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United States v. Baum

February 10, 2009



The opinion of the court was delivered by: Hartz, Circuit Judge.



Before HARTZ, McWILLIAMS, and McCONNELL, Circuit Judges.

This matter is before us on the Appellant's Petition for Panel Rehearing and Rehearing En Banc. The panel GRANTS the petition for the limited purpose of revising the final paragraph of the Opinion beginning on page 15. The Opinion filed on December 22, 2008, is vacated and the attached revised Opinion is substituted in its place.

Brandon L. Baum was convicted on six counts of wire fraud, see 18 U.S.C. § 1343, and seven counts of money laundering, see id. § 1957. These convictions arose from Mr. Baum's orchestration of a scheme to defraud mortgage lenders by arranging for borrowers to provide false information to qualify for loans to purchase homes at artificially inflated prices. On appeal he argues (1) that the evidence at trial was insufficient to establish his fraud; and (2) that the district court miscalculated his total offense level under the United States Sentencing Guidelines (USSG) by using the amount by which the home prices were inflated as the measure of his intended loss to the lenders. We have jurisdiction under 28 U.S.C. § 1291 and affirm.


A. The Offenses

Mr. Baum and six co-defendants were charged in a 14-count indictment in the United States District Court for the Western District of Oklahoma. Thirteen counts alleged criminal conduct by Mr. Baum in representing the buyers of six homes in the Oak Tree subdivision of Edmond, Oklahoma, between 2003 and 2005.

For each of the six purchases Mr. Baum acted as the real-estate agent for the buyer, who was seeking a home loan in the subprime market because of weak credit. The buyer generally could not afford the down payment required by the lender (from 5% to 15% of the cost of the home), so the buyer borrowed that money from Mr. Baum and his associates. Mr. Baum's client agreed to buy the home at the seller's listed price, which often had been reduced over time as the home failed to sell; but Mr. Baum and his client obtained the consent of the seller and the seller's agent to list an inflated price on the purchase contract. The price inflation did not benefit the seller because Mr. Baum prepared an addendum to the purchase contract requiring the seller to pay the excess over the listed price to a named company for remodeling or repairing the home. Apparently unbeknownst to the seller, the company was merely a bank account used to funnel the money to provide cash to the purchaser and to pay Mr. Baum and his associates for their services and for advancing the down payment.

The mortgage lender, of course, was not informed of the true nature of the transaction. The purchase-contract addendum regarding the "remodeling" or "repair" payment was not disclosed, so the lender would be led to believe that the purchase price on the contract (which apparently was supported by an appraisal) was solely for the home itself. Also, the loan application falsely represented that the buyer had not borrowed money to make the down payment, and usually contained false information regarding the purchaser's income and assets.

B. Sentencing

Mr. Baum's base offense level under the Sentencing Guidelines was 7. See USSG § 2B1.1(a). The district court added 4 levels for his role as a leader of the scheme, see id. § 3B1.1(a), and an additional 2 levels for obstruction of justice, based on his false testimony at trial and intimidation of witnesses, see id. § 3C1.1. The court also added 16 levels because the loss intended by Mr. Baum was more than $1,000,000. See id. § 2B1.1(b)(1)(I). In computing the intended loss, the court took into account not only the six mortgage loans underlying Mr. Baum's convictions, but also 15 uncharged loans that involved similar misconduct. See id. § 1B1.3(a)(2) (in setting offense level, court should consider all acts that were part of fraudulent scheme). The court then arrived at an intended loss of $1,393,243.10 by adding the amounts by which the inflated price of each home (the price stated in the purchase agreement) exceeded the actual sales price.

With a total offense level of 29 and a criminal-history category of 1, Mr. Baum's guidelines sentencing range was 87 to 108 months. See id. ch. 5, pt. A. The district court ...

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