and factual findings supporting the order are reviewed for clear error.” United States v. Brock–Davis, 504 F.3d 991, 996 (9th Cir.2007) (citing United States v. Hackett, 311 F.3d 989, 991 (9th Cir.2002); United States v. Stoddard, 150 F.3d 1140, 1147 (9th Cir.1998)). “Provided that it is within the bounds of the statutory framework, a restitution order is reviewed for abuse of discretion.” Id.

DISCUSSION

I. Restitution was mandatory

The MVRA requires restitution when (1) sentencing a defendant convicted of “an offense against property under [Title 18], including any offense committed by fraud or deceit”; and (2) there is “an identifiable victim or victims [who] suffered ... pecuniary loss.” 18 U.S.C. § 3663A(a)(1), (c)(1). Luis claims the district court erred in finding both elements satisfied. We disagree.

A. “Offense against property”

Luis pleaded guilty to conspiring to engage in monetary transactions in property derived from criminal activity under 18 U.S.C. §§ 1956(h) and 1957. The MVRA does not define “offense against property.” See18 U.S.C. § 3663A. However, we have held that “against property” means infringing on a victim's property interest. See Stephens, 374 F.3d at 871. In Stephens, we determined that failure to pay child support in violation of 18 U.S.C. § 228 constitutes an offense against property. Id. at 868, 871. Omission of required support payments infringed on the other parent's right to receive the payments, a property interest. Id. at 871. The failure to pay child support “involv[ed] pecuniary loss” and therefore constituted an offense against property. See id. Here, quite simply, Chase and Citi suffered pecuniary loss when the Rancho Santa Fe property and Palomar property loans went unpaid. Luis's offenses occasioned these losses.

Luis's argument that “against property” requires physical damage to property is unavailing. See United States v. Hunter, 618 F.3d 1062, 1064 (9th Cir.2010) (holding that a conviction for mail fraud invoked the MVRA); c.f. United States v. Rizk, 660 F.3d 1125, 1134–37 (9th Cir.2011) (applying the MVRA to offenses arising out of a mortgage fraud scheme, which included conspiracy, bank fraud, and loan fraud). Moreover, in United States v. Lazarenko, 624 F.3d 1247 (9th Cir.2010), we agreed with the parties that money laundering and conspiracy to launder money constituted offenses against property. Id. at 1249–50. A conviction under 18 U.S.C. § 1957 is for money laundering. United States v. Bush, 626 F.3d 527, 529 (9th Cir.2010); United States v. Rogers, 321 F.3d 1226, 1229 (9th Cir.2003).

We are not alone in this conclusion. Other Courts of Appeals agree that convictions under § 1957 are...