United States v. Marc Engelmann , 720 F.3d 1005 ( 2013 )

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 12-1343
___________________________
United States of America
lllllllllllllllllllll Plaintiff - Appellee
v.
Marc Robert Engelmann
lllllllllllllllllllll Defendant - Appellant
____________
Appeal from United States District Court
for the Southern District of Iowa - Davenport
____________
Submitted: June 3, 2013
Filed: July 30, 2013
____________
Before BYE, GRUENDER, and SHEPHERD, Circuit Judges.
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SHEPHERD, Circuit Judge.
This case is before us after our limited remand in United States v. Engelmann,
701 F.3d 874 (8th Cir. 2012). Marc Robert Engelmann was convicted of conspiracy
to commit bank and wire fraud under 18 U.S.C. § 371, bank fraud under 18 U.S.C.
§ 1344, and wire fraud under 18 U.S.C. § 1343. The district court1 sentenced him to
36 months imprisonment and ordered him to pay a total of $392,937.73 in restitution
to three different financial institutions. Engelmann appealed his conviction and
sentence, and we ordered a limited remand for the district court to conduct an
evidentiary hearing concerning one of Engelmann’s arguments and to reconsider
Engelmann’s motion for a new trial after that hearing. See Engelmann, 701 F.3d at
879. We retained jurisdiction to address all of Engelmann’s points on appeal after
these further district court proceedings.2 Id. The district court held the evidentiary
hearing and issued an opinion. We now affirm Engelmann’s conviction and sentence.
II.
Engelmann was a real estate attorney and represented a seller in nine different
transactions involving a “dual price” purchasing agreement. Through these
agreements, the buyers and sellers provided lenders with inflated sales prices to
secure higher loan amounts, and then the buyers pocketed the difference between the
inflated and actual amounts. The buyers went into first-payment default on all nine
mortgages, and the properties were sold at sheriff’s sales or short sales.
Engelmann’s defense at trial was that he did not have the requisite intent to
defraud because he thought the lenders knew of the dual pricing scheme. He
requested the following jury instruction:
1
The Honorable James E. Gritzner, Chief Judge, United States District Court
for the Southern District of Iowa.
2
Judge Gruender dissented from the limited remand because he “would affirm
the district court’s decision on this issue, and would proceed to the other matters
raised in Engelmann’s appeal.” Engelmann, 701 F.3d at 883 (Gruender, J.,
dissenting).
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One of the issues in this case is whether the defendant acted in
good faith. Good faith is a complete defense to the charge of conspiracy
to commit bank and wire fraud (Count 1), bank fraud (Counts 2 and 3)
and wire fraud (Counts 4 thru 9) if it is inconsistent with the defendant
acting to conspire with one or more other persons to commit bank and
wire fraud under element 1 of Count 1, or the intent to defraud under
element 2 of the bank fraud counts and element 2 of the wire fraud
counts.
Evidence that the defendant acted in good faith may be considered
by you, together with all the other evidence, in determining whether or
not he acted with intent to defraud.
Fraudulent intent is not presumed or assumed; it is personal and
not imputed. One is chargeable with his own personal intent, not the
intent of some other person. Bad faith is an essential element of
fraudulent intent. Good faith constitutes a complete defense to one
charged with an offense of which fraudulent intent is an essential
element. One who acts with honest intention is not chargeable with
fraudulent intent. Evidence which establishes only that a person made
a mistake in judgement or an error in management, or was careless, does
not establish fraudulent intent. In order to establish fraudulent intent on
the part of a person, it must be established that such person knowingly
and intentionally attempted to deceive another. One who knowingly and
intentionally deceives another is chargeable with fraudulent intent
notwithstanding the manner and form in which the deception was
attempted.
Appellant’s Addendum 27-28.
The language in the first two paragraphs tracks the Eighth Circuit’s model
good-faith jury instruction for fraud cases. See Eighth Circuit Manual of Model Jury
Instructions: Criminal 9.08 (“Model Instruction 9.08”). The language in the final
paragraph is from a jury instruction that we upheld in United States v. Ammons, 464
F.2d 414, 417 (8th Cir. 1972), and that the model instructions reference as potential
language to include “if appropriate.” See Model Instruction 9.08; id. n.2.
