Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-16-01385/USCOURTS-ca7-16-01385-0/pdf.json

Parties Involved:
Daniela Tartareanu
Appellant
United States of America
Appellee

Document Text:

In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

Nos. 16-1384, -1385, -2248, -2249, -2330 

UNITED STATES OF AMERICA, 

Plaintiff-Appellee, 

v.

MINAS LITOS and ADRIAN and DANIELA TARTAREANU, 

Defendants-Appellants. 

____________________ 

Appeals from the United States District Court for the 

Northern District of Indiana, Hammond Division. 

No. 2:12-cr-00175-PPS-APR — Philip P. Simon, Judge. 

____________________ 

ARGUED JANUARY 18, 2017 — DECIDED FEBRUARY 10, 2017 

____________________ 

Before WOOD, Chief Judge, and POSNER and HAMILTON, 

Circuit Judges. 

POSNER, Circuit Judge. The three defendants were indicted 

in 2012 on charges of having committed and conspired to 

commit wire fraud, in violation of 18 U.S.C. §§ 1343 & 1349, 

by extracting money from lenders (including Bank of America) that had financed the sale of properties owned by the defendants in Gary, Indiana. The fraud lay in the fact that the 

defendants had represented to Bank of America (we can igCase: 16-1385 Document: 55 Filed: 02/10/2017 Pages: 10
2 Nos. 16-1384, -1385, -2248, -2249, -2330 

nore the other lenders, who are not affected by this litigation) that the buyers of the properties were the source of the 

down payments on the houses, whereas in fact the defendants were the source, having given the buyers the money to 

enable them to make the down payments. They had also 

helped the buyers provide, in their loan applications to Bank 

of America, false claims of creditworthiness. In each of the 

transactions the defendants walked away with the purchase 

price of the property they had sold minus the down payment amount, since the “down payment” they received was 

their own cash, which they’d surreptitiously transferred to 

the impecunious buyer. 

The defendants’ guilt of fraud is not at issue. The issue is 

the propriety of the restitution, in the amount of $893,015, 

that the district judge ordered the defendants to make to 

Bank of America, on the ground that they had cheated the 

bank by pretending that the buyers, not they, were the 

source of the down-payment money for the sale of their 

houses. The judge credited a written declaration by a Bank 

of America representative that “had [the Bank] known the 

true source of [the] down payment funds, [it] would not 

have issued the subject loans” to the buyers of the properties. The district judge rejected the defendants’ argument 

that the bank was not entitled to restitution because it had 

been a coconspirator; he ruled that the bank “did not participate in the kickbacks to buyers or provide false information 

on loan applications.” 

The judge was right about that, and right too that the 

bank had lost $893,015 as a result of the buyers’ defaulting 

on the loans that the bank issued to finance the purchase of 

sixteen houses from the defendants. But he was wrong to 

Case: 16-1385 Document: 55 Filed: 02/10/2017 Pages: 10
Nos. 16-1384, -1385, -2248, -2249, -2330 3 

take the bank representative at her word; her affidavit provided no basis for determining that she knew that Bank of 

America wouldn’t have made the loans had it not been for 

the defendants’ fraudulent statements.

The order of restitution is questionable because Bank of 

America, though not a coconspirator of the defendants, does 

not have clean hands. It ignored clear signs that the loans 

that it was financing at the behest of the defendants were 

phony. Despite its bright-eyed beginning as an upstart 

neighborhood bank for Italian-American workers, Bank of 

America has a long history of blunders and shady practices; 

it narrowly survived the Great Depression of the 1930s, 

nosedived in the 1980s, and lost tens of billions of dollars in 

the crash of 2008—including $16.65 billion in a settlement 

with the U.S. Justice Department over charges of mortgage 

fraud. See, e.g., Michael Corkery and Ben Protess, “Bank of 

America Papers Show Conflict and Trickery in Mortgages,” 

New York Times, Aug. 21, 2014, https://dealbook.

nytimes.com/2014/08/21/bank-of-america-papers-show-confl

ct-and-trickery-in-mortgages/ (visited Feb. 10, 2017, as were 

the other websites cited in this opinion); Matt Taibbi, “Bank 

of America: Too Crooked to Fail,” Rolling Stone, March 14, 

2012, www.rollingstone.com/politics/news/bank-of-americatoo-crooked-to-fail-20120314; Moira Johnston, Roller Coaster: 

