Court Opinion

ID: 804482
Source: CourtListenerOpinion
Date Created: 2012-07-17 14:45:40+00
Date Added: 2024-06-11T18:00:11.601293
License: Public Domain

In the

United States Court of Appeals
              For the Seventh Circuit

No. 11-3299

U NITED S TATES OF A MERICA,
                                                Plaintiff-Appellee,
                               v.

C HRISTOPHER JOHNS,
                                            Defendant-Appellant.

           Appeal from the United States District Court
              for the Eastern District of Wisconsin.
            No. 10-cr-39—Rudolph T. Randa, Judge.

       A RGUED A PRIL 19, 2012—D ECIDED JULY 17, 2012

 Before E ASTERBROOK, Chief Judge, and F LAUM and
W OOD , Circuit Judges.
  F LAUM, Circuit Judge. In 2005, the housing market in
America was near its peak. Allen Banks wanted to cash
in on the housing bubble, and Christopher Johns—the
defendant in this case —was willing to help. Banks was a
construction worker by trade, and he was hoping to
purchase houses from distressed homeowners and flip
those houses for a profit. The problem, it seems, was that
2                                              No. 11-3299

he did not have enough capital to conduct this business.
Johns knew a scheme to work around this problem, and
taught that scheme to Banks. Together, Johns and
Banks would purchase homes from distressed owners at
inflated prices, perhaps nearing the highest price that
they might sell for if the homes were not approaching
a forced sale. As a condition of the purchase, however,
the homeowners had to promise that they would
return the amount of money they received above and
beyond what they owed their own lenders. In essence,
Johns and Banks were manufacturing equity, then de-
manding it back from the homeowners. The owners
were willing to go along, since their only other option
was foreclosure and a forced sale. Banks’ benefit was
that he could renovate the newly-acquired houses
simply by using the funding he received for the purchase
of the home, then pay back his lender after the home
was resold. Johns, meanwhile, would collect a broker’s
fee for each sale.
  Eventually Johns and Banks conducted this scheme
to purchase a home from a couple in bankruptcy.
For whatever reason, Johns and Banks decided that
a mortgage was necessary to secure the return payment
(what Johns called the “rinsed equity”) from the owners
of the home to Banks at closing. Johns wrote up a
mortgage document listing Banks’ girlfriend as the mort-
gagee, and he told the trustee of the owners’ bankruptcy
estate about the second, seemingly fraudulent mort-
gage. Despite some protestations by the trustee, the sale
went through, and Banks used some of the rinsed equity to
pay off all of the owners’ creditors through the bankruptcy
No. 11-3299                                             3

trustee. The owners’ bankruptcy lawyer, however, became
suspicious, and eventually caught on to Johns and Banks’
scheme, which eventually led to the indictment of Johns
and Banks. This appeal is from Johns’ conviction for
making false representations to the debtors’ trustee
regarding the second mortgage and for receiving property
from a debtor with the intent to defeat the provisions of
the Bankruptcy Code. Johns challenges the sufficiency
of the evidence for all four counts against him and the
jury instructions. Johns also challenges two sentencing
enhancements the court included in its calculation of
Johns’ guidelines range —one for the financial loss caused
by Johns and one for targeting vulnerable vic-
tims —before the court sentenced Johns to 30 months in
prison. For the following reasons, we affirm in part and
reverse in part the district court’s rulings, and remand
for further proceedings.

I.   Background
  Johns and Banks first connected at Prosperity Mortgage,
a company owned by Johns, where Banks worked for
Johns repairing customers’ credit. The genesis of the
scheme was Banks’ desire to get involved in the
real estate business, which, at the time, was very lucra-
tive due to the housing bubble. Banks had a background
in construction, and it was his desire to purchase
houses, rehabilitate them, and sell them at a profit.
The problem, as mentioned above, was that Banks did
not have the capital to purchase and rehabilitate these
houses.
4                                               No. 11-3299

  Johns had a solution this problem. While the record
is unclear as to when and how the two decided to
begin the scheme at issue, at some point Johns taught
Banks how to “rinse equity.” The first step of the scheme
was to locate a house on the verge of foreclosure and offer
to purchase the house. Instead of offering the reduced
price for which a foreclosure house would usually
sell, however, Banks would offer an inflated price.
This would allow the sellers to pay off their mortgage,
avoid the foreclosure process, and have “equity” left-
over. The catch was that Banks would require the
sellers to return the newly-created equity to him once
the sale went through. The sellers would therefore
avoid the negative effects of having gone through a
foreclosure and would walk away from the deal with
their mortgage paid off, but would not leave with any
additional monetary benefit. To fund his purchase
of these homes, Banks sought financing from a lender,
who was unaware of the fact that, in reality, Banks
was purchasing homes for less than the amount that
he was actually borrowing. In essence, Banks’ lender
provided loans to purchase homes, but Banks used
that money to both purchase and renovate those homes.
The benefit to Johns in this scheme was the fee
he would receive for acting as broker for the deal.
The sellers would not deal directly with Banks until
the actual closing; rather, Johns would conduct all negotia-
tions and arrange the purchase. In exchange, he collected
a seemingly standard broker’s fee.
  Johns and Banks first conducted this scheme with Johns’
house. Banks purchased the house and, upon closing,
No. 11-3299                                             5

received close to $20,000 back from Johns. The check,
however, was not made out to Banks, but to a third party,
presumably to avoid any suspicions from lenders involved
in the purchase.
  While there are several relevant sales in this case, the
actual charges levied against Johns—charges of false
statements in a bankruptcy proceeding and receipt of
property in a manner inconsistent with the purposes of
the bankruptcy process —stemmed from the purchase
of Arthur and Bobbie Ten Hoves’ home. At the time
that the Ten Hoves were approached by Banks and
Johns, they were involved in Chapter 13 bankruptcy
proceedings. They were also approaching a sheriff’s sale
of their home, since they were unable to make their
mortgage payments to their lender. The Ten Hoves
were introduced to Johns as a “mortgage guy” that
would purchase their home and help them avoid
the ruinous effects that foreclosure would have on
their credit. Johns first attempted to purchase the prop-
erty by way of short sale, offering $62,000 for the home
despite the $87,000 that the Ten Hoves’ still owed
their lender. The Ten Hoves agreed to the sale, but
the lender rejected it. Six weeks later Johns again ap-
proached the Ten Hoves, this time acting as Banks’
agent. Johns, on behalf of Banks, offered the Ten
Hoves $120,000 for their home, but asked that the
Ten Hoves promise to pay back $30,000 to Banks at
closing, which was all but $3,000 of the “equity” in the
Ten Hoves’ home. The Ten Hoves agreed to the deal.
 In order to secure the Ten Hoves’ promise to pay
Banks $30,000 at closing, Johns had them sign a mortgage
6                                           No. 11-3299

document. The document allegedly secured the $30,000
payment owed to Banks, but the mortgagee listed
was Stephanie Fledderman, Banks’ girlfriend. Both the
Ten Hoves and Fledderman testified that they had
never met, and Fledderman confirmed that she
never loaned the Ten Hoves any money. While the mort-
gage document states that it stands as security for a
$30,000 note, the parties never actually executed a
note. The Ten Hoves testified that they did not know
they were singing a mortgage document, and that
they thought they were signing something having to do
with their bankruptcy proceedings.
  Since the Ten Hoves were in bankruptcy at this time,
Johns and Banks needed more than the Ten Hoves’ consent
in order to execute the deal. When individuals are
in bankruptcy, any sale of their assets must be approved
by the trustee or the Bankruptcy Court, so as to ensure
the fair and equitable distribution of assets among
all creditors. Accordingly, Johns contacted the Ten
Hoves’ trustee, asking how much the Ten Hoves owed
all of their creditors and whether the trustee would
approve the sale of the Ten Hoves’ house to Banks. Johns
also faxed the trustee numerous documents regarding
the sale, including the mortgage document signed by
the Ten Hoves. The trustee’s office informed Johns that
the Ten Hoves had $13,709.37 of debt, but denied him
permission to execute the sale of the Ten Hoves’ home
based on the fact that the $30,000 unrecorded mortgage
was not included in the Ten Hoves’ bankruptcy
petition and payment schedule. Johns nonetheless went
through with the sale. Johns, Banks, and the Ten Hoves
No. 11-3299                                                   7

closed sometime in April 2005. A $13,709.37 check
was issued to the Ten Hoves’ trustee in satisfaction of
their debt in bankruptcy.1 This money was taken out of
the equity that was supposed to be rinsed to Banks,
and thus the Ten Hoves were only able to make a
$13,723.75 payment instead of the full $30,000. That
payment was made to Fledderman—though she was not
present at the closing —and despite the fact that it was less
than half the amount promised in the mortgage document,
it was considered as satisfying the mortgage. Fledderman
promptly forwarded the equity payment to Banks.
As always, Johns received his standard broker’s fee. The
Ten Hoves were able to avoid foreclosure and walked
away from the deal without any debt, but they did
not capture any equity that might have existed in their
home. Up until closing, Arthur Ten Hove believed that he
might be able to keep some of the equity. He testified
that Johns told him originally that he could keep $9,000,
but that number was reduced as closing drew near, and
at closing it was revealed that he would not be able to keep
any of the equity.
  The unpermitted sale had the obvious effect of raising
some red flags with the trustee. Before the sale even
took place, a staff attorney at the trustee’s office notified
the Ten Hoves’ bankruptcy attorney, Michael Watton, of

