United States v. James

FILED
United States Court of Appeals
Tenth Circuit

May 5, 2009
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v. No. 08-1292

TORRENCE K. JAMES,

Defendant-Appellant.

Appeal from the United States District Court
for the District of Colorado
(D.C. No. 1:07-CR-000362-WDM-1)

Submitted on the briefs. *

David M. Gaouette, Acting United States Attorney, Andrew A. Vogt, Assistant
United States Attorney, Denver, Colorado, for Plaintiff-Appellee.

Elizabeth L. Harris, Jacobs Chase Frick Kleinkopf & Kelley, LLC, Denver,
Colorado, for Defendant-Appellant.

Before BARRETT, ANDERSON, and BRORBY, Circuit Judges.

BRORBY, Circuit Judge.

*
After examining the briefs and appellate record, this panel has
determined unanimously to honor the parties’ request for a decision on the briefs
without oral argument See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case
is therefore ordered submitted without oral argument.
 Appellant Torrence James pled guilty to one count of wire fraud and aiding

and abetting, in violation of 18 U.S.C. §§ 2 and 1343, was sentenced to thirty

months imprisonment and three years supervised release, and was ordered to pay

$467,767.31 in restitution, both jointly and severally with two other co-

conspirators. Mr. James appeals the district court’s order of restitution,

contending it erred because the amount is unsupported by the evidence and

greater than the actual losses to all three victim mortgage holders at issue. For

relief, he asks this court to remand his case to the district court to enter a

corrected restitution order. In response, the government concedes the district

court order of restitution exceeds the actual losses sustained by MortgageIt and

Specialized Loan Servicing – two of the three victim mortgage holders. However,

it disputes Mr. James’s proposed calculation as to the amount of restitution owed

to them and to the other mortgage holder, Freedom Mortgage. It asks this court to

remand with instructions for the district court to modify its restitution order

regarding the amount of loss attributable to two of the mortgage holders based on

what it asserts are the correct calculations and affirm the district court’s

restitution order as to the amount attributable to the third victim mortgage holder,

Freedom Mortgage. We exercise jurisdiction pursuant to 28 U.S.C. § 1291 and

remand, in part, and affirm, in part, the district court’s restitution order.

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 I. Background

For the purposes of this appeal, we find it unnecessary to recount in full

detail the interstate wire fraud transfer scheme involved in the count charged,

other than to provide first a general account of the scheme and then some of the

relevant undisputed facts underlying that scheme and the parties’ arguments

concerning calculation of the actual losses attributable to each victim mortgage

holder and the proper restitution to be awarded.

In short, in late 2006, Mr. James and others arranged for and facilitated

Tremayne Miller’s purchase of three homes using the name and identification of

an individual whose identity had been stolen. After Mr. Miller obtained loans for

the purchase of those homes from three lenders by using materially false and

fraudulent information, he received money from those lenders for improvements

to the properties which were never made and then failed to pay on the loans,

causing the foreclosure of those properties at a financial loss to the mortgage

holders.

More specifically, Mr. Miller purchased three homes in Colorado, located

at: (1) Stardance Circle, in Longmont (Stardance property); (2) Emerson Street,

in Denver (Emerson property); and (3) Stay Sail Drive, in Windsor (Stay Sail

property). The Stardance property was purchased on November 14, 2006, with a

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loan from MortgageIt in the amount of $975,000. Similarly, the Emerson

property was purchased on November 30, 2006, with a loan from First Magnus

Financial in the amount of $760,000. Finally, the Stay Sail property was

purchased on December 4, 2005, with a loan from Freedom Mortgage in the

amount of $650,000. In each instance, the lenders disbursed funds using

interstate wire transfers. Because the loans covered one hundred percent of the

purchase price, each lender was required to separate the loan amount into first and

second mortgages, and, therefore, each property was financed with two separate

loans from each of the lenders. After closing on each property, the original

mortgage lenders either sold one or both first and second mortgages to another

entity, as follows:

Property Original Total Amt. of 1 st Amt. of 2 nd Miscellaneous
Lender Amount Mortgage & Mortgage &
Financed [Holder] [Holder]

Stardance MortgageIt $975,000 $780,000 $195,000 MortgageIt sold and
Circle [Unknown] [MortgageIt] then repurchased the
2nd mortgage from
Citibank for
$213,785.11.

