Court Opinion

ID: 2982256
Source: CourtListenerOpinion
Date Created: 2015-09-22 20:09:03.645289+00
Date Added: 2024-06-11T15:46:03.000968
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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                            File Name: 14a0164n.06

                                      Case No. 13-1300

                            UNITED STATES COURT OF APPEALS
                                 FOR THE SIXTH CIRCUIT

                                                                               FILED
                                                                          Feb 27, 2014
UNITED STATES OF AMERICA,                         )
                                                                      DEBORAH S. HUNT, Clerk
                                                  )
        Plaintiff-Appellee,                       )
                                                  )      ON APPEAL FROM THE UNITED
v.                                                )      STATES DISTRICT COURT FOR
                                                  )      THE EASTERN DISTRICT OF
RYAN ZUNDEL,                                      )      MICHIGAN
                                                  )
        Defendant-Appellant.                      )      OPINION
                                                  )
                                                  )

BEFORE: DAUGHTREY, SUTTON, and DONALD, Circuit Judges.

        Bernice B. Donald, Circuit Judge. Pursuant to a Rule 11 Plea Agreement, Appellant

Ryan Zundel pleaded guilty to two counts of conspiracy to commit wire fraud in violation of 18

U.S.C. § 371. The district court sentenced Zundel to two consecutive sixty-month prison terms,

imposed a mandatory $200 special assessment, and ordered him to pay $34,548,879 in

restitution. Zundel now appeals, arguing that the district court improperly imposed a two-level

Sentencing Guidelines enhancement for a crime with more than ten victims and that the district

court’s restitution order was issued in error. We AFFIRM Zundel’s sentence but REMAND on

the issue of restitution.
Case No. 13-1300
United States of America v. Zundel

                                                I.

       From 2003 to 2007, Zundel participated in a scheme to defraud Detroit-area mortgage

lenders out of millions of dollars. Zundel owned Bretlin Home Mortgage, where he directed

loan processors who both submitted fraudulent loan applications and prepared fraudulent loans

for closing. This scheme involved two types of false loans—“real” loans and “ghost” (or “G”)

loans. Typically, the same residential property would be used simultaneously as the collateral

for one “real” loan and as the purported collateral for several “G” loans funded by different

lenders. Though these “real” loans involved actual title companies and had properly recorded

deeds and mortgages, the applications and other documents for them were false. The borrowers

in the “real” loan applications were straw buyers who were recruited, often by Zundel, and paid

handsomely. Down payments in these “real” loan transactions were made using proceeds from

the scheme, rather than the supposed borrower’s personal funds.        For “G” loans, only the

mortgage lenders were real; everything else was fabricated by participants in the scheme.

Lenders in these “G” loan transactions were left unsecured and without collateral.

       On June 16, 2010, the government initially charged Zundel, along with six others, with a

single count of conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349, an offense

carrying a 360-month maximum sentence.          After plea bargaining, the government filed a

superseding information on August 2, 2011, charging Zundel with two counts of conspiracy

under 18 U.S.C. § 371; since each of these counts carried a 60-month maximum sentence,

Zundel’s maximum potential incarceration time dropped from thirty years for the single count

under 18 U.S.C. § 1349 to ten years for the two counts under 18 U.S.C. § 371.

       On February 7, 2012, Zundel pleaded guilty pursuant to a Rule 11 plea agreement. Under

this agreement, Zundel pleaded guilty to Count One (pertaining to the “real” loans) and Count

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Case No. 13-1300
United States of America v. Zundel

Two (pertaining to the “G” loans) of the superseding information, both of which alleged

conspiracy to commit wire fraud in violation of § 371. The agreement acknowledged that the

parties disagreed about the applicable Sentencing Guidelines’ range. The government argued

that Zundel’s range should be 121 to 151 months (capped by the 120-month statutory maximum)

based on an adjusted offense level of 32—enhanced from the base offense level of 6 due to a loss

amount of $34,548,879 (twenty-two levels under U.S.S.G. § 2B1.1(b)(1)(L)), there being more

than ten victims (two levels under § 2B1.1(b)(2)(A)), and the use of sophisticated means to

perpetuate the crime (two levels under § 2B1.1(b)(9)(c)), coupled with a three-level upward

adjustment for Zundel’s playing a managerial or supervisory role under § 3B1.1(b) and a three-

level downward adjustment for acceptance of responsibility under § 3E1.1. Zundel, on the other

hand, placed the loss amount at $16,755,960, contended that his conduct did not involve ten or

more victims, and disputed that he was a manager or supervisor; he calculated his total offense

level as 25 and his recommended range as 57-71 months. The agreement stipulated that the

district court would make the factual findings necessary to resolve these disputes by a

preponderance of the evidence.