1
  The $13,709.37 paid to the trustee represented the full amount
of the Ten Hoves’ debt. If they would have proceeded with their
bankruptcy payments, the Ten Hoves would not have had to
pay this amount, but rather would have paid only a percentage
of the debt they owed, in accordance with the bankruptcy
settlement that was reached in their Chapter 13 proceedings.
8                                               No. 11-3299

the unrecorded second mortgage and the proposed
sale that was rejected. This prompted Watton to conduct
an investigation into the matter. In analyzing the mort-
gage document signed by the Ten Hoves, Watton
noticed several irregularities, including a problem with
the notary stamp, an incorrect date, and the fact that
the document was allegedly drafted by Fledderman,
someone that Watton was not familiar with. After
speaking with the Ten Hoves about the sale, Watton and
the Ten Hoves decided to sue all those involved except
Banks, since they were unaware that Fledderman gave
Banks the money that she received as a result of the
sale. Watton’s investigation also lead to the indictment
of Banks and Johns.
   On March 16, 2010, Johns was indicted by a grand
jury for four counts of bankruptcy fraud. Under the
first three counts, Johns was alleged to have made a
false statement to the bankruptcy trustee when he affirmed
that the Ten Hoves’ home was encumbered by a sec-
ond mortgage, in violation of 18 U.S.C. § 152(8) (prohibit-
ing the making of a false entry in recorded informa-
tion relating the property of a debtor), 18 U.S.C. § 157
(prohibiting the making of a false or fraudulent representa-
tion in relation to a bankruptcy proceeding), and 18
U.S.C. § 1519 (prohibiting the making of a false entry in
a record with the intent to influence the administration
of a bankruptcy proceeding). The fourth count alleged
that Johns “knowingly and fraudulently receive[d]”
property from a debtor in bankruptcy “with intent to
defeat the provisions of title 11.” 18 U.S.C. § 152(5).
  At trial, the government put on evidence suggesting
that the mortgage document signed by the Ten Hoves was
No. 11-3299                                               9

fraudulent in an attempt to prove that Johns’ statement
to the trustee regarding the $30,000 encumbrance on
the Ten Hoves’ home was false. The defense countered
by arguing that despite some irregularities with
the mortgage document, the Ten Hoves’ home was, in
fact, encumbered by a $30,000 second mortgage, and
thus Johns’ statement to the trustee about the existence
of said mortgage was not false. The government also
put on evidence that the Ten Hoves paid 100% of the
money that they owed to their creditors despite the
fact that they would have had to pay only 70% if they
stuck to their bankruptcy plan. This, the government
argued, defeated the purpose of Title 11 in violation of
18 U.S.C. § 152(5). Johns disagreed with this contention,
pointing out that the Ten Hoves emerged from bankruptcy
early, the Ten Hoves were debt free as a result of the
deal, and all of the Ten Hoves’ creditors were paid in full.
  Before the case went to the jury, Johns filed a motion
for acquittal, making the arguments outlined above, and
the court denied the motion. Johns also requested that
the jury instructions include an explanation of Wiscon-
sin’s mortgage and contract law to aid the jury in its
determination of whether the Ten Hoves’ home was, in
fact, encumbered by a $30,000 mortgage. The judge
denied this request as well, ruling that there was no
evidence to support a finding that a valid mortgage
existed, and thus no need to inform the jury on what
constitutes a valid mortgage under Wisconsin law.
  The jury convicted Johns on all four counts, and
Johns renewed his motion for acquittal. He also filed
a motion for a new trial. Johns argued that there was
10                                            No. 11-3299

an actual contract between Banks and the Ten Hoves
that was secured by a genuine mortgage, and
thus his statement to the trustee about a $30,000 encum-
brance was not false. The court again denied Johns’
motions, holding that the evidence unequivocally
proved that there was not a valid mortgage between
the Ten Hoves and Fledderman or Banks, and thus his
statement regarding the second mortgage to the trustee
could not have been true.
  At sentencing, the district court made two findings
that are relevant to this appeal. The first involves the
loss amount used to determine Johns’ sentencing guide-
lines range. All four counts in Johns’ indictment
stemmed from the Ten Hoves sale, but the court consid-
ered two other equity-rinsing schemes in calculating
the loss amount for his guidelines range, since those
sales constituted “relevant conduct” under the sentencing
guidelines. First, Johns and Banks conducted a scheme
that was substantially similar to the Ten Hoves sale
when they purchased the home of Michelle Coleman,
except for the fact that Coleman was not in bankruptcy
proceedings and no mortgage document was involved.
As with the Ten Hoves sale, Coleman agreed to direct
her proceeds from the sale of her home to Fledderman,
since Coleman was experiencing financial difficulty
and had foreclosure as her only other option. Coleman did,
however, object to the “rinsing” quite a bit more than
the Ten Hoves. The district court considered the “rinsed”
equity in both the Coleman and Ten Hoves sale to be
an “intended loss” of Johns and Banks’ scheme, and
No. 11-3299                                             11

thus factored the returned payments to Banks into the
calculation of Johns’ sentencing guidelines range.
  The other equity-rinsing sale that was considered by
the court involved the purchase of Lynne and Jeffrey
Spellers’ home. Johns was less involved in the Spellers’
sale than the other two sales. The scheme actually began
not with Banks and Johns, but with a man named
Sean Cooper. The Spellers were having financial dif-
ficulties in 2005, and Cooper was introduced to them
as someone who might be able to help with their mortgage
trouble. The original plan was for Cooper to find a
buyer for the home that would permit the Spellers to
rent the property until they could purchase it back. Cooper
found Johns, who first offered to purchase the property
but then backed out of the deal. Johns instead referred
Cooper to Banks, who eventually purchased the property
conducting the same scheme that he used on Coleman
and on the Ten Hoves. Johns did not serve as a broker
to this deal, but $60,000 of the equity generated by Banks’
purchase went into a bank account for “Cooper Banks and
Johns Asset management Group.” There was no evidence
suggesting that Johns used any of the money gained from
the purchase of the Spellers’ home. The district court
nonetheless considered the “rinsed equity” from the sale
of the Spellers’ home to be a loss under the sentencing
guidelines, and included that loss in calculating Johns’
loss amount, reasoning in part that Johns taught Banks
how to conduct the scheme used to defraud the Spellers.
  The district court also applied a vulnerable victim
enhancement in determining Johns’ guidelines range.
The court reasoned that Johns’ targets were vulnerable,
12                                              No. 11-3299

since they were all in financial distress, and that the blue-
collar backgrounds of Coleman and the Ten Hoves
made them even more susceptible to schemes of this
nature. This enhancement increased Johns’ guidelines
range from 15-21 months to 41-52 months. The government
nonetheless recommended that Johns receive a four-level
reduction based on the § 3553(a) factors. The court ulti-
mately gave Johns a below-guidelines sentence of
31 months on each count, to be served concurrently.
  Johns has appealed several rulings of the district court.
He first argues that the evidence was insufficient to convict
him for all four counts, and thus the district court erred
in denying his motion for acquittal. He also argues that
the court erred in denying his proposed amendments to
the jury instructions which, he argues, entitles him to
a new trial. Finally, Johns argues that if his convictions
stand, we should find that the district court erred
in calculating the loss amount for Johns’ crimes and in
applying a vulnerable victim enhancement to Johns’
sentencing guidelines.