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The district court essentially gave the first two paragraphs of Engelmann’s
requested good-faith instruction but omitted the third paragraph. R. at 77. The other
instructions on the elements of the underlying conspiracy and fraud offenses
explained Engelmann could be convicted only if he “voluntarily and intentionally
joined in the agreement or understanding” while knowing “the purpose of the
agreement or understanding,” R. at 59; that “[a] person who has no knowledge of a
conspiracy but who happens to act in a way which advances some purpose of one,
does not thereby become a member,” R. at 60; and that Engelmann must have acted
“knowingly” and with “intent to defraud,” R. at 66-67.
After the jury began deliberating, it asked the court to define good faith. The
court denied the jury’s request over Engelmann’s objection and directed them to
review the jury instructions they already had available. The jury ultimately found
Engelmann guilty on all counts.
At Engelmann’s sentencing hearing, Engelmann argued that the court could not
enhance his base sentencing level due to the amount of loss involved in the crimes
because the complexity of the sub-prime mortgage market precluded any accurate loss
calculation. The district court rejected this argument and increased Engelmann’s base
offense level by 12 for the amount of loss.
Engelmann also argued at sentencing that the court could not award restitution
under the Mandatory Victims Restitution Act because the lending institutions were
not real “victims” under the statute and because the government could not prove
restitution amounts. The district court rejected each of these arguments and ordered
Engelmann to pay restitution to three companies in the following amounts: New
Century Liquidating Trust ($226,537.34), JP Morgan Chase ($108,560.48), and
Lehman REO-ALS ($57,839.91).
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Meanwhile, after the jury’s verdict, a trial observer contacted the district court
to report that he had seen two of the government’s witnesses, FBI Special Agents Jeff
Huber and Jim McMillan (collectively “the Agents”), speaking outside the courtroom
about testimony that Agent Huber had given at trial.3 A witness sequestration order
was in place throughout the trial. Agent Huber was the government’s designated case
agent and consequently remained in the courtroom throughout the trial. Agent
McMillan was called as a rebuttal witness following Engelmann’s trial testimony.
Both Agents testified that Engelmann essentially confessed to the fraud when they
jointly interviewed him during their investigation. During closing arguments, the
government emphasized that Agent McMillan’s testimony about Engelmann’s
confession was especially credible because he had not heard Agent Huber’s testimony
before giving his own.
Engelmann moved for an evidentiary hearing concerning the Agents’
conversation and for a new trial, arguing that the conversation violated the court’s
witness sequestration order and prejudiced him. Without holding an evidentiary
hearing, the district court denied the motion for a new trial. We vacated and
remanded for the court to hold an evidentiary hearing on this issue, make
supplemental findings of fact, and then reconsider Engelmann’s motion for a new
trial. See Engelmann, 701 F.3d at 879.
At the evidentiary hearing following remand, three trial observers testified that
they saw the Agents speaking outside the courtroom during a trial recess. Two
testified that they could not hear anything that was said. The third witness, the
individual who originally contacted the district court, testified that he could only
remember overhearing someone in the Agents’ vicinity say, “We had Engelmann at
his office.”
3
A more detailed account of the this observer’s initial allegations can be found
in our earlier opinion. See Engelmann, 701 F.3d at 876.
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The Agents and one of the government’s trial attorneys, who was with the
Agents during the conversation in question, also testified at the evidentiary hearing.
All three testified that Agent Huber did not disclose details of his trial testimony to
Agent McMillan during this conversation. Agent McMillan testified that Agent
Huber did tell him generally that “Engelmann denied making certain statements
during our interview,” but Agent McMillan said that Agent Huber never disclosed
details of any witness’s testimony or tried to influence Agent McMillan’s upcoming
testimony. Agent Huber and the government’s trial attorney further testified that they
never disclosed details of any witness’s trial testimony to Agent McMillan at any
other point during the trial.
Additionally, Agent McMillan testified that no one initially informed him that
he should not observe other witnesses’ trial testimony. As a result, he entered the
courtroom on several occasions before his own testimony on rebuttal and observed
brief portions of the testimony of one of Engelmann’s co-conspirators and of an
expert witness called by the defense. He also observed a minute or less of
Engelmann’s trial testimony before Agent Huber approached him and told him to
leave the courtroom because he might be called as a rebuttal witness. According to
his testimony, this was the first time that anyone informed him he should not be in the
courtroom during other witnesses’ testimony.
