The case involves a mortgage fraud scheme. The Court affirms the loss determination under plain error review (no objection below), but remands the restitution determination under de novo review (objection raised below).
The discussion on loss concerned the use of printouts to establish losses related to five second-mortgage loans. The printouts were problematic, so said the defendant, because they named the holder of the first-mortgage note (not second-mortgage note). The Court skirted the merits of the issue, calling it "solely a question of fact," and "factual disputes regarding sentencing not brought to the attention of the district court do not rise to the level of plain error."
The Court states this latter proposition as a truism, but it is not. The case relied upon for the proposition makes clear that some factual errors (those "certainly" erroneous) rise to the level of plain error. That is obviously correct. If, for instance, the facts demonstrated a mathematical error (bad math) not caught below, no doubt the Court would remand for resentencing.
This case, however, was not as clear cut as that. The Court implied that the printouts could have been accurate, and so the district court could not have committed plain error in relying on them.
This portion of the decision is thus a great reminder of the importance of a developed record when litigating a fact-based issue on appeal. Essentially, no objection, no chance on appeal.
The restitution issue went the defendant's way because the district court forgot to consider "downstream noteholders" in awarding restitution to the victims of the offense. In a mortgage fraud scheme involving multiple noteholders, a court must ensure that it awards the proper amount of restitution to each noteholder. A few points on this:
- the government has the burden to prove the actual losses suffered by each noteholder;
- in doing so, and in cases involving more than one noteholder, it cannot simply subtract the sale of the property from the purchase price;
- victims who do not participate in the restitution process (like the noteholders in this case) are unlikely to have much success in obtaining a restitution order; and
- to end where we began, this analysis would not apply in the loss context (where the impact of sales to subsequent lenders is generally irrelevant because the analysis focuses on how much, not who).