United States v. Jason Morrison

Case: 11-50614 Document: 00512197822 Page: 1 Date Filed: 04/04/2013

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
April 4, 2013

No. 11-50614 Lyle W. Cayce
Clerk

UNITED STATES OF AMERICA,

Plaintiff-Appellee,
v.

JASON HEATH MORRISON,

Defendant-Appellant.

Appeals from the United States District Court
for the Western District of Texas

Before STEWART, Chief Judge, and GARZA and ELROD, Circuit Judges.
CARL E. STEWART, Chief Judge:
Defendant-Appellant Jason Heath Morrison (“Morrison”) appeals his
sentence, challenging the district court’s calculation of the loss amount and its
application of the sentencing enhancement for “mass-marketing.” We AFFIRM.
I. FACTUAL & PROCEDURAL BACKGROUND
A. Mortgage Fraud Scheme
Jason Heath Morrison and his co-defendant, Marcus Rosenberger
(collectively, “defendants”), devised and carried out a scheme to defraud
homeowners (“Sellers”), home buyers (“Buyers”) and mortgage lenders
(“Lenders”). In 2009, they formed Vanguard Properties, located in Midland,
Texas. They presented themselves as real estate investors who purchased
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residential properties primarily to re-sell them for a profit, or to “flip” the
houses. Morrison obtained from the Midland County Courthouse a list of
residential properties that were in foreclosure and scheduled to be auctioned off
within the month. He then contacted the Seller in whose name the default
mortgage was held. Morrison informed the Seller that he wanted to purchase
the property and “flip” it for a profit. He explained that the Seller would not
receive any monetary benefit from the sale of his property, but rather, he would
simply relinquish it to Morrison. The benefit to the Seller, explained Morrison,
was that the residence would not go into foreclosure and the Seller’s credit would
not be adversely affected.
To avoid the consequences of the “due on sale” clause1 of the mortgage, the
defendants told the Seller not to notify the Lender of the sale of the property.
Further, the defendants did not file any documentation that would notify the
Lender or the public of the sale. Thus, the Seller still appeared to be the owner
of the property in publicly-recorded documents even though the Seller believed
the property would be taken out of his name.
After the Seller relinquished the property, the defendants advertised the
property in local publications such as the Midland Reporter Telegram and the
Thrifty Nickel. The advertisements stated that the home was “for sale by owner”
and, sometimes, that “owner financing” was available. When potential buyers
responded to the advertisement, Rosenberger met them at the property and
presented himself as the owner. Rosenberger told the potential Buyer that there
was a great deal of interest in the property and encouraged the Buyer to make
an offer as soon as possible. In most cases, the potential Buyers were unable to
qualify for traditional financing and sought owner financing through the
defendants.

1
The “due on sale” clause usually states that if a borrower sells the property without
the Lender’s permission, the Lender may declare the full amount of the loan due.

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In the owner financing contracts, the defendants typically required a
“balloon payment” from the Buyer, which involved the Buyer making a large
down payment and monthly payments for three years, after which time the
Buyer was supposed to pay the remaining balance. However, the defendants
informed the Buyer that after three years, he would qualify for a traditional
mortgage and not need to pay the full remaining balance at once. In addition,
the defendants persuaded the Buyer into the purchase by telling him that they
would extend the loan agreement at the end of three years if the Buyer was
unable to obtain alternative financing. As for the original, outstanding
mortgages, the defendants indicated that they would continue to make payments
on them directly with the Lenders until paid in full.
Upon convincing the Seller to relinquish his home, the defendants did not
pay the Seller’s mortgage note as they had promised they would. Instead, once
they found a Buyer, they used the money from the sale for their personal benefit.
Occasionally, they made a payment on the original mortgage to further delay
foreclosure proceedings. This strategy removed the property from the next
auction and thus allowed the defendants to continue receiving monthly
payments from the Buyer. During the course of the scheme, the Lenders were
unaware that the properties had been “sold” or that the defendants were
involved with the properties. In addition, the Buyers were unaware that their
payments were not being applied to their “mortgages.”
To further their scheme, the defendants also communicated with the
original Lenders. They represented themselves as the original mortgagors by
using information they obtained from the Sellers, such as the Sellers’ names,
dates of birth, and Social Security numbers, to verify their identities. They then
would alter the contact information with the Lenders to Vanguard’s address and
to Morrison’s actual phone number. To continue their scheme, their
communications with the Lenders also involved attempts to obtain loan