The district court found that Agent McMillan violated the sequestration order
by being in the courtroom during portions of three witnesses’ testimony. District Ct.
Order 11, Mar. 6, 2013, ECF No. 149. However, the court found that the violation
did not prejudice Engelmann because the testimony that McMillan overheard “bore
no direct relationship to” and was not “in any way pivotal to” to the testimony that
he ultimately gave. Id. The district court further held that because there was no
evidence that the out-of-court conversation between the Agents involved disclosure
of specific trial testimony, and because Agent McMillan’s testimony was on the
discrete topic of his interview of Engelmann and was fully consistent with his
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contemporaneous notes concerning that interview, the conversation neither violated
the sequestration order nor prejudiced Engelmann. Id. at 12-13. The district court
consequently denied Engelmann’s motion for a new trial. Id. at 14.
With the evidentiary hearing completed, this case returns to us following our
limited remand.
II.
Engelmann argues the district court erred by (1) refusing to give his requested
good-faith instruction; (2) denying his motion for a new trial based on violations of
the witness sequestration order; (3) increasing his base offense level by 12 for the
amount of loss involved in his convictions; and (4) ordering him to pay $392,937.73
in restitution.
A.
Engelmann argues that the district court’s good-faith instruction did not
sufficiently define good faith or explain that fraudulent intent must be personal to
Engelmann and cannot be imputed from co-conspirators. He asserts that the jury’s
request for the court to define good faith illustrates the instruction’s inadequacy.
“We review the district court’s jury instructions for abuse of discretion and will
affirm if the instructions, taken as a whole, fairly and adequately submitted the issues
to the jury.” United States v. Whitehill, 532 F.3d 746, 751 (8th Cir. 2008) (internal
quotation and alteration marks omitted). “Defendants are entitled to a theory of
defense instruction if it is timely requested, is supported by the evidence, and is a
correct statement of the law, but they are not entitled to a particularly worded
instruction.” Id. at 752. District courts have “considerable discretion in framing the
instructions,” and an instruction is sufficient if it “adequately and correctly covers the
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substance of the requested instruction.” Id. (internal quotation marks omitted).
Good-faith instructions are not evaluated in a vacuum, but rather must be evaluated
“by looking at [the jury instructions] as a whole and in the context of the trial.” Id.We conclude that the district court did not abuse its discretion in giving an
abbreviated form of Engelmann’s requested good-faith instruction. Although
Engelmann claims the jury’s request for the court to further define good faith shows
the instruction given was inadequate, the request can also be construed as
demonstrating that the instructions did, in fact, “direct[] the jury’s attention to the
defense of good faith.” See United States v. Casperson, 773 F.2d 216, 223 (8th Cir.
1985). Moreover, “in responding to a jury’s request for supplemental instruction, it
may be proper at times to simply refer the jury back to the original instructions.”
United States v. Beckman, 222 F.3d 512, 521 (8th Cir. 2000).
Taken as a whole, the jury instructions specified that Engelmann could only be
convicted of the fraud and conspiracy offenses if he “voluntarily and intentionally
joined in the agreement or understanding” while knowing “the purpose of the
agreement or understanding,” R. at 59; that “[a] person who has no knowledge of a
conspiracy but who happens to act in a way which advances some purpose of one,
does not thereby become a member,” R. at 60; and that Engelmann must have acted
“knowingly” and with “intent to defraud,” R. at 66-67. The theory of defense
instruction further explained that good faith was “a complete defense . . . if it is
inconsistent with [Engelmann] acting to conspire with one or more other persons to
commit bank and wire fraud . . . or the intent to defraud,” and that “good faith may
be considered by you, together with all the other evidence, in determining whether
or not [Engelmann] acted with intent to defraud.” R. 77. While Engelmann’s
requested good-faith instruction was more detailed than the instruction the district
court gave, “[t]he jury need not be instructed on every inference that it might draw
bearing on the issue of good faith.” United States v. Ammons, 464 F.2d 414, 417 (8th
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Cir. 1972). Here, the jury instructions “fairly and adequately submitted the issues to
the jury.” See Whitehill, 532 F.3d at 751 (internal quotation marks omitted).
