United States v. Wagner

• Decision Date: 17 November 2017
• Docket Number: CRIMINAL NO. 4:15cr28
• Parties: UNITED STATES of America, v. Deborah WAGNER, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

280 F.Supp.3d 811

UNITED STATES of America,

v.Deborah WAGNER, Defendant.

CRIMINAL NO. 4:15cr28

United States District Court, E.D. Virginia, Newport News Division.

Nunc Pro Tunc November 15, 2017

Signed November 17, 2017

Brian James Samuels, Kaitlin Courtney Gratton, United States Attorney's Office, Newport News, VA, for United States of America.

ORDER

ROBERT G. DOUMAR, UNITED STATES DISTRICT JUDGE

This matter comes before the Court to determine the amount of restitution Deborah Wagner ("Defendant") owes in the above-captioned matter. As more fully set forth herein, Defendant is ordered to pay restitution in the amount of $1,845,665.36 jointly and severally with Keith Kosco (4:14cr66) to the extent of $213,045.31 and with Brendan Hawkins (4:14cr74) to the extent of $546,904.00. Since Defendant and her law firm were involved in as many as 2,462 transactions, determining the amount of restitution owed in this case is and was quite complex.

I. FACTUAL AND PROCEDURAL BACKGROUND

On October 15, 2015, Defendant was named in an eleven-count indictment.

Count One charged Defendant with Conspiracy to Commit Mail and Wire Fraud, in violation of 18 U.S.C. § 1349. Counts Two through Five charged Defendant with Mail Fraud, in violation of 18 U.S.C. §§ 1341 and 1342. Counts Six through Eight charged Defendant with Wire Fraud, in violation of 18 U.S.C. §§ 1343 and 1342. Counts Nine through Eleven charged Defendant with Aggravated Identity Theft, in violation of 18 U.S.C. §§ 1028A and 1028(2). Forfeiture of assets was cited pursuant to 18 U.S.C. §§ 981 and 982 and 21 U.S.C. § 853(p). ECF No. 11. On September 9, 2016, Defendant pled guilty, pursuant to a written plea agreement with the Government, to Count One. ECF No. 49.

According to the Agreed Statement of Facts, Defendant and her co-conspirators engaged in a scheme that recruited straw purchasers to serve as grantees in fraudulent transfers of timeshare units. From 2011 to 2013, Defendant and her employees, acting in and through her law firm, Wagner & Hyman, provided third party transfer services to GoodBye Timeshare, owned and operated by Brendan Hawkins. Statement of Facts, ECF No. 51 ¶¶ 2–3. From August 2013 until the end of 2013, Defendant provided similar services to Exotic Equity Transfers, owned and operated by Keith Kosco. Id. ¶¶ 2, 4, 9. Mr. Kosco and Mr. Hawkins, through their respective companies, would charge the original owners a substantial fee to transfer their timeshare units (usually three times the maintenance fees) while assuring the original owners that such transfers were legal and legitimate. Id. ¶¶ 6–7. Defendant's role was to aid in the transfer to straw purchasers by having a fraudulent deed and contract produced to document the sale. Id. ¶ 14. Defendant and her co-conspirators were aware that the straw purchasers had neither the ability nor the intention of satisfying the financial obligations of timeshare unit ownership. Id. ¶ 11. For instance, at least one of the many straw purchasers was a jail inmate who did not know the conspirators were transferring units into her name. Mr. Hawkins and Mr. Kosco, through their companies, paid fees to Defendant and her law firm for her role in the scheme. Id. ¶ 10.

When resorts began objecting to certain transfers because of the repeated use of a straw purchaser, Defendant, her employees, and others would attempt to shift the transfer into the name of another straw purchaser. Id. ¶ 21. In addition, Defendant formed a separate nominee company, Vacation Match, LLC, with a business address at the location of a tanning salon she owned, for the purpose of finding new straw purchasers (many of these straw purchasers were paid $20–$50 for the use of their identities). See Virginia Corporate Records, ECF No. 61–5. The straw purchasers did not pay their fee obligations, resulting in losses of $2,050,739.29 to 14 resorts.¹ See Statement of Facts, ECF No. 51 ¶ 29; Losses by Resort, ECF No. 92–5.

On July 20, 2017 this Court sentenced Defendant to imprisonment for fifty (50) months. ECF No. 85. At that time, the Court recognized that the Mandatory Victim Restoration Act ("MVRA"), 18 U.S.C. § 3663A, applied and thus the court must order restitution, but withheld ruling on the amount of restitution for 90 days pursuant to 18 U.S.C. § 3664(d)(5). The Court ordered the parties to file supplemental briefs regarding the amount of restitution due within 21 days from sentencing, and allowed each party 14 days to respond to the other's brief. ECF No. 85. The United States timely filed its Position on Restitution on August 11, 2017. ECF No. 92. On August 16, 2017, Defendant filed a motion requesting the Court delay entering restitution because Defendant was waiting on a transcript of the sentencing hearing that she intended to cite in her position on restitution. ECF No. 93. On August 25, 2017, Defendant filed her Position on Restitution. ECF Nos. 95, 96. The Government timely replied to Defendant's Position on September 8, 2017. ECF No. 97.

