Ninth Circuit Vacates |$107M Fraud Forfeiture

     SAN FRANCISCO (CN) — A Nevada woman convicted for participating in a $52 million Las Vegas mortgage-fraud scheme won’t have to pay $107 million in forfeiture, the Ninth Circuit ruled Monday.
     Melissa Beecroft, 34, was convicted in March 2012 for her role in a scheme that U.S. Attorney Daniel Bogden said cost federal banks more than $52 million.
     U.S. District Judge Roger Hunt sentenced Beecroft to three years in federal prison and ordered her to pay $2,275,025 in restitution, $107 million in forfeiture for her conviction on a conspiracy count, and $1,420,000 in forfeitures for four remaining counts.
     Beecroft appealed the penalties, saying the court improperly calculated them, and they violate the Eighth Amendment.
     On Monday, a three-judge, Ninth Circuit panel comprised of Circuit Judges Diarmuid O’Scannlain, Milan Smith Jr. and U.S. District Judge Brian Morris affirmed the $2,275,025 in restitution, saying it is based on the actual loss suffered by banks, rather than the amount she gained in fees and commissions.
     During her sentencing, “Beecroft did not question the accuracy of these figures,” O’Scannlain wrote in panel’s ruling.
     “Instead, she argued that restitution should be based on her personal gain rather than the victim’s losses,” he wrote. “Now on appeal, Beecroft still does not argue, let alone demonstrate, that the figures presented by the government were unreliable.”
     Because Beecroft did not challenge the federal government’s estimated loss amounts, the panel affirmed the $2,275,025 in restitution.
     Beecroft mostly prevailed on her challenges to the restitution amounts, though.
     The panel vacated the $107 million in forfeiture ordered, saying it is more than 100 times the maximum amount allowed and violates the federal Excessive Fines Clause.
     It remanded the forfeiture matter to district court to determine the appropriate forfeiture amount for Beecroft’s conviction for her role in a mortgage-fraud scheme.
     Beecroft lost her bid to vacate additional forfeiture amounts totaling $1,420,000, for four other counts.
     The panel said the penalty amounts for each count are well below the $1 million maximum allowed by federal law and do not violate the Excessive Fines Clause.
     During her initial trial, Bogden argued Beecroft was the resident agent and manager of Secured Mortgage Services, which was among companies owned by co-defendants Eve Mazarella and her ex-husband, Steven Grimm.
     Bogden said they provided false information and used by straw buyers to obtain mortgage loans on 227 homes valued at about $107 million. Once the banks funded the loans, Bogden said some of the money was sent to various companies owned by Mazarella and Grimm, and they collected portions of the commissions and fees paid to title and escrow companies.
     Once they controlled a property, Bogden said Mazarella and Grimm sold it to another straw buyer at an inflated price, and they tried to conceal their windfall by channeling the proceeds through various companies they owned.
     Beecroft acted as the mortgage broker, loan officer and loan processor on most of the more fraudulent transactions, and Bogden said most of the mortgages on the properties wound up in default.
     The trio was convicted of conspiracy and fraud charges in December 2011, after a 37-day jury trial.
     Hunt sentenced Grimm to 25 years in prison and Mazarella, to 14. Another eight co-defendants pleaded guilty to their roles in the scheme.
     Attorney Angela Dows of Premier Legal Group in Las Vegas represented Beecroft during the November hearing, while Assistant U.S. Attorney Peter Levitt argued on behalf of the federal government.
     Neither Dows nor Bogden were immediately available for comment on Monday.

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