In the

United States Court of Appeals

For the Seventh Circuit

No. 10-3794

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

BENJAMIN ROBERS,

Defendant-Appellant.

Appeal from the United States District Court 

for the Eastern District of Wisconsin. 

No. 10 CR 95—Rudolph T. Randa, Judge.

ARGUED SEPTEMBER 15, 2011—DECIDED SEPTEMBER 14, 2012

Before FLAUM, MANION, and SYKES, Circuit Judges.

MANION, Circuit Judge. Benjamin Robers pleaded

guilty to conspiracy to commit wire fraud in violation of

18 U.S.C. § 371, based on his role as a straw buyer in a

mortgage fraud scheme; Robers signed mortgage documents seeking loans which were based on false and

inflated income and assets and based on his claim that

he would reside in the houses as his primary residence

and pay the mortgages. The loans went into default and

the real estate which served as collateral for the loans

were later foreclosed upon and resold.
2 No. 10-3794

For simplicity’s sake, we refer to the value of “the property 1

that is returned” as the “offset value.” 

For his role in the scheme, the district court sentenced

Robers to three years’ probation and ordered him to pay

$218,952 in restitution to the victims—a mortgage lender

of one property and the mortgage insurance company

which had paid a claim on the other defaulted mortgage.

Clearly, both mortgage holders experienced significant

losses. Robers appeals, challenging only the restitution

order.

The Mandatory Victims Restitution Act of 1996, 18 U.S.C.

§ 3663A “(MVRA”), governs federal criminal restitution.

It provides, in the case of a crime “resulting in damage

to or loss or destruction of property of a victim,” that

restitution is mandatory and that a court shall order

a defendant to:

(A) return the property to the owner of the property

or someone designated by the owner; or 

(B) if return of the property under subparagraph (A)

is impossible, impractical, or inadequate, pay an

amount equal to the greater of—

(i) the value of the property on the date of the

damage, loss, or destruction, or 

(ii) the value of the property on the date of sentencing, 

less the value (as of the date the property is returned)

of any part of the property that is returned.1

18 U.S.C. § 3663A(b)(1).
No. 10-3794 3

The dispute in this case concerns the calculation of the

“offset value.” Robers argues that the MVRA requires

the court to determine the offset value based on the fair

market value the real estate collateral had on the date the

victim lenders obtained title to the houses following

foreclosure because that is the “date the property is

returned.” The government counters that money was the

property stolen in the mortgage fraud scheme and

that foreclosure of the collateral real estate is not a

return of the property stolen; rather, only when the collateral real estate is resold do the victims receive

money (proceeds from the sale) which was the type of

property stolen. Accordingly, the government argues

that the offset value must be determined based on the

eventual cash proceeds recouped following the sale of

the collateral real estate.

This court in two non-precedential decisions has followed the government’s approach. See infra at 16-18. The

other circuits are split on the issue. The Second, Fifth

and Ninth Circuits have held that in a mortgage fraud

case, the offset value should be based on the fair market

value of the real estate collateral at the time the victims

obtain title to the houses. See infra at 18-19. Conversely, the

Third, Eighth, and Tenth Circuits (and a dissent from

the Ninth Circuit) have concluded that it is proper to

determine the offset value based on the eventual

amount recouped by the victim following sale of the

collateral real estate. See infra at 19.

Today we join the view of the Third, Eighth, and Tenth

Circuits—that the offset value is the eventual cash pro-
4 No. 10-3794

ceeds recouped following a foreclosure sale. We reach

this decision based on the plain language of the MVRA.

The MVRA states that the offset value is “the value (as

of the date the property is returned) of any part of

the property that is returned.” 18 U.S.C. § 3663A(b)(1).

“The property” for purposes of offset value must mean

“the property stolen.” The property originally stolen

was cash. Some amount of cash is the only way part of

the property can be returned. In the mortgage fraud

case we have before us, the property stolen is cash—not

the real estate which serves as collateral. Accordingly,

the property stolen is only returned upon the resale of

the collateral real estate and it is at that point that the

offset value should be determined by the part of the

cash recouped at the foreclosure sale.

We also agree with the government that the victims

are entitled to expenses (other than attorney’s fees and

unspecified fees) related to the foreclosure and sale

of the collateral property because those expenses were

caused by Robers’s fraud and reduced the amount of

the property (cash) returned to the victim lenders.

Because the district court included attorney’s fees and

unspecified fees in the restitution award, we vacate

that portion of the district court’s award, but otherwise

affirm, and remand for proceedings consistent with this

opinion.

I. Background

Benjamin Robers was a straw buyer in a mortgage

fraud scheme devised by James Lytle and carried out by
No. 10-3794 5

Lytle and others. The scheme involved the submission of fraudulent loan applications which materially

misrepresented the straw buyers’ income, qualifications,

and intent to live in the houses and repay the mortgages.

The misrepresentations caused loan funds to be wired

by lenders to settlement companies which closed the

loans. The loans went into default and the banks later

foreclosed on and then sold the houses which served

as collateral for the loans.

The scheme involved more than fifteen houses in a small

geographical area in Walworth County, Wisconsin. 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. In the loan applications, which he

signed, Robers falsely stated that he would use the

houses as his primary residence and that he would pay

the notes secured by the mortgages on the houses; he

also provided false and inflated information concerning

his income and assets. For his role in the scheme,

Robers received a mere pittance—about $500 for each

loan. Both loans went unpaid and the houses

eventually went into foreclosure. After the government

learned of the fraud, Robers waived indictment and

pleaded guilty to an information charging him with

one count of conspiracy to commit wire fraud.

After Robers pleaded guilty, the United States Probation Office prepared a Presentence Investigation

Report (“PSR”). Of relevance to this appeal, the PSR

recommended that Robers should be required to pay

$218,952.18 in restitution, pursuant to the Mandatory
6 No. 10-3794

Victims Restitution Act of 1996, 18 U.S.C. § 3663A

“(MVRA”). Robers objected to the $218,952.18 figure,

arguing that his minor role in the offense and his

limited economic circumstances should result in a total

restitution obligation of $4,800. Robers also claimed

that the proposed restitution award improperly held

him responsible for the decline in real estate values

and consequential and incidental expenses.

At sentencing, the government argued that neither

Robers’s limited role in the offense nor his limited resources justified a lower restitution amount, jointly and

severally owed by all of the participants in the scheme.

The government then presented testimony from two

witnesses to establish the amount of restitution. First, Jim

Farmer, a representative of Mortgage Guaranty Insurance

Corporation (“MGIC”), testified that MGIC had insured

the Grant Street mortgage (which was owned by Fannie

Mae) and that Fannie Mae had submitted a claim for

$159,214.91, which included unpaid principal, accrued

interest, attorney’s fees, property taxes, and other

related expenses. Farmer explained that MGIC had the

option of paying a percentage of the claim or paying the

full amount of the loss and acquiring the real estate and

then liquidating it. MGIC chose to do the latter and was

able to reduce the amount of its loss to $52,952.18, which

was lower than the amount it would have had to pay

had it paid a percentage of Fannie Mae’s claim. In mitigating its loss, though, MGIC incurred additional

expenses, such as hazard insurance, yard maintenance,

and the realtor’s commission.
No. 10-3794 7

Restitution in the amount of $166,000 was ordered to Ameri- 2

can Portfolio, due jointly and severally with Jose Cortez

Valadez, Case No. 07-CR-158 and John Boumenot, Case No. 09-

CR-194. And restitution of $52,952.18 was ordered to MGIC

jointly and severally with James Lytle, Case No. 07-CR-113,

Bradley Hollister, Case No. 08-CR-229, and Eric Meinel,

Case No. 09-CR-217. 