The Bank of America and the Future of American Banking 6–11 

(1990); Gary Hector, Breaking the Bank: The Decline of Bank 

America 49–53, 302–07 (1988). And at the sentencing hearing 

the judge said: “I think they [the defendants and Bank of 

America] are equally culpable. Isn’t that a fair way to look at 

this? ... Bank of America knew [what] was going on. They’re 

playing this dance and papering it. Everybody knows it is a 

sham because no one is assuming any risk. So what’s wrong 

Case: 16-1385 Document: 55 Filed: 02/10/2017 Pages: 10
4 Nos. 16-1384, -1385, -2248, -2249, -2330 

with saying they’re [of] equal culpability?” Indeed; and we 

are puzzled that after saying this the judge awarded Bank of 

America restitution—and in the exact amount that the government had sought. 

And there is worse. The judge remarked that “the loan 

applications [submitted to Bank of America] were a joke on 

their face. They are just, I think, laughable.” The bank had 

issued 9 mortgages to a person named Julius Horton in a 3-

month period, based on his false claims to have $1 million in 

assets and earn $10,000 a month; 8 mortgages to Glenn 

McCue in a 21⁄2 month period, who listed as assets homes he 

didn’t own and rental income on those homes; 6 mortgages 

in a 10-day period [!] to Melissa Hurtado, who claimed to 

have a gross income of $3400 a month and $320,000 in a 

banking account—she had no such money, nor had she the 

two properties that she claimed to own; 3 mortgages to Jonathan Sein, who listed ownership of homes that he didn’t own 

and a nonexistent $150,000 bank account; and 2 mortgages to 

Alberto Gonzalez, who listed a home he didn’t own and pretended to have a bank account with $350,000 in it, though his 

monthly income was estimated to be only between $1000 

and $2000. Bank of America approved them all! The transactions with all these mortgage applicants took place in 2007 

and the first few months of 2008, 2007 being the last full year 

of the housing bubble and 2008 the first year of the crash.

Had the bank done any investigating at all, rather than 

accept at face value obviously questionable claims that the 

mortgagors were solvent, it would have discovered that 

none of them could make the required down payments, let 

alone pay back the mortgages. These people were just fronts 

for the defendants, who made the down payments required 

Case: 16-1385 Document: 55 Filed: 02/10/2017 Pages: 10
Nos. 16-1384, -1385, -2248, -2249, -2330 5 

by the bank, pocketed the mortgage loans (which were of 

course much larger than the down payments) that the bank 

made, and left it to the nominal mortgagors to default since 

they hadn’t the resources to repay the bank. All this was 

transparent. 

To say the bank was merely negligent would be wrong. 

Recklessness is closer to the mark. Negligence is merely failure to exercise due care; often it is unconscious. Recklessness 

is knowing involvement in potentially harmful activity. The 

bank was reckless. It had to know that it would receive applications for mortgage loans from people who knowing or 

doubting their ability ever to repay them would misrepresent their assets and earning power in order to obtain the 

loans, their thinking taking the form of “sufficient unto the 

day is the evil thereof,” a biblical maxim (meaning “live in 

the present”) that is better applied to spiritual life than to investment decisions. And the bank knew that in a bubble period it would have no difficulty selling the mortgages it had 

issued—even mortgages doomed to default; the bank’s failure to demand evidence of the financial sufficiency of the 

mortgagees constituted deliberate indifference to a palpable 

risk that the bank’s executives must have been aware of. The 

bank had every incentive to close its eyes to how phony 

these loan applications were, because it expected to turn 

around and sell the mortgages to a hapless Fannie Mae. (It 

was foiled in this scheme, regarding the sixteen properties at 

issue, only because Fannie Mae noticed just how “irregular” 

the transactions were and forced Bank of America to take the 

mortgages back.) 

