United States v. Wilson Titus , 821 F.3d 930 ( 2016 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 15-3054
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
WILSON TITUS,
Defendant-Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
13-cr-761 — Charles R. Norgle, Sr., Judge.
____________________
ARGUED APRIL 19, 2016 — DECIDED MAY 12, 2016
____________________
Before BAUER, POSNER, and FLAUM, Circuit Judges.
FLAUM, Circuit Judge. Defendant Wilson Titus pled guilty
to bank fraud arising out of an extensive mortgage fraud
scheme involving ten defendants and fifty-two residential
properties. He was sentenced to thirty-six months in prison.
He appeals, claiming that his sentence was procedurally un-
reasonable because the district court did not support the sen-
tence with sufficient factual findings. We agree with Titus,
2 No. 15-3054
and accordingly, we vacate his sentence and remand for re-
sentencing.
I. Background
In September 2013, ten defendants, including Titus, were
indicted in connection with a mortgage fraud scheme involv-
ing multiple residential properties in the Chicago area. The
indictment alleged that defendants obtained mortgages to fi-
nance the purchase of the properties using straw buyers who
were dishonest on their mortgage loan applications. Defend-
ants allegedly recruited the straw buyers, helped them fill out
fraudulent mortgage applications, and then took kickbacks
from the loans. The indictment alleged that the mortgage
lenders incurred losses of over eight million dollars when the
mortgages were not fully recovered upon the sale or foreclo-
sure of the properties. The scheme operated from August 2004
through October 2012 and involved approximately fifty-two
fraudulent mortgage loans.
Titus was charged in six counts of the indictment and pled
guilty to Count 3—bank fraud in violation of 18 U.S.C.
§ 1344—on April 2, 2015. Titus submitted a plea declaration
in which he admitted to participating in a scheme to obtain
money from financial institutions by using false representa-
tions. He claimed that his fraud was limited to two fraudulent
mortgage applications. For the first, involving a property lo-
cated on South Richmond Street, he explained that he intro-
duced the straw buyer to the scheme’s ringleader, co-defend-
ant Keith Austin. Titus then accompanied the buyer to the
mortgage closing. He admitted that as he helped the buyer
sign the mortgage application, he noticed that she had mis-
represented her employment. After closing, Titus accepted
$5,000 from the proceeds of the mortgage loan for repair work
No. 15-3054 3
that he never performed. Titus also admitted to accompany-
ing the same straw buyer to a mortgage closing for a different
property located on West End Avenue. Again, Titus encour-
aged the buyer to sign the loan application even though it did
not accurately state her employment.
After Titus’s guilty plea, the government provided an ex-
plication of the offense asserting that Titus was involved in
eighteen out of the fifty-two fraudulent mortgage loans ob-
tained in the scheme. The case agent from the Department of
Housing and Urban Development provided the probation of-
fice with a spreadsheet detailing the eighteen fraudulent
loans in which Titus allegedly took part. 1 The presentence in-
vestigation report (“PSR”) adopted the government’s asser-
tion that Titus was involved in eighteen fraudulent loans and
estimated that the total loss attributable to Titus was at least
$3,334,627. The PSR explained that this loss amount would in-
crease once the remaining fraudulently-purchased properties
were sold. 2
In calculating the sentence range, the PSR began with a
base offense level of 7 and added 18 levels because the loss
amount was between $2.5 million and $7 million. See U.S.S.G.
§ 2B1.1. 3 The PSR added another 2 levels because the offense
involved ten or more victims. See § 2B1.1(b)(2)(A)(i). Because
Titus accepted responsibility, the PSR subtracted 3 levels. See
1 This spreadsheet is not in the record before this Court.
2
At the time the PSR was prepared, six of the eighteen fraudulently-
purchased properties had not yet been sold.
3 The probation office applied the 2014 Sentencing Guidelines Man-
ual.
4 No. 15-3054
§ 3E1.1. As a result, the total offense level was 24, resulting in
a sentencing range of 51 to 63 months in prison.
The government filed a sentencing memorandum agree-
ing with the guidelines calculation contained in the PSR, ex-
cept that the government also recommended a 2-level in-
crease for the use of sophisticated means under
§ 2B1.1(b)(10)(C). In light of that 2-level increase, the total rec-
ommended offense level was 26, with a corresponding sen-
tencing range of 63 to 78 months in prison.