FBI Special Agent Michael Sheen also testified at the

sentencing hearing. After detailing how the scheme

operated, he explained that the Inlet Shores house had

a mortgage note of $330,000 owned by American Portfolio

and that the foreclosed real estate eventually sold for

$164,000, resulting in a $166,000 loss. There were additional expenses related to the foreclosure sale, but American Portfolio had not responded to the government’s

request for additional information. Accordingly, the

amount of restitution requested for the Inlet Shores

mortgage was limited to $166,000.

The district court sentenced Robers to three years’

probation—a below-Guideline sentence. Based on the

testimony at the sentencing hearing, the district court

ordered restitution of $166,000 to American Portfolio

and $52,952.18 to MGIC, for a total restitution award

of $218,952.18. Robers’s co-conspirators who were

involved with the procurement of the Grant Street and

Inlet Shores mortgages were also ordered to pay restitution in the same amounts and the restitution awards

were all entered with joint and several liability. Robers 2

appeals, challenging only the restitution award.
8 No. 10-3794

Robers does not argue on appeal that his minor role in 3

the offense and his limited economic circumstances should

reduce the restitution amount.

II. Analysis

On appeal, Robers argues that the district court erred

in calculating the amount of restitution based on the

eventual resale value of the foreclosed real estate. Robers

maintains that the district court should have based

the restitution award instead on the fair market value

of the real estate at the date of foreclosure, and that

by using the eventual resale proceeds of the houses he

was wrongly held responsible for the decline in their

value. Robers also argues that many of the miscellaneous

expenses included in the loss calculation for the Grant

Street house are consequential or incidental damages

that are not properly considered in a restitution

award. While generally we review a restitution order 3

deferentially, reversing only for an abuse of discretion,

both of Robers’s arguments present questions of the

award’s legality. As such, our review is de novo. United

States v. Webber, 536 F.3d 584, 601 (7th Cir. 2008) (“We

review de novo questions of law regarding the federal

courts’ authority to order restitution; we review for

abuse of discretion a district court’s calculation of restitution, taking the evidence in the light most favorable

to the Government.”) (internal citations omitted). See

also United States v. Yeung, 672 F.3d 594, 600 (9th Cir.

2012) (“We review the legality of a restitution order,

including the district court’s valuation method, de novo.”).
No. 10-3794 9

Robers agreed that the ultimate victim of the Inlet Shores 4

fraud was American Portfiolio and that MGIC was the

ultimate victim of the Grant Street fraud. 

A. Offset Value

1. The statutory language 

The MVRA governs federal criminal restitution and

provides, in relevant part, that a sentencing court “shall

order” defendants convicted of certain crimes to “make

restitution” to their victims. 18 U.S.C. § 3663A(a)(1). In 4

the case of a crime “resulting in damage to or loss or

destruction of property of a victim,” the statute

further provides that the order of restitution shall

require the defendant to:

(A) return the property to the owner of the property

or someone designated by the owner; or 

(B) if return of the property under subparagraph (A)

is impossible, impractical, or inadequate, pay an

amount equal to the greater of—

(i) the value of the property on the date of the

damage, loss, or destruction, or 

(ii) the value of the property on the date of sentencing, 

less the value (as of the date the property is returned)

of any part of the property that is returned.

18 U.S.C. § 3663A(b)(1).
10 No. 10-3794

The Inlet Shores house was sold 31 months after foreclosure 5

but it is unclear from the record when the Grant Street real

estate was sold. 

Robers argues that the plain language of the MVRA

required the district court to reduce the restitution

award by the value of the mortgaged real estate as of

the date of foreclosure because that is the value “as of

the date the property is returned.” He contends that it

was legal error for the court to calculate the offsetting

amount based on the eventual resale prices of the real

estate because the houses were resold many months

after the foreclosure actions gave title to the victim

lenders. And with the burst of the real estate bubble in 5

the mid-2000s, Robers maintains that the houses sold

for less, not based on his fraud, but for other

unrelated reasons. The government responds that

Robers’s argument misreads the MVRA and argues that

under the plain language of the MVRA, the restitution

award is only reduced at the time that the mortgaged

collateral is sold because cash is the property that was

taken and cash is only returned at that point in time.

We agree with the government. More specifically,

we hold that in calculating a restitution award where,

as in this case, cash is the property taken, the restitution amount is reduced by the eventual cash proceeds

recouped once any collateral securing the debt is sold.

We reach this holding based on the plain language of

the MVRA. The MVRA states that the restitution award

is reduced by “the value (as of the date the property is
No. 10-3794 11

returned) of any part of the property that is returned.” 18

U.S.C. § 3663A(b)(1)(B)(ii) (emphasis added). Read in

the context of the statute, “the property” must mean the

property originally taken from the victim. The applicable

subsection of the MVRA first addresses the situation

we have here—where there is “damage to or loss or

destruction of property of a victim of the offense.” In this

case the “loss” the victims suffered was a significant

amount of cash. Next, it refers to the return of “the property to the owner.” 18 U.S.C. § 3663A(b)(1). In this case,

since the property taken from the victims was cash, the

two houses purchased with the cash were not the

property taken from the lenders, but rather were

collateral that secured the cash loans. The two cannot be

equated. Cash is liquid. Real estate is not. The victimlender was defrauded out of cash and wants cash back;

the victim does not want the houses and they do not, in

any way, benefit from possessing title to the houses

until they are converted into cash upon resale. Under

the plain language of the statute, what matters is when

at least part of the cash was returned to the victims—not when the victims received title to the houses

securing the loans. And the cash was returned to

the victims only when the collateral houses securing

the loans were eventually resold.

Our interpretation of the MVRA gives the phrase “the

property” a consistent meaning throughout the statute:

It always means “the property stolen.” Robers’s interpretation, on the other hand, seeks to give the

phrase “the property” a different meaning within the

same statutory section. Under Robers’s interpretation
12 No. 10-3794

the property returned would be the collateral houses

and their estimated value at the time the victim receives

title. However, “[t]here is a natural presumption that

identical words used in different parts of the same act

are intended to have the same meaning.” Matter

of Merchants Grain, Inc. By and Through Mahern, 93 F.3d

1347, 1356 (7th Cir. 1996) (quoting Atlantic Cleaners &

Dyers, Inc. v. United States, 286 U.S. 427, 433 (1932)). The

MVRA directs the court to offset the loss by “the value

(as of the date the property is returned) of any part of

the property that is returned.” Under Robers’s interpretation “any part” of the property returned would have to

refer to the collateral house. Obviously part of a house

cannot be returned. Nor can a house (or any part of a

house) be the same as cash. It is only when “the property”

means “the property stolen” (cash) that the “any part”

language makes sense, because then it is possible to

return only a part of the property. A house is not part of

the cash. Thus, our reading both gives the phrase “the

property” a consistent meaning throughout the MVRA

and does not render the “any part” language of the

statute superfluous or nonsensical.