Stay Sail Freedom $650,000 $520,000 $130,000
Drive Mortgage [Specialized Loan [Freedom
Servicing] Mortgage]

Emerson First Magnus $760,000 Unknown amount Unknown The original lender,
Street Financial [Unknown] amount First Magnus
[Unknown] Financial, declared
bankruptcy and
provided no
additional
information on
current mortgage
holders.

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 As part of the scheme to defraud, Mr. Miller convinced the property sellers

to “kick back” a portion of the selling price or loan money to him to ostensibly

cover needed repairs on the property. These funds were disbursed at closing by

the original lenders and, in two instances, the funds were distributed to a shell

corporation set up by Mr. James called T&T Contractors. In the third instance,

for the Emerson property, the money was funneled to another account, under

another name. The kickbacks to the defendants on the properties totaled

$395,783, and none of that money was ever used for improvements, nor were the

properties ever occupied. Eventually, after no payments were made on the loans,

the mortgage holders foreclosed on the properties and sold those properties at

foreclosure sales for less than the loan amounts due.

Following Mr. James’s arrest and indictment, he pled guilty to one count of

wire fraud and aiding and abetting, in violation of 18 U.S.C. §§ 2 and 1343,

regarding the bank loan and “kick back” scheme involved with the purchase of the

three homes. Pursuant to the plea agreement, Mr. James agreed to pay restitution

to the victim mortgage holders “in amounts to be determined by the time of

sentencing.” R., Vol. 1, Doc. 93 at 1. At the plea hearing, the parties and the

district court confirmed that no restitution amount had yet been determined and

no agreement as to the amount of restitution was reached.

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 Following Mr. James’s guilty plea, a probation officer prepared a

presentence report calculating his sentence under the applicable 2007 United

States Sentencing Guidelines (“U.S.S.G.” or “Guidelines”). The probation officer

calculated Mr. James’s base offense level at seven under U.S.S.G. § 2B1.1(a)(1).

The probation officer then applied a fourteen-level upward adjustment under

§ 2B1.1(b)(1)(H) because the loss attributable to the defendant was more than

$400,000 but less than $1,000,000. To arrive at this figure, the probation officer

subtracted the total amount of resale of the properties after foreclosure from the

total amount financed through loans to Mr. Miller, and then deducted all

identified interest, fees, penalties, and liquidation expenses, for a total loss

amount of $948,082.31. The following chart breaks down information provided

in the presentence report:

Property Original Total Date Amount of Actual Loss Lender Funds
Address Lender Amount Resold Resale Distributed for
Financed Improvements

Stardance MortgageIt $975,000 04/30/08 $623,900 $351,100 $176,865 to
Circle T&T Contr.

Emerson First Magnus $760,000 01/04/08 $417,000 $343,000 $98,000 to
Street Financial Melanie Caple

Stay Sail Freedom $650,000 04/11/08 $428,500 $253,982.31 $120,918 to
Drive Mortgage (per lenders) T&T Contr.

TOTAL TOTAL:
ACTUAL $395,783
LOSS:
$948,082.31

After applying a two-level increase in the offense level for use of

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fraudulent identification and a three-level decrease for acceptance of

responsibility, the probation officer calculated the total offense level at twenty,

which, together with Mr. James’s criminal history category of III, resulted in a

Guidelines range of forty-one to fifty-one months imprisonment. However,

pursuant to an agreement between the parties, they requested a downward variant

thirty-month sentence based, in part, on the lengthy sentence Mr. James received

in another case; accordingly, the district court ultimately imposed a thirty-month

term of imprisonment.

