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United States v. Tartareanu

United States Court of Appeals, Seventh Circuit

March 8, 2018

United States of America, Plaintiff-Appellee,
Adrian Tartareanu and Daniela Tartareanu, Defendants-Appellants.

          Argued February 7, 2018

         Appeals from the United States District Court for the Northern District of Indiana, Hammond Division. No. 2:12-cr-00175 - Philip P. Simon, Judge.

          Before Bauer, Rovner, and Sykes, Circuit Judges.


         On October 23, 2013, a jury convicted Adrian and Daniela Tartareanu of wire fraud in violation of 18 U.S.C. § 1343 and conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349. They appealed their original sentences, and we remanded for resentencing. United States v. Litos, 847 F.3d 906 (7th Cir. 2017). On remand, the district court sentenced Adrian to 36 months' imprisonment, Daniela to 21 months' imprisonment, and imposed a $30, 000 fine on each of them. In this appeal, the Tartareanus challenge the district court's intended loss calculation under U.S.S.G. § 2B1.1, as well as its decision to deny Daniela a minor role reduction under U.S.S.G. § 3B1.2. We affirm.

         I. BACKGROUND

         In 2005, Adrian and co-defendant Minas Litos established a company called Red Brick Investment Properties, through which they intended to purchase, rehabilitate, and resell homes. Daniela, the only employee with a real estate license, served as Red Brick's office manager. The group sought out buyers who either did not have good enough credit or enough money for a down payment (or both) and assisted them in applying for mortgage loans. Between June 2007 and March 2009, Red Brick sold 45 houses.

         Red Brick provided the buyers with the down payment funds for each sale, but the loan applications falsely stated that the buyers were putting up their own money. Litos and the Tartareanus also assisted the buyers in providing false information on the applications indicating their creditworthiness for the loans, including fictitious incomes, nonexistent bank accounts, and other fake assets. The Tartareanus attended the closings as the seller's representatives and signed documents falsely stating that no portion of the down payments had been paid by the seller or any other third party.

         After closing, Red Brick provided the buyers with further undisclosed payments, which were intended to ensure that the buyers could make at least two payments before defaulting on their loans. Red Brick told the buyers that the properties had renters either present or incoming, though most buyers ultimately received insufficient rental income to cover their loan payments.

         Bank of America provided the loans for 32 of the 45 Red Brick sales, all of which were processed by loan officer Stepha- nie Riggs. In March 2008, Bank of America opened an internal investigation into Riggs' loan files. During the investigation she acknowledged that it was possible that the loan applications contained false income and assets, but denied falsifying any of that information herself. Bank of America determined there was no conclusive evidence that Riggs had been involved in any dishonest act, but it fired her in April 2009, citing a loss of trust and confidence.

         After a four day trial, a jury found the Tartareanus guilty of 16 counts of wire fraud and one count of conspiracy to commit wire fraud. The district court originally sentenced Daniela to 21 months' imprisonment, Adrian to 36 months' imprison- ment, and ordered $893, 015 in restitution to be paid jointly and severally to Bank of America. On appeal, we remanded for resentencing, holding that Bank of America was not a proper victim for purposes of a restitution order because it was deliberately indifferent to the many warning signs regarding the borrowers' inability to repay their loans. Litos, 847 F.3d at 908.

         On remand, the United States Probation Office filed a revised Presentence Investigation Report (PSR). It recom- mended a total loss amount of $1, 835, 861, which was the same as its original recommendation. The Tartareanus objected in their sentencing memoranda, arguing that the court should exclude Bank of America's losses from that calculation because it was not a "victim" that suffered an actual loss. The govern- ment contended that Bank of America's losses qualified as an "intended loss" under U.S.S.G. § 2B1.1, and, therefore, were properly included in the loss calculation.

         The Tartareanus also cited a number of factors they contended should mitigate their sentences, pursuant to 18 U.S.C. § 3553(a). They noted the lack of threats and violence, that their fraud involved willing buyers and a complicit bank, their lack of criminal history, and Adrian's conduct while imprisoned to that point. They also submitted affidavits and other documents, which they argued demonstrated their belief that they were operating within the bounds of the law. Additionally, Daniela requested a base offense-level reduction, arguing that she was a minor participant under U.S.S.G. § 3B1.2.

         At their resentencing hearings, the district court rejected the Tartareanus' objections to the loss amount calculation. It found that this was a case of intended loss, and that whether Bank of America was complicit in the scheme or not was irrelevant to the calculation. It determined, therefore, that the total ...

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