2. The MVRA’s statutory goal

The MVRA’s overriding purpose is “to compensate

victims for their losses.” United States v. Pescatore, 637 F.3d

128, 138 (2d Cir. 2011) (internal quotations omitted). And

[b]ecause the MVRA mandates that restitution

be ordered to crime victims for the “full amount” of
No. 10-3794 13

losses caused by a defendant’s criminal conduct, see 18

U.S.C. § 3664(f)(1)(A); United States v. Reifler, 446 F.3d

at 134 . . . , it can fairly be said that the “primary and

overarching” purpose of the MVRA “is to make

victims of crime whole, to fully compensate these

victims for their losses and to restore these victims to

their original state of well-being.” 

United States v. Boccagna, 450 F.3d 107, 115 (2d Cir. 2006)

(quoting United States v. Simmonds, 235 F.3d 826, 831 (3d

Cir. 2000).

Our holding is consistent with the goals of the MVRA,

as well as the concept of restitution. The offset amount

for purposes of restitution is the cash recouped

following the disposition of the collateral. Otherwise

the victims would not be made whole again because

the eventual sales proceeds could be, as they were in

this case, woefully inadequate to fully compensate the

victims for their loss and to put them in the position

they would have been absent the fraud.

Robers claims otherwise, asserting that our reading of

the MVRA makes him the insurer of real estate values

and improperly holds him responsible for declines in

the real estate market. Robers then posits that the victims’

losses in this case were caused by the collapse of the

real estate market and not his fraud. Therefore holding

him responsible for the further decline in the real

estate values—after the victims acquired title to the

houses—violates the underlying purpose of the MVRA.

Not so. Contrary to Robers’s argument, his fraud

actually caused the losses at issue here. Absent his fraudu-
14 No. 10-3794

lent loan applications, the victim lenders would

not have loaned the money in the first place. Likewise

the mortgage notes would not have been extended,

not paid, and then defaulted upon. And the banks

would not have had to foreclose on and then resell

the real estate in a declining market at a greatly

reduced value.

The decline in the real estate market does not mitigate

his fraud. Robers lied about several things—his intent to

reside in the house as his primary residence, his promise

to pay the mortgage, his inflated income, and his exaggerated asset value. Absent Robers’s fraud, the decline

in the real estate market would have been irrelevant:

Assuming he actually qualified for the loans, he would

be living in the house and making the mortgage payments out of the income he claimed to be earning. If

his assets had the value he claimed, he would not want

to risk using them to satisfy any deficiency following

a foreclosure sale. The declining market only became

an issue because of Robers’s fraud. See Yeung, 672 F.3d

at 603 n.5 (“[H]ere Yeung created the circumstances

under which the harm or loss occurred through her use

of false information that induced the Long Beach Trust

to purchase the loan. Because the Long Beach Trust’s loss

is directly related to Yeung’s offense, the declining

value of the real estate collateral, even if attributable to

general financial conditions, does not disrupt the causal

chain, and the victims of the fraud are entitled to restitu-
No. 10-3794 15

Contrary to our holding, Yeung held that the offset value 6

for purposes of restitution is the collateral’s value at the time

title transfers to the loan holder. See infra at 25-28. 

tion.”) (internal citation omitted). Essentially Robers 6

wants a bailout, leaving the victims of his fraud to

suffer the consequences of his deceit. Robers, not his

victims, should bear the risk of market forces beyond his

control. See United States v. Rhodes, 330 F.3d 949, 954 (7th

Cir. 2003) (“[The defendant], rather than the victims,

should bear the risk of forces beyond his control.” (quoting

district court opinion)).

If the real estate values increased, thereby allowing

the creditor to resell the houses at a higher amount

than owed, the bank would not be entitled to a restitution award. Similarly, if the increased sales price

merely reduced the bank’s loss, it would obviously be

error for the district court to order restitution based on

the earlier lower market value because “[t]he VWPA and

MVRA ensure that victims recover the full amount of

their losses, but nothing more.” United States v. Newman,

144 F.3d 531, 542 (7th Cir. 1998). See also United States v.

Smith, 156 F.3d 1046, 1057 (10th Cir. 1998) (“[A] district

court may not order restitution in an amount that

exceeds the loss caused by the defendant’s conduct. Such

a restitution order would amount to an illegal sentence.

[T]he imposition of an illegal sentence constitutes plain

error.”) (internal quotations omitted). Thus, what Robers

truly seeks is a one-way ratchet. But “the ‘intended beneficiaries’ of the MVRA’s procedural mechanisms ‘are the
16 No. 10-3794

If a district court had entered a restitution order based on

7

the estimated fair market value of the real estate prior to

resale and the eventual sales proceeds ended up higher, a

defendant could come back to court and request that the

restitution award be reduced. Rather than speculate and

then later adjust the restitution award, we believe the better

approach is to do what, according to the government, the

Eastern District of Wisconsin does: If the collateral real estate

has not been sold by the time of sentencing, the court enters

a restitution award for the total loss to the victims and once

the real estate is sold, the court modifies the restitution

award based on the cash proceeds. 

victims, not the victimizers.’ ” United States v. Moreland,

622 F.3d 1147, 1172 (9th Cir. 2010) (quoting United States

v. Grimes, 173 F.3d 634, 639 (7th Cir. 1999)).7

3. Seventh Circuit precedent

Our holding is consistent with this circuit’s previous

decisions reached in non-precedential orders. In United

States v. Cage, 365 Fed. App’x 684, 687 (7th Cir. 2010), this

court stated:

The restitution amount proposed by the government

and adopted by the court at sentencing was

the amount in mortgage loans that Cage helped to

fraudulently secure less the amount the lenders recovered through the sale of the fraudulently purchased

properties. This was a proper way to calculate the

amount of restitution [] owed . . . .
No. 10-3794 17

In United States v. Shepard, 269 F.3d 884, 888 (7th Cir. 2001), this 8

court also considered the question of the appropriate amount

of offset, but Shepard is distinguishable from the case at

hand. In Shepard, the defendant argued that “he and his

wife ‘returned’ about $12,000 of the [stolen] $92,000 by using

it to make improvements in [the victim’s] home.” Id. at 887.

We noted that “to the extent improvements increased the

(continued...)

And in United States v. Bates, 134 Fed. App’x 955 (7th

Cir. 2005), we explained the difference between the property stolen (cash) and the property returned (real estate

collateral) stating:

Bates insists that Coldwell did not suffer any compensable loss because it ended up with the

residence, and that the “loss” claimed by the realtor

in fact consists of unrecoverable “incidental and

consequential damages” and “lost profits.” Bates,

though, did not take a house from Coldwell; she

caused the realtor to lose cash, but cash is not

what was “returned” to Coldwell. Coldwell assumed temporary ownership of the residence only

as a means of mitigating Bates’s fraud, and so long as

Coldwell possessed a residence it did not want instead

of the funds Bates caused it to expend, the realtor was

not made whole—Bates’s fraud placed Coldwell in the

position of real estate seller rather than realtor.

