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United States v. Beecroft

United States Court of Appeals, Ninth Circuit

June 13, 2016

United States of America, Plaintiff-Appellee,
v.
Melissa R. Beecroft, Defendant-Appellant.

          Argued and Submitted November 16, 2015 San Francisco, California

         Appeal from the United States District Court for the District of Nevada, No. 2:08-cr-00064-RLH-GWF-3 Roger L. Hunt, Senior District Judge, Presiding

          Angela H. Dows (argued), Premier Legal Group, Las Vegas, Nevada, for Defendant-Appellant.

          Peter S. Levitt (argued), Assistant United States Attorney; Daniel G. Bogden, United States Attorney; Elizabeth O. White, Appellate Chief; United States Attorney's Office, Las Vegas, Nevada, for Plaintiff-Appellee.

          Before: Diarmuid F. O'Scannlain and Milan D. Smith, Jr., Circuit Judges, and Brian M. Morris, District Judge. [*]

         SUMMARY [**]

         Criminal Law

         The panel affirmed an order of restitution and the amounts of forfeiture on the defendant's convictions for Counts 10, 11, 13, and 14; vacated $107 million in forfeiture ordered on her conviction on Count 1; and remanded for reconsideration of the appropriate amount of such forfeiture, in a case in which the defendant was convicted for participating in an extensive mortgage-fraud conspiracy.

         The panel held that the defendant's bare speculation that the process employed by the district court in calculating the losses incurred by the victim banks was somehow deficient does not approach her burden of demonstrating clear or obvious error in the district court's restitution calculations. Rejecting the defendant's Eighth Amendment challenge to the restitution order, the panel wrote that without error in the loss calculation, the defendant cannot show that requiring her to pay that amount back to the victims was somehow excessive or grossly disproportional to her crimes. The panel noted that the district court required the defendant to pay slightly more than $2 million of the more-than-$50 million in losses caused by the conspiracy in which she participated.

         The panel held that the district court did not err in calculating the proceeds of her criminal activity when imposing the order of money forfeiture. The panel rejected the defendant's contention that the district court needed to take additional evidence to determine the "accurate" amount of loan proceeds obtained by the conspiracy, where the defendant has not argued, let alone demonstrated, what "good reason" the court had to believe that the government's proposed forfeiture amount exceeded the proceeds of her crimes. The panel wrote that this court has previously rejected the argument that a defendant should not be ordered to forfeit the total loan proceeds, where the defendant never personally received the money but instead made only a small commission on each transaction.

         The panel held that the order of forfeiture imposed against the defendant personally at sentencing is punitive and therefore subject to Eighth Amendment excessiveness review. The panel held that the amounts of forfeiture ordered on the defendant's four subsidiary counts of conviction ($330, 000; $305, 000; $325, 000; and $460, 000) are not excessive, given the gravity of the offenses, and that the amounts are substantially less than the $1 million maximum fine authorized by statute and the Sentencing Guidelines range. The panel held that the $107 million forfeiture order on the conspiracy count, which is 100 times greater than the maximum fine allowable and 5, 000 times greater than the lower end of the Guidelines range, runs afoul of the Excessive Fines Clause. The panel remanded for the district court to reconsider that amount.

          OPINION

          O'SCANNLAIN, Circuit Judge

         Following her convictions for participating in an extensive mortgage-fraud conspiracy, a defendant was ordered to pay more than $2 million in restitution and to forfeit more than $100 million. We must decide whether either amount was erroneously calculated or unconstitutionally excessive.

         I

         A

         From roughly 2003 through 2008, Melissa Beecroft took part in a multi-million dollar residential mortgage-fraud scheme in the Las Vegas area. Led by Steven Grimm and Eve Mazzarella, the conspirators recruited and paid straw purchasers[1] to buy homes at substantially inflated prices, sometimes with 100% mortgage financing. Once the mortgage loans were funded, Grimm and Mazzarella caused title and escrow companies to disburse excess funds to various shell corporations they owned, under the pretense of using the money to make repairs and improvements to the homes, though such repairs were never made. Grimm and Mazzarella also arranged to have participating mortgage brokers and loan officers remit a portion of their commissions and fees to Grimm. After each sale, the straw buyers would then transfer ownership in the properties themselves to Grimm and Mazzarella's shell corporations.

         Altogether, the scheme involved more than 400 straw-buyer transactions and 227 properties purchased for more than $100 million. The vast majority of the loans involved went into default, causing the lenders to lose tens of millions of dollars.

         B

         Beecroft's role in the scheme began sometime after September 2002, when she was hired as an administrative assistant at Grimm's company, Desert Funding. In April 2003, Beecroft began working as an independent loan processor for Select Equities, another company Grimm owned, and she later became the owner and manager of a third company, Secured Mortgage Services, in which the majority of her business consisted of mortgages she prepared for Grimm. In these positions, Beecroft participated extensively in Grimm's mortgage-fraud scheme, completing loans for Grimm, handling false information that was given to banks on behalf of straw buyers (including inflating income information and even completing some of the fraudulent loan applications herself), and directing to whom fraudulent third-party disbursements would be made. Beecroft participated in the scheme for years-joining Grimm even before Mazzarella did-and was described by at least one witness as Grimm's "right hand." According to the government, Beecroft's participation caused 143 of the 227 properties to go into default. The government believes she made in excess of $400, 000 from commissions and fees generated during the scheme.

         C

         For her role in the scheme, Beecroft was charged with conspiracy to commit bank, mail, and wire fraud, in violation of 18 U.S.C. § 1349, along with multiple subsidiary counts of both mail and wire fraud in violation of 18 U.S.C. §§ 1341, 1343. After a lengthy jury trial, Beecroft was convicted of the conspiracy count (Count 1), along with four subsidiary counts-two counts each of mail and wire fraud (Counts 10, 11, 13, and 14).

         Prior to sentencing, the probation office filed a presentence investigation report (PSR) calculating Beecroft's offense level at 37.[2] The Guidelines range for imprisonment was 210 to 262 months per count, and the PSR recommended 210 months for each count (to run concurrently). The PSR also recommended that Beecroft be ordered to pay full restitution to the victims for the losses caused by the conspiracy, calculated at more than $52 million in total, as supported in exhibits provided by the government. The Guidelines authorized a fine between $20, 000 and $1 million per count, but the PSR recommended no fine, given the large amount of restitution recommended.

         At sentencing, the district court concluded that, although Beecroft was in some sense "the hub" of the scheme, she was "not anywhere near as culpable as Mr. Grimm or Miss Mazzarella, " and did not orchestrate the conspiracy or perhaps even fully understand it. Accordingly, the court sentenced Beecroft significantly below the Guidelines range and the PSR's recommendation: only three years in prison and five years under supervised release. Regarding restitution, the court again bristled at ordering the full amount recommended in the PSR. Instead, the court limited the loss calculation to certain properties proven at trial-a total of $2, 275, 025-rather than the more than $52 million for all properties involved in the conspiracy. The district court also entered a criminal monetary forfeiture order against Beecroft in the sum of $107 million for the conspiracy ...


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