good morning your honour's made my knees good man please the court my name is marquis burt and i represent mr paul wagner i'd like to start with the issue of the closely related issues of the number of victims and the amount of  loss there are a large number of reasons why the government didn't meet its burden of proving either the number of victims or the number the amount of the loss leading to the great majority of the sentence against mr wagner in this case first as the court knows the trial involved allegations that mr wagner defrauded four lenders in the sale of eleven homes the only way the government gets to more than more than  ten lenders and eighteen million dollars over the sale of eighty five some homes is by including every single home that his company sold for a period of two years regardless of who the lender was and regardless of whether there was any fraud evidence of fraud in any of those specific transactions first of all it's undisputed that some lenders like am trust and this is according to the government's own witness did not object to sellers giving incentives to buyers such as down payments and mortgage payments for some period of time and also as stated by the government witness that was a practice that used to be common in the industry  for some period of time but sixty four of the land of the loans that mr wagner was sentenced for having defrauded people on were from lenders other than those that were involved in the trial and the government offered no evidence at all as to whether any of those lenders did or did not allow the kinds of incentives that mr wagner gave in this case or whether or not those incentives were disclosed in this lenders because that's all there's a lay just it well it's limited for less lenders because that not only is all that was alleged but those were the only ones where their practices and what they would allow as  incentives were provided as evidence either at trial or at sentencing so if someone does allow these incentives and some didn't and we've got evidence about four lenders and then you've got lenders on sixty four other loans i don't remember how many but it was a large number but there's no evidence at sentencing or at trial as to what they allowed and didn't allow that's the first failure of proof and again clear and convincing evidence is the standard here same which were intended to respond to this argument in front of the district court purported to show either a kickback payments to coconspirators or mortgage payments to the lender for all of the list of i know what they showed and this was don't remember the exhibit number but the the last exhibit that the government provided only shows that the that the amount of loan the amount of sale to subsequent lenders and the amount of the foreclosure they did not show evidence that mr wagner defrauded each of those lenders that was not offered at trial yes i have i have i have one other question about the sentencing in the district court found that the loss was something around eighteen million dollars if i recall correctly and the appropriate guideline is a range from seven to twenty so even if you are right can you show that it would be below seven yes your honor the defense argued and  provided their calculations to the effect that the loss to the eleven that were shown or arguably shown that's a different issue to have been defrauded was only three hundred fifty eight thousand original loan amount minus ass that's actually and that's actually a different question ok if you're wrong about the method she's wrong about the method but you're talking only about the number of transactions involved and choose your other separate argument where you fall in the sort of seven million and above or or below i think i understand my question i'm saying i'm trying to separate out i arguing about the methodology from your my question about the seven million as assuming that the methodology is correct would you have to knock out every single one of those other transactions below seven million or would you get there at all you would have to knock out every single one of the seventy one extra transactions where there was no evidence of fraud and where there was no evidence that those particular banks would have objected to the incentives that mr wagner offered and these were incentives that were advertised on television radio billboards flyers there was nothing secret about that but but i think that and i understand that these are separate somewhat separate issues but i think they're related because the methodology that was used was also wrong the methodology that was used to calculate loss was the original loan amount minus the sale price at foreclosure which is something that happened years later and after the loans were resold to other lenders and if you look at united states v james which which is a case that i think is very important here that says that in cases involving lenders who sold fraudulently acquired loans to successive lenders so practicing the foreclosure sales prices from the original loan amounts is not a reasonable method of calculating the original lender sloss and the reasons are two one it doesn't take into account what the successor lenders paid for the loans and to the losses to those successor lenders were not reasonably foreseeable to the defendant and i think that applies here rea yeah because for one thing yes i do say that because for one thing there's a there's in the ten year way she has to time we're talking about years later i think the fraud was supposedly two thousand and seven to two thousand and nine some of these sales were in two thousand and eleven and two thousand and twelve secondly there are a lot of the burger case u s free burger and the guidelines for require the losses to be the result of fraud but there are a lot of things that happened between the original loan the resale of the loan the foreclosure of the loan and the sentencing which the guideline to be one point one says is what you have to the time you have to mention the last they had nothing to do with fraud nor do we know because there was no evidence presented by the government at trial or at sentencing as to the whether or not the successor lenders took these loans is that with knowledge of the fraud or with knowledge of anything else that affected the value of those loans it's too attenuated and that is what the james court said and they concluded that to the extent  lender sustained in the actual loss that's a different the difference between the outstanding balance on the loan and what the lender received when it sold the loan meaning to the successor lenders so that's why i think that's an implied your client got the amount the loss and now what if we agreed with it what would that brings down it would bring it down to leaving aside in the guideline variance five and a half years mr wagner would be home by now and i've had a number of other cases of course as your honor where there was a variance and sense you start with the guidelines you would assume or at least not assume contrary that the court would also of very doubt downward from whatever the new guideline ranges based on whatever the original reduction was for the what are you saying the guidelines range would be if if i had that calculated i don't remember the range but i remember that the loss alone reduces it from fourteen years to five and a half years there's another homes paid to reduce the balance of the loans which mr wagner argued was in the millions and there was no factual finding either way or and no evidence to contradict that and even the government acknowledges that some sales that occurred during that period were not fraudulent and there was