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modifications under the federal Home Affordable Modification Program (HAMP).
HAMP is designed help homeowners who have defaulted on their mortgages or
who are at risk of defaulting by providing financial assistance to offset the
homeowners’ monthly mortgage payments. HAMP also provides financial
incentives to participating lenders and mortgage service companies to modify the
terms of eligible loans. In the event that the defendants were unable to obtain
a HAMP modification, they inquired about alternative avenues for delaying
foreclosure, such as lender-specific programs for reduced monthly payments. In
each instance, their intent was to continue to receive the Buyers’ money without
applying funds to the outstanding mortgages held by the Lenders. The scheme
involved a total of nine properties in Midland, Texas.
B. Conviction and Sentencing
A grand jury returned a sixteen-count indictment charging the defendants
with mail fraud, wire fraud, conspiracy, and aggravated identity theft. Morrison
was charged in fifteen of the sixteen counts. Without a plea agreement,
Morrison pleaded guilty to the indictment on January 21, 2011.2 Rosenberger
was convicted on all counts following a jury trial.3
The district court sentenced Morrison on June 29, 2011. According to the
presentence report (“PSR”), Morrison’s applicable U.S. Sentencing Guidelines
(“U.S.S.G.”) calculations reflected a total offense level of 27, which included: 1)
a base offense level of 7 for the mail and wire fraud convictions; 2) a 14-level

2
In an unrelated criminal case, Morrison was charged in a one-count indictment with
failure to register as a sex offender. Morrison pleaded guilty in both cases, the mortgage
scheme to defraud and the failure to register as a sex offender, in a single proceeding.
Accordingly, he was sentenced on both convictions in a single proceeding, and his offenses
were grouped for purposes of the guidelines calculation. Separate judgments were entered in
each case. The sex offender conviction is not at issue in this appeal.
3
A panel of this court affirmed Rosenberger’s convictions and sentence in an
unpublished opinion. See United States v. Rosenberger, Nos. 11-50621 & 11-50632, 2012 WL
6582509, at *4 (5th Cir. Dec. 17, 2012) (per curiam) (unpublished).

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increase for a loss amount of $870,570, U.S.S.G. § 2B1.1(b)(1)(H); 3) a 2-level
increase for an offense committed through mass-marketing, U.S.S.G. §
2B1.1(b)(2)(A)(ii); 4) a 2-level increase for an offense involving sophisticated
means, U.S.S.G. § 2B1.1(b)(10)(C); and 5) a 2-level increase for obstruction of
justice, U.S.S.G. § 3C1.1. The Guidelines were not applicable to Morrison’s
convictions for aggravated identity theft because the statute of conviction
provides for a mandatory, consecutive term of 24 months’ imprisonment. See 18
U.S.C. § 1028A. Morrison was not awarded points for acceptance of
responsibility, U.S.S.G. § 3E1.1, because he fled to Washington to avoid
prosecution and attempted to change his identity.
Morrison objected to the loss calculation and the mass-marketing
enhancement, both of which he raises on appeal. He also challenged the
sentencing enhancements for sophisticated means and obstruction of justice, as
well as the PSR’s failure to apply the 3-level reduction for acceptance of
responsibility.
1. Loss Calculation
The PSR contained a loss calculation in the amount of $870,570. The PSR
arrived at this amount by totaling the new sale prices for the nine properties
that the defendants sought from the Buyers, i.e., $1,138,000. The PSR
calculated that the $34,424.29 paid toward the outstanding mortgages was
approximately 23.5% of the $146,337.25 that the defendants received from the
Buyers. The remaining 76.5% of value from the new sale prices of the
residences, i.e., $1,138,000, was $870,570, and the PSR found this amount to be
the loss.
At the sentencing hearing, the defendants, who were represented by
separate counsel, both objected to the $870,570 figure contained in the PSR.
They argued instead that the court should use the actual loss of $111,912.96,
which included $146,337.25 in cash received from the Buyers minus the

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$34,424.29 paid to the Lenders. The defendants argued for this actual loss
calculation because, in their view, the only “real” victims harmed in the scheme
were those Buyers who gave the defendants money and ultimately received
nothing in return. The defendants argued that the Sellers were going to lose the
properties anyway, and the banks were in the same position they would have
been in without the fraud, i.e., in the process of pursuing foreclosure on those
properties.
The Government argued that intended, rather than actual, loss was the
appropriate measure of loss in this case, because it was the greater figure. The
Government further asserted that the sale prices of the homes that the
defendants set were the best measure of the value of the homes and thus, the
appropriate measure of intended loss. This value amounted to $1,138,000. The
Government maintained that the only reason the actual loss amount was not
greater was because law enforcement was able to thwart the defendants’ plans
before they could actuate the full extent of the intended loss. Thus, according
to the Government, the defendants should not benefit from the much lower
actual loss figure simply because their scheme was not as successful as it would
have been absent law enforcement’s intervention. The Government alternatively
argued that the PSR’s loss calculation, in the amount of $870,570, was also
reasonable, but that an actual loss amount of $111,912.96 was not.
After hearing this argument, the court solicited information from the
parties regarding the value of the first mortgages that were outstanding at the
time the defendants became involved with the properties. While this exact value
was not available, the parties surmised that the original loan amounts were an
appropriate proxy because the homeowners did not own the homes long before
they encountered difficulties with paying their mortgages. The U.S. Probation
Officer, who prepared the PSR, produced a spreadsheet which reflected the value
of the first mortgages. The district court then took a recess to confer with the