The Court set a hearing on the amount of restitution to occur on October 23, 2017. ECF No. 104.² The Defendant was incarcerated in West Virginia and was not able to physically attend the hearing as scheduled, so in the interests of justice the Court converted the hearing into a scheduling conference. ECF No. 110.³ At the scheduling conference, the Court reset the hearing for November 15, 2017. ECF No. 112. On October 25, 2017, the Court accepted a sworn waiver of presence filed by Defendant and ruled the November 15, 2017 amount of restitution hearing would proceed without Defendant present. ECF No. 116.

II. LEGAL STANDARD

Where the Mandatory Victim Restoration Act ("MVRA") applies, as it does here, "a restitution order imposed under the MVRA is mandatory." United States v. Roper, 462 F.3d 336, 338 (4th Cir. 2006). Restitution must be ordered "in the full amount of the victim's losses ... irrespective of the defendant's financial condition or ability to pay." United States v. Ritchie, 858 F.3d 201, 207 (4th Cir. 2017).

Where property is lost, the defendant must pay (1) the value of the property on the date of loss or sentencing, whichever is greater, minus (2) the value of any property returned, as valued on the date of its return. 18 U.S.C. § 3663A(b)(1)(B).

It is the Government's burden to demonstrate the amount of restitution due, by a preponderance of the evidence. 18 U.S.C. § 3664(e). But "once the Government has satisfied its burden to offer evidence supporting its restitution calculation, the burden shifts to the defendant to dispute that amount with her own evidence." United States v. Stone, 866 F.3d 219, 227 (4th Cir. 2017). "[A]bsolute precision is not required in calculating restitution under the MVRA." United States v. Matos, 611 F.3d 31, 45 (1st Cir. 2010). "So long as the basis for reasonable approximation is at hand, difficulties in achieving exact measurements will not preclude a trial court from ordering restitution." United States v. Mejia, 326 Fed.Appx. 710, 712 (4th Cir. 2009) ; see also United States v. Gushlak, 728 F.3d 184, 195–96 (2d Cir. 2013) (" 'reasonable approximation' will suffice, especially in cases in which an exact dollar amount is inherently incalculable. * * * the MVRA requires only a reasonable approximation of losses supported by a sound methodology"); Matos, 611 F.3d at 45 ("only a modicum of reliable evidence is required to establish a restitution award").

III. DISCUSSION

A. THE GOVERNMENT'S REQUEST FOR RESTITUTION

The Government asks this Court to award restitution against Defendant in the amount of $1,845,665.36, jointly and several with Brendan Hawkins to the extent of $546,904.00 and with Keith Kosco to the extent of $213,045.31.⁴ ECF No. 97–2 at 1. This amount is the sum of unpaid maintenance fees reported by 14 resorts, which fees were not paid because of Defendant's fraudulent transfers. Salter Decl. ECF No. 97–1 at 1. Defendant could foresee losses due to unpaid maintenance fees because avoiding future fees was the value the conspiracy's customer's received in exchange for their payment, and the conspirators set the rate they charged customers based on triple the maintenance fee.

The losses, by resort, are reflected in Exhibit E to the Government's Position on Restitution, ECF No. 92–5, less 10% to remove late fees and interest, Salter Decl. ECF No. 97–1 at 1. The Government's investigator, Former FBI Agent Scott Salter, avers that the chart is "a fair and accurate summary chart showing the losses incurred over the course [of] 864 transfers, broken down by resort property and straw purchaser." Id. at 1. During the November 15, 2017 hearing, Mr. Salter testified that he compiled the chart based on each resorts' responses to subpoenas from the Government regarding unpaid maintenance fees incurred due to straw purchasers into whose name Defendant and her co-conspirators moved timeshare units.

The Government further argues its figure is conservative because it seeks restitution for only 864 transactions whereas, based on the invoices Defendant sent to her co-conspirators, Defendant was involved in as many as 2,462 transactions. Salter Decl. 97–1 at 1. The Government seeks an award regarding only these 864 transactions because it limits the losses it requests to fees not paid by straw purchasers for whom only Defendant and her law firm prepared fraudulent paperwork. See ECF No. 82 at 2. The Government does not request fees related to known straw purchasers whose fraudulent paperwork may have been facilitated by a separately prosecuted conspirator. See id. Based on the average loss per transaction, the Government argues the total losses Defendant caused could be as high as $5,855,523.18. Salter Decl., ECF No. 97–1 at 1.

B. THE DEFENDANT'S ARGUMENTS

Defendant raises a number of arguments to decrease or eliminate the amount of restitution she should owe to the resort victims. The arguments fall into five general categories: (1) the Government's request does not award...