       The plea agreement contained two other provisions pertinent to this appeal.            First,

regarding restitution, the agreement provided: “The court shall order restitution to every

identifiable victim of defendant’s offenses and all other relevant conduct. The victims and their

respective loss amounts will be identified at sentencing.” Second, the agreement contained a

waiver of right to appeal, which stated in relevant part that if the district court imposed a prison

term between 72 and 151 months, then Zundel could only appeal adverse rulings on Sentencing

Guidelines disputes regarding the amount of loss, the number of victims, or his role as a manager

or supervisor.

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Case No. 13-1300
United States of America v. Zundel

       On April 10, 2012, the United States Probation Office prepared a Presentence Report

(“PSR”) for Zundel. The PSR, which tracked the government’s calculation in Zundel’s plea

agreement, placed Zundel’s total offense level at 32 and calculated the loss at $32,548,879 for

the purposes of restitution. The government filed its sentencing memorandum on January 3,

2013, and Zundel filed his on January 8, 2013. Zundel’s memorandum challenged, among other

things, the number of victims, stating:

       The parties agreed to disagree on the number of victims. While given the number
       of financial institutions listed in the PSR as victims, it may be questionable
       whether the number of victims attributable to Defendant’s conduct will be under
       ten, the number will be unknown until Defendant has had the opportunity to
       review the loan documents regarding the questioned loans in the spreadsheet.

       After postponing sentencing at Zundel’s request four different times over the course of

five months, the district court finally held the sentencing hearing on February 12, 2013. During

this hearing, Zundel argued that his offense only involved nine, rather than ten or more, victims.

Zundel also challenged the government’s loss calculation. After hearing argument from both

parties, the district court overruled Zundel’s objections to the enhancements under U.S.S.G. §§

2B1.1(b)(1)(D) (pertaining to the amount of loss) and 2B1.1(b)(2)(A)(i) (pertaining to the

number of victims). The court determined that his Guidelines range was 135 to 168 months,

though capped at 120 months by statute, and sentenced Zundel to 120-months incarceration.

Although Zundel asked that the district court reserve the issue of restitution, the district court

further ordered Zundel to pay restitution in the amount of $34,548,879.

       On February 15, 2013, Zundel filed a motion for a restitution hearing. On March 6,

2013, while that motion was still pending, the district court entered judgment reflecting its

rulings at the sentencing hearing; Zundel filed a notice of appeal the same day. After holding a

hearing on Zundel’s motion, on May 15, 2013 the district court entered an order stating that

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Case No. 13-1300
United States of America v. Zundel

Zundel’s appeal vested jurisdiction in the appellate court and therefore deprived the district court

of jurisdiction to resolve Zundel’s motion for a restitution hearing. The order noted, however,

that if this Court were to remand the case, then the district court would grant Zundel’s motion in

part by permitting briefs regarding restitution and then, if appropriate, scheduling a restitution

hearing. Fed. R. Crim. P. 37 and Fed. R. App. P. 12.1 required that Zundel promptly notify this

Court of the district court’s May 15, 2013 order. The record indicates that Zundel did not notify

the Court until he filed his brief on October 11, 2013.

                                                 II.

         We review the district court’s interpretation of the Sentencing Guidelines de novo and its

sentencing determination for abuse of discretion. United States v. Baker, 559 F.3d 443, 448 (6th

Cir. 2009); see also Gall v. United States, 552 U.S. 38, 51 (2007). We accept the district court’s

findings of fact unless they are clearly erroneous and give deference to the district court’s

application of the Guidelines to the facts. United States v. Galaviz, 645 F.3d 347, 358 (6th Cir.

2011).

                                                 A.

         Zundel first challenges the district court’s application of a two-level enhancement under

U.S.S.G. § 2B1.1(B)(2)(A)(i) for a crime involving ten or more victims. Zundel contends that he

raised a factual objection to the number of victims listed in the PSR, which shifted the burden to

the government to prove the facts necessary for the ten-or-more-victims enhancement by a

preponderance of the evidence, and that the government did not present sufficient evidence to

justify the enhancement. Zundel misapprehends his and the government’s duties.

         “When a defendant fails to produce any evidence to contradict the facts set forth in the

PSR, a district court is entitled to rely on those facts when sentencing the defendant.” United

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Case No. 13-1300
United States of America v. Zundel

States v. Geerken, 506 F.3d 461, 467 (6th Cir. 2007). Further, as we stated in United States v.