Id. at 958.

These Seventh Circuit decisions, though, as noted, are

non-precedential. The other circuits are split on the 8
18 No. 10-3794

(...continued) 8

market value of [the victim’s] house, and thus were (or

could have been) realized by [the victim’s] estate in selling

the property, the funds were ‘returned’ for statutory purposes.”

Id. We continued: “It is no different in principle from taking

the money from one of [the victim’s] bank accounts and depositing it in another a week later. So long as [the victim] regained

beneficial use of the property, it has been ‘returned’ as

§ 3663A(b)(1)(B)(ii) uses that term.” Id. at 887-88. In Shepard,

though, the government did not contend that the “the change

of the property’s form—from cash to, say, central

air conditioning—precludes a conclusion that the property

has been ‘returned.’ ” Id. at 888. Moreover, in Shepard, the

victim was using and benefitting from the home improvements, whereas in this case, the victims were not using the

collateral, but were merely attempting to sell the collateral to

recoup their stolen property—cash. Finally, while Shepard

remanded the case for determination of “the amount by which

improvements enhanced the market value of the house,” there

was no discussion concerning the appropriate time for this

valuation, i.e., upon resale of the house or at the time the

home improvements were made. Id. Thus, Shepard does not

answer the question before us.

The following cases interpret both the MVRA and its prede- 9

cessor, the Victim and Witness Protection Act of 1982

(“VWPA”). Unlike the MVRA, the VWPA required courts to

consider the economic circumstances of the defendant prior

to ordering restitution, and the granting of restitution was

discretionary, not mandatory. See 18 U.S.C. § 3663. “With

(continued...)

appropriate offset amount to use in calculating restitution. In a series of cases, the Ninth Circuit has held 9
No. 10-3794 19

(...continued) 9

these exceptions, the two statutes are identical in all

important respects, and courts interpreting the MVRA may

look to and rely on cases interpreting the VWPA as precedent.” See United States v. Gordon, 393 F.3d 1044, 1048

(9th Cir. 2004).

that the offset amount is the fair market value of the

collateral real estate at the date of foreclosure when

the victim-lender took title and could have sold it for cash.

See United States v. Smith, 944 F.2d 618, 625-26 (9th

Cir. 1991); United States v. Hutchison, 22 F.3d 846, 856 (9th

Cir. 1993); United States v. Catherine, 55 F.3d 1462, 1465

(9th Cir. 1995); United States v. Davoudi, 172 F.3d 1130, 1135

(9th Cir. 1999); United States v. Gossi, 608 F.3d 574, 578 (9th

Cir. 2010); United States v. Yeung, 672 F.3d 594, 605 (9th Cir.

2012). The Second and Fifth Circuits have similarly

held that in a mortgage fraud case, the restitution offset

is based on the fair market value of the collateral at the

time it is returned to the victim. See United States v.

Boccagna, 450 F.3d 107, 120 (2d Cir. 2006); United States

v. Holley, 23 F.3d 902, 915 (5th Cir. 1994). Conversely, the

Third, Eighth, and Tenth Circuits have held that it is

proper to base the offset value on the eventual

amount recouped by the victim following sale of the

collateral real estate. See United States v. Himler, 355 F.3d

735, 745 (3d Cir. 2004); United States v. Statman, 604

F.3d 529, 538 (8th Cir. 2010); United States v. James, 564

F.3d 1237, 1246-47 (10th Cir. 2009).
20 No. 10-3794

4. Circuits holding that the offset value is determined based on the estimated fair market value

of the collateral securing the loans at the date

of foreclosure when title is transferred to

the lender

Our conclusion conflicts with the view of the Ninth,

Fifth, and Second Circuits. As noted above, those courts

all held that the offset amount is the estimated fair

market value of the collateral at the date of foreclosure.

In reaching this conclusion, the courts all purported to

rely on the plain language of the MVRA, stressing that

under the MVRA, courts are to reduce the restitution

award by “the value (as of the date the property is returned).” But none of those cases actually addressed

the question of what constitutes “the property” under

the statute. And their conclusions are based on the

courts improperly treating the collateral recovered as

the property stolen.

a. The Ninth Circuit

Examining the development of the case law in the

Ninth Circuit illuminates this omission. Smith was the

first of the cases to consider the appropriate offset in a

similar situation—where the victim lent cash based on

the defendant’s fraud and eventually foreclosed on the

real estate securing the loan. Smith, 944 F.2d at 620-21. In

Smith, the defendant asserted “that the district court

failed to give him adequate credit against the restitution amount for the value of the collateral property,”

arguing that the court should have used the value of the
No. 10-3794 21

real estate at the time the victims regained title to

the property. Id. at 625. Smith alleged “that because

the value of Texas real estate steadily declined throughout the time in question, the measurement of the

property’s value at the later dates resulted in an inadequate credit for the collateral property, and that therefore the restitution figure is far too high.” Id. The Ninth

Circuit agreed with defendant Smith. And Smith serves

as the linchpin for further cases. Because the court went

astray in Smith by applying language in the much

different property restitution case (Tyler), we quote its

reasoning in full:

We agree with Smith that the district court used

incorrect dates in valuing the property. The Act provides that if a victim has suffered a loss of property,

the district court may order restitution in the

amount of this loss “less the value (as of the date the

property is returned ) of any part of the property that

is returned.” 18 U.S.C. § 3663A(b)(1) (emphasis

added). We interpreted this portion of the Act in

United States v. Tyler, 767 F.2d 1350 (9th Cir. 1985)

(Tyler), in which Tyler pled guilty to theft of timber

and was ordered to pay restitution under the Act.

The district court determined the amount of restitution as the difference between the value of the timber

at the time of sentencing and the higher value at the

time of theft. Id. at 1351. Because the government

recovered the timber on the day of the theft,

however, we concluded that “[a]ny reduction in its

value stems from the government’s decision to hold

the timber during a period of declining prices, not
22 No. 10-3794

from Tyler’s criminal acts.” Id. at 1352. The value of

the property “ ‘as of the date the property [was] returned’ ” equaled the amount lost when the timber was

stolen, and therefore restitution under the Act was

inappropriate. Id. (quoting 18 U.S.C. § 3579, which was

subsequently renumbered as 18 U.S.C. § 3663). 

The same reasoning should apply in determining

the value of the collateral property in this case.

Smith should receive credit against the restitution

amount for the value of the collateral property as of

the date title to the property was transferred to

either Savings & Loan or Gibraltar. As of that

date, the new owner had the power to dispose of the

property and receive compensation. Cf. 18 U.S.C.

§ 3663(e)(1) (restitution may be ordered for any

person who has compensated a victim). Value

should therefore be measured by what the financial

institution would have received in a sale as of that

date. Any reduction in value after Smith lost title to

the property stems from a decision by the new

owners to hold on to the property; to make Smith pay

restitution for that business loss is improper. See

Tyler, 767 F.2d at 1352. The victims in this case

“receive[d] compensation” when they received title

to the property and the corresponding ability to sell

it for cash; the value of the compensation should

therefore be measured and deducted from the total

loss figure as of the date title was transferred. 18

U.S.C. § 3663(e)(1). Because the law is clear, to do

otherwise would be an abuse of discretion.