In recommending the amount of restitution, the probation officer

determined the actual losses due to foreclosure sales in the amount of

$948,082.31 was an inappropriate method for calculating the amount of restitution

due under 18 U.S.C. § 3663A because not all of the lenders had retained the

original mortgages and, therefore, did not suffer any actual loss, and some of the

subsequent mortgage holders could not be identified. According to the probation

officer, the only confirmed, reported losses for the purpose of restitution involved

only three of the victim mortgage holders – MortgageIt, Specialized Loan

Servicing, and Freedom Mortgage – which submitted loss statements. The

probation officer calculated the losses they sustained as follows:

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 Property Mortgage Mortgage Amount of Loss Miscellaneous
Holder Held

Stardance MortgageIt 2 nd mortgage $213,785 Cost of its repurchase of
Circle 2 nd mortgage from
Citibank; original
amount of 2 nd mortgage
was $195,000

Stay Sail Drive Specialized 1 st mortgage $123,982.31
Loan Servicing

Stay Sail Drive Freedom Mtg. 2 nd mortgage $130,000

Emerson Street Unknown Unknown Unknown First Magnus declared
(original mtg. bankruptcy and no
holder was additional information
Financial was submitted by it as
Corp.) to the 1 st or 2 nd
mortgage holders or its
losses, if any.

TOTAL AMOUNT
OF LOSS:
$467,767.31

As shown, the recommended restitution amount, as estimated by the probation

officer, was $467,767.31. Because no information could be obtained as to losses

by the mortgage holders retaining the mortgages on the Emerson property, no

restitution was awarded regarding that $760,000 loan and it is not at issue on

appeal.

Mr. James objected to the presentence report concerning the recommended

amount of restitution, generally claiming he did not know if the claimed losses

were accurate for the purpose of calculating the amount of loss or restitution.

Nevertheless, at sentencing, Mr. James’s attorney ultimately agreed with the

recommended restitution amount by stating, “[s]o the basic way the probation

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officer addressed this is I think appropriate.” R., Vol. 3 at 4. At the conclusion

of the sentencing hearing, the district court ordered Mr. James to pay the amount

of restitution recommended by the probation officer in the amount of

$467,767.31. 1

II. Discussion

On appeal, Mr. James claims the district court erred because the amount of

restitution is unsupported by the evidence and greater than the three identified

mortgage holders’ actual losses. To the extent he did not object to the amount of

restitution at sentencing but instead acquiesced, he acknowledges our review is

for plain error, with which the government agrees. The government also submits

that certain discrepancies in the awarded restitution occurred which constitute an

extraordinary circumstance seriously affecting Mr. James’s substantial rights and

the fairness and integrity of portions of the court’s restitution order, requiring

remand for correction. As a result, we begin with a discussion of our standard of

review.

1
As Mr. James contends, the district court indicated the restitution amount
of $467,767.31 was imposed pursuant to the plea agreement. However, as Mr.
James clarifies, neither the plea agreement nor the colloquy at the plea hearing
suggest he agreed to that specific amount. Instead, as Mr. James points out, he
did not agree to any specific amount but agreed to pay actual losses to the
affected mortgage holders in an amount to be determined by the time of
sentencing.

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 Generally, “[w]e review the district court’s application of the [Mandatory

Victims Restitution Act 2] de novo, review its factual findings for clear error and

review the amount of restitution awarded for abuse of discretion.” United States

v. Gallant, 537 F.3d 1202, 1247 (10 th Cir. 2008), cert. denied, ___ S. Ct. ___,

2009 WL 721006 (U.S. Apr. 20, 2009) (No. 08-9301). However, in this case, the

parties agree Mr. James did not object to the calculation or amount of the

restitution awarded at sentencing so that plain error review is appropriate for

reviewing the restitution awarded. See United States v. Smith, 156 F.3d 1046,

1057 (10 th Cir. 1998). Accordingly, we apply plain error review to Mr. James’s

claims. For Mr. James to prevail on his plain error argument regarding the

amount of restitution, he must “‘show clear or obvious error that affected his

substantial rights, and that seriously affected the integrity of the judicial

proceedings.’” United States v. Johnson, 183 F.3d 1175, 1179 (10 th Cir. 1999)