Lang, 333 F.3d 678 (6th Cir. 2003):

       A defendant cannot show that a PSR is inaccurate by simply denying the PSR’s
       truth. Instead, beyond such a bare denial, he must produce some evidence that
       calls the reliability or correctness of the alleged facts into question. If a defendant
       meets this burden of production, the government must then convince the court
       that the PSR’s facts are actually true. But the defendant gets no free ride: he must
       produce more than a bare denial, or the judge may rely entirely on the PSR.

Id. at 681 (quotation omitted).      Although Zundel’s sentencing memorandum noted that he

disputed the number of victims, Zundel never filed objections to the PSR and did not produce

evidence to support his opposition to the PSR’s calculation of the number of victims before his

sentencing hearing.

       During his sentencing hearing, Zundel orally objected to the PSR’s number of victims.

Zundel’s counsel explained that although he had not intended to pursue this objection, he had

changed his mind the night before the hearing because, after speaking with Zundel, he concluded

that “there’s a possibility that there is less than ten [victims].” Zundel contended that he had

reviewed the list of victims in the PSR but that he could only remember dealing with nine

primary mortgage lenders and that he therefore reserved the right to object to a finding of ten or

more victims. Further, Zundel argued that these primary lenders may have sold the mortgages to

other holders, who, in turn, could have again resold the mortgages. Zundel argues that because

mortgages are generally resold without recourse, only the parties who suffered financial loss

should qualify as victims. Zundel contended then, as he does now, that the PSR’s victim list

over-represents the number of victims by impermissibly counting multiple holders of the same

loan as multiple victims.

       Zundel offered neither evidence of the mortgages having been resold and bundled nor

evidence of multiple holders of the same loan being counted as multiple victims. On questioning

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Case No. 13-1300
United States of America v. Zundel

from the district court, Zundel admitted that the only evidence to support his contention was his

own oral identification of the nine lenders with whom he had dealt and that he had not advised

the government of which victims he believed did not belong on the victim list. Zundel later

admitted that he lacked any specific facts to address the list of alleged victims. As the district

court stated, Zundel’s bare allegations left it with two options: “taking [Zundel’s] comments and

viewing them as being speculative or treating the Government’s assertions as being

uncontested.” Because Zundel did not produce evidence to call the reliability of the PSR’s

victim list into question, the burden of persuasion never shifted to the government. See Lang,
333 F.3d at 681. Accordingly, the district court did not err in overruling Zundel’s objection and

relying on the PSR’s findings regarding the number of victims.

       Even if Zundel had satisfied Lang’s requirement to introduce evidence supporting his

challenge to the PSR and shifted the burden to the government, a review of the record indicates

that Zundel’s argument that there may be fewer than ten victims is unfounded.             As the

government explained during the sentencing hearing, it only counted one victim per transaction.

Likewise, Zundel stated “my suspicion is that for each individual loan, ultimately, there’s going

to be one victim.” Under this one-loan-one-victim theory, Zundel’s involvement with far more

than ten “G” loans—each of which left a lender unsecured and without collateral—provides

enough victims to justify applying U.S.S.G. § 2B1.1(B)(2)(A)(i).

       The Seventh Circuit employed similar reasoning in United States v. Knox, 624 F.3d 865,

872 (7th Cir. 2010). The Knox defendant used a fraudulent real estate flipping scheme wherein

he duped buyers into purchasing properties at inflated prices and then tricked lenders into

extending mortgages based on these exaggerated values. Id. at 867. Knox argued that because it

was uncertain whether the buyer or the lender in each transaction sustained the actual loss, the

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Case No. 13-1300
United States of America v. Zundel

number of victims could not be determined. Id. at 873. The Seventh Circuit, however, held that

because Knox had acknowledged that there would be at least one victim for every transaction,

the court could apply U.S.S.G. § 2B1.1(B)(2)(A)(i) without having to identify exactly who bore

the loss for each transaction. Id. at 872. The rationale from Knox imports nicely here; in each

fraudulent loan transaction, of which there were more than ten, someone—be it the originating

lender or a successor—suffered an actual loss and thus qualifies as a victim for the purposes of

U.S.S.G. § 2B1.1(B)(2)(A)(i). The district court, therefore, did not err in applying the ten-or-

more-victims enhancement.

                                               B.

       Zundel also relies on evidence presented at the sentencing of his co-conspirator, Ronnie

Duke, to argue that the ten-or-more-victims enhancement should not apply. Pursuant to a Rule

11 plea agreement, Duke pleaded guilty on July 5, 2012 to one count of conspiracy to commit

wire fraud in violation of 18 U.S.C. § 1349. Although § 1349 carries a thirty-year maximum

sentence, based on Duke’s substantial assistance, his plea agreement capped his maximum

sentence at fifteen years. As here, the parties disagreed about Duke’s applicable Guidelines

range, particularly the number of victims (over fifty) and the loss amount ($100 million). In the

plea agreement, the government placed Duke’s range at 360 months to life, whereas Duke

calculated his range at 262 to 327 months. After a later-filed PSR factored in Duke’s entire

criminal history, his range—even without the disputed enhancements for more than fifty victims

and a $100 million in losses—shifted to 324 to 405 months.