II. Discussion
A. Counts One through Three
  In order for Johns to have been convicted of
counts one through three in his indictment, the jury
needed to find that he made materially false and fraud-
ulent representations to the Ten Hoves’ Chapter 13 trustee.
See 18 U.S.C. §§ 2, 152(8), 157(3), and 1519. Johns argues
that the representation he made to the trustee—that the
No. 11-3299                                                13

Ten Hoves’ home was encumbered by a $30,000 mort-
gage—was unquestionably true, and thus there is insuffi-
cient evidence to convict Johns on counts one through
three. In the alternative, Johns argues that the jury instruc-
tions in his case were faulty. More specifically, he argues
that the jury, rather than the judge, should have decided
whether a valid mortgage existed between the Ten Hoves
and Fledderman, and that, accordingly, the jury should
have been presented with instructions informing it of
Wisconsin’s law on mortgages and contracts. We now turn
to these arguments.

  1. Sufficiency of the Evidence
  The first district court action that Johns challenges is the
denial of his motion for judgment of acquittal, in which he
argued that there was not sufficient evidence to convict
him on Counts one through three. While we review de
novo a denial of a motion for judgment of acquittal, United
States v. Boender, 649 F.3d 650, 654 (7th Cir. 2011), this
standard of review is slightly deceiving. A review of a
motion for acquittal is in essence the same as a review of
the sufficiency of the evidence. “We evaluate the evidence
in the light most favorable to the government, and if
‘any rational trier of fact could have found the essential
elements of the crime beyond a reasonable doubt,’
the judge committed no error in denying the motion
for acquittal and we will affirm the conviction.” United
States v. Douglas, 874 F.2d 1145, 1155 (7th Cir. 1989) (quot-
ing Jackson v. Virginia, 443 U.S. 307, 319 (1979)) abrogated
on other grounds by United States v. Durrive, 902 F.2d
1221 (7th Cir. 1990).
14                                              No. 11-3299

  The question we must answer is whether the mortgage
document established a genuine mortgage securing a
$30,000 obligation; if it did not, then Johns made a materi-
ally false representation to the Chapter 13 Trustee, and
his argument to the contrary fails. In support of the
existence of a mortgage, Johns cites Wisconsin case
law explaining that a mortgage does not need separate
consideration in order to be valid, and that only
the underlying obligation must involve the exchange
of consideration. See, e.g., Mitchell Bank v. Schanke,
676 N.W.2d 849, 859-60 (Wis. 2004). Thus, the fact
that Fledderman never actually loaned the Ten
Hoves money or interacted with them in any way does
not invalidate the mortgage that was allegedly executed
by the Ten Hoves since, he argues, the mortgage document
secured the enforceable underlying obligation that the
Ten Hoves had to Banks. Johns further contends that
the mortgage document at issue is valid under the statute
of frauds, but that, in any event, the Ten Hoves’ perfor-
mance of the agreement they had with Banks makes
that contract valid, regardless of whether the statute of
frauds would have made it voidable.
  The district court rejected Johns’ arguments concerning
the sufficiency of the evidence on Counts one through
three, ruling that regardless of whether the mortgage
was facially valid, the evidence clearly showed that there
was no actual mortgage as a matter of law. The district
court did not explain why no genuine mortgage existed in
this case, but in defending the court’s decision, the govern-
ment argues that there was no underlying obligation
between Banks and the Ten Hoves at all, at least with
respect to the $30,000 of equity that was to be rinsed back
No. 11-3299                                                   15

to Banks upon closing. With no underlying obligation,
the government contends, there obviously could not be a
mortgage securing that obligation. In support of this
contention, the government points out several facts about
the sale of the Ten Hoves’ home. The government explains
that the Ten Hoves only dealt with Johns before closing
and that they were unaware of what they were signing
when they executed the mortgage document. The govern-
ment further argues that the mortgage document did not
satisfy the statute of frauds. These points, they argue,
prove that there was no obligation between the Ten Hoves
and Banks, other than the deal for Banks to purchase their
home for $120,000. The government does not cite any
case law in reaching this conclusion.
   We do not doubt that the points made in Johns’ brief
regarding the legal requirements for a valid mortgage
are accurate. He is correct in stating that, under both
Wisconsin law and contract law generally, a mortgage does
not need separate consideration to be enforceable, since
it is not a contract, but rather secures a contractual obliga-
tion. See Restatement of Property: Mortgages, § 1.2, com-
ment. A mortgage is only enforceable, however, to
the extent that the underlying obligation is enforceable,2
id.; “[u]nless it secures an obligation, a mortgage is
a nullity.” Restatement of Property: Mortgages, § 1.1,
comment (a); see also Mitchell Bank, 676 N.W.2d at 859
(quoting Doyon & Rayne Lumber Co., 220 N.W. 181, 182
(1928)) (“Where there is no debt—no relation of debtor
and creditor-there can be no mortgage.”). Thus, if

2
  There are some exceptions to this rule, but they are irrelevant
to this case.
16                                               No. 11-3299

the government’s attack on the underlying $30,000 ob-
ligation that allegedly existed between Ten Hoves and
Banks is successful, the mortgage would have nothing
to secure, and would therefore not exist.
   Several of the government’s arguments against the
existence of a $30,000 obligation to Banks, however,
miss the mark. For instance, the fact that the Ten Hoves
only dealt with Johns up until the closing, where
they finally met Banks, is irrelevant; parties to a contract
deal through agents all of the time. See, e.g., United States
v. Ramirez, 574 F.3d 869, 875-76 (7th Cir. 2009). Further,
the Ten Hoves’ failure to read or fully understand
the mortgage document, without more, does not negate
the existence of an agreement. See Raasch v. City of Milwau-
kee, 750 N.W.2d 492, 498 (Wis. Ct. App. 2008) (quoting
Rent-A-Center, Inc. v. Hall, 510 N.W.2d 789, 792
n.5 (Wis. Ct. App. 1993)) (“It is the ‘firmly fixed’ law in
this state that, absent fraud, a person may not avoid
the clear terms of a signed contract by claiming that he
or she did not read or understand the contract.”); Hughes
v. United Van Lines, Inc., 829 F.2d 1407, 1417 (7th Cir.
1987) (“One who signs a contract in the absence of fraud
or deceit cannot avoid it on the grounds that he did not
read it or that he took someone else’s word as to what
it contained.”).3 As for the government’s statute of frauds
argument, it may or may not be meritorious, but the
district court found, and we agree, that the mortgage did
3
  It may be that there was fraud or deceit at play regarding
Johns’ efforts to get the Ten Hoves to sign the mortgage docu-
ment, but the government does not argue that the Ten
Hoves were the victims of fraud with regard to this specific
document, as opposed to a general fraudulent scheme.
No. 11-3299                                           17

not exist even if it was facially acceptable, and thus we
need not consider this issue.
  First, assuming that there was a valid obligation for
the Ten Hoves to pay Banks $30,000 at closing, there is
no evidence connecting that obligation owed to Banks
with the alleged mortgage security held by Fledderman.
The mortgage document signed by the Ten Hoves states,
in pertinent part:
   Arthur E. Ten Hove and Bobbie J. Ten
   Hove . . . mortgages to Stephanie Fledderman (“Mort-
   gagee”, whether one or more) to secure payment of
   Thirty-thousand and No/100 Dollars ($30,000) evi-
   denced by a not [sic] or notes bearing on even date
   executed by Arthur E. Ten Hove and Bobbie J.
   Ten Hove . . . to Mortgagee, and any extension and
   renewals of the note or notes, and the payment of
   all other sums, with interest, advanced to protect
   the security of this Mortgage, the following
   property . . . .
Banks’ name is conspicuously absent from that language
(as well as the rest of the document). The document
clearly contemplates an obligation to pay Fledderman
$30,000, secured by a m ortgage on the Ten
Hoves’ house, with absolutely no connection to
Banks. Since the evidence is also clear that the Ten
Hoves were oblivious to Fledderman’s involvement in
this transaction, a connection between the obligation
to Banks and the secured obligation to Fledderman
cannot be substantiated through parol evidence. Thus,
the mortgage document did not secure the obligation
owed to Banks by the Ten Hoves.
18                                              No. 11-3299

