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May 27, 2014

Fascinating research on federal mortgage fraud prosecutions and sentencing in Western PA

20140525mortgage-fraud-thumbI am pleased and excited to have learned over the long weekend that the Pittsburgh Post-Gazette and the Duquesne University School of Law collaborated on an innovative Fact Investigations class, led by associate professor and Criminal Justice Program director Wesley Oliver, to study the modern work of Western Pennsylvania's federal prosecutors in response to modern mortage fraus.  As explained in this first article of a series about this work, this group "identified 144 prosecutions alleging mortgage-related crimes in the Pittsburgh area ... [and then] analyzed 100 prosecutions in which sentence had been pronounced and for which the federal sentencing guidelines could be discerned." Before getting into the findings, I want to heap praise on everyone involved in this project because it shows what valuable work can be done when law schools and traditional media team up to examine intricate and dynamic issues concerning the federal criminal justice system.

Here, from the start of the first article in the series, are the basic findings of this terrific project:

In 2008, as the housing market dragged the world economy down, orders came from Washington, D.C., to federal prosecutors nationwide: Bust the people whose lies contributed to the mess.

Six years later, the effort by Pittsburgh's federal prosecutors to punish fraudulent mortgage brokers, appraisers, closing agents, property flippers and bank employees can claim 144 people charged, more than 100 sentenced and no acquittals.

That undefeated record, though, came at a price: Some of the worst offenders got extraordinary deals in return for their testimony against others.

A review by the Pittsburgh Post-Gazette and Duquesne University School of Law students of 100 completed cases showed that the sentences of mortgage-related criminals in the Pittsburgh area were driven more by their degree of cooperation with prosecutors than by the number of people they scammed, the dollars they reaped or the damage they did to the financial system.  Some of the most prolific offenders used their central places in the fraud conspiracy to secure light sentences.

• Leniency for cooperation was doled out liberally.  At least 30 of the 100 defendants were the beneficiaries of prosecutorial motions to reward "substantial assistance" to the investigation.  That cooperation rate is nearly double that seen in fraud cases nationwide, suggesting that prosecutors here rewarded more defendants than normal.

• Most of the mortgage criminals who assisted prosecutors got no prison time, and the average amount of incarceration for those 30 defendants was a little more than three months.  By contrast, defendants who pleaded guilty but didn't provide substantial assistance to prosecutors, got average sentences of three years in prison.  Those few who went to trial faced an average of 6½ years behind bars.

•  Several of the figures most central to the region's mortgage fraud problem cooperated with prosecutors, and got non-prison sentences.  For instance, Kenneth C. Cowden, formerly of McKees Rocks and now of Florida, performed unlicensed appraisals that exaggerated real estate values in the region to the tune of hundreds of millions of dollars. He cooperated and got nine months in a halfway house.  Jay Berger of Fox Chapel, who recruited Cowden and lived lavishly from fraudulent mortgages, was sentenced in 2012 to 15 months in prison, but died this month at age 49 without serving time.

Here are links to all the article in the series:

Regular readers will not be at all surprised to hear me say that I view this terrific bit of investigative journalism as further proof that those who are really concerned about suspect disparities in federal sentencing ought to be much more focused on the application of (hidden and unreviewable) prosecutorial sentencing discretion than about the exercise of (open and reviewable) judicial sentencing discretion.

May 27, 2014 at 10:56 AM | Permalink

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Comments

I am not sure I understand your point. Please elaborate. Does this article involve "hidden and unreviewable" or "open and reviewable" sentencing discretion?

Posted by: Zachary B. | May 27, 2014 4:19:44 PM

Well, Zachary B., it seem that prosecutors pushed hard for non-prison sentences for the 30 cooperators and sought years in prison for the non-cooperators, leading to the average sentence being so low for the cooperators and so much higher for the non-cooperators. And yet while there is a record (and the chance for review) for each sentence imposed by the judge, there is no record (and no chance for review) concerning how prosecutors which 30 of the 93 defendants who pled guilty would also get to be cooperators and garner all the sentencing benefits that follow.

Current and former prosecutors may have a good sense of how cooperators are selected and rewarded in this and other settings, but this is an opaque and unreviewable mystery to the rest of us. And though I hope only appropriate factors play a central role in these important prosecutorial sentencing determinations, research from the USSC and outsiders provide reasons to be concern about whether all is kosher in an arena without any sunlight or real accountability.

Posted by: Doug B. | May 27, 2014 5:08:15 PM

Thanks for the clarification.

The evil AUSAs, they sit around in their free time and try to screw people. And, they keep it all a secret. I am sure they "pick" cooperators arbitrarily...maybe by flipping coins or playing eeny, meeny, miney, moe. Certainly, they don't consider things like willingness, credibility, criminal history, usefulness, history of violence, relative culpability, etc. And, I am sure that all of the people who did not cooperate tried to do so, but were turned away because criminal defendants never refuse to cooperate when an offer of cooperation is made by an AUSA. Indeed, all defendants want to help the AUSA prosecute their friends, family members, and neighbors. But, the AUSAs are just evil. After all, most people become AUSAs because they really want to hurt people (and not just people, innocent people). The nonsense these AUSAs spew about public service, helping their communities, protecting our country from terrorists, is all just a bunch of bunk. Indeed, everything that is wrong with our criminal justice system is the fault of the AUSA. Come on!

I respect and admire you---always have. But, it is getting old.

Posted by: Zachary B. | May 27, 2014 6:41:04 PM

so in English those at the top of the fraud tossed the small fry at the bottom under the buss and the feebs were happy to help shove them into prison.

After all the small fry are the ones who won't know shit so can't as proved by this!

"Most of the mortgage criminals who assisted prosecutors got no prison time, and the average amount of incarceration for those 30 defendants was a little more than three months. By contrast, defendants who pleaded guilty but didn't provide substantial assistance to prosecutors, got average sentences of three years in prison."

then the little crooked shits wonder why more and more normal American citizens are reaching the point that it's past time to start over. with a new gov't

Posted by: rodsmith | May 29, 2014 12:24:42 AM

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