       Duke was the last of the co-conspirators to be sentenced; his sentencing hearing took

place roughly two months after Zundel’s on April 8, 2013. At sentencing, Duke objected to the

government’s calculations of loss amount and the number of victims.            He bolstered his

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Case No. 13-1300
United States of America v. Zundel

objections with an opinion witness, Chip Cummings, who concluded that Duke’s loss amount

was $94 million and that Duke’s crimes only affected forty victims. So that there would not be

any Guidelines disputes, the government agreed to accept these findings. The government now

explains that it did not endorse Cummings’s calculations but decided not to contest them because

the bottom of Duke’s range exceeded the 180-month cap and therefore any additional Guidelines

determinations would be wholly academic. Over the government’s objection that the issues were

undisputed, the district court allowed Cummings to testify regarding his quantification of victims

and loss.

        Zundel latches onto Cummings’s analysis indicating that there were fewer than fifty

victims in Duke’s case to support his argument that there were fewer than ten victims in his own

case. Because Duke was the mastermind of the entire mortgage fraud scheme, Zundel contends

that the victim list attached to Duke’s restitution order comprises an exhaustive list of victims for

the entire scheme. Zundel claims that comparing the government’s loss spreadsheet in his case

with the restitution order in Duke’s judgment proves that, in his case, only nine entities suffered

losses and thus that there were only nine victims. Our review indicates that Zundel must have

miscounted. In its loss chart for Zundel’s case, the government identified twenty-two lenders1

whose loans resulted in a loss. Of these twenty-two lenders, ten2 appear as victims in Duke’s

restitution order. The overlap of these ten institutions reaffirms that Zundel’s crime involved ten

1
  These twenty-two lenders in the government’s chart are Aames Funding Corp., Aegis Wholesale Corp., Argent
Mortgage, Bayrock, BNC Mortgage, Chase Bank, Credit Suisse Financial, Decision One Mortgage, Entrust
Mortgage, FMF Capital, Fremont Investment, Impac Funding Corp., Lime/Green Light Financial Services, Long
Beach Mortgage, MILA, Inc., Novastar Mortgage, People’s Choice, PHM Financial Inc., Rocky Mountain
Wholesale, Saxon Mortgage, Southstar Funding, and Wilmington Finance.
2
  The ten overlapping lenders are Aegis Wholesale, Argent Mortgage, Chase Bank (listed as “JP Morgan Chase”),
Credit Suisse Financial, Fremont Investment, Novastar Mortgage, People’s Choice, PHM Financial, Saxon
Mortgage (listed as “Morgan Stanley-Saxon Mortgage Services”), and Wilmington Finance.

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Case No. 13-1300
United States of America v. Zundel

or more victims and that the district court properly applied a two-level enhancement under

U.S.S.G. § 2B1.1(B)(2)(A)(i).

                                                III.

       Zundel also contends that the district court erred in issuing its restitution order because it

did not specifically identify the victims who suffered losses and the amount owed to each victim.

After his sentencing, Zundel filed a motion for a restitution hearing on February 15, 2013.

Without ruling on Zundel’s motion, the district court entered judgment on March 6, 2013.

Zundel filed a notice of appeal the same day, thereby divesting the district court of its

jurisdiction to hear his motion for a restitution hearing. On May 15, 2013, the district court

entered an order stating that it lacked jurisdiction to entertain Zundel’s motion for a restitution

hearing. Consistent with Fed. R. Crim P. 37(a), the order noted that if this Court were to remand

the case, then the district court would grant Zundel’s motion in part by permitting briefing on the

issue of restitution and then scheduling a restitution hearing if the court deemed it appropriate.

We now remand the question of restitution to the district court.

       We end with two observations. First, Zundel completely neglected both Fed. R. Crim. P.

37(b) and Fed. R. App. P. 12.1(a)’s requirements to “promptly notify” the clerk of this Court

about the district court’s order of May 15, 2013. His failure to comply with these notice

requirements could permit us to conclude that Zundel had forfeited his restitution argument, were

we so inclined. Second, we note that the appeal-waiver provision of Zundel’s plea agreement

forecloses his ability to appeal the district court’s eventual ruling on his motion for a restitution

hearing.

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Case No. 13-1300
United States of America v. Zundel

                                              IV.

       For the foregoing reasons, we AFFIRM the district court’s imposition of a 120-month

sentence and REMAND the issue of restitution to the district court.

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