Id. at 625-26.
No. 10-3794 23

There are several flaws in Smith’s reasoning. First,

Smith quoted, with emphasis, the “less the value (as of

the date the property is returned)” language from the

MVRA, but ignored the fact that the property returned

was not the property stolen. See Smith, 944 F.2d at 631-

32 (O’Scannlain, J., dissenting) (explaining that the

majority “erroneously treats the five collateral properties

as if they are somehow equivalent to the stolen capital,”

but “[w]hat Smith stole was capital, and to restore his

victims to the status quo ante, he must return the

present value of that capital.”). Second, and relatedly,

the Ninth Circuit in Smith relied heavily on its decision

in Tyler to support its reasoning, but Smith’s reliance

on Tyler was misplaced because in Tyler, the defendant

was charged with theft of government timber and the

exact same property (i.e., the timber) was recovered on

the very day of the theft. Thus, Tyler does not support

the view that “the property” in the MVRA means any

property returned, as opposed to the property stolen.

See Smith, 944 F.2d at 632 (O’Scannlain, J., dissenting)

(“Nor does our decision in United States v. Tyler, 767

F.2d 1350 (9th Cir. 1985), upon which both the

majority and Smith rely, support the court’s holding. See

ante at 624-25. A defrauded lender’s assumption of

title over collateral property that is itself part of the

fraud is in no way analogous to a timber owner’s

recovery of stolen timber.”) Third, Smith reasoned that

as of the date the victim received title to the collateral,

the new owner had the power to dispose of the real

estate and receive compensation, and accordingly the

value of the real estate should be based on the amount
24 No. 10-3794

the financial institution would have received in a sale as

of that date. This reasoning ignores the reality that

real property is not liquid and, absent a huge price discount, cannot be sold immediately. Fourth and finally,

the court in Smith unreasonably assumed that any reduction “after Smith lost title to the property stems from

a decision by the new owners to hold on to the property.” Smith, 944 F.2d at 625. This rationale also incorrectly assumes that real estate is liquid—which it is not.

We say all of this because the Ninth Circuit’s decision in Smith served as the keystone for all of the subsequent decisions holding that the offset value is the fair

market value of the collateral real estate on the date

the title to the collateral reverted to the victim. For instance, in United States v. Hutchinson, 22 F.3d 846 (9th

Cir. 1993), the defendant challenged the district court’s

use of the final sales price as the offset value. Based

on Smith, the Ninth Circuit agreed that the appropriate

offset was the value of the collateral at the time the

bank gained control of the real estate. Similarly, in

United States v. Catherine, 55 F.3d 1462 (9th Cir. 1995),

the defendant argued that the district court should

have valued the real estate for offset purposes at the

time the victim foreclosed on the collateral real estate,

and the Ninth Circuit stated: “We decided this exact

issue in Hutchinson, id. at 854-56, which in turn, relied

on United States v. Smith.” Id. at 1465. The court in

Catherine then followed these precedents and reversed

and remanded the case for the district court to value

the collateral at the time the bank received title. Id. And

in United States v. Davoudi, 172 F.3d 1130 (9th Cir. 1999),
No. 10-3794 25

the Ninth Circuit again held that the district court erred

in basing its offset valuation on the eventual sales price

of the collateral. Davoudi parroted Smith’s reasoning and

cited Smith, Catherine, and Hutchinson. Then in United

States v. Gossi, 608 F.3d 574 (9th Cir. 2010), the Ninth

Circuit relied on Davoudi, to conclude: “Under this Court’s

precedent, the district court reasonably found that [the

victim] had the power to dispose of the property at the

time it took control of the property at foreclosure. ‘Value

should therefore be measured by what the financial

institution would have received in a sale as of that date.’ ”

Id. at 578 (quoting Smith, 944 F.2d at 625).

The final and most recent decision from the Ninth

Circuit is United States v. Yeung, 672 F.3d 594 (9th Cir.

2012). In Yeung, the court considered the propriety of

several restitution orders to financial institutions which

suffered losses following a fraudulent real estate

scheme and stated:

Using the framework set forth in § 3663A(b), we

have developed some guidelines for calculating the

restitution amount in a case involving a defendant’s

fraudulent scheme to obtain secured real estate loans

from lenders. Generally, district courts calculating

a direct lender’s loss in this context begin by determining the amount of the unpaid principal balance

due on the fraudulent loan, less the value of the

real property collateral as of the date the direct

lender took control of the property. United States v.

Hutchison, 22 F.3d 846, 856 (9th Cir. 1993); United

States v. Smith, 944 F.2d 618, 625-26 (9th Cir. 1991)
26 No. 10-3794

(construing the VWPA). Because restitution should

address a victim’s “actual losses,” see Smith, 944 F.2d

at 626, we have approved restitution awards that

included other amounts in the calculation of loss,

such as prejudgment interest (using the governmental loan rate), id., interest still due on the loan,

Davoudi, 172 F.3d at 1136, and expenses associated

with holding the real estate collateral that were incurred by the lender before it took title to the

property, Hutchison, 22 F.3d at 856. To calculate

the value of the real property collateral “as of the date

the property is returned,” § 3663A(b)(1)(B)(ii), courts

use the value of the collateral “as of the date the victim

took control of the property,” Davoudi, 172 F.3d at 1134.

The lender does not take control of the collateral

merely by triggering the foreclosure process. See

United States v. Gossi, 608 F.3d 574, 578 (9th Cir.

2010). Rather, the lender generally takes control on

the date the lender either (1) receives the net

proceeds from the sale of the collateral to a third

party at the foreclosure sale, see United States v. James,

564 F.3d 1237, 1246 (10th Cir. 2009), or (2) takes title

to the real estate collateral at the foreclosure sale, at

which time “the new owner had the power to

dispose of the property and receive compensation,” see

Smith, 944 F.2d at 625. The direct lender’s losses may

also be reduced by amounts recouped from resale of

the loan or from other types of “return” of property.

See, e.g., Hutchison, 22 F.3d at 856.

Id. at 601.
No. 10-3794 27

Yeung also held that “when a victim purchased a loan in the 10

secondary market, that is, where the victim is the loan

purchaser as opposed to the loan originator . . . the value of

that loan is not necessarily its unpaid principal balance, but

may vary with the value of the collateral, the credit rating of

the borrower, market conditions, or other factors, [and thus]

the loan purchaser may have purchased the loan for less than

its unpaid principal balance.” Yeung, 672 F.3d at 601-02. The

Ninth Circuit in Yeung then remanded the case to the district

court to recalculate the restitution award. Robers filed Yeung

as supplemental authority and argued that, as in Yeung,

remand is required to determine the price at which the loans

were purchased in the secondary market. Robers, however,

had never previously argued (either before the district court

or in briefing or at oral argument) that the restitution award

was improperly based on the outstanding principal balance,

as opposed to some potentially lower amount paid for the

loans in the secondary market. Therefore, he has waived

these issues.

