Wednesday, April 27, 2011

Sixth Circuit Upholds Conviction for 51 counts of fraud, money laundering and conspiracy to commit fraud against Nashville Mortgage Broker

In this well written opinion, Judge Sutton summed up the activity of Mr. Stafford of Nashville:  "Harold Stafford set out to make money from a quaint phenomenon once known as rising home prices.  The first premise of his plan was legitimate but mistaken—that residential real estate would continue to appreciate in value. The second premise of his plan was illegitimate and equally mistaken—that he could get away with filing a series of fraudulent loan applications to purchase the properties.  When the predictable happened, a jury convicted him for violating several white-collar criminal laws, and a judge sentenced him to 96 months in prison."

On appeal to the Sixth Circuit, Stafford raises three issues; the most serious of which is enhancement at his sentencing.  The Sixth Circuit affirmed the District Court on all grounds. 

Regarding an enhancement for obstruction of justice, the Court noted, Stafford told a straw buyer of a home that, if he faced questioning, “we can’t say anything, we have got to stick together.” Because Stafford impeded an ensuing investigation of the mortgages in question, it sufficed as an enhancement for obstruction.

Sophisticated Means was satisfied as an enhancement when Stafford instructed others to submit applications for owner-occupied loans; told straw buyers to purchase all of their houses in the same month before the purchases appeared on their credit reports; directed others to apply for loans from different lenders; supplied people with falsified tax returns; and otherwise misused his specialized knowledge of the mortgage industry to create and sustain this conspiracy.  

Lastly, the Court found he was an organizer or leader because he recruited many straw buyers, enlisted builders to sell nearly two dozen homes and brought others in on the scheme. He gave direction and oversight at all levels of the scheme the Sixth Circuit found.

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