Restitution for a reckless bank? A dubious remedy indeed—which is not to say that the defendants should be alCase: 16-1385 Document: 55 Filed: 02/10/2017 Pages: 10
6 Nos. 16-1384, -1385, -2248, -2249, -2330 

lowed to retain the $893,015. That is stolen money. We don’t 

understand why the district judge, given his skepticism concerning the entitlement of Bank of America to an award for 

its facilitating a massive fraud, did not levy on the defendants a fine of $893,015. 18 U.S.C. § 3571(d) authorizes a fine 

of not more than the greater of twice the gross gain or the 

gross loss caused by an offense from which any person either derives pecuniary gain or suffers pecuniary loss. 

Had the amount of the fraud been made the basis of a fine rather than restitution, the $893,015 would have gone to 

the federal Treasury, a far worthier recipient of it than Bank 

of America in this case. At least that is an issue that deserves 

the further scrutiny of the district court, and we are therefore 

vacating the order of restitution and remanding for a full resentencing as to the Tartareanus (more as to Litos later). Because a criminal sentence is a package composed of several 

parts, “when one part of the package is disturbed, we prefer 

to give the district court the opportunity to reconsider the 

sentence as a whole so as to ‘effectuate its sentencing intent.’” United States v. Mobley, 833 F.3d 797, 801 (7th Cir. 

2016). Our remand for the imposition of a new sentence for 

the Tartareanus will allow the district court to “reconfigure 

the sentencing plan” to “satisfy the sentencing factors in 18 

U.S.C. § 3553(a).” Pepper v. United States, 562 U.S. 476, 507 

(2011), quoting Greenlaw v. United States, 554 U.S. 237, 253 

(2008). 

We ask the district judge to give serious consideration on 

the remand to the possible alternative remedy of a heavy fine on the defendants. With regard to such a possibility the 

judge may wish to ask either the Board of Governors of the 

Federal Reserve System or the Office of the Comptroller of 

Case: 16-1385 Document: 55 Filed: 02/10/2017 Pages: 10
Nos. 16-1384, -1385, -2248, -2249, -2330 7 

the Currency (or both, perhaps in collaboration) to submit an 

amicus curiae brief addressed to the issue of the appropriateness of an order of restitution in a case such as this. 

We are mindful that the federal criminal code requires 

“mandatory restitution to victims of certain crimes,” 18 

U.S.C. § 3663A (the Mandatory Victim Restitution Act of 

1996, usually referred to as the MVRA), including fraud, see 

§ 3663A(c)(1)(A)(ii), but only for “an offense resulting in 

damage to or loss or destruction of property of a victim of 

the offense.” § 3663A(b)(1). That doesn’t seem to describe the 

loss suffered by Bank of America as a result of its improvident loans, especially when we consider its complicity in the 

loss—its reckless decision to make the loans without verifying the solvency of the would-be borrowers, despite the palpable risk involved in, for example, providing mortgage 

loans to a person who applies for six mortgages in ten days.

We need to consider, however, the possible bearing on 

the issue of restitution in this case of United States v. Soto, 799 

F.3d 68 (1st Cir. 2015), a case in which one of the defendants 

challenged a restitution order on the ground that “because 

the losses stemmed not only from her conduct but also from 

the lenders’ own greed and market practices at the time, her 

actions did not proximately cause the entire loss.” Id. at 97. 

The court of appeals rejected the argument on the ground 

that the fact “that the lenders’ own greed and market practices at the time may have contributed to the loss has nothing to do with whether the entire loss amount was foreseeable to [the defendant].” Id. at 98. But the defendant in Soto

had argued that the lenders were “greedy,” not that they 

had engaged in wrongdoing but only that the general “market practices” at the time had influenced their behavior. This 

Case: 16-1385 Document: 55 Filed: 02/10/2017 Pages: 10
8 Nos. 16-1384, -1385, -2248, -2249, -2330 

case is different because of the palpably phony nature of the 

loan applications and the fact that Bank of America approved all of them without investigation of the manifold 

suspicious circumstances—such conduct of a major bank is 

indicative of deliberate indifference rather than of mere negligence. That difference also distinguishes this case from 

United States v. Ojeikere, 545 F.3d 220, 223 (2d Cir. 2008), 

which held that “restitution under the MVRA may not be 

denied simply because the victim had greedy or dishonest 

motives, where those intentions were not in pari materia with 

those of the defendant.” The court reasoned that the victims 

had not been involved in a scheme to lose their own money. 

