The US Court of Appeals for the Ninth Circuit recently affirmed a restitution order in favor of both the originator and purchaser of two fraudulently obtained mortgages under the Mandatory Victim Restitution Act (MVRA). According to the Ninth Circuit, from 2006 to 2008, Defendant Marco Luis was involved in a conspiracy to engage in monetary transactions in property with fraudulently obtained loans in violation of 18 U.S.C. §§ 1956(h) and 1957. Luis falsely stated the source and amount of co-conspirators’ earnings in order to obtain four mortgages, which he then used to purchase parcels of land. By September 2009, all four loans went into default and their fraudulent nature was discovered during a criminal investigation of one of Luis’s co-conspirators. In March 2012, Luis pled guilty to two counts of conspiracy and was sentenced to four years in jail. The District Court ordered restitution to the originator of two mortgages and the purchaser of the other two. Luis appealed.
The Ninth Circuit affirmed the restitution order as mandatory under the MVRA because Luis was convicted of an offense against property, and the owners of the mortgages were identifiable victims who suffered pecuniary loss. The Ninth Circuit held that an offense against property did not require physical damage to property, as Luis argued, and that any offense that involves pecuniary loss met the requirement. The Ninth Circuit also held that under the MVRA a loan purchaser is a victim if the defendant fraudulently obtained the loan and the fraud was not discovered until after the purchase. The Ninth Circuit therefore found an identifiable victim for all four mortgages.
The Ninth Circuit affirmed the order, but vacated the District Court’s calculation with respect to the amount of restitution owed to the loan purchaser. The Ninth Circuit held that the District Court erred by calculating the restitution amount in the same way for both the originator and the purchaser. The Ninth Circuit held that the amount for the loan purchaser must be based on the value of the loans when purchased rather than the unpaid principal balance (which is the formula for a loan originator).
United States v. Luis, No. 13-50020 (9th Cir. Aug. 28, 2014).