B.
Engelmann argues the district court erred in denying his motion for a new trial
due to witness sequestration violations. The district court found on remand that
(1) the Agents’ out-of-court conversation during trial did not violate the sequestration
order or prejudice Engelmann and (2) although Agent McMillan violated the
sequestration order by observing portions of trial testimony, these violations did not
prejudice Engelmann. “We review a district court’s rulings regarding sequestration
orders for abuse of discretion, granting wide latitude to the court and requiring the
moving party to show prejudice.” United States v. Camacho, 555 F.3d 695, 702 (8th
Cir. 2009). Likewise, “[w]e review the denial of a motion for a new trial for abuse
of discretion and give great deference to the district court’s ruling.” Hohn v. BNSF
Ry. Co., 707 F.3d 995, 1002 (8th Cir. 2013) (internal quotation marks omitted).
The district court did not abuse its discretion in finding that the Agents’ out-of-
court conversation did not violate the sequestration order. As the district court
concluded, the evidence presented at the remand hearing showed that the
conversation did not involve disclosure of any details regarding trial testimony.4
Rather, Agent McMillan was told in general terms in preparation for his upcoming
rebuttal testimony that “Engelmann denied making certain statements during our
interview.” It was within the district court’s discretion to conclude that this
conversation did not violate the sequestration order, but rather was permissible
contact between a government attorney, the government’s case agent, and a
4
Consequently, it was not improper for the prosecutor to note in closing
argument that the Agents had testified consistently regarding their investigatory
interview of Engelmann.
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government witness in preparation for the witness’s trial testimony. See United
States v. Stewart, 878 F.2d 256, 259 (8th Cir. 1989) (“Federal Rule of Evidence 615
. . . does not authorize trial courts to prevent executive branch officials from
conferring with their witnesses.”).
Furthermore, the district court did not abuse its discretion in finding that the
sequestration violations which occurred when Agent McMillan observed trial
testimony did not prejudice Engelmann. Agent McMillan only testified as a rebuttal
witness, and his testimony was limited to Engelmann’s statement to the Agents during
their investigatory interview. The district court found that the testimony Agent
McMillan observed “bore no direct relationship to” and was not “in any way pivotal
to” Agent McMillan’s own later testimony. Engelmann does not contest these
findings on appeal. Consequently, the district court did not abuse its discretion in
finding that Agent McMillan’s sequestration violations did not prejudice Engelmann.
See United States v. Collins, 340 F.3d 672, 681 (8th Cir. 2003) (finding no prejudice
when witnesses “offered testimony on two completely different issues that did not
overlap and did not involve any of the same facts”).
Absent any prejudicial sequestration violations, the district court did not abuse
its discretion in denying Engelmann’s motion for a new trial. We note, however, that
the result of the proceedings on remand illustrate the importance of holding an
evidentiary hearing in this case. The hearing revealed that the government did not
timely advise Agent McMillan that he was subject to a sequestration order since he
was a potential witness. Agent McMillan consequently violated the sequestration
order on several occasions by entering the courtroom to view portions of trial
testimony before Agent Huber finally advised him that he should not be in the
courtroom. Moreover, before the evidentiary hearing, a courtroom observer alleged
that he overheard the Agents discussing details of trial testimony. At the hearing,
however, this observer only testified that he overheard someone in the Agents’
vicinity make a brief reference to Engelmann. The hearing gave Engelmann the
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opportunity to present evidence concerning the Agents’ conduct, which in turn
allowed the district court to meaningfully evaluate Engelmann’s claims of prejudice.
It is important for courts not only to ensure that justice is done, but also to preserve
the appearance of justice so that litigants and the public maintain confidence in our
legal system. Holding an evidentiary hearing in this case furthered these twin goals.
C.
Engelmann argues the district court erred in increasing his base offense level
by 12 due to the amount of loss involved in his convictions. See United States
Sentencing Commission, Guidelines Manual, §2B1.1(b)(1). He asserts that the
district court erred in calculating actual loss by comparing the unpaid balances on the
mortgages to the prices paid for the properties at sheriff’s sales or short sales.