The government’s sentencing memorandum also asked
for restitution in the amount of $3,760,859. The government
did not explain how it arrived at this figure but contends on
appeal that it more accurately reflects the actual losses at-
tributable to Titus’s conduct than the PSR loss amount, which
only accounted for twelve fraudulent mortgage loans.
Titus raised several objections to the PSR. He argued that
he should only be held responsible for fraud associated with
three properties—the South Richmond and West End proper-
ties referred to in his plea declaration, and a third property
located in Eggleston—because he was unaware that the work
he performed for the other properties was in furtherance of
the fraudulent scheme. 4 Because the government’s chart
showed that the loss amount for those three properties was
only $987,750, Titus argued that he was entitled to a lower of-
fense level adjustment. See § 2B1.1(b)(1). He also contended
4 For the twelve contested properties, there is evidence that Titus acted
as an attorney at one of the closings, sought and obtained “water certifica-
tions” for certain properties, and sometimes received payment for “rehab
work” that was never performed.
No. 15-3054 5
that the government had not shown that the sophisticated
means enhancement was warranted.
At Titus’s sentencing hearing, the district court cited the
relevant conduct guideline, § 1B1.3, which provides that in a
case involving jointly undertaken criminal activity, a defend-
ant is responsible for actions of others that are reasonably
foreseeable in connection with that criminal activity. Relying
on that guideline, the court rejected Titus’s argument that he
should only be held responsible for three fraudulent transac-
tions, explaining that the “most conservative view of this mat-
ter would be that he is responsible for at least another five.”
Later, the district court determined that Titus was responsible
for “no less than eight” of the fraudulent transactions. The
court rejected Titus’s challenge to the sophisticated means en-
hancement and adopted the offense level, guideline range,
and restitution amount (to be paid jointly and severally with
the other co-defendants) 5 proposed by the government. Alt-
hough the guidelines provided for at least 63 months in
prison, the district court imposed a 36-month sentence in light
of Titus’s age of 66 at the time of sentencing and his likelihood
of recidivism. This appeal followed.
II. Discussion
Titus argues that the district court committed procedural
error at sentencing because it did not make sufficient clear
and explicit factual findings supporting the sentence. In par-
ticular, Titus advances that the district court did not articulate
the number of fraudulent transactions that it was holding him
5 The district court imposed a restitution amount of $3,760,859, the
number proposed by the government, but erroneously attributed it to the
PSR.
6 No. 15-3054
responsible for, nor did it make factual findings supporting
the amount of restitution, the imposition of certain sentence
enhancements, and the total offense level. We review claims
of procedural sentencing error de novo. United States v. Boat-
man, 786 F.3d 590, 593 (7th Cir. 2015).
In arguing that he is entitled to a resentencing, Titus points
to United States v. Bokhari, 430 F.3d 861 (7th Cir. 2005), in
which we vacated two defendants’ sentences for mail fraud
because of procedural error. The Bokhari defendants had ob-
jected to the sentence enhancements and loss amount recom-
mended by the PSR, but the district court did not address
those objections when sentencing them. Id. at 863–64. We ex-
plained that because of that error, the district court “did not—
and could not—calculate the total offense level and corre-
sponding sentencing range with requisite specificity.” Id. In
addition, we deemed the district court’s statement that the to-
tal offense level was “somewhere in the 26 range” insuffi-
ciently specific. Id. at 864. We concluded: “[T]he sentencing
record here lacks sufficient clarity for this court to determine
how—or if—the district court made final rulings on the de-
fendants’ objections to the PSR, much less the district court’s
methodology and final determinations pertaining to total of-
fense level under the Guidelines.” Id.As in Bokhari, the sentencing record in this case lacks suf-
ficient “explicit and clear factual findings and determina-
tions.” Id. Although the district court likely had a reasoned
basis for holding Titus responsible for all eighteen charged
No. 15-3054 7
transactions, 6 the court did not make that finding explicit. In-
stead, the court stated twice that it was holding Titus respon-
sible for at least eight transactions. Without more, we have no
way of knowing whether the court held Titus responsible for
as few as eight, or as many as eighteen, fraudulent transac-
tions.