(quoting United States v. Hatatley, 130 F.3d 1399, 1405 (10 th Cir. 1997)). We

have held a district court may not order restitution in an amount that exceeds the

actual loss caused by the defendant’s conduct, which would amount to an illegal

sentence constituting plain error. See Smith, 156 F.3d at 1057.

2
We also refer to the Mandatory Victims Restitution Act of 1996 as the
“Act” or the “MVRA.” See Pub. L. No. 104-132, 110 Stat. 1227 (codified
principally at 18 U.S.C. § 3663A and enforced under 18 U.S.C. § 3664, as
provided in § 3663A(d)).

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 Applying our plain error review, we address Mr. James’s claims broken

down by property, as follows:

A. Stardance Property

1. Offset Claim Regarding First Mortgage on Stardance Property

Mr. James points out that while MortgageIt sold the first mortgage on the

Stardance property to another unidentified entity for $780,000, the probation

officer failed to reduce its restitution award amount for the second mortgage (the

one MortgageIt retained) with the profit it made from the sale of the first

mortgage. As a result, he claims the amount of restitution awarded to MortgageIt

on the second mortgage should be reduced or offset by any profit it made on its

sale of the first mortgage. The government disagrees, noting that despite its and

the probation officer’s best efforts, no documentation on the first mortgage

transaction was available, and, therefore, the district court properly did not

engage in speculation by offsetting profits from the sale of that mortgage.

Because Mr. James raises the same claim with respect to the Stay Sail property,

we will address this issue later in our discussion.

2. Claim Regarding Second Mortgage on Stardance Property

Mr. James contends, and the government agrees, MortgageIt was

improperly awarded $18,785.11 more in restitution than it should have been

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awarded on the second mortgage for the Stardance Property. In arriving at this

figure, the parties agree the second mortgage on the property in the amount of

$195,000 was sold to Citibank and then subsequently repurchased by MortgageIt

from Citibank for $213,785.11. While MortgageIt claimed a loss of the buy-back

amount of $213,785.11 from Citibank, Mr. James suggests his fraudulent conduct

had nothing to do with the fact MortgageIt later repurchased the loan from

Citibank at a higher amount than the initial loan amount. As a result, he claims

the amount of restitution should be the original second mortgage loan amount of

$195,000, which is $18,785.11 less than the amount claimed as a loss by

MortgageIt and applied by the probation officer and the district court. The

government agrees the loss to MortgageIt was “inexplicably determined to be

$18,785.11 greater than the amount of the second mortgage loan.” Ape. Br. at 7.

As the parties both agree, the amount awarded exceeds the loss caused by the

defendant’s conduct and, therefore, amounts to an illegal sentence. See Smith,

156 F.3d at 1057. As a result, we conclude plain error occurred warranting

remand of this portion of the restitution award to the district court with

instructions to reduce the restitution amount to MortgageIt by $18,785.11. Id.

B. Stay Sail Property

1. Claim Regarding First Mortgage on Stay Sail Property

Mr. James contends, and the government agrees, the probation officer

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incorrectly calculated the restitution amount awarded to Specialized Loan

Servicing, the first mortgage holder on the Stay Sail property. They disagree,

however, on whether the corrected restitution award should be calculated by

applying the actual foreclosure sale amount on that property, at $428,500, or the

assessed value of that property, at $468,000. Specifically, the government agrees

with Mr. James that when calculating the loss to Specialized Loan Servicing the

probation officer erred in relying on that mortgage holder’s stated loss

calculations, which included an inaccurate foreclosure sale price of $396,017.69,

rather than the correct foreclosure sale price of $428,500. As Mr. James explains,

the probation officer subtracted the lender’s inaccurate foreclosure sale amount of