  Johns’ representation regarding a $30,000 encumbrance
on the Ten Hoves’ home could still have been true, how-
ever, if the mortgage document secured an obligation of
$30,000 to Fledderman herself. As illustrated above,
the mortgage document clearly contemplates the exis-
tence of an obligation from the Ten Hoves to Fledder-
man. Yet there is no evidence that Fledderman and the
Ten Hoves ever met, so any underlying agreement
and obligation that would serve to validate the existence
of a mortgage would need to exist within the confines of
the mortgage document itself, not through some outside
agreement. The document does state that the Ten Hoves
agree to pay Fledderman $30,000, but there are two prob-
lems that prevent this statement from establishing an
actual contract between the Ten Hoves and Fledderman.
First, Fledderman never signed the agreement, nor is
there any evidence that she was aware of a mortgage
agreement between herself and the Ten Hoves. Thus,
there could not have been a meeting of the minds between
the alleged parties to the contract, and no underlying
contract was formed. See Household Utilities, Inc. v.
Andrews Co., Inc., 236 N.W.2d 663, 669 (Wis. 1976) (explain-
ing that a contract cannot exist without a “meeting of
the minds,” and that “[t]here is no meeting of the
minds where the parties do not intend to contract”).
Even if Fledderman was party to an underlying agree-
ment, however, the agreement would fail due to lack of
consideration. Under the terms of the mortgage docu-
ment, the Ten Hoves owe Fledderman $30,000, which is
secured by a mortgage on the Ten Hoves’ house, but
Fledderman owes nothing in return. Thus, the underlying
No. 11-3299                                             19

agreement that would be secured by the alleged mortgage
would lack consideration, the obligation would be unen-
forceable, First Wisconsin Nat. Bank of Milwaukee v. Oby,
188 N.W. 2d 454, 459 (Wis. 1971); Cawley v. Kelley, 19
N.W. 65, 66 (Wis. 1884), and the mortgage would be a
“nullity,” Restatement of Property: Mortgages, § 1.1,
comment; see also Mitchell Bank, 676 N.W.2d at 859.
  Johns has a response to this. He argues that
the Fledderman mortgage is not a stand-alone mort-
gage/contract, but rather a part of an “overall agreement.”
The consideration for that agreement, he claims, is
obvious: the Ten Hoves receive the ability to avoid
the black mark of foreclosure, sell their home, and get
out of their bankruptcy proceedings, and in exchange
they must sell their home, execute a mortgage in favor
of Fledderman, and pay that mortgage off at the closing
of the sale of their home. This seems to be a legitimate
agreement that could be enforceable, putting aside
any potential problems arising from the fact that the
beneficiary of the mortgage is not the obligee of the
underlying obligation. The problem is that the Ten
Hoves did not agree to it. Such an agreement is not codi-
fied in the mortgage document, and the evidence was
more than sufficient for a jury to find that the Ten Hoves
were oblivious to Johns and Banks’ scheme, and that
they were unaware that they were providing a mortgage
to Fledderman to, in effect, secure their obligation to
Banks. There was therefore no meeting of the minds,
and thus no enforceable “overall agreement” approved
by the Ten Hoves and secured by the mortgage document.
See Household Utilities, Inc., 236 N.W.2d at 669.
20                                                No. 11-3299

  Johns could argue that Wisconsin courts “give effect
to the parties’ intent to contract if such intent is
discernible from their conduct,” Herder Hallmark Consul-
tants, Inc. v. Reginier Consulting Group, Inc., 685 N.W.2d 564,
566 (Wis. 2004), but given that the Ten Hoves did not
even know that a second mortgage was involved in
the deal, we cannot discern an intent to include such a
mortgage from the Ten Hoves’ sale of their house
or rinsing of their equity. Johns could also argue that
he was simply mistaken about Wisconsin mortgage
law, and thus did not knowingly make a false representa-
tion to the Chapter 13 Trustee. In his brief, how-
ever, Johns states that “[c]ounts one through three of
the indictment rise and fall on whether at the time Johns
reported the mortgage to the bankruptcy trustee the
Ten Hoves’ home was encumbered by a thirty
thousand dollar mortgage,” apparently conceding
any possible argument based on scienter. These argu-
ments have therefore been waived for failure to present
them this Court on appeal. United States v. Powell,
576 F.3d 482, 497 n.6 (7th Cir. 2009).
  We therefore conclude that, as a matter of law,
there was no $30,000 encumbrance on the Ten Hoves
home at the time it was sold, regardless of whether
there was an enforceable obligation from the Ten Hoves
to Banks. Thus, Johns’ representation to the Trustee
to the contrary was a materially false statement,
and his convictions on counts one through three
must stand.
No. 11-3299                                              21

  2.   Instructional Error
   Johns next argues that even if we do not find that, as a
matter of law, a legitimate mortgage securing a $30,000
obligation on the Ten Hoves’ home existed at the time of
its sale, it should still be up to the jury to determine
whether such an obligation and security existed. If this
is true, he argues, then the jury was not equipped to
make such a determination, since the court refused
to allow his proposed jury instructions explaining
contract law and mortgage law in Wisconsin.
  Since we hold today that, as a matter of law, no mortgage
existed, no reasonable jury could find otherwise.
Thus, submission of jury instructions including Wisconsin
mortgage law were not necessary and, in any event,
no prejudice could have resulted from their exclusion. See
United States v. Quintero, 618 F.3d 746, 753 (7th Cir. 2010)
(“[W]e will reverse [based on jury instructions] only if
the instructions, when viewed in their entirety, so mis-
guided the jury that they led to appellant’s prejudice.”).

B. Count Four—Sufficiency of the Evidence
  Under count four, Johns is alleged to have “knowingly
and fraudulently received a material amount of property”
“with the intent to defeat the provisions of title 11 of the
United States Bankruptcy Code.” Johns was found guilty
on this count, and he now challenges the sufficiency of the
evidence. Johns argues that he could not have intended to
defeat the provisions of the Bankruptcy Code, since he
helped all creditors get paid in full and helped the debtor
22                                                No. 11-3299

emerge from bankruptcy earlier than anticipated. The
government, conversely, contends that one of the main
purposes of the Bankruptcy Code is to help debtors get a
“fresh start,” and Johns, in stealing the Ten Hoves’ equity,
defeated that purpose. As discussed in Section III.A.1
above, “We evaluate the evidence in the light most favor-
able to the government, and if ‘any rational trier of fact
could have found the essential elements of the crime
beyond a reasonable doubt,’ the judge committed no
error in denying the motion for acquittal and we will
affirm the conviction.” Douglas, 874 F.2d at 1155 (quoting
Jackson v. Virginia, 443 U.S. 307, 319 (1979)).
  Since it is clear that Johns received property from
the Ten Hoves in the form of his broker’s fee, the
parties focus on whether or not Johns received
such property with the intent to defeat the provisions
of the Bankruptcy Code. We have very little case law
on the specific provision at issue here—18 U.S.C.
§ 152(5)—but in discussing § 152 generally, we have stated:
     Section 152 of Title 18 is a congressional attempt to
     cover all of the possible methods by which a debtor or
     any other person may attempt to defeat the intent
     and effect of the bankruptcy law through any type of
     effort to keep assets from being equitably distributed
     among creditors.
United States v. Goodstein, 883 F.2d 1362, 1369 (7th Cir. 1989)
(citing Stegeman v. United States, 425 F.2d 984, 986 (9th Cir.
1970)). See also United States v. Persfull, 660 F.3d 286, 294
(7th Cir. 2011); United States v. Ellis, 50 F.3d 419, 422 (7th
Cir. 1995); C OLLIER ON B ANKRUPTCY, ¶ 7.02(5)(a)(iv) (“At a
No. 11-3299                                                  23

minimum, this component requires the defendant to act in
such a way as to intentionally effect a deviation from the
distributions anticipated by title 11 liquidations, including
both the priorities and the rule that claimants within a
class share pro rata.”). Johns argues that these sources
illustrate the true purpose of 18 U.S.C. § 152(5)—to
provide broad protection against people interfering
with creditors rights under the Bankruptcy Code.
In support of this contention, Johns also cites several
prototypical § 152 cases, in which creditors or debtors
attempt to hide or transfer assets so as to cheat the bank-
ruptcy system and prevent the equitable distribution of
a debtor’s limited property. See, e.g., United States v. Arthur,
582 F.3d 713 (7th Cir. 2009) (finding sufficient evidence
to support a verdict convicting a couple of bankruptcy
fraud when a husband transferred property to his wife
in an attempt to hide the property from creditors);
Persfull, 660 F.3d 286 (finding sufficient evidence to
convict two brothers of bankruptcy fraud where one
brother transferred property to another to keep the prop-
erty out of the reach of creditors).
   The government cites no cases in which an individual
is found guilty of bankruptcy fraud despite the fact that all
creditors received the full amount of the obligation that
was owed to them. It nonetheless argues that under the
Chapter 13 plan, the Ten Hoves only had to pay 70% of
their debt to creditors, but after they sold their home to
Banks, the creditors received 100% of the debt owed. The
government argues that this contradicts one of the central
purposes of the Bankruptcy Code, which is to give debtors
a fresh start. See In re Bogdanovich, 292 F.3d 104, 107 (2d Cir.
24                                              No. 11-3299