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parties in chambers in order to calculate a loss amount using the information
contained in the spreadsheet. Once back on the record, the district court
proposed that, instead of the new sale prices, the court would use the value of
the first mortgages because this was “a more realistic starting point.”
The district court then recited the language of Application Note 3(A) of
§ 2B1.1, including the definitions for actual and intended loss and the general
rule that “loss is the greater of actual loss or intended loss.”4 The district court
further stated, “using those definitions, the Court is going to use as set forth in
the guidelines the greater of the actual loss and the intended loss.” Based on
these guidelines, the district court stated that the intended loss in the case
would be $769,365, which reflected the total of all the mortgages, $803,789.07,
minus the monies the defendants paid to the Lenders, $34,424.29.
The district court next solicited additional argument regarding its
proposal. Counsel for both the defendants argued that the district court should
reduce the total loan loss amount by the value of the underlying properties. In

4
Citing U.S.S.G. § 2B1.1, app. n.3(A), the court stated:

I do want to put on the record that under 2B1.1, Application Note
3 states the following: “This application note applies to the
determination of loss under subsection (b)(1). General Rule.
Subject to the exclusions in subdivision (D), loss is the greater of
actual loss or intended loss. ‘Actual loss’ means the reasonably
foreseeable pecuniary harm that resulted from the offense.
‘Intended loss’ means the pecuniary harm that was intended to
result from the offense; [sic] and includes intended pecuniary
harm that would have been impossible or unlikely to occur.”
Then it goes down. “Pecuniary harm means harm that is
monetary or that otherwise is readily measurable in money.
Accordingly, pecuniary harm does not include emotional distress,
harm to reputation, or other non-economic harm. Reasonable
pecuniary harm for purposes of this guideline means pecuniary
harm that the Defendant knew, or under the circumstances,
reasonably should have known, was a potential result of the
offense.”

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making this argument, counsel invoked Application Note 3(E) of U.S.S.G.
§ 2B1.1, which provides that, in calculating the victims’ pecuniary losses for
fraud offenses, that amount shall be reduced by the value of the collateral. See
U.S.S.G. § 2B1.1 app. n.3(E). Specifically, defense counsel urged the court to
reduce the total loan amount by the defendants’ proposed sale prices for the
homes, as the indicator of the value of those homes:
MR. LOW [defense counsel]: I’m going to make this
argument based on Application Note 3(E), Application
Note 3(E) to 2B1.1, “Credits Against Loss. Loss shall be
reduced by the following:” And it indicates “The money
returned, and the fair market value of the property
returned.” And then I guess it also goes on. And sub
(ii), “In a case involving collateral pledged or otherwise
provided, the amount the victim has recovered.”

Defense counsel argued that because the victims recovered the properties, the
new sale prices should be reduced by the value of the collateral to calculate the
proper loss amount.
Soon after defense counsel’s argument, the following exchange took place
between the Government and the district court:
MR. BERRY [the Government]: Mr. Low was reading
to you from [A]pplication Note (E)(i), and he read the
beginning of it. I think he just inadvertently glossed
over the remaining clause of the first sentence that
says, “The money returned, and the fair market value
of the property returned and the services rendered” –
this is all what the loss shall be reduced by–that was
provided “to the victim before the offense was detected.”
That’s not the case here . . . . They don’t get credit for
the fair market value of those properties, because they
were detected. They didn’t turn this over prior to. To
the extent that the victims managed to salvage in some
way, they don’t get that credit. And I think he just
didn’t see that part of the section.

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THE COURT: Yeah, and I agree. I think that that
section only applies if there was a voluntary return
prior, before detection, as is set forth in 2B1.1, the
Application Note 3(E). I find this does not apply in this
case.
Defense counsel did not respond to this discourse between the Government and
the court.
The district court then stated its ruling, finding by a preponderance of the
evidence that the total loss amount was $769,365, which the court based on both
the evidence adduced at Rosenberger’s trial and the evidence proffered at
sentencing. The district court explained that “each applicable loan amount
manifested intended loss because the Defendants acted with indifference or
reckless disregard by exposing the lending agencies . . . to a loss of the total loan
without considering whether repayment could ever be made.” The court further
stated:
[B]y 2B1.1, using the term “intended loss” instead of
“actual loss,” the Court finds that the record supports
this determination of using the mortgages, as I
previously said. And the Court finds the Defendants
did, in fact, intend to inflict a loss in the total amount
of the fraudulently obtained loans . . . . Here the
repayment of these loans, these first mortgages, was in
the control not of the Defendants but of the consumers.
There is no evidence that the Defendants intended to
repay the loans. . . . And the Court finds that the
Defendants acted with conscious indifference or
recklessness about the repayment of the loans.