$396,017.69 from the original first mortgage loan amount of $520,000, for a

recommended actual loss to Specialized Loan Servicing of $123,982.31. Both

Mr. James and the government agree that if the correct foreclosure sale amount of

$428,500 had been deducted from the original first mortgage loan amount of

$520,000, it would have resulted in an actual loss of $91,500, rather than the loss

of $123,982.31. Thus, Mr. James claims that, at a minimum, the restitution

amount should be reduced from $123,982.31 to $91,500 – a difference of

$32,482.31. The government agrees this is the amount by which the restitution

award should be reduced in regard to the Stay Sail property.

However, Mr. James alternatively suggests the loss to Specialized Loan

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Servicing should not be calculated based on the foreclosure sale price of $428,500

but should be calculated using the assessed value of the home, which the Larimer

County Assessor’s Office valued at $468,000 weeks after the foreclosure sale on

the property. Mr. James makes this claim, even though he acknowledges the

probation officer used the foreclosure sale price to determine the other mortgage

holders’ losses, rather than the assessed value. By applying the assessed value,

Mr. James asserts the amount of restitution should be the difference between the

original first mortgage loan amount of $520,000 and the assessed value of

$468,000, for an actual loss of only $52,000. Thus, Mr. James is alternatively

claiming the restitution award should be reduced from $123,982.31 to $52,000 – a

difference of $71,982.31. In support, he states the assessed value of the Stay Sail

property is a better measure of the value of the property returned to the mortgage

holder under 18 U.S.C. § 3663A(b)(1)(B)(ii), which requires the court to reduce

the restitution award by the amount of the value of any part of the property

returned to the victim. Mr. James also asserts that under § 2B1.1 cmt. n.3(C)(i)

and our decision in United States v. Messner, 107 F.3d 1448 (10 th Cir. 1997), loss

is ordinarily calculated based on fair market value.

The government disagrees, arguing assessor valuations of real estate for tax

purposes are typically based on sales prices of similar properties within a

specified time period and are therefore somewhat historical in nature and lag

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behind price changes in a rapidly changing market. As a result, it claims no

better measure exists as to what a victim’s actual loss is after foreclosure than the

sale to a ready, willing, and able buyer in an arm’s length transaction.

As the parties agree, the district court erred in applying an inaccurate

foreclosure sale amount in calculating the amount of restitution awarded to

Specialized Loan Servicing, thereby warranting plain error sufficient to remand

the restitution award to the district court for entry of a corrected restitution

amount. The issue now before us is whether the district court should continue to

apply the foreclosure sale amount (as corrected) in calculating the amount of

restitution, or, as Mr. James claims, it should be directed to apply the fair market

value in calculating the restitution amount to be awarded to Specialized Loan

Servicing. In addressing this issue, we are guided by our and other case law, as

well as the language in 18 U.S.C. §§ 3663A and 3664.

Under the MVRA, when an offense involves a scheme, conspiracy, or

pattern of criminal activity, restitution may be ordered for any victim directly

harmed by the defendant’s conduct. See 18 U.S.C. § 3663A(a)(2). Title 18

U.S.C. § 3663A, states, in part:

The order of restitution shall require that such defendant--
(1) in the case of an offense resulting in damage to or loss or
destruction of property of a victim of the offense--

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 (A) return the property to the owner of the property ...; or
(B) if return of the property ... is impossible, impracticable, or
inadequate, pay an amount equal to--
(i) the greater of--
(I) the value of the property on the date of the damage, loss, or
destruction; or
(II) the value of the property on the date of sentencing, less
(ii) the value (as of the date the property is returned) of any part of the
property that is returned.