Here, in contrast, Bank of America was deliberately indifferent to the risk of losing its own money, because it intended 

to sell the mortgages and transfer the risk of loss to Fannie 

Mae for a profit. 

It remains to consider defendant Litos’s appellate waiver. 

He pleaded guilty and in his guilty plea agreement he 

“agree[d] to make restitution to the victims of my offense in 

an amount to be determined by the sentencing court” and 

waived his right to appeal or otherwise contest his conviction or sentence. Yet like the Tartareanus, who were convicted by a jury, Litos appealed—despite his waiver—thus presenting us with a dilemma. If we enforce his appellate waiver, Litos will be left on the hook for the full $893,015 in restitution to Bank of America, because the district judge’s order 

made the three defendants jointly and severally liable. But if 

we vacate the restitution portion of all three sentences, we 

must ignore Litos’s appellate waiver. Because our doubts 

about the propriety of ordering restitution to Bank of America apply as much to Litos as to the other defendants, however, and because it would be unjust to make Litos alone owe 

Case: 16-1385 Document: 55 Filed: 02/10/2017 Pages: 10
Nos. 16-1384, -1385, -2248, -2249, -2330 9 

the full amount of restitution to the undeserving bank, we’ve 

decided to ignore the appellate waiver. 

A number of the other federal courts of appeals have said 

they won’t enforce even voluntary and knowing waivers in 

plea agreements if enforcing them would result in a “miscarriage of justice.” See, e.g., United States v. Vélez-Luciano, 814 

F.3d 553 (1st Cir. 2016); United States v. Adams, 814 F.3d 178, 

182 (4th Cir. 2016); United States v. Hahn, 359 F.3d 1315, 1327 

(10th Cir. 2004); United States v. Andis, 333 F.3d 886, 891 (8th 

Cir. 2003); United States v. Khattak, 273 F.3d 557, 562 (3d Cir. 

2001); United States v. Teeter, 257 F.3d 14, 25–26 (1st Cir. 

2001). In Vélez-Luciano, for example, the First Circuit refused 

to enforce an appeal waiver with respect to a condition of 

supervised release because the government had indicated 

that it no longer thought the defendant ought to be subject to 

the condition and the court had expressed its own reservations about the utility of the condition. 844 F.3d at 564–65. 

And in this case too the government and the district judge 

both expressed reservations about the propriety of awarding 

restitution to Bank of America. 

Further with reference to Litos’s appeal waiver, we’ve 

held that there are exceptional situations in which waiver 

does not foreclose appellate review—for example if an appeal waiver is part of a plea agreement that was involuntary, 

or if the district court relied on a constitutionally impermissible factor, or if the defendant received ineffective assistance of counsel in regard to the negotiation of a plea agreement, or if the sentence exceeded the statutory maximum. 

Jones v. United States, 167 F.3d 1142, 1144 (7th Cir. 1999). And, 

coming closer to the facts of this case, in United States v. Andis, supra, 333 F.3d at 892, the Eighth Circuit said it would 

Case: 16-1385 Document: 55 Filed: 02/10/2017 Pages: 10
10 Nos. 16-1384, -1385, -2248, -2249, -2330 

not enforce an appellate waiver if “the sentence is ‘in excess 

of a statutory provision or otherwise contrary to the applicable 

statute’” (emphasis added). Likewise, Bank of America was 

not a proper victim for the purposes of restitution under 18 

U.S.C. § 3663A, and so the order of restitution was contrary 

to the applicable statute and therefore illegal—just as a prison term that exceeded a statutory maximum would be illegal. 

We therefore decline to enforce Litos’s appellate waiver 

as to restitution, but, because the exceptions to waiver are 

narrow, uphold it as to the rest of his sentence. So while we 

reverse the order of restitution against Litos as well, we remand only for limited resentencing on the issue of restitution (with direction to consider whether a fine is possible). 

In all other respects the judgment of the district court is 

affirmed. 

Case: 16-1385 Document: 55 Filed: 02/10/2017 Pages: 10