2002); In re Andrews, 80 F.3d 906, 909-10 (4th Cir. 1996); In
re Christensen, 193 B.R. 863, 866 (N.D. Ill. 1996). According
to the government, the jury could have found that
there was no actual agreement between Banks and the
Ten Hoves under which the Ten Hoves would have to
pay back the inflated equity —$30,000 —upon the sale of
their home. Thus, they had a right to that equity,
the government suggests, and its use to pay off
their creditors at a higher rate than they would have
paid under the Chapter 13 plan defeated the purpose
of giving the Ten Hoves a “fresh start.”
  We are not persuaded by this argument. For one, in each
of the cases that consider a debtor’s “fresh start” to be
of central importance to bankruptcy proceedings, 18 U.S.C.
§ 152 is not at issue. Further, a finding that the Ten
Hoves did not agree to pass on their “equity” at the closing
of the sale of their house would not be supported by
the evidence. Arthur Ten Hove himself testified that
he was aware of the fact that he would not keep any equity
at closing. Thus, the money used to pay off the Ten Hoves’
creditors was not money that they would have been able
to keep otherwise; rather, it was a part of the manufactured
equity that Johns and Banks created through their
scheme. The Ten Hoves, therefore, were not in a worse
position then if the bankruptcy proceeding went
as planned, and their ability to have a “fresh start” was
not interrupted.
  This, however, does not end our inquiry, for we
do accept the government’s broader argument that Johns
intended to defeat the Bankruptcy Code by disregarding
the Trustee’s role in the Ten Hoves’ bankruptcy plan.
No. 11-3299                                             25

Pursuant to the Bankruptcy Code, the trustee or
the Bankruptcy Court was supposed to approve of any
sale of the Ten Hoves’ property that was not a part of
their bankruptcy payment plan. Johns was aware of this,
and he was also told by a staff attorney in the trustee’s
office that the sale of the Ten Hoves’ home was not ap-
proved. By continuing with the sale anyway, and
thus flouting the dictates of the Bankruptcy Code,
Johns intended to defeat the Ten Hoves’ bankruptcy
payment plan, and thus the Bankruptcy Code in gen-
eral. This notion finds support in early 20th century case
law interpreting a precursor to the current Bankruptcy
Code. In Knapp and Spencer Co. v. Drew, the Eighth Circuit
held, “The appellant in taking the money from the bank-
rupt after proceedings in bankruptcy had been instituted
against him violated the spirit and purpose of the bank-
ruptcy act by attempting to prevent the administration of
the estate by the proper court. . . .” 160 F. 413, 416 (8th
Cir. 1908) (emphasis added). While Knapp involved
a prototypical bankruptcy fraud case—one in which a
creditor seeks to gain more than he would under
the bankruptcy plan, thus defeating the intent of equitable
distribution—the violation is stated in broader
terms, suggesting that any improper interference with
bankruptcy proceedings could violate the provision
at issue. Similarly, in In re Payman, the Second Circuit
held that “whoever prevents [the administration of
a bankrupt estate] even by equal distribution to those as-
sumed to be creditors frustrates the proceeding.” 40 F.2d
194, 195 (2d. 1930) (emphasis added). The relevancy of
these cases is obviously lessened by their age, but the
26                                            No. 11-3299

point is as cogent now as it was then: the Bankruptcy
Code envisions that a trustee will administer an individ-
ual’s plan to reorganize, and if a third party attempts to
operate outside of that prescribed method, the
Bankruptcy Code is frustrated.
  Johns’ actions were similar to those of the appellants
involved in Knapp and Payman in that they directly contra-
dicted the planned administration of the Ten Hoves’
estate. While some of the central goals of the
Bankruptcy Code were still upheld by the sale of the
Ten Hoves’ home (i.e., the payment of creditors and
the removal of the Ten Hoves from Bankruptcy Court),
the planned administration of the Ten Hoves’ estate
was knowingly interrupted by Johns, and thus it is fair
to say that he intended to defeat the provisions of
Chapter 11. We therefore find the evidence sufficient
for the conviction of Johns under count four.

C. Sentencing
  Johns challenges two findings regarding his sen-
tencing guidelines range: the calculation of the loss
amount attributable to his crimes under United States
Sentencing Guideline (“U.S.S.G.”) § 2B1.1 and the vulnera-
ble victim enhancement added to his guidelines
range under U.S.S.G. § 3A1.1. He puts forth two arguments
regarding his loss calculation. First, he claims that
there should not be a loss amount attributable to his
crime at all, since the alleged “equity” lost by the
Ten Hoves, the Spellers, and Ms. Coleman was not real,
No. 11-3299                                              27

but rather was simply manufactured equity from
the inflated home prices created by Johns and Banks’
scheme. If we do find that a loss amount is appro-
priate for the sales, however, Johns argues that he did
not have enough of an involvement in the sale of the
Spellers’ home to have the loss involved in that transac-
tion added to his total loss amount. In his challenge to
the vulnerable victim enhancement, Johns argues that
the sellers involved in Johns’ scheme should not be consid-
ered “victims,” since, again, they did not loss anything
due to the scheme. He also contends that financial strain
is not enough to make a victim vulnerable, nor can
a victim be vulnerable because he is particularly unsophis-
ticated. The district court rejected each of these argu-
ments at Johns’ sentencing hearing, and Johns’ guidelines
range was determined to be 41 to 51 months (up from 15-
21 months without the loss amount and vulnerable
victim enhancem ents). The governm e n t , h ow -
ever, advocated for a four-level reduction in Johns’ guide-
lines calculation under 18 U.S.C. § 3553(a), reasoning
that Johns should not be held accountable for the loss that
resulted from the sale of the Spellers’ home. The govern-
ment appears to have changed course, however, since it
now contests Johns challenge to the inclusion of the Speller
sale in calculating his sentencing guidelines range. The
court did not explicitly agree to the government’s recom-
mendation, but did depart downward from the
guidelines range, giving Johns a sentence of thirty
months. We now consider Johns’ challenges to that sen-
tence.
28                                                  No. 11-3299

    1.   Loss Calculation
  Before turning to the district court’s general loss amount
calculation, we will decide whether one of the three
sales at issue—Banks’ purchase of the Spellers’
hom e— should be included in determining the
loss amount for Johns’ guidelines calculation (assuming
an actual or intended loss resulted from the sale).4
Whether a particular loss should be included in a guide-
lines calculation depends upon “(1) whether the
acts resulting in the loss were in furtherance of
jointly undertaken criminal activity; and (2) whether
those acts were reasonably foreseeable to the defendant

4
  We note that Johns may have had an argument that the
Coleman and Speller sales do not meet the definition of
“relevant conduct” in relation to Johns’ bankruptcy fraud
charges, and thus should not have been considered in calculat-
ing Johns’ sentencing guidelines range. Since Coleman and the
Spellers were not in bankruptcy, it is questionable whether the
Coleman and Speller sales “occurred during the commission of
the offense of conviction, in preparation for that offense, or in
the course of attempting to avoid detection or responsibility for
that offense.” U.S.S.G. § 1B1.3(a)(1). Then again, U.S.S.G.
§ 1B1.3(a)(2) construes some conduct that is “part of the
same course of conduct or common scheme or plan as the
offense of conviction” as relevant conduct, and thus may allow
for the Coleman and Speller sales to be considered relevant
conduct. In any event, Johns has not challenged his guidelines
range on the basis of U.S.S.G. § 1B1.3(a)(1), and thus has
waived any argument of this nature. See United States v.
Husband, 312 F.3d 247, 250 (7th Cir. 2002) (“[A]ny issue that
could have been but was not raised on appeal is waived and
thus not remanded.”).
No. 11-3299                                               29