According to Engelmann, this method did not take into account the realities of the
sub-prime mortgage market, where mortgages were regularly repackaged and sold as
securities.5 “The government bears the burden of proving the amount of loss by a
preponderance of the evidence.” United States v. Sample, 213 F.3d 1029, 1034 (8th
Cir. 2000). “We review the district court’s factual findings regarding the amount of
loss for clear error.” Id.5
Subtracting the prices obtained at a sheriff’s sale or short sale of each property
from the unpaid loan balances yielded a “proposed total loss of 470,000 dollars and
some change.” See Sent. Tr. 107. This amount would have resulted in a 14-level
increase under the guidelines. See USSG §2B1.1(b)(1)(H). However, the district
court concluded that “there is reasonable question on the issue of the commercial
reasonableness of the transactions.” Sent. Tr. 107. Consequently, the court was “not
absolutely comfortable that [the loss amount] is in excess of 400,000” and instead
found that the loss amount “is between 200 and 400 thousand; and, therefore, that is
an increase of 12 rather than 14 in the calculation of the guidelines.” Id.
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The guidelines define actual loss as “the reasonably foreseeable pecuniary harm
that resulted from the offense.”6 USSG §2B1.1 comment. (n.3(A)(i)). Reasonably
foreseeable pecuniary harm, in turn, “means pecuniary harm that the defendant knew
or, under the circumstances, reasonably should have known, was a potential result of
the offense.” USSG §2B1.1 comment. (n.3(A)(iv)). “Because the damage wrought
by fraud is sometimes difficult to calculate[,] a district court is charged only with
reasonably estimating the loss using a preponderance of evidence standard.” United
States v. McKanry, 628 F.3d 1010, 1019 (8th Cir. 2011) (internal alterations and
quotation marks omitted).
Here, the district court did not clearly err in basing its actual loss calculation
on the difference between the unpaid loan balances and the prices obtained for the
properties at sheriff’s sales or short sales. This is the method the guidelines
recommend, see USSG §2B1.1 comment. (n.3(E)(ii)), and we have previously upheld
this method in cases involving mortgage fraud, see, e.g., McKanry, 628 F.3d at 1019;
United States v. Parish, 565 F.3d 528, 535 (8th Cir. 2009). Although Engelmann
argues this method does not reflect the realities of a market where mortgages were
being securitized, “[t]he appropriate test is not whether market factors impacted the
amount of loss, but whether the market factors and the resulting loss were reasonably
foreseeable.” Parish, 565 F.3d at 535. It was reasonably foreseeable “that a scheme
premised on false loan applications and inflated real estate prices would unravel, and
that market conditions could exacerbate the losses.” See United States v. Spencer,
700 F.3d 317, 323 (8th Cir. 2012). Although securitization may make it more
difficult to allocate losses among individual banks or investors, the district court’s
method produced a reasonable estimate of total loss. Cf. USSG §2B1.1 comment.
(n.3(F)(iv)) (“In a case involving a fraudulent investment scheme . . . loss shall not
6
“As a general rule, the amount of loss is the greater of actual loss or intended
loss.” United States v. Parish, 565 F.3d 528, 534 (8th Cir. 2009) (citing USSG
§2B1.1 comment. (n.3(A))). Both parties agree that the district court based its loss
calculation on actual loss.
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be reduced by the money or the value of the property transferred to any individual
investor in the scheme in excess of that investor’s principal investment (i.e., the gain
to an individual investor in the scheme shall not be used to offset the loss to another
individual investor in the scheme).”). Thus, the district court did not clearly err in
increasing Engelmann’s base offense level by 12 due to the amount of loss.
D.
Engelmann argues the district court erred in ordering him to pay restitution of
$57,839.91 to Lehman REO-ALS, $108,560.48 to JP Morgan Chase, and
$226,537.34 to New Century Liquidating Trust. He argues that (1) these parties are
not “victims” under the Mandatory Victims Restitution Act, 18 U.S.C. §§ 3663A-
3664 (“MVRA”), and (2) even if they are “victims,” the government did not present
sufficient evidence of the amounts of loss to each victim. “We review de novo the
district court’s interpretation of the [MVRA]. We review for clear error the district
court’s factual determinations underlying an order for restitution, as well as the
district court’s finding as to the proper amount of restitution.” United States v.