On the basis of this precedent, the Ninth Circuit in

Yeung then reversed the district court’s restitution

awards, which were based on the subsequent sales price

of the real estate, and remanded to the district court.

10

As the above excerpt from Yeung makes clear, its

holding was based on the well-established precedent

that flowed from Smith. And as discussed above, none

of those cases addressed the fundamental distinction

between the property stolen (cash) and the property

recovered (real estate). Like its predecessors, Yeung did

not recognize that the Smith decision relied on Tyler,

which was factually distinguishable from all of the
28 No. 10-3794

cases at hand because Tyler involved a case where the

property the defendant was charged with stealing was

the same as the property returned to the victim (timber)

and the theft and return happened on the same day.

b. The Fifth Circuit

The Smith decision has likewise served as the basis

for other circuits holding that the offset value is the

value of the collateral at the time of foreclosure. In

United States v. Holley, 23 F.3d 902, 915 (5th Cir. 1994), the

Fifth Circuit, like the Ninth Circuit, held that the

offset value should be based on the fair market value

on the date of foreclosure. In coming to this conclusion,

the Fifth Circuit first stated that its decision in United

States v. Reese, 998 F.2d 1275 (5th Cir. 1993), dictated

the result. It noted that in Reese it had 

explained that “it would appear that the ‘property’

as to which [the savings and loan] might have

suffered ‘damage to or loss or destruction of’ could

only be loan proceeds funded in cash at the

original closing of [the improperly extended] loan.”

Id. at 1283. However, we also explained that when

the real property that secures such a loan is deeded

back to the financial institution, “the value of

such property should constitute a partial return of

the ‘cash loan proceeds.’ ” Id. at 1284.

Holley, 23 F.3d at 915.

But the court’s reasoning in Reese was limited to this

statement: “Conceptually, it would seem to us that
No. 10-3794 29

when a lender accepts conveyance of the secured property in lieu of foreclosure, the value of

such property should constitute a partial return of the

‘cash loan proceeds.’ ” Reese, 998 F.2d at 1284. This reasoning ignores the fact that the victim accepted the collateral real estate, not in lieu of the cash proceeds, but

in order to sell and recoup the cash proceeds.

After citing the reasoning of Reese, the court in Holley

then turned to Smith, stating: 

The Smith court held that the defendant “should

receive credit against the restitution amount for

the value of the collateral property as of the date

title to the property was transferred” to the FSLIC’s

successor. Id. at 625. The court reasoned that, as of

that date, “the new owner had the power to dispose

of the property and receive compensation.” Id. The

Smith court concluded that the value of the returned

property “should therefore be measured by what

the financial institution would have received in a

sale as of that date. Any reduction in value after

[the defendant] lost title to the property stems

from a decision by the new owners to hold on to

the property.” Id.

Holley, 23 F.3d at 915.

Unlike the Ninth Circuit’s decision in Smith, the Fifth

Circuit in Holley at least acknowledged the government’s

argument “that the ‘property’ that was lost was [the

bank’s] capital and that the return of [the real estate] to [the

bank] represents only the return of the collateral for the
30 No. 10-3794

actual property involved in this case” and that it was not

until that collateral was sold for cash that the victim

regained its property. Id. But Holley did not provide any

basis for ignoring this distinction, other than citing its

previous decision in Reese. See id. And Reese merely concluded that there was no “conceptual” difference.

Reese, 998 F.2d at 1284. However, as explained above,

the two are not conceptually equivalent: cash is liquid,

real estate is not; the collateral secured the cash

loan—it was not the cash loan; and the victim had cash

before the fraud and wanted cash back as its returned

property. In short, we find the Fifth Circuit’s reasoning

in Reese unpersuasive and thus its decision in Holley

adds nothing to the analysis.

c. The Second Circuit

Finally, the Second Circuit addressed the issue of offset

value in United States v. Boccagna, 450 F.3d 107 (2d Cir.

2006). In Boccagna, the defendants were charged in a

mortgage fraud scheme involving the United States

Department of Housing and Urban Development (“HUD”).

Id. at 109-110. HUD foreclosed on the collateral and then

resold the real estate at a fraction of their fair market

value to the New York City Department of Housing

Preservation and Development in order to further its

mission to develop low-cost housing. Id. at 110. When

considering the appropriate amount by which to offset

the victim’s loss, the Boccagna court initially noted that

the government did not argue that “the property that is

returned” language of the MVRA only applies to actual
No. 10-3794 31

The court in Boccagna also cited this court’s decision in 11

Shepard. But as discussed above, see supra at 17-18 n.8,

Shepard is distinguishable.

cash and not to “any property that HUD obtained after

default.” Id. at 112 n.2. The court then said that “[s]uch an

argument would not be convincing,” but based its holding

on precedent from the Fifth and Ninth Circuits. Id. 11

Boccagna explained:

As two of our sister circuits, construing identical offset

language in the Victim and Witness Protection Act,

codified at 18 U.S.C. § 3663, have concluded, when

a lender victim acquires title to property securing a

loan, “the value of such property should constitute

a partial return of the cash loan proceeds.” United

States v. Holley, 23 F.3d 902, 915 (5th Cir. 1994) (internal

quotation marks omitted); see United States v. Smith,

944 F.2d 618, 625 (9th Cir. 1991) (holding that defendant “should receive credit against the restitution

amount for the value of the collateral property as

of the date title to the property was transferred”

to lender victim). 

Boccagna, 450 F.3d at 112 n.2.

The Second Circuit in Boccagna then went on to hold that

the offset value should generally be based on the fair

market value of the real estate at the time of foreclosure.

Id. at 109. Boccagna, thus, adds nothing to the analysis,

having merely relied on Holley and Smith—which were

incorrect for the reasons noted above.
32 No. 10-3794

In sum, as our detailed discussion of the Ninth, Fifth and

Second Circuits’ decisions explains, those decisions all

relied on the keystone decision in Smith. And the

Ninth Circuit’s reasoning in Smith is flawed for several

reasons: Smith purported to rely upon the statutory

language but ignored the distinction between the

property stolen (cash) and the property returned (real

estate). Compounding this error was Smith’s reliance

on Tyler which was factually distinct. In Tyler, the defendant was charged with stealing timber and the property

recovered—on the same day as the theft—was timber.

Thus, Tyler does not answer the question of the

appropriate offset value where the property stolen and

returned differ. The Ninth Circuit in Smith also treated

real estate as a liquid asset. But it was not liquid

because the collateral could not be turned into cash the

same day title transferred. The court misconstrued the

market forces by assuming that the only reason collateral

would not be immediately turned into cash would be a

deliberate decision by the victim to hold on to the property.

Beyond Smith’s faulty reasoning, the only additional

rationale for using the value of real estate at the time the

victim obtained title to the collateral was the Fifth

Circuit’s view in Reese that, conceptually, obtaining title

to real estate is the same as receiving cash. But it is not:

real estate is not liquid; it is not what was stolen; it is

not what the victim wants; and it does not benefit the

victim in any way until it is turned back into cash upon

resale. Accordingly, it is only when the real estate is

converted into cash through a future sale that the offset

value should be determined. The plain language of the
No. 10-3794 33

As discussed earlier, see supra at 23, Judge O’Scannlain 12

dissented in the pivotal Ninth Circuit opinion (United States

v. Smith), preferring the same approach to the offset valuation

later approved by the Third, Eighth, and Tenth Circuits. 

