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United States v. House

United States Court of Appeals, Seventh Circuit

February 27, 2018

United States of America, Plaintiff-Appellee,
Precious W. House, Defendant-Appellant.

          Argued December 1, 2017

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 14 cr 00010 - Andrea R. Wood, Judge.

          Before Bauer, Flaum, and Rovner, Circuit Judges.


         On March 19, 2015, a jury convicted defendant-appellant Precious House of six counts of bank fraud, in violation of 18 U.S.C. § 1344, as a result of his involvement in a fraudulent automobile loan scheme. At sentencing, the district court determined the appropriate Sentencing Guidelines range was 108 to 135 months' imprisonment, and sentenced House to serve 108 months. House appeals from that sentence, arguing that the district court improperly applied a three-level enhancement by finding that House was a manager or supervisor of the scheme, pursuant to § 3B1.1(b) of the Sentencing Guidelines. We affirm.

         I. BACKGROUND

         From approximately February to December 2013, House and his co-defendants participated in a scheme to secure automobile loans-and retain a percentage of the proceeds-by falsifying income and vehicle information for individuals who were seeking personal loans.

         House owned a wholesale car dealership called Rolling Auto. In September 2012, he approached co-defendant Crystal Williams, who was working for a lending consulting company at the time, and proposed a plan in which they would seek loans by falsely stating that Rolling Auto intended to sell cars to loan applicants. He picked an unreliable partner; Williams entered into a plea agreement with the government and provided the core testimony at trial against House and co-defendants Brian Hughes and Murchael Turner. She testified that, as part of the scheme, she prepared loan applications for 19 different borrowers, none of whom would actually purchase a vehicle from Rolling Auto. On those loan applications, Williams falsified details such as registration fees, balances due, taxes owed, and the names of salespersons. House provided her with the details of vehicles she could use on false purchase orders that would correspond with the amounts sought by the borrowers. Specifically, House supplied her with the make, model, color, year, vehicle identification numbers, mileage, and price for vehicles that neither he nor Rolling Auto owned.

         Williams would ensure that the loan checks were made payable to Rolling Auto, and instructed the borrowers to send the loan checks to Rolling Auto's address. In some cases, House deposited the checks in Rolling Auto's business checking account at TCF Bank, retaining a certain percentage of the funds, and distributed the remainder to Williams and the borrower, based on the amounts Williams provided. In other cases, House cashed the checks at a currency exchange before retaining his percentage and distributing the remainder. House signed the checks in his role as owner of Rolling Auto.

         In March 2013, TCF returned one of the checks House had deposited, which caused the Rolling Auto business account to go into the negative. Williams anticipated that the bank might close the account as a result, so she suggested that they open another account with Bank of America. House provided her with Rolling Auto's employer identification number and other information, and she opened a new account in Rolling Auto's name. House continued to deposit checks into that account and distribute the funds as he had done previously.

         In July 2013, credit unions began denying loans to Rolling Auto. In response, Williams proposed creating a new business to use as a front for the car loans. Williams drafted articles of incorporation, which she sent to House for review, for a company called Xpress Automotives; the business was not operational, nor did it own a car lot or any cars. After Williams filed the paperwork, House used Xpress Automotives to apply for and receive nine additional loan checks.

         House was personally involved in applying for 51 loans to credit unions for fictitious auto sales in 2013. Thirty-six of those were approved, resulting in total loan proceeds of $1.1 million. House personally kept $105, 589.96 of that money, which was the most in relation to his co-defendants. Williams took approximately $60, 000, Hughes took approximately $68, 000, and Turner approximately $2, 500.

         On March 19, 2015, a jury found House guilty of all six counts of bank fraud against him. Prior to his sentencing, the United States Probation Office filed a Presentence Investigation Report (PSR), which recommended a total offense level of 31, combined with a criminal history category of II, to reach a Sentencing Guidelines range of 121 to 151 months' imprisonment. As part of its calculation, the PSR included a four-level enhancement for being the organizer or leader of criminal activity, pursuant to § 3B1.1(a) of the Sentencing Guidelines.

         House and the government each filed a sentencing memorandum in response to the PSR. The government recommended a three-level enhancement for being a manager or supervisor, pursuant to § 3B1.1(b). Among his other objections, House contended that no enhancement under that section was warranted, ...

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