Statman, 604 F.3d 529, 535 (8th Cir. 2010) (internal citations and quotation marks
omitted).
1.
The district court properly rejected Engelmann’s argument that Lehman REO-
ALS, JP Morgan Chase, and New Century Liquidating Trust are not “victims” under
the MVRA. The MVRA defines “victim” as “a person directly and proximately
harmed as a result of the commission of an offense for which restitution may be
ordered including . . . any person directly harmed by the defendant’s criminal conduct
in the course of the scheme, conspiracy, or pattern.” 18 U.S.C. § 3663A(a)(2).
Engelmann essentially argues that these three financial institutions are not “victims”
because they are bad actors whose conduct caused the sub-prime mortgage crisis.
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However, New Century was the original lender on seven of the nine mortgages at
issue, and Lehman REO-ALS and JP Morgan Chase each directly or indirectly
acquired the remaining two loans from the original lender. This puts all three entities
squarely within the MVRA’s definition of “victim” as a party “directly and
proximately harmed” by the mortgage fraud conspiracy. See 18 U.S.C.
§ 3663A(a)(2).
2.
The district court did not clearly err in determining the amount of restitution
owed to Lehman REO-ALS, JP Morgan Chase, and New Century Liquidating Trust.
“The burden is on the government to prove the amount of restitution based on a
preponderance of the evidence.” Statman, 604 F.3d at 535 (internal quotation marks
omitted). Restitution awards are “limited to the victim’s provable actual loss.”
United States v. Chalupnik, 514 F.3d 748, 754 (8th Cir. 2008). The court cannot
award restitution to a single victim based on collective losses to a market of which
the victim is a member, nor can the court award a victim restitution on behalf of other
unidentified victims. Id. at 755. Moreover, “general invoices ostensibly identifying
the amount of loss without further explanation are insufficient.” United States v.
Haileselassie, 668 F.3d 1033, 1037 (8th Cir. 2012) (internal quotation and alteration
marks omitted).
Engelmann makes two arguments about why the district court erred in
calculating restitution. First, he challenges the district court’s method of subtracting
prices paid at sheriff’s sales or short sales from unpaid loan balances to calculate the
restitution owed on some of the mortgages at issue. He asserts that this method
ignores the reality of the subprime mortgage market and the fact that mortgages were
being securitized and sold to investors as part of a package. Second, he argues
generally that the district court erroneously relied on the victims’ own claims of loss,
without requiring any additional corroborating evidence.
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With respect to Engelmann’s first argument, the district court’s method of
calculating loss was proper. We previously have stated that “for goods held by a
merchant for sale, lost profits . . . are the proper measure of ‘actual loss.’” Chalupnik,
514 F.3d at 755. This reasoning is equally applicable to Engelmann’s situation
involving residential real estate. To the extent that the government proved a victim
was entitled to collect the payments on a particular mortgage, subtracting the price
paid at a sheriff’s sale or short sale of the property (i.e., the amount the victim
actually collected) from the unpaid loan balance (i.e., the amount the victim was
entitled to collect) would reflect the amount of profit the victim lost on that particular
mortgage. This is true regardless of whether the victim was the original lender or
someone who later acquired the securitized mortgage as part of a package. To the
extent that Engelmann argues the district court should have credited his expert
witness’s testimony that the loss amounts in this case were not provable due to market
conditions, the district court’s implicit rejection of that testimony was a credibility
determination that is “virtually unreviewable” on appeal. See United States v.
Holthaus, 486 F.3d 451, 456 (8th Cir. 2007).
Turning to each individual victim, we hold that the district court did not clearly
err in determining the government proved each loss amount awarded. Agent Huber
testified at sentencing that he reviewed documents and consulted with real estate
agents about the sales of the properties at issue. Sent. Tr. 7. Although none of the
three victims sent a representative to testify at the hearing, we previously have held
that a district court can determine loss amounts by relying on the testimony of a
government agent who spoke with victims about their losses. See United States v.
Smiley, 553 F.3d 1137, 1146 (8th Cir. 2009).
