In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 13-3815

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

FREDERIC S. HAYWOOD,

Defendant-Appellant.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 08 CR 1023-2 — Ronald A. Guzmán, Judge.

____________________

ARGUED NOVEMBER 18, 2014 — DECIDED JANUARY 26, 2015

____________________

Before BAUER, MANION, and WILLIAMS, Circuit Judges.

MANION, Circuit Judge. Fred Haywood, with help from 

others, processed bogus applications for mortgage loans and 

caused $1.4 million in losses to the lenders. He pleaded 

guilty to wire fraud, 18 U.S.C. § 1343, and was sentenced to 

151 months’ imprisonment. On appeal Haywood argues that 

part of the loss should have been excluded in calculating his 

offense level under the sentencing guidelines. Haywood 

explains that he disclosed part of his fraud during proffer
2 No. 13-3815

sessions protected by U.S.S.G. § 1B1.8. He also contends that 

the district court improperly applied a 4-level, 

aggravating-role adjustment under U.S.S.G. § 3B1.1(a). We

affirm the judgment.

Haywood worked for several mortgage brokers between 

July 2001 and June 2007, and during that time he and at least 

10 others (including his 5 codefendants) defrauded financial 

institutions that made loans to the brokerages’ clients. As a 

“loan officer” or “loan processor” for his employers, 

Haywood was tasked with preparing loan applications and 

assembling supporting documents on behalf of home buyers 

needing financing. But many applications that Haywood

prepared were chock-full of lies. He corroborated them with 

phony or altered documents, including property appraisals, 

cashier’s checks (altered to make it appear that the buyers 

had made down payments), W-2 forms, pay stubs, and 

statements from landlords or property-management companies verifying that buyers who didn’t already own a home 

were paying rent. Sometimes Haywood inflated the purchase price, causing the buyer to borrow more than necessary and allowing him to divert the excess to himself at closing. Sometimes the “buyers” themselves participated in the 

frauds, since they never intended to occupy the homes or 

repay the loans. Instead, they were being paid by Haywood 

to lend their names (and good credit) to secure fraudulent 

loans. Overall, Haywood admitted arranging 65 fraudulent 

loans. 

Many of the phony rent verifications came from “New 

Christian Property Management,” one of several shell companies incorporated by Haywood. (He used that company 

also to funnel loan proceeds to himself.) Codefendant Steve 
No. 13-3815 3

Young, a fellow loan officer at one of the brokerages, created 

a variety of sham documents to meet Haywood’s specifications. Codefendant Sumira Persuad supplied many of the 

inflated appraisals. Codefendant DeAngelo McMahan, another loan officer, helped gather documents for Haywood’s 

loan applications. Haywood also paid at least five unindicted “bird dogs” to find “buyers” who would willingly apply 

for fraudulent loans. 

In July 2007, before federal authorities had filed charges, 

an FBI special agent and three other federal agents interviewed Haywood (with his lawyer and a federal prosecutor 

present). Haywood admitted that at least 20 times from 2003 

through 2005 he had given lenders false information about 

loan applicants’ income, employment, and assets. But, as evidenced by the FBI agent’s report of that interview, 

Haywood falsely denied much of his illegal activity, and apparently he did not share details about specific fraudulent 

loans. It was nearly 18 months later, in December 2008, that 

federal authorities charged Haywood. He executed a plea 

agreement and pleaded guilty to a single count of wire fraud 

in April 2012. 

An FBI special agent discussed the case with the probation officer who prepared Haywood’s presentence investigation report. That report reflects that the agent told the probation officer that Haywood had given truthful information 

during “two proffer interviews” conducted before he signed 

the plea agreement. In their plea agreement the parties stipulated that Haywood was responsible for 65 fraudulent loans 

(each one listed in “Attachment A” to the plea agreement) 

with a combined loss of $1,447,270. The plea agreement also 

states, in a section titled “Offense Level Calculation,” that a 
4 No. 13-3815

16-level increase would apply under U.S.S.G. § 2B1.1(b)(1)(I) 

“because the loss amount of $1,447,270 exceeds $1,000,000 

but is less than $2,500,000.” The plea agreement says nothing 

about the proffer interviews, about Haywood cooperating, 

or about U.S.S.G. § 1B1.8.

The probation officer relied entirely on the plea agreement in recommending that the loss amount used for guidelines purposes include the entire $1,447,270. In the presentence investigation report, the probation officer calculated a 

guidelines imprisonment range of 151 to 188 months, based 

on a total offense level of 29 and a criminal history category 

of VI. That offense level includes the 16-level increase under 

§ 2B1.1(b)(1)(I) for a loss between $1 million and $2.5 million. 

The Level 29 also includes a 4-level increase under U.S.S.G. 

§ 3B1.1(a), which applies to “an organizer or leader of a 

criminal activity that involved five or more participants or 

was otherwise extensive.” The probation officer reasoned 

that the scheme involved at least five participants, that 

Haywood was “culpable in all aspects,” and that he served 

as an organizer exerting “a guiding influence over” 

the other participants.

Three days before sentencing, new counsel for Haywood 

filed—late—a sentencing memorandum. Counsel objected to 

the 16-level increase under § 2B1.1(b)(1)(I). According to 

counsel, “three deals involving 5121 S. Union, 2130 

S. Trumbull, and 5721 S. Hermitage with a total loss value of 

$486,000” should be excluded from the guidelines loss because, counsel asserted, the government had first learned 

about those frauds “during various proffer sessions.” Counsel insisted that the guidelines loss would be $917,000 after 

subtracting $486,000, which would lead to an upward ad-
No. 13-3815 5

justment of 14 levels, not 16, see U.S.S.G. § 2B1.1(b)(1)(H). In 

addition, counsel also objected that Haywood wasn’t an organizer or leader and, thus, shouldn’t receive a 4-level increase under § 3B1.1(a). 