no attempt by the government or the district court to determine which of those there were how many of those were and there's no reason to think that there would have been you know all the rules the government really relies on in saying gee we can count every home sold during that entire two year period as being fraudulent is that the company used a company bank account there is no evidence that that there was different bank accounts used for fraudulent for to versus non fraudulent loans and companies use bank accounts to make their payments and that there was a servicing company that was used to make payments on the please the court peter levitt for the united states your honor this court held in thomson that only a reasonable estimate of law it's based on a vailable information is required to affirm a loss amount in this case not in at sentencing and not even in argument was anything said about relevant conduct in the computation loss that's what gets us to we don't have to prove all eighty five of wagner's dirty loans that went from he ball up his merrill lynch account he'd walk over the checks to west star the service and company and he'd have west star paid the duped lenders you prove the modus operandi is that essentially what yes so that's how the what the district what was a district court looking at when it found eighteen point two million well first of all the district court heard the trial testimony of christine your ten of west star who is looking at asked about some of the false loans and said those were drawn on the merrill lynch account agrees that these checks were from wagner's merrill lynch account ms york and testified at docket number two zero two around pages nine hundred eighteen then we have roman nelson and beverly antonio who testified at trial roman nelson testified that she was told to make the buyer's payments through the merrill lynch account and she was told if ever questioned about it she should make it look like a payoff on wagner's construction loans roman nelson testified at xor e c f one ninety nine at page two eighty five that this story she was told to tell was not true because the payment was actually for the buyer's mortgage payments and not for wagner's construction loans all of this was before the seems to fit a pattern that i've seen over the past six six and a half maybe it's been seven years doing the appellate work for the nevada mortgage fraud cases they never say at sentencing not rela not grimm not lindsay would judge gould wrote they never said hang on a second government we want to put you to your proof on your spread sheet for last we want to go through every single darn loan here we want to get your i forensic expert back here put him on the stand we want to question him and go through every single one of these loans and see if we can get it down below seven million they never do that why do they never do that if i can only speculate it's because they know we're going to be able to prove it up and they don't want to take a thirty minute sentencing hearing and turn it into a two day evidentiary hearing but that wasn't seriously they could have put us to our proof they could have said let's look at line forty if it seems to me that was a possibility and duplications here the same losses and so would you explain why that line your view that's not the case it's not the case your honor because i'm i'm reading judge reinhart's two step process in united states versus morris and i'm seeing that what we did was all based on that the first step is to calculate actual loss which is the reasonably foreseeable peculiarly harm from the fraud this amount will almost always be the entire value of the principal of the loan the second step is to apply credits against loss that and judge reinhardt references application a note  three each to two to be one point one and you did duff from the measure of any loss any amount recovered or recoverable from the creditor from the sale of the collateral that is what we five years later your honor is quite right with regard to the foreseeability analysis and if there are no further questions on that mention that  the district courts to sift lee addressed and rejected the fact that a few a smattering of bonafide mortgage payments were made this doesn't matter not one whit this is these are a few the district court deemed these payments de minimus these are thirty year fixed mortgages six figure loans paying a few hundred or even a couple hundred a couple thousand bucks upfront doesn't matter particularly where the first few payments are denting the principle not at all ok i realize that your patience is a little strange here but they're with us the this be the lapse in time here between the conviction and sentencing  in this appeal is that due to the new trials and motions for reconsideration of what what was going on i believe your honor that's part of it it's after the  first appeal was docketed which way in two thousand and thirteen right to the pro se wagner kept filing motions and appealing to denials of those motions in the district ron your honors first of all the government argues the relevant context is not an issue here of the government argues for several pages and it's answering brief that this is relevant conduct and that it should should be included and used in sentencing because the relevant conduct secondly this was contested at sentencing you can find the defendant sentencing memorandum at docket number one fifty nine i refer to it in my briefs and in fact pretty much every argument at least the ones we've discussed here today that were discussed in my brief were raised in the sentencing  memorandum there was also a spreadsheet which backed up what was in the sentencing memorandum which was presented to the court for some reason didn't make it into the record but it's consistent with the arguments i have it i can submit it if the court wants me to  third the government has the person of proving this if once this is the tendon sentencing memorandum was filed it was up to the government to bring in the witnesses and i'll prove it up you know th contested and there are the basis for object it is what it is that the last calculations involve the transactions between two thousand and seven and two thousand and nine that were not just limited to the use of straw buyers that they made payments to his merrill lynch account and then from that account to the west star loan services and so i find it appropriate to use the transactions that use the west for our loan servicers and that gets back to what the government just said and what your honor asked them about was did they use the same m o modus operandi well i would argue that using a company bank account to pay company bills is and using a loan service for a builder who does not make loan payments but does these things for servicing companies that is not the m o here it would only be part of the m o if there were evidence that only fraudulent loans for the entire two year period were using this bank account and there is no evidence of that what the m o that the government argued was a great deal more complicated than that it didn't vall things like straw buyers it did involve things like excessive payments fraudulent what you call appraisals things like that and quite a few things and there was no evidence offered at sentencing or a trial that any of these seventy one additional homes the seventy one additional loans involved those things the only the only similarity was that they used they used the company bank accounts the only thing that was different about this compared to other fraudulent schemes of this kind is that everything that mr mr wagner did was advertised on television and radio