In making its rulings, the district court expressly relied on United States v.
Wimbish, 980 F.2d 312 (5th Cir. 1992), abrogated on other grounds by Stinson
v. United States, 508 U.S. 36 (1993), and United States v. Morrow, 177 F.3d 272
(5th Cir. 1999).
2. Mass-Marketing Enhancement

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The district court then solicited argument from the parties regarding the
defendants’ objection to the mass-marketing sentencing enhancement. Although
the defendants placed the ads in the newspaper, the defendants argued that the
enhancement did not apply because “it was a single sale at a single time,” not
“cumulatively” or “consecutively.” The Government argued that case law
supported the finding that the use of newspaper advertisements qualifies as
mass-marketing, including our decision in United States v. Magnuson, 307 F.3d
333, 335 (5th Cir. 2002). Finding that there was evidence that the newspaper
was used to solicit potential buyers for the properties, the district court
overruled the defendants’ objection to this enhancement.
3. Remaining Objections
The district court sustained Morrison’s objection to the acceptance of
responsibility credit and applied the 2-level reduction to his offense level.
Consequently, the Government made a motion for Morrison to receive the
additional 1-level reduction for acceptance of responsibility. The district court
overruled Morrison’s objections to the enhancements for sophisticated means
and obstruction of justice.
4. The Sentence
The district court adopted the PSR as amended by the court’s re-
calculation of the loss amount and the 3-level downward adjustment for
acceptance of responsibility. Thus, Morrison’s amended offense level was 24.
Based on his criminal history, Morrison’s corresponding guideline range of
imprisonment was 63 to 78 months on the mail and wire fraud convictions, and
24 months on the aggravated identity theft convictions. After denying
Morrison’s request for a downward departure or variance and the Government’s
request for an upward departure, the district court sentenced Morrison to a total
of 87 months’ imprisonment and 3 years of supervised release. The court also

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ordered restitution in the amount of $173,495.79 and a special assessment of
$1,500.
Morrison timely appealed.
II. DISCUSSION
Morrison appeals only the district court’s loss calculation and its
application of the mass-marketing sentencing enhancement. We address each
issue in turn.
A. Loss Amount Calculation
1. Standard of Review
We review a defendant’s sentence for reasonableness under an
abuse-of-discretion standard. Gall v. United States, 552 U.S. 38, 49-50 (2007);
United States v. Goss, 549 F.3d 1013, 1016 (5th Cir. 2008) (citation omitted).
Nevertheless, “the district court must still properly calculate the guideline
sentencing range for use in deciding on the sentence to impose.” Goss, 549 F.3d
at 1016 (citation omitted). We review calculations of the loss amount and other
factual determinations for clear error, and we review legal questions about the
interpretation of the Guidelines de novo. United States v. Tedder, 81 F.3d 549,
550 (5th Cir. 1996) (citations omitted). Under the clearly erroneous standard,
we will uphold the district court’s finding so long as it is “plausible in light of
the record as a whole. However, a finding will be deemed clearly erroneous if,
based on the record as a whole, we are left with the definite and firm conviction
that a mistake has been committed.” United States v. Ekanem, 555 F.3d 172,
175 (5th Cir. 2009) (internal quotation marks and citations omitted).
“[T]he district court cannot achieve absolute certainty in
determining . . . losses.” Goss, 549 F.3d at 1019 (citations omitted). Instead,
“[t]he [district] court need only make a reasonable estimate of the loss.” U.S.S.G.
§ 2B1.1 app. n.3(C); Goss, 549 F.3d at 1019 (citations omitted). Moreover, “[t]he
sentencing judge is in a unique position to assess the evidence and estimate the

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loss based upon that evidence. For this reason, the court’s loss determination
is entitled to appropriate deference.” U.S.S.G. § 2B1.1 app. n.3(C) (citations
omitted); United States v. Teel, 691 F.3d 578, 589-90 (5th Cir. 2012) (citation
omitted).
2. Applicable Law
Under U.S.S.G § 2B1.1, the sentencing guideline range depends upon the
amount of financial loss to the victims. The calculated loss shall be the greater
of actual or intended loss. U.S.S.G. § 2B1.1, app. n.3(A). “Actual loss” means
“the reasonably foreseeable pecuniary harm that resulted from the offense.” Id.
§ 2B1.1, app. n.3(A)(i). “Intended loss” means, inter alia, “the pecuniary harm
that was intended to result from the offense.” Id. § 2B1.1, app. n.3(A)(ii)(I).
Further, Application Note 3(E) of § 2B1.1, “Credits Against Loss,” provides
that “loss shall be reduced by the following”:
(i) The money returned, and the fair market value of
the property returned and the services rendered, by the
defendant or other persons acting jointly with the
defendant, to the victim before the offense was detected.
The time of detection of the offense is the earlier of (I)
the time the offense was discovered by a victim or
government agency; or (II) the time the defendant knew
or reasonably should have known that the offense was
detected or about to be detected by a victim or
government agency.