18 U.S.C. § 3663A(b)(1)(A) and (B) (emphasis added). As the Second Circuit

suggests, § 3663A generally uses the term “value,” and does not limit calculation

of “value” only to the use of the “fair market value” of the property at issue. See

United States v. Boccagna, 450 F.3d 107, 114 (2d Cir. 2006). Instead, subsection

(i) of § 3663A(b)(1)(B) “references ‘the value of the [victim’s] property,’” and

“[s]ubsection (ii) references ‘the value ... of any part of the property that is

returned,’ in other words, the offset value.” Id. (quoting § 3663A(b)(1)(B)(i) and

(ii)). Thus, it instructs the court on what to value – the property – and when to

value it – on the date of the damage, loss, or destruction; or on the date of

sentencing, whichever is greater; or, in the case of the offset value, on the date

the property is returned. See id. However, the statute is silent on the question of

how the referenced property is to be valued. Id. (relying, in part, on United States

v. Simmonds, 235 F.3d 826, 831 (3d Cir. 2000)). As the Boccagna court points

out, “nowhere does the statute reference ‘fair market value’ as the only measure

to be used in making the restitution calculations contemplated by

§ 3663A(b)(1)(B),” but, instead, it “appears to contemplate the exercise of

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discretion by sentencing courts in determining the measure of value appropriate to

restitution calculation in a given case.” 450 F.3d at 114-15. This is demonstrated

further by § 3664(f)(1)(A), which provides, in part, a ‘“court shall order

restitution ... in the full amount of each victim’s losses as determined by the court

....’” Id. (quoting 18 U.S.C. § 3664(f)(1)(A)).

As the Second Circuit further points out, other courts have recognized that

methods other than fair market price may be used in calculating property values,

such as using the foreclosure price as a measure in calculating a property’s value

in bankruptcy proceedings or the replacement price in calculating a property’s

value for restitution under §§ 3663A and 3664. See id. at 115 (relying on BFP v.

Resolution Trust Corp., 511 U.S. 531, 543 n.7 (1994), and Simmonds, 235 F.3d at

832). Indeed, other courts have specifically recognized or used the foreclosure

sale price as a reasonable method of determining the amount of the restitution

award under § 3663A. See United States v. Innarelli, 524 F.3d 286, 288-89, 294

(1 st Cir.) (remanding because district court “did not offset the amount recovered

[by the lender] through the resale of the [real] properties after foreclosure, as

required by statute”), cert. denied, 129 S. Ct. 350 (2008); United States v. Berger,

473 F.3d 1080, 1104, 1108 (9 th Cir. 2007) (upholding as reasonable restitution

award to banks that deducted percentage of money recovered on foreclosed

collateral from the original loan amount); United States v. Oladimeji, 463 F.3d

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152, 160 (2d Cir. 2006) (recognizing in fraud scheme that loan amount for

purchase of real property must be offset with any receipt of loan payments or

proceeds obtained from foreclosure of the real property). Given § 3663A

generally uses the term “value” and does not require the use of the term “fair

market value,” the Second Circuit in Boccagna construed “‘value’ as used in the

MVRA to be a flexible concept to be calculated by a district court by the measure

that best serves Congress’s statutory purpose.” 450 F.3d at 115.

Indeed, this approach allows the district court to determine in each

circumstance the best measure of value for the purpose of calculating the actual

loss in awarding restitution. Such an approach, however, must keep in mind that

the purpose of restitution is not “to punish defendants or to provide a windfall for

crime victims, but rather to ensure that victims, to the greatest extent possible, are

made whole for their losses.” United States v. Parker, 553 F.3d 1309, 1323 (10 th

Cir. 2009) (internal quotation marks and citation omitted). In making this

determination, “[a] sentencing court may resolve restitution uncertainties with a

view towards achieving fairness to the victim, so long as it still makes a

reasonable determination of appropriate restitution rooted in a calculation of

actual loss.” Gallant, 537 F.3d at 1252 (internal quotation marks and citation

omitted) (emphasis added).