Here, with respect to Lehman REO-ALS, Agent Huber testified that Wells
Fargo was the original lender on the mortgage and that Lehman later purchased the
mortgage from Wells Fargo. Sent. Tr. 22. Agent Huber testified that he was unable
to speak to anyone at Lehman about this property because “Lehman Brothers is no
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longer in existence,” and that the claimed loss amount on the property was
approximately $89,000 according to a “number that was provided to me by Wells
Fargo.” Id. at 22. The district court found that it was “unable to determine the full
amount of the claimed restitution for Lehman REO-ALS” based on the evidence
offered and instead determined that “the amount of restitution payable to Lehman
REO-ALS is the difference between the outstanding loan balance and the sale value,
for a restitution amount of $57,839.91.” Appellant’s Addendum 25. The district
court did not clearly err in determining the government proved, by a preponderance
of the evidence, that Lehman had the right to collect on the mortgage loan. As noted
above, the method the district court used to calculate loss was appropriate.
With respect to JP Morgan Chase, Agent Huber testified that Wells Fargo
originated the mortgage and then sold it to EMC Mortgage, which in turn was bought
out by JP Morgan. Sent. Tr. 24. JP Morgan reported its loss amount as the unpaid
principal balance, plus interest, minus “Initial Billing Proceeds.” Appellee’s
Addendum A9. Huber explained that this latter number was the price paid at the
sheriff’s sale. Sent. Tr. 23. Although JP Morgan originally reported the price as
$44,697.92, Appellee’s Addendum A9, Agent Huber testified at sentencing that the
true price was $50,560, Sent. Tr. 25. In its restitution award, the district court stated
it was using the higher sales price to calculate restitution, apparently again basing the
award on the difference between the unpaid loan balance and the price obtained at the
sheriff’s sale, and then adding accrued interest. Cf. Appellant’s Addendum 25.7 The
7
JP Morgan Chase provided documentation showing an unpaid principal
balance of $107,840.33 and accrued interest of $53,280.15. Appellee’s Addendum
A9. Subtracting the $50,560 sales price from the principal and interest reported by
JP Morgan yields $110,560.48. The district court appears to have miscalculated this
figure by $2,000 since it awarded restitution of $108,560.48. See Appellant’s
Addendum 25. On appeal, however, neither Engelmann nor the government pointed
out this mathematical error, and neither party is arguing that the restitution awarded
to JP Morgan Chase was too low. We therefore decline to correct the error. Cf.
Commercial Prop. Invs., Inc. v. Quality Inns Int’l, Inc., 61 F.3d 639, 650 (8th Cir.
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district court did not clearly err in awarding restitution of $108,560.48 to JP Morgan
Chase.
With respect to New Century, Huber testified that New Century sold six loans
it originated in this case to Morgan Stanley. Sent. Tr. 17. When the buyers defaulted
on the first payment of all of these mortgages, New Century had to pay penalties to
Morgan Stanley per their contractual agreement. Id. 17-19. New Century submitted
documentation showing the amount of these penalties. Appellee’s Addendum A3;
Sent. Tr. 20. New Century also submitted documentation showing a loss on a seventh
property, apparently calculated by subtracting the price obtained at a short sale from
the unpaid loan balance. Cf. Appellee’s Addendum A5. The district court did not
clearly err in awarding restitution of $226,537.34 to New Century Liquidating Trust.
III.
Accordingly, we affirm Engelmann’s conviction and sentence.
GRUENDER, Circuit Judge, concurring in the judgment.
I concur in the judgment, and I join the court’s opinion except with respect to
the final paragraph in Section II.B. I continue to believe that Engelmann failed to
present sufficient evidence to require an evidentiary hearing at the time the district
court took up his motion for a new trial, and regardless what we now know in
hindsight, “[a]n appellate court can properly consider only the record and facts before
the district court.” See Huelsman v. Civic Ctr. Corp., 873 F.2d 1171, 1175 (8th Cir.
1989); see also Fed. R. App. P. 10(a); United States v. Drefke, 707 F.2d 978, 983 (8th
Cir. 1983) (per curiam). Accordingly, I continue to believe that the district court
1995) (“Because neither party has raised any objection . . . we decline to undertake
an independent investigation of that evidence . . . .”).
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correctly denied Engelmann’s motion for a new trial without a hearing for the reasons
stated in my dissent from the court’s prior opinion in this matter. See United States
v. Engelmann, 701 F.3d 874, 879-883 (8th Cir. 2012) (Gruender, J., dissenting).
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