(ii) In a case involving collateral pledged or otherwise
provided by the defendant, the amount the victim has
recovered at the time of sentencing from disposition of
the collateral, or if the collateral has not been disposed
of by that time, the fair market value of the collateral at
the time of sentencing.

U.S.S.G. § 2B1.1, app. n.3(E)(i)-(ii).
In making its loss determination, the district court here expressly relied
on our decisions in Wimbish, 980 F.2d 312, and Morrow, 177 F.3d 272. The

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Government also cites our decision in Tedder, 81 F.3d 549, for its position, while
Morrison cites to Goss, 549 F.3d 1013. We discuss the essential facts and
holdings of each of these cases before turning to the case sub judice.
a. Wimbish
In Wimbish, the defendant deposited forged checks with several banks and
received a portion of each deposit as cash back. 980 F.2d at 313. The total face
value of the checks was $100,944, and the actual loss to the banks was $14,731,
which was the amount Wimbish actually received. Id. The district court used
the greater amount–the face value of the checks–as the loss amount for
calculating Wimbish’s guideline range. Id. On appeal, we rejected Wimbish’s
argument that he intended to defraud the banks of only the amount of cash he
received, i.e., $14,731. Id. We concluded that, “in carrying out his scheme
Wimbish acted with conscious indifference to the impact his scheme would have
on the victims.” Id. at 316. We thus reasoned, “Wimbish’s callous indifference
to his victims’ loss falls within the ambit of intended loss.” Id. Accordingly, we
upheld the district court’s intended loss calculation. Id. at 317.
b. Morrow
In Morrow, the defendants falsified loan applications in order to enable
customers to obtain financing for mobile home purchases. 177 F.3d at 285. The
district court’s calculation of the bank’s loss was the total loan amounts that the
customers fraudulently procured at each lot. Id. at 300. Relying on Wimbish,
“[t]he district court concluded that each applicable loan amount manifested
‘intended loss’ because the defendants acted with indifference or reckless
disregard by exposing the bank to a loss of the total loan without considering
whether repayment could ever be made.” Id. at 300-01 (citation omitted). On
appeal, we concluded that the district court did not err “by using the intended,
rather than the actual, amount of loss because the defendants in this case had
no control over whether the mobile home consumers would repay the loans.” Id.

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at 301. We accordingly upheld the district court’s use of intended loss on these
facts. Id.
c. Tedder
In Tedder, the defendant supplied false social security numbers to his
credit counseling clients “to fraudulently obtain [car loans and mortgages] to the
full extent of the amounts requested in the loan applications” where the clients
likely would not have qualified otherwise. 81 F.3d at 550. In discussing whether
actual or intended loss was a more appropriate measure, we stated that, if the
defendant intends to repay the loans, actual loss is the appropriate basis. Id. at
551 (citations omitted). “However, where the defendant does not intend to
repay, and the actual loss is less than the intended loss, only because law
enforcement official [sic] thwarted his plans, then the full intended loss is the
appropriate basis for calculation.” Id. (citation omitted). Accordingly, we
concluded that the intended, rather than the actual, loss was the appropriate
measure and affirmed the district court’s intended loss calculation. Id.
d. Goss
In Goss, the defendant was a mortgage lender who conspired with others
to submit false mortgage applications for borrowers who otherwise may not have
qualified for the loans. Goss, 549 F.3d at 1014. At sentencing, the district court
declined to deduct the value of the underlying collateral and instead used the
intended loss (to the lenders) because it was more than the actual loss. Id. at
1015-16. On appeal, Goss challenged the district court’s loss calculation due to
the fact that real property is inherently recoverable and thus should be deducted
from the total loan amounts. Id. at 1015-16 (citations omitted).
We held that we first must determine whether an actual or intended loss
framework is appropriate for calculating the victims’ losses. Id. at 1016.
Moreover, “whether to deduct collateral–whether to employ an actual or an
intended-loss calculation–will depend upon the specific facts at hand.” Id. at

