Notable sentencing reversal by Seventh Circuit in mortgage fraud sentencing

For understandable reasons, mortgage fraud crimes and punishments are generating more controversies in the federal courts these days.  Consequently, I suspect lots of folks for lots of reasons may be interested in today's sentencing work by a Seventh Circuit panel in US v. Robertson, No. 11-1651 (7th Cir. Nov. 16, 2011) (available here).  Robertson gets started this way: 

In the late 1990s, Henry and Elizabeth Robertson were involved in a Chicagoland mortgage fraud scheme.  Through their company, Elohim, Inc., the Robertsons bought residential properties and then sold those properties to nominee buyers at inflated prices.  Along the way they provided lenders with false information about the buyers’ finances, sources of down payments, and intentions to occupy the residences.  The scheme involved 37 separate fraudulent transactions and resulted in a net loss of more than $700,000 to various lenders.

After the scheme collapsed, the Robertsons went bankrupt but were not charged with any crimes. They went about the laudable business of rebuilding their lives and rehabilitating themselves.  Elizabeth continued to work as a full-time nurse in a hospital’s pediatric intensive care unit.  Henry worked as a full-time cable installer and technician.  They raised their three children and became fully engaged in their community.  Each volunteered as a coach in youth sports, and Henry assisted in fighting crime in their neighborhood by serving as president of their block club.  Neither Henry nor Elizabeth engaged in any criminal activity from 1999 to 2010, apart from a reckless driving offense by Henry in 2002.

But the Robertsons could not escape their past. On the day before the ten-year statute of limitations for one crime would have expired, the government charged the Robertsons with one count of wire fraud, 18 U.S.C. § 1343, and two counts of bank fraud, 18 U.S.C. § 1344.  The Robertsons both pled guilty to a single count of wire fraud, and both were sentenced on March 2, 2011.  The sentencing court based their sentences on the 2010 United States Sentencing Guidelines that were then in effect.  Elizabeth was sentenced to 41 months in prison, and Henry was sentenced to 63 months. They were also ordered to pay more than $700,000 in restitution.

The Robertsons appeal from their sentences on several grounds. First, they argue that the district court’s use of the more severe 2010 Sentencing Guidelines violated the ex post facto clause of the Constitution, and they urge us to overrule United States v. Demaree, 459 F.3d 791 (7th Cir. 2006), which held that the ex post facto clause does not apply to changes in the now-advisory federal Sentencing Guidelines.  They also argue that their roles in the mortgage fraud scheme did not warrant a 2-level guide line enhancement imposed by the sentencing court pursuant to U.S.S.G. § 3B1.1(c) for their roles in organizing the scheme.  We reject these arguments.  But we agree with the Robertsons’ final argument, that the sentencing judge failed to consider adequately their unusually strong evidence of self-motivated rehabilitation.  For this reason, we vacate their sentences and remand for resentencing.  Because we remand, we do not address the Robert sons’ additional argument that their sentences were substantively unreasonable.