in connection with that criminal activity.” United States v.
Aslan, 644 F.3d 526, 536-37 (7th Cir. 2011) (citing United
States v. Salem, 597 F.3d 877, 884–86 (7th Cir. 2010)). Since
Johns had participated in a scheme nearly identical to
that perpetrated upon the Spellers, and Johns was a
part of the attempt to buy the Spellers’ home at the
front end of the scheme, he could clearly foresee any
loss that occurred pursuant to the sale. The only
question, therefore, is whether the sale was in
furtherance of jointly undertaken criminal activity, as
it relates to Johns. We review the determination of
whether the sale was in furtherance of jointly undertaken
criminal activity for clear error. United States v. Adeniji,
221 F.3d 1020, 1028 (7th Cir. 2000).
  Johns argues that the district court only considered
foreseeability, and did not analyze whether the sale
was in furtherance of joint activity between himself
and Banks. He reminds us that he did not serve as
broker to the deal, nor did he receive his normal broker’s
fee. Johns likens his participation in the overall scheme
to the defendant described in U.S.S.G. § 1B1.3, App. n.
2(c)(5). In that example, the guidelines describe the girl-
friend of a drug-dealer who makes a single drug
delivery at his request because he is ill. Id. The guide-
lines suggest that she should only be held accountable
for the single sale and not additional sales made by
her boyfriend, since the other sales were not in
furtherance of jointly undertaken activity. Id. The
district court and the government discuss several facts
suggesting that Johns was, in fact, more “involved” in
the Speller sale than he claims. For one, the sale took
30                                           No. 11-3299

place only eight days after the sale of the Coleman
house—a sale that was undoubtedly a part of Johns’
scheme. Johns also originally offered to purchase
the Spellers’ house, but backed out of the deal before
it went through. John could (but does not) argue that
this is evidence of his repudiation of the crime, but the
fact is, his offer and subsequent balk could have aided
in convincing the Spellers to sell their home to
whoever was willing to buy it and at whatever price.
The government also points out that Johns was a
signatory on the account in which the funds from the
Speller sale were deposited, though there is no evidence
that Johns used those funds. Finally, the court discusses
the fact that Johns taught the scheme to Banks, making
Johns partially responsible.
  We agree with Johns that a criminal who teaches another
criminal how to commit a given crime should not be
on the hook for every subsequent scheme that the ap-
prentice executes. This scheme, however, is not an
isolated fraud with which Johns had no contact. It
is arguable that Johns actually initiated the scheme,
since Cooper approached him initially to purchase
the Spellers’ home. Johns had access to the scheme’s
profits, whether or not he took advantage of that ac-
cess. Johns’ interaction with the Spellers may have
driven down the price at which they would be
willing to sell their home. While it may be a close call
as to whether any loss attributable to the sale ought to
be added to Johns’ loss amount, it was not clear error
for the court to make such a finding. What remains to
be determined, however, is whether Johns caused,
No. 11-3299                                                  31

or intended to cause, any loss to the Spellers, the Ten
Hoves, or Ms. Coleman at all.
   We review what constitutes a loss de novo, and the loss
determination itself for clear error. United States v. Berheide,
421 F.3d 538, 540 (7th Cir. 2005). It is the government’s
burden to prove the loss amount by a preponderance of
the evidence. United States v. Schroeder, 536 F.3d 746, 752-
53 (7th Cir. 2008). Under § 2B1.1, App. n. 3(A), the
loss attributable to culpable activity is the greater of
the actual loss or intended loss. Actual loss is defined
as “the reasonably foreseeable pecuniary harm that re-
sulted from the offense,” and intended loss, under the
guidelines, means “the pecuniary harm that was intended
to result from the offense; and . . . includes intended
pecuniary harm that would have been impossible
or unlikely to occur.” Id. At Johns’ sentencing hearing,
both of the parties and the district court agreed that
if Johns’ scheme caused a financial loss, it was the result
of the homeowners’ inability to access equity that they
had in their homes. The question we must answer, there-
fore, is whether Johns, by way of his scheme, prevented
any of the homeowners from accessing equity they had
in their homes or intended to prevent such access.
  The government argued to the district court (and contin-
ues to argue) that the original payment price for
each home, before any “equity” was rinsed back to
Banks, represented the fair market value, and that each
homeowner had a right to that equity. Since Banks
took that equity for himself, the government
argues, each homeowner suffered a loss. Johns counters
by arguing that each homeowner was in foreclosure,
32                                                No. 11-3299

and thus the amount of money that each home could have
fetched in a fair and open market was irrelevant.
He contends that the imminent prospect of a forced sale
reduced the purchase price of each home, and thus
the homeowners did not have any positive equity.
Since the homeowners could not access the fair
market value, Johns asserts, there was no equity to
lose, and therefore no loss attendant to his scheme.
  In calculating Johns’ guidelines loss calculation,
the district court seemed to split the difference between
the two parties’ positions. Though the entire point of
the scheme at issue was to inflate the price of homes
in foreclosure, the district court found that the fraudulently
augmented prices represented the fair market value of
each home. 5 With regard to the sale of the Coleman
home and the Ten Hoves home, however, the district
court found that there was no actual loss suffered by the
homeowners. The court found that the financial positions
of Coleman and the Ten Hoves prevented them from
selling their home for its fair market value, thus
restricting their access to whatever equity they may have
had in their homes under different circumstances. Since,
but for the scheme, these homeowners could not have
accessed their homes’ equity anyway, the court found that

5
  This conclusion may be based on the fact that Banks’ lender
approved the facial purchase price for each home, thus
lending some credence to the notion that each home could have
sold for that amount. As our analysis will show, however, it is
unimportant whether or not the fraudulent purchase prices
represented the fair market value of each home.
No. 11-3299                                              33

they suffered no actual harm due to Johns’ actions.6
Despite the lack of any actual harm to the Ten Hoves or
Coleman, however, the district court found it to be
“clear and undisputed that the intended loss was
the amount of equity that could be manufactured out
of people like the Ten Hoves, who couldn’t extract
that equity under their conditions.” The court agreed
with Johns that “in the real world there wasn’t any
equity that [the Ten Hoves] had except for that which
was created by the fraud,” but nonetheless concluded
that the manufactured equity was an intended loss
“because the proceeds were used for purposes that
the Defendants put the proceeds to.”
  The district court’s findings regarding the Speller sale
were not quite so clear. In one portion of the transcript,
the court stated that “when we look at the Ten Hoves,
and we look at Coleman, and the others, the Spellers,
for them the equity wasn’t there.” Directly after
concluding that Coleman and the Ten Hoves did not
suffer any actual loss as a result of Johns’ actions, how-
ever, the court stated, “I believe there was some
equity that could be argued existed in the property for
the Spellers,” suggesting that the Spellers did, in fact,
experience an actual loss caused by the scheme. It would
therefore seem that the district court found both an
actual and intended loss with regard to Banks’ purchase
of the Speller home.

6
  In fact, the court suggested that the Ten Hoves may have
benefitted from Johns’ scheme, since they were able to avoid
foreclosure and end their bankruptcy proceedings.
34                                              No. 11-3299

  With regard to the sale of the Ten Hoves and the
Coleman homes, we agree with the district court’s conclu-
sion that the homeowners suffered no actual loss, but
disagree that there was an intended loss attendant to
the scheme. To begin with, the notion that a fraudulent
scheme aimed at inflating the price of a house can set
the house’s fair market value is seriously flawed, but given
the circumstances that each of the homeowners found
themselves in, the “fair market value” of their homes
were irrelevant. As the Supreme Court explained in
BFP v. Resolution Trust Corp., “market value, as it is com-
monly understood, has no applicability in the forced-
sale context,” since “property that must be sold with-
in those strictures is simply worth less.” 511 U.S. 531,
537-39 (1994) (emphases in original). See also United States
v. Buchman, 646 F.3d 409, 412 (7th Cir. 2011) (observing
that in the case of real estate sales, “[a]n extended
search may be required to achieve the asset’s full value,
because it takes time for news to reach the person who
can make the best use of the asset”). Thus, the homeowners
had no claim to their homes’ fair market value, since
they were all facing the possibility of foreclosure and
a forced sale of their property. It is therefore irrelevant
whether or not Banks’ purchase price for each home,
before the “equity” was returned to him, was equal to
the home’s “fair market value.” The record is devoid of
any evidence of what each home would have fetched in
a forced sale, and thus the government cannot contend
that, but for Johns’ scheme, the homeowners would
have been in a better financial situation.
 Moreover, even if there were evidence that a forced sale
would have netted the homeowners a greater amount of
No. 11-3299                                             35