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1018. Distinguishing Morrow, we concluded that Goss was not “so ‘consciously
indifferent or reckless’ about the repayment of the loans as to impute to him the
intention that the lenders should not recoup their loans, whether by payment
from the borrowers or through recovering the collateral in the event of default.”
Id. (citation omitted). We stated that “[t]his determination rests in large
measure on the direction provided by the guidelines’ commentary, as well as the
common-sense notion that, generally, the value of real, immovable property will
be recoverable should the owner default.”5 Id. We opined that “control over the
repayment of these loans to third parties” is less important “when determining
the appropriate loss calculation in a case involving immovable real property,
because part, if not all, of the loan value was more likely recoverable.” Id.
However, we also recognized that “there are situations where the deduction of
collateral may not provide the most fair loss assessment . . . . [f]or example, if a
defendant’s intent to avoid repaying a loan is sufficiently clear, and recovery of
the collateral is problematic.” Id. at 1017 (citing Morrow, 177 F.3d at 301, and
Tedder, 81 F.3d at 551). We affirmed Goss’s conviction but remanded for
resentencing for the district court to deduct the collateral’s value for the loss
calculation. Id. at 1019-20.
3. Analysis
a. Parties’ Arguments
Morrison argues that the district court erred by finding U.S.S.G. § 2B1.1,
app. n.3(E), “Credits Against Loss,” inapplicable to the facts of this case.

5
We relied on the Federal Sentencing Guidelines Handbook, which states that
“immovable collateral such as real estate properly pledged to the victim will virtually always
be credited against loss.” Goss, 549 F.3d at 1017 (citing Roger W. Haines, Jr. et al., Federal
Sentencing Guidelines Handbook: Text and Analysis 387 (2007 ed.)) (hereinafter Handbook).
We thus surmised that “[a]n examination of [the guidelines and the Handbook], without more,
strongly suggests that, for loss-calculation purposes, loan collateral is to be deducted from the
total value of the loan.” Id. (citing Handbook at 330 (noting the Guidelines’ general “net loss
approach”)).

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Specifically, Morrison argues that the district court erred by finding that the
“collateral was not returned ‘to the victim before the offense was detected,’”
because the court relied on the wrong subsection of the guidelines, i.e.,
subsection (i). Citing to Goss, 549 F.3d at 1013, and § 2B1.1, Morrison alleges
that, because the district court misread Application Note 3(E)(ii), it failed to
properly calculate the intended loss in this case. Morrison argues that, instead,
the district court should have deducted the collateral value of each property from
each loan’s total value. Morrison maintains that, “[d]espite the fact that several
of the new purchasers had recovered the houses . . . there was no attempt to
determine how much the intended losses might be reduced to offset the
recovered collateral.”
The Government has acknowledged that the district court may have
determined, incorrectly, that U.S.S.G. § 2B1.1, app. n.3(E) was inapplicable to
this case. However, the Government relies on Morrow and Tedder to argue that
deduction of the value of collateral may be precluded if a defendant’s intent to
avoid repaying a loan is sufficiently clear, and recovery of the collateral is
problematic. See Morrow, 177 F.3d at 301; Tedder, 81 F.3d at 551. The
Government argues that each of the loan amounts involved manifested intended
loss because the defendants: 1) did not intend to repay the loans; 2) did not have
control over whether the Buyers repaid the loans; and 3) acted with indifference
or reckless disregard by exposing the lending agencies to a loss of the total loan
amounts. The Government further argues that deducting the value of the
collateral from the loans is inappropriate because it would fail to capture the full
scope of the fraud here, which involved several classes of victims, including the
Lenders, Sellers, Buyers, and the federal government vis-á-vis the HAMP
program.
b. Loss Calculation in Morrison’s Case

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No. 11-50614

In light of our circuit precedent, we cannot say that the district court erred
by employing an intended loss calculation and declining to account for the
collateral’s value, especially given the district court’s factual findings that the
defendants did not intend to repay the mortgage loans here. While the district
court appears to have concluded erroneously, under Application Note 3(E) of
U.S.S.G. § 2B1.1, that credits against loss only apply where the property is
returned prior to detection by law enforcement, any potential error in the court’s
refusal to apply this guideline on this basis was harmless.6 See United States v.
Ibarra-Luna, 628 F.3d 712, 713-14 (5th Cir. 2010).
Harmless error applies to sentencing “if the proponent of the sentence
convincingly demonstrates both (1) that the district court would have imposed
the same sentence had it not made the error, and (2) that it would have done so
for the same reasons it gave at the prior sentencing.” Id.; see also United States
v. Delgado-Martinez, 564 F.3d 750, 753 (5th Cir. 2009) (citations omitted) (noting
that a procedural error in sentencing is harmless if “the error did not affect the
district court’s selection of the sentence imposed”). We conclude that the
Government, as the proponent of the sentence here, has met its burden. The
record more than amply supports the district court’s findings that Morrison and
his co-defendant intended to cause a total loss of the loan amounts where they
had no intent to repay the loans and repayment was in the control of third
parties, not the defendants. These findings, in turn, support the district court’s
decision to use the total value of the loans (minus payments to the Lenders) as

