Court Opinion

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Date Created: 2015-10-13 22:02:19.288405+00
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Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

5-5-2004

USA v. Thies
Precedential or Non-Precedential: Non-Precedential

Docket No. 03-1303

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"USA v. Thies" (2004). 2004 Decisions. Paper 726.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/726

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                                                 NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

                          No. 03-1303

               UNITED STATES OF AMERICA

                               v.

                      WINTHROP THIES,

                                     Appellant

         On Appeal from the United States District Court
                  for the District of New Jersey
                (D.C. Crim. No. 98-cr-00301-2)
             District Judge: Hon. William H. Walls

           Submitted Under Third Circuit LAR 34.1(a)
                         May 3, 2004

   Before: SLOVITER, FUENTES and BECKER, Circuit Judges

                      (Filed: May 5, 2004)

                  OPINION OF THE COURT
SLOVITER, Circuit Judge.

       Winthrop Thies, who was found guilty by a jury of conspiracy to commit wire and

mail fraud, wire fraud and interstate transportation of fraudulently obtained money,

appeals from the District Court’s order sentencing him to 30-months imprisonment on

each count to be served concurrently. He requests that we vacate his sentence and

remand for a new sentencing hearing.

       We have jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a).

                                             I.

       Thies was convicted for his role in connection with a fraudulent mortgage

transaction for two New Jersey properties. Also involved in the conspiracy were Lew

Markus, the President of Lex Terrae, a New Jersey corporation, and John Hildebrandt, a

former title insurance agent whose license was revoked after he misappropriated trust

fund assets.

       In January 1993, Markus purchased Equihab, a troubled company that owned 25

residential properties in New Jersey. Equihab had defaulted on its mortgage loans with

Midlantic National Bank (hereinafter Midlantic), causing the bank to foreclose on the

properties. M arkus hoped to pay off the mortgages and sell the buildings for a profit.

However, after purchasing Equihab for $25,000, Markus was in dire need of cash but he

was unable to sell the New Jersey properties because of Midlantic’s foreclosures.

       To obtain cash, Markus schemed with Hildebrandt and Thies to sell false

                                             2
mortgages for two of the New Jersey properties on the secondary mortgage market. Thies

acted as an attorney for Markus and as President of First National Capital Corporation

(hereinafter First National), another company owned by Markus that purportedly owned

the mortgages on the two New Jersey properties. Thies arranged to sell the false

mortgages to Levie Mortgage Investment Corporation for approximately $116,000. To

complete the transaction, Markus, Hildebrandt and Thies drafted and signed, inter alia,

false title and closing documents, which they sent by mail and fax. Levie Mortgage was

not aware that Midlantic had foreclosed on the properties’ real mortgages, and the value

of the properties was mere fiction created to secure the cash Markus needed.

       First National made four mortgage payments to Levie Mortgage but then stopped

paying. When it investigated, Levie Mortgage uncovered the fraud. Thies, Markus and

Hildebrandt were indicted. Markus and Hildebrandt pled guilty to charges stemming

from their participation in the transactions at issue. Thies pled not guilty and was

convicted by a jury. At trial, Thies contended that he was unaware that the New Jersey

mortgages were fraudulent and that he signed the mortgage documents without reading

them. To refute this defense, the Government introduced evidence of two prior

uncharged mortgage schemes in which Thies allegedly participated.

       Six months prior to the New Jersey scheme, Markus attempted to obtain a

$300,000 loan using a New York City property as collateral. Because the United States

Government had a $1,000,000 lien against the property, no legitimate title company

                                             3
would issue a title commitment for the property. In need of money, Markus worked with

Hildebrandt to create false title documents, which he used to induce the Winter Trust

Group to loan him $300,000. The Government concedes that there is no evidence that

Thies participated in this transaction.

       Four months after securing the Winter Trust Group financing, M arkus decided to

obtain another loan using the same New York City property. He again had Hildebrandt

prepare false title documents to secure a $250,000 loan. This time, however, Markus and

Hildebrandt told Thies about the Winter Trust Group fraud and revealed that Hildebrandt

had lost his title agent license for prior fraudulent conduct. Despite the illegal nature of

the proposed transaction, Thies agreed to participate by providing an attorney opinion

letter indicating that Normark Industries’ $250,000 mortgage would be the property’s first

mortgage. In reality, this mortgage would be subordinate to the Government lien for

$1,000,000 and the Winter Trust Group mortgage for $300,000. Based upon the false

title documents and Thies’ attorney opinion letter, Normark purchased the mortgage on

the New York City property for $250,000.

       Following the jury’s guilty verdict, the District Court, as noted above, sentenced

Thies to 30-months imprisonment on each of the four charges but permitted the sentences

to run concurrently. This sentence was based upon the court’s determination that Thies

committed a level 17 offense in criminal history category II. The category II

classification reflected a prior conviction in New Jersey state court. The offense level

                                              4
calculation contained four components: a base offense level, enhancements for Thies’

extensive involvement, relevant conduct and obstruction of justice. The Government and

defendant agreed upon a base offense level of six (per U.S.S.G. § 2F1.1(a)), a two-level

enhancement because Thies contributed more than just minimal planning (pursuant to

U.S.S.G. § 2F.1(b)(2)(A)) and a six-level enhancement for the $116,994 financial loss

caused by the Levie Mortgage scheme. Pursuant to § 2F1.1(b)(1)(K), however, the

Government requested an additional four-level enhancement to reflect the $550,000 loss

suffered by the Winter Trust Group and Normark Industries when they purchased the

false New York mortgages. Thies objected to that enhancement, arguing that the court

should not consider the New York frauds as relevant conduct when computing his

sentence under the Guidelines. The Government also requested a two-level enhancement

for obstruction of justice, which Thies later conceded was applicable. In short, the parties

agreed Thies’ base level offense of six should be enhanced two levels for extensive

involvement and six levels for financial loss caused by the New Jersey fraud totaling a

14-level offense. They disagreed whether this level should be enhanced for relevant

conduct and obstruction of justice. The Government argued that it should be enhanced to

20.