MVRA dictates this conclusion because “the value (as of

the date the property is returned),” 18 U.S.C. § 3663(b)

(emphasis added), in the context of the statute must mean

the property taken from the victim. But even if there were

any ambiguity in the meaning of “the property,” we would

interpret that language to best achieve the statutory goal of

the MVRA—to make the victim whole—and this goal is

best achieved by calculating restitution based on the actual

cash proceeds recouped following the resale of any collateral real estate.

5. Circuits holding that the offset value is determined based on the cash proceeds recouped

following resale of the collateral real estate.

This brings us now to the decisions from the Third,

Eighth and Tenth Circuits, which have all held that their

respective district courts correctly used, as the offset value

for calculating restitution, the eventual proceeds recouped

following a foreclosure sale.12

a. The Third Circuit

The Third Circuit addressed this issue in United States

v. Himler, 355 F.3d 735 (3d Cir. 2004). In Himler, the defen-
34 No. 10-3794

In Himler, the court also noted that the defendant had pur- 13

chased the condominium at an inflated price ($193,833)

while other similar condominiums were selling between

$150,000 and $160,000. Himler, 355 F.3d at 744.

dant had fraudulently purchased a condominium by

tendering false checks to a settlement company that in

turn paid the seller $193,833. Id. at 737. The district

court ordered Himler “to pay restitution in the amount of

$193,833—to be reduced by the ultimate net proceeds

from the sale of the condominium.” Id. at 744. The Third

Circuit upheld that award, noting first that the victim

in this case “was not a seller of the condominium who

was returned to his or her pre-crime position upon

reobtaining title to the condominium. Rather, [the

victim] was the settlement company that facilitated the

purchase and sale between [the seller] and [the defendant].” Id. And deeding the collateral real estate back to

the settlement company did not adequately compensate

the victim for its loss. Id. at 744-45. The Third Circuit 13

then noted that the government had conceded that the

statute requires a district court to “value” the property

“as of the date the property is returned” to the victim.

Id. at 745. But the court agreed with the government that

the district court did not abuse its discretion in entering

a restitution order that would be reduced by the future

proceeds from the real estate’s sale. Id. In reaching this

conclusion, the court noted that, had the offset amount

been determined prior to its sale, the defendant would

have been left with a high bill because market forces
No. 10-3794 35

allowed the condominium to sell for $181,000, whereas at

the time title transferred to the settlement company,

similar condominiums were selling for $150,000 to

$160,000. Id.

In Himler, the Third Circuit seemed to rely on the fact

that the defendant was in a better position under the

district court’s approach because the real estate values

had increased between the time title transferred and

the resale. Id. at 745. Obviously, we have the converse

here, but what Himler’s reasoning illustrates is that with

fluctuating real estate values, the only way to measure

the true loss to the victim is by looking to the actual

resale price of the collateral real estate. Under the MVRA,

the actual loss is the appropriate measure of restitution.

b. The Tenth Circuit

In United States v. James, 564 F.3d 1237 (10th Cir. 2009),

the Tenth Circuit also upheld a restitution award that

calculated the total loss by subtracting the eventual resale

price of the collateral real estate from the initial loan

proceeds. Id. at 1246-47. In James, the Tenth Circuit reasoned that “[b]ecause, in this case, the foreclosure

price method more closely reflects the actual loss [the

victim] experienced, we cannot say the district court’s

method of using that value was unreasonable or that it

otherwise erred in using that valuation method in determining the amount of restitution under the MVRA.” Id.
36 No. 10-3794

c. The Eighth Circuit

Similarly, in United States v. Statman, 604 F.3d 529 (8th

Cir. 2010), the Eighth Circuit upheld the district court’s

use of the eventual proceeds from a foreclosure sale as

the offset value. Id. at 538. In that case, the defendants

had been charged with wire fraud in relation to a

scheme to purchase a business. Id. at 532. Among

other things, in purchasing the business they assumed a

bond secured by real estate. Id. at 536. Following their

conviction for fraud, at sentencing defendant Rund objected to the government’s methodology for calculating

restitution. Id. at 537. Then on appeal Rund argued

that “the district court erred because the loss to [the

victim] should not have been calculated based on the

alleged foreclosure sale price but [, instead, on] the assessed value of the properties.” Id. The court rejected

Rund’s approach, which, as the Eighth Circuit explained,

“would have this court use the appraised value of the

foreclosed property to calculate the loss amount, which

would result in a lower restitution payment to [the victim].” Id. In rejecting Rund’s approach, the Eighth

Circuit stressed the overarching goal of the MVRA—

making crime victims whole—and then concluded

that “[u]nder the circumstances of this case, the

district court’s use of the foreclosure sale price provided a fair and adequate representation of [the victim’s] loss and satisfied the overarching goal of the

MVRA, to make [the victim] whole.” Id.

The Himler, 355 F.3d 735, Statman, 604 F.3d 529, and

James, 564 F.3d 1237, decisions all support our conclusion
No. 10-3794 37

today that the offset value is best determined by the

money eventually recouped upon the resale of the collateral real estate. This conclusion is consistent with

the plain meaning of the MVRA and also furthers the

statutory goal of making the victims whole again. Accordingly, today we join the view of the Third, Eighth,

and Tenth Circuits and hold that the offset value is

the eventual proceeds recouped following a foreclosure

sale.

B. Inclusion of Other Expenditures

In addition to challenging the district court’s use of

the eventual resale price of the foreclosed real estate as

the offset value, Robers also argues on appeal that the

district court erred in including various other expenditures in the restitution award related to the

Grant Street real estate. The Inlet Shores restitution

award was based solely on the difference between

loan amount and the resale amount, so there is no additional issue there. But with the Grant Street real

estate, the restitution awarded was based on the following figures:
38 No. 10-3794

Claim:

Unpaid Principal balance $140,478.91

Accrued interest $ 13,698.36

Attorney fees $ 1,400.00

Property taxes $2,478.10

Other expenses $450.00

Hazard Insurance $485.00

Property preservation $736.54

Statutory Disbursement $1,311.56

Less ending escrow balance ($1,823.56)

Total Claim paid: $159,214.91

Additional expenses after MGIC took over ownership:

Insurance $374.51

Utilities $112.69

Title Commitment $325.00

Broker price opinion $119.00

Claim investigation costs $715.00

Total Expenses: $1,646.20

Recovery from sale:

Sales Price $118,000.00

Broker’s commission ($8,080.00)

Prorated taxes ($1,724.68)

Title Policy ($607.00)

Settlement charges ($679.39)

Net Proceeds $107,908.93

Total Loss $52,952.18
No. 10-3794 39

In challenging these line-item expenses, Robers

merely argues that the district court did not adequately

explain how or why they should be included. And then

he stresses that consequential and incidental expenses

are not recoverable. The only specific line-item expenses,

though, for which he develops an argument are

“attorney’s fees” and “other expenses.” This court has

held that attorney’s fees expended in pursuing litigation

are not recoverable, Shepard, 269 F.3d at 887, but they are

recoverable if they represent damage to the property or

are incurred as part of an investigation for the prosecution. Scott, 405 F.3d at 620. Because we lack sufficient

detail to know on which line these attorney’s fees fall, we

vacate that portion of the restitution award. Similarly,

because we cannot know what “other expenses” means

and thus whether they are recoverable, we vacate that

portion of the restitution award as well.