6
Under U.S.S.G. § 1B1.7, the Commentary that accompanies the Guidelines’ sections
“may interpret the guideline or explain how it is to be applied. Failure to follow such
commentary could constitute an incorrect application of the guidelines, subjecting the sentence
to possible reversal on appeal.” U.S.S.G. § 1B1.7 (citing 18 U.S.C. § 3742). Further,
“commentary in the Guidelines Manual that interprets or explains a guideline is authoritative
unless it violates the Constitution or a federal statute, or is inconsistent with, or a plainly
erroneous reading of, that guideline.” Stinson, 508 U.S. at 37-38; see also United States v.
Nevares-Bustamante, 669 F.3d 209, 212 & n.4 (5th Cir. 2012) (citation omitted).

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No. 11-50614

the intended loss amount. Accordingly, the district court’s refusal to deduct the
value of the collateral comports with these factual findings, and we are
convinced that the district court would have arrived at the same loss calculation
absent its misstatement, if any, regarding Application Note 3(E). See Goss, 549
F.3d at 1016 (“In making [the] determination [of ‘whether the collateral value
should be deducted from the loan’s total value’], we must first decide whether an
actual or intended-loss framework is appropriate for calculating the victims’
losses.”); id. at 1018 (“[W]hether to deduct collateral–whether to employ an
actual or an intended-loss calculation–will depend upon the specific facts at
hand.”).7
Significantly, the district court already had proposed an intended loss
calculation–reflecting the full amount of first mortgages minus monies paid to
the Lenders–before it found that Application Note 3(E) was inapplicable. After
reciting the Guidelines’ definitions for actual and intended loss and the general
rule that “loss is the greater of actual loss or intended loss,” the district court
stated that it was “going to use as set forth in the guidelines the greater of the
actual loss and the intended loss,” i.e., the intended loss in the amount of
$769,365. The court then stated its findings that: 1) “each applicable loan
amount manifested intended loss because the Defendants acted with indifference
or reckless disregard by exposing the lending agencies . . . to a loss of the total
loan without considering whether repayment could ever be made”; 2) “the
repayment of . . . these first mortgages, was in the control not of the Defendants
but of the consumers”; and 3) “[t]here is no evidence that the Defendants
intended to repay the loans[.]” The record supports these findings.
The record is replete with evidence that the defendants employed multiple
tactics to perpetuate their scheme as long as possible. They required substantial

7
We do not express an opinion, however, regarding whether a district court may never
deduct the collateral’s value in an intended loss calculation under Goss.

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No. 11-50614

balloon payments from the Buyers, which naturally vested the Buyers in the
transactions. The defendants entered into three-year sales contracts with the
Buyers and promised to renew those contracts if the Buyers were unable to
secure alternative financing. They sought loan modifications through HAMP
and lender-specific programs in order to delay the foreclosure process. They also
made minimal payments towards the first mortgages to delay foreclosure but
otherwise used the proceeds from the Buyers for their personal benefit. All of
these actions demonstrate their lack of intent to repay the loans. “[W]here the
defendant does not intend to repay, and the actual loss is less than the intended
loss, only because law enforcement official [sic] thwarted his plans, then the full
intended loss is the appropriate basis for calculation.” Tedder, 81 F.3d at 551
(citation omitted). The district court thus correctly applied our precedent to this
case. See Wimbish, 980 F.2d at 316 (“The district court’s calculation is supported
broadly by the caselaw.”). Accordingly, the district court’s conclusion that
“Credits Against Loss” did not apply to this case was ultimately immaterial,
given its decision to use the loss amount equal to the total loan values minus
payments to the Lenders. See Tedder, 81 F.3d at 551 (“[T]he trial court
implicitly found that the seriousness of Tedder’s crime justified the calculation
of the loss based upon the total of the loan amounts applied for.”).
The fact that the collateral underlying the loans here was real property
does not alter our conclusion. Despite our recognition in Goss that the value of
the collateral usually should be deducted from the loan amount, we also
acknowledged that “there are situations where the deduction of collateral may
not provide the most fair loss assessment . . . . [f]or example, if a defendant’s
intent to avoid repaying a loan is sufficiently clear, and recovery of the collateral
is problematic.” Goss, 549 F.3d at 1017 (citing Morrow, 177 F.3d at 301, and
Tedder, 81 F.3d at 551). The facts of this case are exactly the exceptional
circumstances that Goss contemplated.

