Opinion ID: 2790833
Heading Depth: 3
Heading Rank: 4

Heading: Calculation of Offset Value

Text: Foley also assigns error to the district court's method of offsetting the original loan amount by the amount recouped at the foreclosure sale, or for units that had not been resold, the 2012 tax assessment value. Foley contends that the loss to the lenders was set when the foreclosure was complete, such that the -42- loan amount should have been offset by the property's fair market value at the time that the lender took possession. Under 18 U.S.C. § 3663A(a)(1), when sentencing a defendant convicted of [fraud and other specified offenses], the court shall order . . . that the defendant make restitution to the victim of the offense. For offenses such as fraud that result[] in . . . loss . . . of property of a victim of the offense, the restitution order shall require the return of the lost property, or, if return of the property is impossible, impracticable, or inadequate, payment of an amount equal to the value of the property less the value . . . of any part of the property that is returned. Id. § 3663A(b)(1). At the time that Foley filed this appeal, the circuits were divided on the proper calculation of the offsetting value . . . of any part of the property that is returned in mortgage fraud cases. Compare United States v. Robers, 698 F.3d 937, 942 (7th Cir. 2012) (offsetting the amount of money received at foreclosure sale), with United States v. Yeung, 672 F.3d 594, 604 (9th Cir. 2012) (offsetting the value of the property on the date the lender acquired title). The Supreme Court has since resolved the question, holding that the restitution award must be offset by the amount of money the victim received in selling the collateral, not the value of the collateral when the victim received it. Robers v. United States, 134 S. Ct. 1854, 1856 (2014). The -43- Robers Court reached this conclusion by interpreting the statutory phrase any part of the property as refer[ring] only to the specific property lost by a victim, which, in the case of a fraudulently obtained loan, is the money lent. Id. Consequently, the Court explained that no 'part of the property' is 'returned' to the victim until the collateral is sold and the victim receives money from the sale. Id. Robers did not squarely resolve the proper calculation of loss when the collateral remained unsold at the time of sentencing, suggesting in dicta that [o]ther provisions of the [restitution] statute allow the court to avoid an undercompensation or a windfall. Id. at 1858. Among other things, the Court noted that those provisions would seem to give a court adequate authority to count, as part of the restitution paid, the value of collateral previously received but not sold. Id. Two concurring Justices further suggested that [i]f a victim chooses to hold collateral rather than reduce it to cash within a reasonable time, then the victim must bear the risk of any subsequent decline in the value of the collateral, because the defendant is not the proximate cause of that decline. Id. at 1860 (Sotomayor, J., concurring, joined by Ginsburg, J.). Seizing on these qualifications, Foley suggests in a post-Robers Fed. R. App. P. 28(j) letter that a rehearing should be ordered as to the applicability of Robers in this case. -44- To be sure, Robers did not address the district court's method of offsetting the loan amount by the 2012 tax assessment value for properties that had not yet been sold. But this approach, if anything, inured to Foley's benefit, granting an offset even though under Robers the lenders' property (i.e., money lent) had yet to be returned. Nor does this case raise the specter of unreasonable delay contemplated by the concurring Justices. Like the defendant in Robers, Foley made no argument that the lenders delayed selling the properties because of a choice to hold the homes as investments. Id. As the concurring Justices recognized, [r]eal property is not a liquid asset, which means that converting it to cash often takes time. . . . Because such delays are foreseeable, it is fair for [the defendant] to bear their cost: the diminution in the homes' value. Id. That principle is equally germane here.17 17 Foley also suggests in his Rule 28(j) letter that rehearing is necessary to address the applicability of Robers's proximate cause analysis to a defendant, who was not a straw buyer like Robers but an attorney who came onto the scene after the loan applications had been approved. We disagree. We have already rejected Foley's argument that the foreclosures were unforeseeable to him, see section III.A.1.i. supra, and to the extent Foley implies that he did not proximately cause the drop in property values, Robers rejected that very argument. See 134 S. Ct. at 1859 (explaining that [f]luctuations in property values are common . . . [and] foreseeable and that losses in part incurred through a decline in the value of collateral sold are directly related to an offender's having obtained collateralized property through fraud). -45- In short, Robers vindicates rather than impugns the district court's methodology. We therefore find no basis for the rehearing Foley requests.