We reject, however, Robers’s claim that the district court

did not adequately explain why it included the other

miscellaneous expenditures in the restitution award.

After stating that it had read the parties’ restitution

memoranda and the defense’s objections, the district

court explained:

The trend is, I think—and the thrust of Seventh

Circuit case law, and the thread that runs is becoming

stronger in this fabric, is that these expenses aren’t

going to be considered as consequential . . . . As

the government has argued, these are fraud cases.

It was a fraud that was perpetrated, which resulted

in all of these actions that had to be taken but for
40 No. 10-3794

the fraud. And that’s not putting a person, a victim in

this type of case, in a better place. It’s putting a

victim back where the victim never should have gone

and never would have been but for the conduct that

was conducted by the defendant. . . . And I deem it to

be the case in this case, as I deemed it to be in the

Bradley Hollister case. . . . so consistent with the logic

of it, I think that the logic is overwhelming, that the

fraud was committed. The victim is owed, and he’s

owed the direct expenses—I’ll call them direct expenses that flow from the fraud that would not have

existed or not there—never would have been there.

Robers believes that this discussion is insufficient,

citing United States v. Hosking, 567 F.3d 329 (7th Cir.

2009), wherein the government presented only a single

document with general and vague descriptions of the

victim’s costs. Id. at 333. But the problem in Hosking

was that the district court found that the costs were not

appropriately included in restitution order and then,

rather than determine the appropriate amount of restitution, merely cut the claimed costs in half. Id. at

334. Conversely, here the only component of the award

that is unclear is the “other expenses” category, which

we have vacated. And we reject Robers’s argument that

the remainder of the restitution order was not sufficiently explained.

As noted, other than his challenge to “attorney’s fees”

and “other expenses,” Robers does not challenge individually the other line-item expenses, merely stating

that they are all consequential or incidental expenses

that cannot be recovered. We have held that con-
No. 10-3794 41

sequential or incidental expenses are not compensable

under the MVRA. Shepard, 269 F.3d at 887 (“Both § 3663A

and its predecessor § 3663 have been understood to

require restitution only for direct losses and not for

consequential damages and the other effects that may

ripple through the economy.”); United States v. Arvanitis,

902 F.2d 489, 497 (7th Cir. 1990) (“In the case of restitution

for offenses resulting in the loss of property, 18 U.S.C.

§ 3663(b) limits recovery to property which is the subject

of the offense, thereby making restitution for consequential damages, such as attorneys fees, unavailable.”).

But we have also explained that the “direct” versus

“consequential and incidental” demarcation is not

exactly helpful. United States v. Scott, 405 F.3d 615, 620

(7th Cir. 2005). Rather, the better question is whether

the injury is to “property,” which is recoverable under

the MVRA, or other losses, which are not. Id. 619-20.

In Scott, we explained this principle, while holding

that an order of restitution appropriately included the

cost of an audit: 

The audit expense, though a loss to Scott’s employers,

was not a gain to him. But it was a form of damage to

the [victim-] employers’ property. Suppose money

was stolen from a bank and eventually returned,

but the bank incurred a bookkeeping cost in determining whether the entire amount stolen had been returned. That cost would be a diminution in the value

of the bank’s property, caused by the theft, and

would therefore be a proper item for restitution. See

United States v. Donaby, 349 F.3d 1046, 1051-54 (7th Cir.
42 No. 10-3794

2003); United States v. Rhodes, 330 F.3d 949, 953-54 (7th

Cir. 2003); United States v. Hayward, 359 F.3d 631, 642

(3d Cir. 2004). This case is no different.

Id. at 619.

Like Scott, we conclude in this case that the remainder

of the line-item expenses fall on the injury-to-property

side of the line. The property damaged by Robers’s

fraud was capital and to recoup that capital, Fannie Mae

and then MGIC had to incur numerous expenses to

safeguard, keep up, and dispose of the collateral that

secured the loan. The only way MGIC was able to regain

its capital at the end of the day, at the value it recovered

on resale, was by expending cash up front. For instance,

if real estate taxes were not current, the buyer’s offer

would be lower by an equal amount. If title insurance

were not provided, the purchase would be riskier and

the buyer would be only willing to purchase at a lower

price. If a realtor were not hired, the property would not

be marketed as effectively, again leading to a lower

amount. And maintenance and utilities expenses

preserved the collateral, and insurance safeguarded the

collateral while the victim attempted to mitigate the

damage to its property. In other words, the amounts

expended by the victim to achieve the final disposition

of the collateral real estate were incurred solely to

rectify, to the extent possible, the damage to the capital.

These expenses are directly related to Robers’s fraud
No. 10-3794 43

The Eighth Circuit in United States v. Alexander, 679 F.3d 721 14

(8th Cir. 2012), upheld a restitution award to HUD that

included foreclosure expenses. The court in Alexander, though,

held that foreclosure expenses were recoverable under the

MVRA because HUD was a victim of the crime and “was

responsible for making such a payment to the lender based on

its guarantee of the mortgage loan.” Id. However, in the case

before us, the government seeks restitution to MGIC, not as a

victim, but because it is subrogated to the lender’s interest

pursuant to 18 U.S.C. § 3664(j)(1). Being subrogated to Fannie

Mae’s interest, then, means that MGIC steps into the shoes

of Fannie Mae and cannot recover merely because it paid

Fannie Mae’s insurance claim. See Shepard, 269 F.3d at 887.

Thus, Alexander’s analysis is inapplicable and, as we have

done above, we have focused instead on the restitution due

to MGIC not as an insurer, but as if it were the lender.

and are thus recoverable.14 Accordingly, we affirm

the restitution award, other than the award for attorney’s

fees and “other expenses,” which we vacate, and

we remand for entry of judgment consistent with this

opinion.

III. Conclusion

Robers’s fraud deprived his victims of cash. Under the

MVRA, restitution of the property stolen—here cash—was

mandatory. Because cash was stolen and cash was not

returned to the victims until the collateral securing

the fraudulent loans was sold, under the plain language

of the MVRA the value of the property returned on

the date of its return is the amount of cash recovered at
44 No. 10-3794

the time the foreclosed real estate was eventually resold.

In a stagnant, declining market, house values will

decrease and this reduction in value of the real estate is

a risk that falls on Robers, the one who defrauded

the victims. The loss in value of the real estate and the

various line-item expenses incurred by the victims

while attempting to convert the collateral back to cash

are directly caused by Robers’s fraud and constitute

recoverable damages to his property. Attorney’s fees for

collecting a debt, though, are not properly recoverable

under the MVRA and “other expenses” may not be.

Accordingly, we vacate that portion of the restitution

award. For these reasons, we AFFIRM IN PART, VACATE IN

PART, and REMAND to the district court for entry of a

restitution order consistent with this opinion.

9-14-12