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 In this instance, the district court determined the best measure of

calculating Specialized Loan Servicing’s actual loss was by using the amount of

money it procured from the foreclosure sale and then subtracting that amount

from the amount of the mortgage on which Mr. James had defaulted. If the

district court had used the assessed value instead, which is an approximate value

of the property, that measure would not have as closely represented the

“calculation of actual loss” incurred by Specialized Loan Servicing. In other

words, the assessed value of $468,000 might represent the approximate value of

the property, but not best represent the actual loss Specialized Loan Servicing

experienced when it sold the property at foreclosure for the lower price of

$428,500. Because, in this case, the foreclosure price method more closely

reflects the actual loss Specialized Loan Servicing experienced, we cannot say the

district court’s method of using that value was unreasonable or that it otherwise

erred in using that valuation method in determining the amount of restitution

under the MVRA.

Nevertheless, Mr. James also asserts that under U.S.S.G. § 2B1.1 cmt.

n.3(C)(i) and our decision in Messner, loss is ordinarily calculated based on fair

market value. As Mr. James asserts, in Messner we held that “the amount of loss

is usually determined by an item’s fair market value.” 107 F.3d at 1456.

However, in that case, we were discussing loss for the purpose of calculating the

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defendant’s sentence under the Guidelines, as opposed to restitution owed to any

victims under the MVRA. Id. at 1455-56. In addition, in Messner, we held that

market value is not an appropriate measure of loss if that value is “inadequate to

compensate for the victim’s harm.” Id. at 1456. As we previously pointed out, in

this case, calculating Specialized Loan Servicing’s actual loss using the

foreclosure sale amount more accurately measures its loss than using the

property’s assessed value. Finally, even if the court used the Guidelines

commentary to determine the restitution amount, instead of 18 U.S.C. §§ 3663A

and 3664, the Guidelines commentary to which Mr. James refers, suggesting loss

be calculated using the “fair market value of the property,” is merely a suggestion

which the district court generally has flexibility in using in determining loss

calculations. See United States v. Stoupis, 530 F.3d 82, 84-85 & n.4 (1 st Cir.

2008) (recognizing that “‘value’ for MVRA purposes is distinct from ‘loss’ for

Sentencing Guidelines purposes” and commenting on U.S.S.G. § 2B1.1 cmt.

n.3(C)(i)).

For these reasons, we remand Specialized Loan Servicing’s restitution

award to the district court with instructions to use the foreclosure sale amount of

$428,500, which the parties agree is the correct foreclosure price, so that when

that amount is deducted from the original first mortgage loan amount of $520,000,

the actual loss is $91,500, rather than the inaccurate loss of $123,982.31

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previously calculated by the district court, for a reduction in the restitution award

to Specialized Loan Servicing in the amount of $32,482.31.

2. Offset Claims Regarding Second Mortgages on Stay Sail and Stardance
Properties

Like his offset claim on the Stardance property involving MortgageIt, Mr.

James claims restitution to Freedom Mortgage on its second mortgage for the Stay

Sail property should be offset by any profit it made in selling the first mortgage. 3

As relief, he asks this court to remand the restitution awards to both MortgageIt

and Freedom Mortgage to the district court to enter a corrected restitution order

which would offset or reduce the amount of restitution awarded both of them by

the amount of profit they made on selling the other mortgages on those properties.

Mr. James suggests his request for an offset regarding these profits “amounts to

more than mere speculation,” given “MortgageIt sold the second mortgage to

Citibank and repurchased it for $18,785 more than the original loan amount [–] a

difference that might have represented MortgageIt’s initial profit on the

transaction.” Apt. Br. at 17. As previously noted, the government disagrees any

restitution award should be offset by these alleged profits, asserting that despite

3
Mr. James points out conflicting evidence exists as to whom Freedom
Mortgage originally sold the first mortgage; i.e., the Winter Group or the current
first mortgage holder, Specialized Loan Servicing. In any event, he acknowledges
that at the time of foreclosure Specialized Loan Servicing held the first mortgage
and asserts that, regardless of which entity the first mortgage was originally sold
to, the restitution award should be offset by any profit.