money than they ended up with after the Banks sales,
this would not necessarily mean that the homeowners
suffered a loss as a result of the scheme, since they
each had good reason to strike a deal with Johns and
Banks. By agreeing to sell their homes to Banks and to
return to Banks any “equity” that remained, each home-
owner avoided the negative effects of going through a
foreclosure proceeding, such as a lower credit rating. They
also had the guarantee, instead of the mere hope,
of receiving enough money to pay off their lenders. In
the case of the Ten Hoves, they were able to exit bank-
ruptcy early, with all of their debts paid off. Indeed,
the district court observed that the Ten Hoves actually
benefitted from the scheme. Thus, even if a foreclosure
and a forced sale would have resulted in a higher
net purchase price for each of the homeowners, there
were benefits to accepting Johns and Banks’ proposal
that remained even after the curtain was lifted on
the scheme. Thus, considering the factual findings of
the district court—which, by all indications, were not
clearly erroneous—neither Coleman nor the Ten
Hoves suffered an actual loss caused by Johns and
Banks’ scheme.
  Nor did Johns intend for there to be a loss in brokering
Banks’ purchase of the Coleman and the Ten Hoves homes.
As Johns points out, he and Banks were successful in
their scheme (except for the fact that they were caught),
and no loss occurred. How, then, could they have
intended for loss to occur? The confusion must stem from
the faulty supposition that ill-gotten gains must have
caused someone a loss, but as we have stated before,
“intended losses are intended losses, not bookkeeping
36                                                 No. 11-3299

entries. United States v. Peel, 595 F.3d 763, 773 (7th Cir.
2010). It is not enough that a criminal expect a pecuniary
gain—he must foresee that his victim will actually suffer
pecuniary loss.7 See U.S.S.G. § 2B1.1 App. n. 3(A)(ii) (“ ’In-
tended loss . . . means the pecuniary harm that was in-
tended to result from the offense”). In United States v.
Schneider, for instance, a couple fraudulently obtained gov-
ernment contracts through collusive bidding. 930 F.2d 555,
556-57 (7th Cir. 1991). We held that the “victim”—in that
case, the government—did not suffer a loss at all, since
it obtained contracts for a lower price than it would have
from competing contractors, and thus an enhancement
based on a loss amount was improper. Id. at 558-59.
  The same principle applies in this case: unless the
Ten Hoves (and the other homeowners) would have
been in a better financial position but for Johns’ scheme,
they did not suffer a loss. Similarly, unless a foreseeable
result of the scheme was the placement of the Ten Hoves
in a worse financial position than if they did not sell their
house to Banks, no loss was intended. The fact that
the difficult financial positions of the Ten Hoves
and Coleman permitted Johns to enact his scheme does
not necessarily mean that the scheme was designed
to financially harm the homeowners.8 Both the Ten Hoves
and Coleman agreed to Johns and Banks’ offer to purchase

7
  It is true that ill-gotten gains can sometimes be counted as a
“loss”, but such a substitution can only be made “if there is a
loss but it reasonably cannot be determined.” U.S.S.G. § 2B1.1
App. n. 3(B)
8
  In fact, Johns’ scheme worked best when Banks’ purchase of
a home was the seller’s best option, rinsed equity notwithstand-
ing.
No. 11-3299                                                37

their home because, given the homeowners’ financial
straits, it was the best option available to them. The fact
that Johns lied to the Bankruptcy Trustee, or even that
he lied to the Ten Hoves about Fledderman’s “mortgage”
on their home, does not change this fact—they received
precisely what they agreed to, and agreed to for
good reason. Thus, neither a loss to the Ten Hoves nor
a loss to Coleman was a part of the scheme, and such a
loss was never intended. We therefore reverse the
district court’s finding of a loss amount based on the sale of
the Ten Hoves and the Coleman homes in calculating
Johns’ sentencing guidelines range.
  Given the district court’s separate factual findings
regarding the sale of the Spellers’ home, the potential
existence of a loss amount incident to that sale is more
difficult to assess. As with the Ten Hoves, the Spellers
were in financial distress and their home was in fore-
closure proceedings when they sold their home to Banks.
The district court nonetheless found that, unlike the
Ten Hoves and the Coleman homes, the Speller home
had some equity at the time of sale, but the district court
does not explain how it came to this conclusion. The
answer may lie in some of the factual differences between
the Speller sale, on the one hand, and the Ten Hoves and
Coleman sale on the other. The record indicates that
the Spellers did not believe they were selling their home
outright, with no future rights to the property. Under their
understanding of the agreement, the equity that was
“rinsed” back to Banks at the time of sale was supposed to
be used solely for their benefit, through the payment of the
mortgage, of taxes, and for repairs. Further, the Spellers
38                                                 No. 11-3299

believed that they had an option to repurchase the resi-
dence. Thus, the district court may believe that the Spellers
were duped into giving up the equity they had in
their house (which could have been accessed through
a forced sale) in order to gain the advantages proposed
by Johns and Banks—an option to repurchase and equity
used for their benefit.
  It is not clear from the transcript if the district court did,
in fact, believe that the Spellers actually lost equity
that they had access to by falling victim to Johns
and Banks’ scheme. On remand, we leave it to the
district court to clarify whether the Spellers did suffer
an actual or intended financial loss due to Johns’
actions, in light of our analysis of the Ten Hoves and
Coleman sales.

  2.   Vulnerable Victim Enhancement
  The district court applied a two-level enhancement
to Johns’ sentence for targeting vulnerable victims.
More specifically, it found that Johns targeted unsophisti-
cated homeowners in financial distress. The court
also noted that no financial loss is necessary for a vulnera-
ble victim enhancement to apply, though this point
was unimportant given the district courts finding
of intended loss to all three homeowners. Johns argues
that under our case law, financial vulnerability is
not enough to trigger the vulnerable victim enhancement,
even when coupled with an unsophisticated, “blue collar”
background. Further, Johns again argues that there
was no loss in this scheme, at least with respect to the
No. 11-3299                                              39

homeowners, and thus there could not have been any
victims. The government contends that no financial loss is
necessary for a vulnerable victim enhancement to apply,
and that financial strain can be sufficient to make a
victim vulnerable to fraud.
   Given our conclusion that Coleman and the Ten Hoves
did not suffer an actual or intended loss, and that
the Spellers may not have suffered a loss, we must deter-
mine whether Johns is correct in his assessment that none
of the homeowners can be considered victims of Johns’
relevant conduct. We also must determine which of
the three homeowners could be considered “vulnerable”
if any of them can, in fact, be considered a victim. In
reviewing vulnerable victim findings, we have observed
that district court judges are in a particularly good
position to make this determination. United States v.
White, 903 F.2d 457, 463 (7th Cir. 1990). We review the
finding for clear error. United States v. Christiansen, 594
F.3d 571, 574 (7th Cir. 2010).
  Under § 3A1.1, app. n. 2, the vulnerable victim enhance-
ment should be applied where there is a person
“(A) who is a victim of the offense of conviction and
any conduct for which the defendant is accountable
under § 1B1.3 (Relevant Conduct); and (B) who is unusu-
ally vulnerable due to age, physical or mental condition, or
who is otherwise particularly susceptible to the criminal
conduct.” Only one victim must be vulnerable in order for
the enhancement to apply, United States v. Sims, 329 F.3d
937, 944 (7th Cir. 2003), and the victim must be chosen
because of his vulnerability. United States v. Porcelli,
440 Fed. Appx. 870, 878 (11th Cir. 2011).
40                                               No. 11-3299

