Opinion ID: 858507
Heading Depth: 2
Heading Rank: 2

Heading: The Martin Property

Text: The buyer of the Martin property was codefendant Daniels. According to Agent Russell, Wendlandt admitted that he wrote two large fraudulent paychecks to Daniels, with the agreement that Daniels would cash the checks and then return the money to create the appearance that Daniels had a high income. Wendlandt knew that Daniels intended to purchase the house not to live in, but to run as an adult foster care program, which violated the terms of FHA loans. Wendlandt helped secure a highly inflated appraisal so that Daniels could use the loan to purchase both the house and the existing business. Daniels pled guilty in federal court to felony fraud on April 19, 2011, and his sentencing was pending at the time Wendlandt was sentenced. At Wendlandt’s sentencing hearing, the government anticipated that the property was “almost certain to go into default” after Daniels’ sentencing and likely imprisonment, and argued that the loss amount attributable to Wendlandt on account of this fraudulent loan should be $97,276.36, the difference between the government’s proffered fair market value of $99,900 and the remaining balance on the fraudulent loan, $197,176.36. Defense counsel represented to the court that Daniels’ mother was going to take over the loan payments and, consequently, the loss amount should be zero because this mortgage was not in default at the time of sentencing. The district court adopted the government’s proposed loss formula for the Martin property. Wendlandt’s argument that the loss amount should be zero because there was not actual loss at the time of sentencing overlooks the relevance of “intended loss” under § 2B1.1. The Guideline instructs a sentencing court to include the greater of actual or intended loss, the latter being the “pecuniary harm that was intended to result from the offense.” U.S.S.G. § 2B1.1 cmt. n.3(A)(ii). Our court has further defined intended loss “as the loss the defendant subjectively intended to inflict on the victim,” not the potential loss (the gross amount of a fraudulently obtained loan). United States v. Moored, 38 F.3d 1419, 1427 (6th Cir. 1994). Although we have subsequently reaffirmed Moored’s definition in two cases without extensive discussion, see United States v. Newson, 351 F. App’x 986, 988 (6th Cir. 2009); United States v. Wade, 266 F.3d 574, No. 11-2018 USA v. Wendlandt Page 10 586 (6th Cir. 2001), Moored interpreted a sentencing Guideline, U.S.S.G. § 2F1.1, which has since been materially amended in 2001 to delete references to “expected” and “probable” loss, and consolidated with U.S.S.G. § 2B1.1. Our court has not had occasion to address the meaning of “intended loss” under the current version of § 2B1.1, and it is worth noting that there is considerable disagreement among our sister circuits as to what the optimal measure of “intended loss” should be—an objective or subjective analysis, and whether constructive, as opposed to actual, intent will suffice. See generally Gabrielle A. Bernstein, Comment, The Role of Expectations in Assessing Intended Loss in Mortgage-Fraud Schemes, 2010 U. Chi. Legal Forum 337, 341-42 (2010) (and cases collected therein). However, although the parties now debate its fine points, the present case is not the appropriate vehicle to resolve this complex issue because the topic of “intended loss” in reference to the Martin property was never raised below by Wendlandt, and the formula employed by the district court was, under the generous latitude afforded by the “reasonable estimate” standard, an acceptable and accurate measure of “the pecuniary harm that was intended to result from [Wendlandt’s] offense.” See United States v. Appolon, 695 F.3d 44, 69 (1st Cir. 2012) (holding that the district court’s calculation of intended loss as the original mortgage loan amount less the property’s assessed value at the time of sentencing “was a reasonable proxy for culpability in the circumstances of th[e] case,” where the defendants were “veterans of the real estate industry” who “knew that the mortgage loans on the properties involved in their scheme would enter default” and “that the properties would be grossly devalued as a result”); United States v. McCoy, 508 F.3d 74, 79 (1st Cir. 2007) (“As McCoy was obtaining loans for individuals with low income and poor credit, he could—and should—have expected that the banks would probably recover only the value of the mortgaged properties. Intended loss was therefore the value of the loans less the expected value of the properties.”). The district court heard ample testimony from Agent Russell about Wendlandt’s admitted central role in fraudulently securing the loan for the Martin property, and we have no reason to conclude that the court clearly erred in crediting this testimony, or that No. 11-2018 USA v. Wendlandt Page 11 the government’s valuation of the property, accepted by the district court, was “outside the realm of permissible computations.” United States v. Lutz, 154 F.3d 581, 590 (6th Cir. 1998).