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its and the probation officer’s best efforts, no documentation on those transactions

was available, and, therefore, the district court properly did not engage in

speculation in offsetting restitution to the mortgage holders with profits from the

sale of the other mortgages.

We have held “[a] restitution order must be specific in a dollar amount that

is supported by evidence in the record” but that “the determination of an

appropriate restitution is by nature an inexact science,” United States v. Williams,

292 F.3d 681, 688 (10 th Cir. 2002) (internal quotation marks and citation omitted),

so that absolute precision is not required. See Gallant, 537 F.3d at 1252. Thus,

“[t]he court need only make a reasonable estimate of the loss, given the

information available.” Id. (emphasis added).

In estimating the loss, a “sentencing court is required to ‘order the

probation officer to obtain and include in’ the [presentence report] ‘information

sufficient for the court to exercise its discretion in fashioning a restitution

order,’” and the presentence report “‘shall include, to the extent practicable, a

complete accounting of the losses to each victim.’” United States v. Barton, 366

F.3d 1160, 1165 (10 th Cir. 2004) (quoting 18 U.S.C. § 3664(a)) (emphasis added).

“‘Any dispute as to the proper amount ... of restitution shall be resolved by the

court by the preponderance of the evidence,’” and “‘[t]he burden of demonstrating

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the amount of the loss sustained by a victim as a result of the offense shall be on

the attorney for the Government.’” Id. (quoting 18 U.S.C. § 3664(e)). However,

plain error review on appeal now requires Mr. James to show a clear or obvious

error affecting his substantial rights that seriously affected the integrity of the

judicial proceedings. See Johnson, 183 F.3d at 1179. Mere conjecture or

speculation on appeal as to whether a victim lender recouped or recovered part of

a loan is insufficient to vacate a restitution order, see Oladimeji, 463 F.3d at 160,

and clearly this applies to mere conjecture as to any profit and the amount of such

profit obtained as part of a loan transaction.

Presumably, as Mr. James claims, the mortgage holders made some profit

when they sold the other mortgages they held on the properties. However, in this

case, the government represents the presentence report included, to the extent

practicable, a complete accounting of the losses to each victim and that the

government otherwise provided all of the documentation it could obtain on

restitution owed to MortgageIt and Freedom Mortgage so that it has arguably met

its burden of demonstrating the actual loss sustained. In addition, Mr. James did

not raise an objection with regard to these offset claims, so the possibility of

obtaining such evidence or information was not discussed or disputed before the

district court. We also note Mr. James has provided no specific information on

appeal with respect to the amount or percentage of profits to be used to offset the

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restitution awards and neither party has indicated that additional documentation or

information is or will be available for consideration by the district court on

remand. Moreover, Mr. James’s assertion that the amount for which MortgageIt

repurchased the mortgage from Citibank “might have represented MortgageIt’s

initial profit on the transaction” is purely speculative. Under the circumstances

presented, it appears the district court made a reasonable estimate of loss for the

purpose of calculating the restitution award based on the best information

available to it, see Gallant, 537 F.3d at 1252, and that no additional information

is or will be available for consideration by it on remand. For these reasons, we

conclude Mr. James has not met his burden of establishing plain error sufficient

to warrant remand on the offset issue he now raises on appeal.

III. Conclusion

We REMAND, in part, and AFFIRM, in part, the district court’s

restitution order, for the reasons set forth herein. Specifically, we REMAND to

the district court the $213,785.11 restitution award to MortgageIt, ordering it to

reduce it by $18,785.11, for a total corrected restitution award amount of

$195,000.00; REMAND to the district court the $123,982.31 restitution award to

Specialized Loan Servicing, ordering it to reduce it by $32,482.31, for a total

corrected restitution award amount of $91,500.00; and AFFIRM in all other

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respects the restitution awards made by the district court, including the

$130,000.00 restitution award to Freedom Mortgage.

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