       The court ultimately decided to apply a level 17 offense by attributing a three-level

enhancement for financial loss to the New York fraud and declining to enhance the

sentence for obstruction of justice. Thies appeals the judgment of sentence.

                                             5
                                              II.

       We exercise plenary review over the District Court’s interpretation and application

of the Sentencing Guidelines, and review its factual findings for clear error. United

States v. Geevers, 226 F.3d 186, 189 (3d Cir. 2000).

       Thies contends that the District Court failed to (1) specify and properly apply the

relevant conduct test it relied upon to enhance his sentence and (2) make factual findings

sufficient to satisfy the preponderance of the evidence threshold. Appellant’s Br. at 22.

a. Relevant Conduct Test

       Under the Sentencing Guidelines, a district court judge is to consider “all acts . . .

that were part of the same course of conduct or common scheme or plan as the offense of

conviction” as relevant conduct for purposes of sentence enhancement. U.S.S.G. §

1B1.3(a)(2) (emphasis added). The same course of conduct exists if the offenses “are

sufficiently connected or related to each other to warrant the conclusion that they are part

of a single episode, spree, or ongoing series of offenses.” U.S.S.G. § 1B1.3, cmt. n.9(B).

A common scheme or plan exists if the offenses are “substantially connected to each

other by at least one common factor, such as common victims, common accomplices, or

similar modus operandi.” U.S.S.G. § 1B1.3, cmt., n.9(A). In assessing whether offenses

constitute a course of conduct or a common scheme, the court must consider “the degree

of similarity of the offenses, the regularity (repetitions) of the offenses, and the time

interval between the offenses.” U.S.S.G. § 1B1.3, cmt. n.9(B).

                                               6
       Although Thies cites no authority requiring the District Court to explicitly identify

the relevant conduct test upon which it relies, Thies criticizes the court’s failure to

identify which test it applied. However, a review of the hearing transcript shows that the

District Court was familiar with both the record and the Sentencing Guidelines. See, e.g.,

App. at 308, 310 (familiarity with trial record) and 311-12 (familiarity with Guidelines).

Although the court did not expressly state which test it was applying, its language

demonstrates that it relied upon the common scheme test. For example, the court’s

statement that Thies was “doing the same thing with the same people” shows the presence

of multiple common factors between the New Jersey and New York frauds. App. at 309.

These multiple common factors speak directly to the degree of similarity among the

offenses. Additionally, the court described the frauds as “part of the same activity”

because he found that the frauds were “more or less contemporaneous.” App. at 332. In

fact, the Levie Mortgage fraud occurred less than six months after the Normark fraud.

Compare App. at 155 (dating Normark fraud as November 1992) with App. at 162-64

(dating Levie fraud as beginning in January 1993 and concluding in May of same year).

It is apparent that the court understood the tests to be applied and properly considered the

similarity, regularity and temporal relationship of the frauds when determining whether to

enhance Thies’ sentence for relevant conduct.

b. Preponderance of the Evidence

       A district court must substantiate its conclusions about relevant conduct by a

                                               7
preponderance of the evidence. United States v. Rudolph, 137 F.3d 173, 177 (3d Cir.

1998). Thies contends that the District Court did not make sufficient findings to support

its conclusion that the Normark fraud was relevant conduct.

       First, Thies offers no authority to support his assertion that the District Court’s

failure to explicitly state its reliance on the preponderance of the evidence standard

supports a conclusion that the court failed to apply that standard. Moreover, Thies is

incorrect that the court did not explicitly use that term. In fact, the court stated, “I find by

a preponderance of the evidence available to me from the trial and from the presentence

investigation that [Thies was] a knowing participant in the [Normark] fraud.” App. at

346 (emphasis added).

       Second, the court enhanced Thies’ sentence by three levels rather than four, as

requested by the Government, because it found that only Thies’ participation in the

Normark fraud was demonstrated by a preponderance of the evidence. Its refusal to

enhance Thies’ sentence for the Winter Trust Group fraud suggests that the evidence did

not support Thies’ participation in that fraud, a fact that the Government ultimately

conceded during the sentencing hearing when questioned by the judge. See App. at 334.

       Finally, the court referred to the record and paragraphs 16 through 21 of the pre-

sentence investigation report as offering evidence that “Thies was involved in the New

York activity which reflects his knowing those persons involved and his assisting those

persons involved in getting if not the first, definitely the second mortgage on [the New

                                               8
York City property].” App. at 332. The facts set forth in the pre-sentence report provide

adequate support for the court’s conclusion. There is simply no basis for us to find clear

error in the District Court’s factual findings.

                                              III.

                                      CONCLUSION

       The transcript of the sentencing hearing demonstrates that the District Court was

aware of and applied the appropriate test for determining whether the New York frauds

constituted relevant conduct under the Sentencing Guidelines. It only enhanced Thies’

sentence for the New York Normark fraud, not for the Winter Trust Group fraud, and the

trial transcript contained evidence that supports the conclusion that the Levie Mortgage

fraud and the New York Normark fraud were sufficiently connected to justify

characterizing the Normark fraud as relevant conduct under the Guidelines. We will

affirm the judgment of sentence.