In Haywood’s sentencing memorandum, defense counsel 

supplied no details about the objection to the probation 

officer’s loss calculation, not even the dates or individual 

losses corresponding to the three addresses, all in Chicago. 

And, in fact, counsel’s math does not add up. Subtracting 

$486,000 from the agreed total loss of $1,447,270 would leave 

$961,270, not $917,000. More importantly, Exhibit A to the 

plea agreement identifies five, not three, fraudulent loans 

involving these addresses: in November 2003 and December 

2004 for S. Union, showing no loss for the first of the two 

loans and $47,500 for the second; in February 2004 and April 

2005 for S. Trumbull, showing no loss for the first loan and 

$91,500 for the second; and in June 2007 for S. Hermitage, 

showing a loss of $284,750. These losses add up to $423,750, 

not $486,000, and subtracting $423,750 from $1,447,270 

leaves $1,023,520, still above the $1 million threshold for a 

16-level increase. 

The government and probation officer didn’t respond to 

Haywood’s written objections. At the sentencing hearing, 

when defense counsel was asked about remaining objections 

to the presentence report, the lawyer raised the issue of the 

4-level increase under § 3B1.1 but said nothing about the loss 

calculation or the corresponding 16-level increase under 

§ 2B1.1(b)(1)(I). Counsel asserted that being a “loan officer” 

didn’t “necessarily make” Haywood a supervisor of the other participants. The better view, counsel argued, was that the 

participants were “freelancers.” The district court overruled 
6 No. 13-3815

Haywood’s objection to the 4-level increase, finding that he 

was an organizer and leader in an “extensive—I mean really 

extensive—fraudulent conspiracy.” 

Haywood, who is represented by new counsel on appeal,

first argues that the district court miscalculated the guidelines loss by including the $486,000 purportedly attributable 

to the S. Union, S. Trumbull, and S. Hermitage “deals.” 

Those losses, Haywood says, were shielded by U.S.S.G. 

§ 1B1.8(a) from being used in calculating overall loss because 

he volunteered the fraud during proffer interviews. 

Haywood’s new lawyer, though, simply has copied from 

previous counsel’s sentencing memorandum without delving into the details or even checking the math. Like his predecessor, appellate counsel asserts that the losses from the 

three addresses add up to $486,000, which, as far as the record shows, is wrong. The correct figure, $423,750, is too 

small to whittle the stipulated loss, $1,447,270, below the 

$1 million needed for a 16-level increase. See U.S.S.G. 

§ 2B1.1(b)(1)(I). So even if the district court should have ignored all five of the fraudulent loans linked to these properties, the mistake was harmless. 

Haywood also argues that the district court erred in finding him to be an organizer or leader and adding 4 offense 

levels under § 3B1.1 (indeed, Haywood insists, no increase 

was warranted). Haywood admits being an “active and even 

an enthusiastic participant in the mortgage fraud,” but he 

continues to insist that his “co-defendants” were freelancers 

and not under his control. He did not control Richard 

Young, he says, and in fact learned from Young how to 

commit mortgage fraud. Moreover, Haywood adds, he participated in just one “deal” with DeAngelo McMahan, none 
No. 13-3815 7

with Rita McKenzie, and never even met Carl McMahan. His 

brief says nothing about Sumira Persaud.

A 4-level increase is warranted under § 3B1.1(a) if the defendant participated in a criminal activity involving at least 

five participants (including himself) and organized or led at 

least one of the other participants. U.S.S.G. § 3B1.1 cmt. n.2; 

United States v. Vasquez, 673 F.3d 680, 685 (7th Cir. 2012); 

United States v. Blaylock, 413 F.3d 616, 621 (7th Cir. 2005); 

United States v. Gerstein, 104 F.3d 973, 979 (7th Cir. 1997). A 

“participant” need not be convicted or even charged. See 

U.S.S.G. § 3B1.1 cmt. n.1; United States v. Knox, 624 F.3d 865, 

874 (7th Cir. 2010); United States v. Boutte, 13 F.3d 855, 860 

(5th Cir. 1994). And contrary to what Haywood implies, a 

defendant can be an organizer or leader without knowing 

every participant. United States v. Kamoga, 177 F.3d 617, 622 

(7th Cir. 1999). Relevant factors include the defendant’s decision-making authority, whether he recruited accomplices, 

his planning and participation, the nature of the offense, and 

the amount of control he exerted over others. U.S.S.G. 

§ 3B1.1 cmt. n.4; United States v. Cooper, 767 F.3d 721, 733 

(7th Cir. 2014).

Haywood’s contention that he wasn’t an organizer or 

leader is preposterous. He admitted processing the applications for the 65 fraudulent mortgage loans listed in Exhibit A 

to the plea agreement. He told Young what phony documents he wanted and what specific information to include in 

those documents. He recruited Persaud and told her what 

valuations to use in her inflated appraisals. He instructed

DeAngelo McMahan to bring particular documents to a loan 

closing and to fax him documents to prepare loans. And he 

recruited and paid at least five “bird dogs” to find “buyers” 
8 No. 13-3815

for fraudulent loans. This was more than enough for the 

court to conclude that Haywood “had direction and control 

during the pertinent transactions over what the others did.”

Accordingly, we affirm the judgment.