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No. 11-50614

In addition to the foregoing facts demonstrating the defendants’ intent
regarding repayment, the mortgage fraud scheme here was atypical in that it
involved several classes of intended victims, including the Buyers, the Sellers,
the Lenders, and the federal government. As the victims who gave Morrison
money purportedly to purchase a home and received nothing in return in most
cases, the Buyers are the most salient group of victims. As for the Lenders, the
defendants’ acts successfully delayed the Lenders’ foreclosure sales and
prevented the Lenders from recovering their investments or minimizing their
losses. Additionally, the federal government’s HAMP program provides financial
assistance to distressed homeowners and financial incentives to participating
mortgage lenders and services. In soliciting loan modifications through HAMP,
Morrison also intended to defraud the federal government. Moreover, the
Government aptly observed on appeal that the defendants’ scheme could make
recovery of the collateral problematic, given the potential for title disputes over
the properties arising from the defendants’ conscious efforts to avoid publicly
recording any documents evidencing the transfers. See Goss, 549 F.3d at 1017.
Thus, simply offsetting the value of the collateral from the loan amounts would
fail to capture the full scope of the fraud here. See U.S.S.G. § 2B1.1 app. n.3(C)
(“The [district] court need only make a reasonable estimate of the loss.”).
Above all else, the fact-intensive nature of the inquiry at issue particularly
persuades us to heed the Guidelines’ instruction that we defer to the district
court’s loss calculation. See U.S.S.G. § 2B1.1 app. n.3(C) (citations omitted)
(“The sentencing judge is in a unique position to assess the evidence and
estimate the loss based upon that evidence. For this reason, the court’s loss
determination is entitled to appropriate deference.”). The district court here was
fully engrossed in the facts of this case, as it presided over Rosenberger’s trial.
It also deliberated in painstaking detail over the proper loss amount. Notably,
it rejected both the PSR’s and the Government’s suggested loss calculations,

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No. 11-50614

finding that the first mortgages was a “more realistic starting place.” The
district court’s actions thus bolster our conclusions that its calculation is entitled
to significant deference and that any potential error was harmless in this case.
Accordingly, we affirm the district court’s loss calculation.
B. Mass-Marketing Sentencing Enhancement
Morrison’s second argument on appeal is that the district court misapplied
the Guidelines when it used the “mass-marketing” enhancement under
§ 2B1.1(b)(2)(A)(ii) to increase his offense level by two points. He asserts that
nine properties were listed in local newspapers on “distinctly separate
occasions,” and for each listing, they sought only one purchaser for the property.
Citing the Application Note for this enhancement, Morrison argues that his plan
was not one “to induce a large number of persons” because his scheme involved
only nine victims.8
As Morrison does not challenge the underlying facts supporting the district
court’s application of this enhancement, our review is limited to the question of
whether the district court correctly interpreted and applied the Guidelines. See
Tedder, 81 F.3d at 550. Morrison’s argument is unavailing, however, in light of
our decision in Magnuson, 307 F.3d at 335.
In Magnuson, the defendant’s fraudulent scheme included placing
advertisements in grocery store tabloids falsely promising interest-free loans.

8
The Application Note provides in pertinent part as follows:

For purposes of subsection (b)(2), “mass-marketing” means a
plan, program, promotion, or campaign that is conducted through
solicitation by telephone, mail, the Internet, or other means to
induce a large number of persons to (i) purchase goods or services
. . . . “Mass-marketing” includes, for example, a telemarketing
campaign that solicits a large number of individuals to purchase
fraudulent life insurance policies.

U.S.S.G. § 2B1.1, app. n.4(A).

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No. 11-50614

307 F.3d at 334. On appeal, we concluded that Magnuson’s actions constituted
“mass-marketing” because the newspaper advertisements reached over 300,000
people per week, i.e., “a large number of persons.” Id. at 335; U.S.S.G.
§ 2B1.1(b)(2)(A)(ii), app. n.4(A). We thus held that the mass-marketing
enhancement “merely requires advertising that reaches a ‘large number of
persons.’” Magnuson, 307 F.3d at 335. Therefore, the district court did not err
in imposing the mass-marketing enhancement to Magnuson’s offense level, and
we affirmed the district court accordingly. Id.
In the instant case, the defendants used advertisements in newspapers
circulated to thousands of people and potentially more through online viewing.
In this way, their advertisements reached “a large number of persons.” See
Magnuson, 307 F.3d at 335. While the defendants may have phrased their
advertisements to sell one house to one person, they solicited thousands of
potential buyers in order to find the one buyer for each property. Consequently,
the district court did not err in imposing the mass-marketing enhancement.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s loss calculation
and its application of the mass-marketing enhancement to Morrison’s sentence.

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