Articulating the precise number of fraudulent transactions
was particularly important because the district court presum-
ably applied a sentence enhancement for crimes involving ten
or more victims. 7 The PSR explained that the adjustment was
6 When criminal conduct is jointly undertaken, as it was here, relevant
conduct includes “all reasonably foreseeable acts and omissions of others in fur-
therance of the jointly undertaken criminal activity.” United States v. Aus-
tin, 806 F.3d 425, 430 (7th Cir. 2015) (emphasis added); see also U.S.S.G.
§ 1B1.3(a)(1)(B). Titus does not dispute that all of the eighteen charged
transactions were part of the scheme spearheaded by Austin. Titus admit-
ted to recruiting buyers and helping them fill out fraudulent paperwork
in connection with three of those fraudulent transactions. As for the oth-
ers, Titus admitted to performing work on the underlying properties and
receiving payments from Austin at the closings. Even assuming that Titus
did not know that he was engaged in fraud when he was working on the
other properties, it would not have been error for the district court to find
that the fraud was reasonably foreseeable.
7 The district court articulated the offense level and the sentencing
guidelines range but did not address any of the sentence enhancements
recommended by the PSR. Nonetheless, we assume that the district court
applied these enhancements because the offense level of 26 would not
make sense otherwise.
The district court did address the sophisticated means enhancement
proposed by the government and properly resolved Titus’s objection to it
by explaining:
8 No. 15-3054
appropriate because the offense “resulted in actual losses to
11 different lenders in connection with 18 fraudulently obtained
mortgage loans” (emphasis added). Although Titus did not ob-
ject to this sentence enhancement before or during his sen-
tencing hearing, the district court was required to make fac-
tual findings supporting it. United States v. Galbraith, 200 F.3d
1006, 1013–14 (7th Cir. 2000). Because the enhancement was
not contested, the court could have adopted the PSR’s find-
ings without making independent findings on the record. See
id. But the district court did not state that it accepted the PSR’s
account of the facts, nor did it make factual findings of its own
to support the imposition of the sentence enhancement. And
without knowing the extent of Titus’s participation in the
scheme and the number of victims affected by it, we have no
way of evaluating the propriety of this enhancement.
Likewise, without knowing how many fraudulent trans-
actions the court attributed to Titus, we cannot evaluate the
reasonableness of imposing an 18-level enhancement based
on a loss amount of $2.5 million to $7 million. Titus contended
that the loss amount was much lower, closer to $1 million.
Although we know that the district court disagreed with this
low figure, we cannot be certain that the loss amount ex-
[Titus] knew that his offense conduct and relevant con-
duct involved the use of false documents, false verifica-
tions of rent and employment, the use of aliases, corrup-
tion and participation of loan officers, and the defendant
misrepresented himself along the way. There is enough
to support an increase of two levels based upon sophisti-
cated means….
No. 15-3054 9
ceeded $2.5 million without specific factual findings, includ-
ing the number of fraudulent transactions for which Titus was
held responsible.
The fact that the district court awarded $3,760,859 in resti-
tution is insufficient to justify the loss amount enhancement
because the restitution award also lacked factual support. The
district court merely adopted the figure contained in the gov-
ernment’s sentencing memorandum and erroneously at-
tributed it to the PSR. Without any factual support for the fig-
ure, we cannot evaluate whether $3,760,859 is a reasonable
restitution amount. See United States v. Hosking, 567 F.3d 329,
333–34 (7th Cir. 2009) (remanding a restitution award “based
on inadequate explanation and insufficient reasoning” (cita-
tion and internal quotation marks omitted)).
The government asks us to assume that the district court
found that Titus’s participation extended to all eighteen prop-
erties because this is the only way to arrive at a total offense
level of 26 and a restitution amount above $3.7 million. But it
is not our role to justify a sentence that lacks a sufficient ex-
planation with our best guess for why the court imposed the
sentence that it did. “We have repeatedly held that it is the
role of the district court—not this Court—to make the initial
factual findings necessary to support a sentencing calcula-
tion.” Bokhari, 430 F.3d at 864.
III. Conclusion
For the foregoing reasons, we VACATE Titus’s sentence
and REMAND for resentencing in accordance with this opin-
ion. In reaching this decision, we make no comment on the
substantive reasonableness of the sentence imposed, which is
a matter that we leave open for the district court on remand.