Wednesday, December 24, 2008

Real Estate Fraud Conviction, Sentence Confirmed

United States v. Baum, ___ F.3d ___, 2008 WL 5274316 (10th Cir. 2008)

Defendant, a real estate agent, was found guilty of wire fraud and money laundering for his scheme: he was an agent for buyers who did not qualify for home loans because of poor credit; Defendant lent money to buyers for down payment; home prices were inflated on the contract; buyers agreed to pay an additional amount for remodels per a contract addendum (not disclosed to mortgage lender) that were never meant to happen and that money went into a fund to pay back Defendant, plus. The mortgage lender never knew the truth.

Sufficiency of evidence: phony sales prices, undisclosed addenda, false appraisals, false info regarding borrowers supported fraud verdicts; the unperformed remodeling work was not a matter of breach of contract. (The Court criticizes the brevity of the statement of facts in Defendant’s brief–5 pages–and hints that the COA might not even have reached the merits given how poorly D developed the facts).

Sentencing: “intended loss” under the guidelines does not include an element of purpose or desire–if so, perhaps Defendant did not intend that anyone lose anything, and intended his scheme to work. Although knowledge of probable consequences might not be enough to establish intended loss, that is left for another day–Defendant did not raise the issue below, and any error does not rise to the level of plain error.