  We first address Johns’ argument that there were no
victims to this scheme as defined in the sentencing guide-
lines, and thus there could not have been any vulnerable
victims. As the government points out, we observed
in Stewart that “[t]here is no requirement in section
3A1.1 that a target of the defendant’s criminal activities
must suffer financial loss.” United States v. Stewart, 33 F.3d
764, 770 (7th Cir. 1994). In Stewart, a fraud was perpetrated
upon several elderly people by the president and
operator of an insurance firm. Id. at 766. The fraudster
sold annuities that were meant to supply funds for
the purchasers’ funeral arrangements, but the defendant
instead pocketed their payments, and paid for funeral
arrangements by way of a pyramid scheme. Id. The
funeral homes involved in the scheme were contractually
obligated to provide funeral services, and thus the pur-
chasers’ were not at risk of losing what they paid for.
Id. Rather, it was the funeral homes that were at risk
of suffering a loss. Id. We held, however, that the purchas-
ers were still victims in that they were made to be instru-
mentalities of a fraud, and that no financial loss
was necessary under the vulnerable victim enhancement.
Id. at 770-71. We based this holding on United States v.
Newman, 965 F.2d 206 (7th Cir. 1992). In Newman, the
defendant used a 21-year-old woman to help him defraud
her family out of money, and maintained his control over
her through rape, threats and drugs. Id. at 207-08. We
held that the woman in Newman was a vulnerable victim
of the defrauder despite the fact that she was not the
individual that was financially defrauded. Id. at 212.
Accordingly, we held in Stewart that the elderly annuities
No. 11-3299                                                41

purchasers could be vulnerable victims of the defrauder’s
crimes despite the fact that they did not actually suffer
financial loss, since, again, they were made to be the instru-
mentalities of the fraud. 33 F.3d at 770.
  We also cited two analogous cases from other circuits
for support in Stewart. In United States v. Bachynsky, the
patients of a doctor convicted of defrauding insurance
companies were considered vulnerable victims by the Fifth
Circuit despite the fact that they did not suffer financial
loss. 949 F.2d 722, 735-36 (5th Cir. 1991). The Fifth
Circuit, similar to the panel in Stewart, pointed to the
fact that the patients were made to be instrumentalities
of the doctor’s fraud, but it also suggested that the
doctor provided unnecessary or risky treatment that
could have actually been harmful to his patients. Id.
The Eleventh Circuit, in United States v. Yount, held that
elderly account-holders who had money misappropriated
by a bank employee were vulnerable victims despite
the fact that they were reimbursed for their losses, and
thus, on balance, did not suffer financial loss. 960 F.2d
955, 957-58 (11th Cir. 1992). Contrary to our reasoning
in Stewart, however, the Eleventh Circuit relied on the
fact that the account holders in Yount did suffer an actual
loss, and were merely reimbursed, much like the victim
of a burglar that has insurance. Id.
  A district court in Kansas has disagreed with our analy-
sis in Stewart. See United States v. Anderson, 85 F.Supp.2d
1084, 1092 (D. Kan. 1999). That court held that the vulnera-
ble victim enhancement could only apply if the “victim”
suffered actual or intended harm or loss. Id. at 1091-93.
42                                              No. 11-3299

The district court reasoned that our reliance on Newman
in Stewart was misplaced, since in Newman, the rape
victim suffered actual harm, albeit not financial,
whereas the elderly annuities purchasers in Stewart did
not suffer any actual or intended harm. Id. at 1092.
Further, the court did not believe that an innocent
person being used as an instrumentality in someone
else’s fraud constitutes a harm or loss, as we suggested
in Stewart. Id. The Kansas court distinguished Bachynsky
and Yount, the out-of-circuit cases we relied on in
Stewart, by the fact that the instrumentalities of fraud
in those cases experienced actual harm as well. Id.
Thus, the court concluded that an instrumentality of
a fraud that suffers no actual or intended harm cannot be
a vulnerable victim. Id.
  As the Kansas district court pointed out in Anderson, this
discrepancy can potentially be explained by a change to
the sentencing guidelines that occured post-Stewart.
Anderson, 85 F.Supp.2d at 1092-93. Being made an instru-
mentality of a fraud may have been enough to render
one a victim under the version of U.S.S.G. § 3A1.1 in
place at the time we decided Stewart. Under the guide-
lines that were in place in 1994, the vulnerable victim
enhancement was used when a vulnerable victim
“[was] made a target of criminal activity.” See U.S.S.G.
§ 3A1.1, App. n. 1 (1994); see also Anderson, 85 F.Supp.2d
at 1092-93. Under the current version of the
guidelines, however, a person must be a victim of
“the offense of conviction” or “any conduct for which the
defendant is accountable,” U.S.S.G. § 3A1.1, App. n. 2
(2011), in order for the enhancement to apply, and there
No. 11-3299                                                43

is no mention of “targets” of crime. Perhaps a person
who has suffered no harm as a result of a fraudulent
scheme, but was nonetheless made an instrumentality
to that scheme, could be considered to have been “made
a target of criminal activity,” U.S.S.G. § 3A1.1, App.
n. 1 (1994), but we agree with the Anderson court that
the very same person cannot be deemed a victim
under the current guidelines. Accord United States v.
Salahmand, 651 F.3d 21, 29-30 (finding the vulnerable
victim enhancement to be proper for a fraudulent physi-
cian, and distinguishing cases involving those who
“suffered no injury at all,” thus failing to “qualify as
‘victims’ under any definition”); United States v. Gieger,
190 F.3d 661, 664-65 (5th Cir. 1999) (finding that patients
who received free ambulance rides due to the ambulance
company’s falsification of reports were not victims of
the company’s fraud, and thus a vulnerable victim en-
hancement was not appropriate). Thus, the vulnerable
victim enhancement was inappropriate to the extent that
it was based on the Ten Hoves and Coleman being
labeled as “victims,” and unless the district court finds
that the Spellers experienced some actual or intended
harm, the vulnerable victim enhancement was inappro-
priate altogether.
  If it turns out that the Spellers did experience a loss,
we must determine whether they were vulnerable, and
thus the enhancement was nonetheless proper.
Johns argues that financial distress is not enough to
trigger the vulnerable victim enhancement. For support,
he cites several cases in which victims are in financial
straits and have additional vulnerabilities. See, e.g., United
States v. Fiorito, 640 F.3d 338, 351 (8th Cir. 2011)
44                                              No. 11-3299

(where victims were found to be vulnerable due to finan-
cial distress and additional factors, such as age
and alcoholism). While the government does not cite
any cases directly on point from the Seventh
Circuit, several other circuits have held that the
precise opposite of Johns’ contention is true—finan-
cial distress alone is enough to make one vulnerable to
financial fraud crimes. See Porcelli, 440 Fed. Appx. 870,
878 (finding vulnerable victim enhancement was appro-
priate when people were targeted because of the
financial distress of being in danger of losing their
homes); United States v. Arguedas, 86 F.3d 1054, 1058
(11th Cir. 1996) (“A victim’s vulnerable financial situa-
tion may alone serve as the basis of a section
3A1.1 enhancement . . . .”); United States v. Zats, 298 F.3d
182, 188 (3d Cir. 2002) (“Financial vulnerability is one way
a victim can be ‘otherwise particularly susceptible.’ ”).
While there is no case law as directly on point in
the Seventh Circuit, we have stated that “[d]efrauders
who direct their activities . . . against people who be-
cause of mental or educational deficiencies or financial
desperation are suckers for offers of easy money” trigger
a vulnerable victim enhancement. United States v. Grimes,
173 F.3d 634, 637 (7th Cir. 1999). We now clearly hold
that financial desperation is enough to make one vulnera-
ble to financial crimes. Since the Spellers were in a
position to lose their home at the time of their transaction
with Banks and Johns, they would suffice as financially
vulnerable, and thus should trigger the enhancement
if they are deemed by the district court to have suffered
a financial loss.
No. 11-3299                                            45

 3.   Further Enhancements on Remand
  The record makes clear that, throughout the proceedings
in the district court, the parties were conflicted on how
to label the fraud perpetrated by Johns—as bankruptcy
fraud, with the Ten Hoves as the victims; as bank
fraud, with Banks’ lenders as the victims; or both.
The record before us is unclear as to whether the govern-
ment, in the district court, presented alternative argu-
ments regarding possible guidelines enhancements in
the event that the district court viewed Banks’ lenders
as victims of the scheme at issue. If the government
did make such alternative arguments, and the
district court, due to its view of the case, did not
reach those arguments, then the arguments are preserved
and can be argued on remand. Cf. Walker v. Wallace
Auto Sales, Inc., 155 F.3d 927, 936 (7th Cir. 1998)
(“Because the district court did not reach the issue
of whether the plaintiffs’ remaining claims are viable
and the parties have not briefed that issue on
appeal, we remand that issue to the district court for its
consideration in the first instance.”). If the arguments
were not made at Johns’ original sentencing hearings,
the arguments for further enhancements have been
waived. Skarbek v. Barnhart, 390 F.3d 500, 505 (7th Cir.
2004).

                    III. Conclusion
  For the reasons set forth above, we A FFIRM in part
and R EVERSE in part the judgment of the district court,
46                                          No. 11-3299

and R EMAND for further proceedings consistent with this
opinion.

                         7-17-12