Mortgage Fraudster Loses Restitution Challenge
WASHINGTON (CN) - The Supreme Court on Monday sided with the approach chosen by the U.S. government for a mortgage fraudster to repay the lender and insurer he cheated.
Benjamin Robers had been ordered to make the $218,900 in restitution and serve three years' probation after pleading guilty to a wire fraud conspiracy count.
Federal prosecutors in Wisconsin had provent that Robers acted as a straw buyer in a mortgage scheme by inflating his income on mortgage documents he signed.
"The scheme involved more than fifteen houses in a small geographical area in Walworth County, Wisconsin," Judge Daniel Manion wrote for a three-judge panel of the 7th Circuit last year. "Robers served as a straw purchaser for only two houses - one on Grant Street in Lake Geneva and the other on Inlet Shores in Delavan. ... For his role in the scheme, Robers received a mere pittance - about $500 for each loan."
Robers had claimed that he would live in the mortgaged properties as his primary residence and make loan payments, but the loans went into default and the property into foreclosure, the panel found.
Under the Mandatory Victims Restitution Act of 1996, Robers had been ordered to make restitution to the victims of the scheme - in this case, a mortgage company and a mortgage insurance company that paid a claim on one of the defaulted loans.
Robers had tried to reduce the amount owed by calculating "the offset value based on the fair market value the real estate as of the date of foreclosure because that is the value 'as of the date the property is returned,'" the court noted.
The government meanwhile pushed to determine the value "based on the eventual cash proceeds recouped following the sale of the collateral real estate."
Noting a circuit split, the panel sided with the government's approach.
The Supreme Court was unanimous Monday in affirming for the government.
"In our view, the statutory phrase 'any part of the property' refers only to the specific property lost by a victim, which, in the case of a fraudulently obtained loan, is the money lent," Justice Stephen Breyer wrote for the court. "Therefore, no 'part of the property' is 'returned' to the victim until the collateral is sold and the victim receives money from the sale. The import of our holding is that a sentencing court must reduce the restitution amount by the amount of money the victim received in selling the collateral, not the value of the collateral when the victim received it."
In a concurring opinion, Justice Sonia Sotomayor wrote that the analysis should apply "only in cases where a victim intends to sell collateral but encounters a reasonable delay in doing so."
"Because Robers did not sufficiently argue below that the banks broke the chain of proximate causation by choosing to hold the homes as investments, and because the delay encountered by the banks appears to have been reasonable, it is fair for Robers to bear the cost of that delay," Sotomayor wrote, joined by Justice Ruth Bader Ginsburg. "I therefore join the court in affirming the restitution order."