Opinion ID: 222737
Heading Depth: 2
Heading Rank: 6

Heading: Loss Calculation in Sentencing

Text: Green was sentenced to 37 months in prison based in part on an aggregate loss amount of $189,500. He contests the district court's calculation of the loss amount attributable to him. We review loss calculations for clear error. See United States v. Powell, 576 F.3d 482, 497 (7th Cir.2009). We have stated on many occasions that loss calculations need only be a reasonable estimate of the loss. See United States v. Borrasi, 639 F.3d 774, 783 (7th Cir.2011); U.S.S.G. § 2B1.1, note 3(C) (The court need only make a reasonable estimate of the loss.). For Green to succeed, he must show that the court's loss calculations were not only inaccurate but outside the realm of permissible computations. United States v. Radziszewski, 474 F.3d 480, 486 (7th Cir.2007), quoting United States v. Lopez, 222 F.3d 428, 437 (7th Cir.2000). At his sentencing hearing, Green introduced evidence showing that some of the properties involved in the fraud were sold at public auction and requested that proceeds from the sales, at which the lenders were the highest bidders, be credited against the loss. The district court rejected Green's calculations. Green re-asserts his argument on appeal, claiming that the district court improperly calculated the loss amount by not using the prices at which the lenders obtained title to the properties at the public auctions. Green's suggested calculation misses the mark. Where a lender forecloses and acquires the property at public auction by making a credit bid ( i.e., a bid that offers to cancel the outstanding principal, interest, and related fees in return for title to the property), the credit bid is not a reliable measure of the actual market value of the property. See generally River Road Hotel Partners, LLC v. Amalgamated Bank, ___ F.3d ___, ___ (7th Cir.2011); In re Philadelphia Newspapers, LLC, 599 F.3d 298, 320-21 (3d Cir.2010) (Ambro, J., dissenting) (explaining credit bidding in Chapter 11 bankruptcy context). [6] In a typical fraudulent mortgage scheme, a credit bid is highly likely to overvalue the property. The whole point of the fraud was to fool the lender into lending far more than the market value of the property, and then to disappear, leaving the lender with a property worth far less than the loan. Using a credit bid based on the fraudulently inflated loan amount to measure loss would surely understate the actual loss. Thus, in this situation, it would have been an error for the district court to use Green's proposed method of calculating loss. Here, the district court correctly determined the appropriate loss amount using the formula we outlined in United States v. Radziszewski . The court subtracted the sale price the lender received after it recovered possession of the property from the amount of its original loan, as in Radziszewski. See 474 F.3d at 486-87; see also United States v. Serfling, 504 F.3d 672, 679 (7th Cir.2007) (upholding district court's loss calculation which subtracted the price obtained for collateral from the amount of loan proceeds, and rejecting calculation proposed by defendant based on fraudulent appraisal); U.S.S.G. § 2B1.1, note 3(E)(ii) (loss shall be reduced by the amount the victim has recovered at the time of sentencing from disposition of the collateral, or if the collateral has not been disposed of by that time, the fair market value of the collateral at the time of sentencing). The district court used this method that we have previously upheld for the same situation and that properly captures the loss suffered by the lenders. We find no error and uphold Green's sentence.