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United States v. Ritchie

United States Court of Appeals, Fourth Circuit

May 30, 2017

TIMOTHY L. RITCHIE, Defendant-Appellant.

          Argued: January 26, 2017

         Appeal from the United States District Court for the District of Maryland, at Baltimore. Richard D. Bennett, District Judge. (1:15-cr-00500-RDB-1)


          Jonathan Biran, BIRAN KELLY LLC, Baltimore, Maryland, for Appellant.

          Kathleen O'Connell Gavin, OFFICE OF THE UNITED STATES ATTORNEY, Baltimore, Maryland, for Appellee.

         ON BRIEF:

          Rod J. Rosenstein, United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Baltimore, Maryland, for Appellee.

          Before TRAXLER, DIAZ, and THACKER, Circuit Judges.

         Affirmed by published opinion. Judge Diaz wrote the opinion for the court, in which Judge Traxler and Judge Thacker joined except as to Part III.D. Judge Traxler wrote the opinion for the court as to Parts III.D and IV, in which Judge Thacker joined. Judge Diaz wrote a separate dissenting opinion as to Parts III.D and IV.


         Timothy Ritchie was convicted of making a false statement in a matter within the jurisdiction of the executive branch of the federal government, in violation of 18 U.S.C. § 1001(a)(2). The district court sentenced Ritchie to twelve months and one day in prison and ordered him to pay $1, 385, 444.83 in restitution to Bank of America. Ritchie does not contest his conviction or prison sentence but appeals the district court's order of restitution.

         Finding no error, a majority of the court affirms the district court's decision in its entirety.



         The facts relevant to this appeal are these. Ritchie owned Richland Homes, Inc., through which he built, purchased, and sold homes in Maryland and elsewhere. In July 2005, Ritchie agreed to buy three lots of a parcel of real property in Maryland (the "Property"). John Davis, a real estate settlement agent employed by Allshore Title Services, LLC conducted the closing and prepared a settlement sheet known as the Housing and Urban Development Form 1 ("HUD-1 form").[1]

         On the HUD-1 form, Ritchie was named as "Borrower, " and the line for "Cash from Borrower" listed a figure of $1, 153, 937.23. Ritchie, however, did not actually bring any funds to the closing, and both Ritchie and Davis knew that the HUD-1 form falsely reflected otherwise. The HUD-1 form was sent to Countrywide Bank which in turn wired $2, 445, 102 to Allshore to fund the settlement.

         Ritchie defaulted on this mortgage in 2007. Bank of America purchased Countrywide in 2008, and subsequently foreclosed on the Property. In the foreclosure proceedings, Bank of America filed an Affidavit of Compliance asserting that the outstanding principal balance on Ritchie's loan was $2, 491, 444.83. In May 2015, Bank of America sold the Property at a public sale for $1, 106, 000.

         Ritchie pleaded guilty to making a false statement in a matter within the jurisdiction of the U.S. Department of Housing and Urban Development ("HUD"). As set out in the plea agreement, the district court was free to order restitution for the full amount of the actual, total loss caused by Ritchie's offense. The plea agreement identified the following as possible bases for restitution: (1) the Victim and Witness Protection Act of 1982 ("VWPA"), 18 U.S.C. § 3663; (2) the Mandatory Victims Restitution Act ("MVRA"), 18 U.S.C. § 3663A; or, (3) as a condition of supervised release, pursuant to 18 U.S.C. §§ 3563(b)(2) and 3583(d). The government contended that the court could order restitution in the amount of "at least $454, 000." J.A. 13. Ritchie maintained, however, that restitution was not appropriate, and he reserved the right to appeal any order of restitution.


         Following Ritchie's plea, a probation officer prepared a Presentence Report ("PSR"), which set forth Ritchie's personal and financial history and calculated his advisory Guidelines range. The PSR also concluded that the MVRA applied to Ritchie's offense and that "restitution could be ordered . . . should the Court find that there was a loss in the case." J.A. 318. Ritchie did not object to the PSR.

         The parties thereafter filed sentencing memoranda. As relevant here, Ritchie claimed that the MVRA did not apply because his offense of conviction was not "an offense against property" within the meaning of the MVRA, 18 U.S.C. § 3663A(c). Ritchie also objected to making restitution because the government could not show that Bank of America, as successor to Countrywide, was "directly and proximately harmed as a result" of Ritchie's offense. In Ritchie's view: (1) HUD was the sole "victim" of his offense; (2) Countrywide knew that Ritchie did not bring funds to the closing and did not rely on Ritchie's false statement on the HUD-1 when it disbursed the loan; and (3) Bank of America's eight-year delay in foreclosing and its neglect of the Property were superseding causes of the Bank's alleged loss.

         In its sentencing memorandum, the government urged that Bank of America, as Countrywide's successor, was a "victim" under the MVRA and VWPA. The government also advised the court that "Bank of America [was] still in the process of compiling the final loss figure, " for purposes of restitution. J.A. 45 n.2. One day before the sentencing hearing, the government filed Bank of America's final loss figure, calculated as more than $1.5 million, along with its reply to Ritchie's sentencing memorandum. The district court deemed the submissions untimely, however, and declined to consider them.

         At the sentencing hearing, the government offered the affidavit filed by Bank of America in the foreclosure proceeding affirming that the principal balance on Ritchie's outstanding loan was $2, 491, 444.83, and the recorded Deed of Substitute Trustee showing that the Property sold for $1, 106, 000. Based on these documents, the government contended that the loss caused by Ritchie's offense for purposes of calculating the Guidelines range was the difference between these figures, or $1, 385, 444.

         In response, Ritchie argued that Countrywide had approved the loan before it received the false HUD-1 form and was also complicit in Ritchie's offense, and therefore suffered no loss. The district court rejected this argument, stating that "there is not a scintilla of evidence before me . . . that says there's any evidence that Countrywide knew full well there was not going to be any exchange of funds." J.A. 147. Ultimately, the court denied Ritchie's objection to the PSR, concluding that the actual loss to Bank of America for purposes of Ritchie's Guidelines calculation was $1, 385, 443.83.[2]

         The district court then turned to the issue of restitution. Ritchie reiterated his view that Bank of America "inherit[ed]" Countrywide's "[un]clean hands" and knowledge of the falsified HUD-1 form, and was therefore not entitled to restitution. J.A. 174-75. Ritchie also contended that as "a matter of public record, " Bank of America purchased "Countrywide's paper . . . at a steep discount, " and that any restitution ordered would constitute a "windfall" because Bank of America paid "nowhere near $2, 491, 000" for Ritchie's loan. J.A. 175.

         Although the district court stated that "[e]veryone knows" that Bank of America bought Countrywide's assets at a discount, it rejected Ritchie's arguments. J.A. 176. The court reasoned that "the precise loss resulting from this loan, resulting from [Ritchie's] clear lying on a document . . . [is] a very easy . . . arithmetic calculation." J.A. 177-78. The court applied the same calculation it arrived at for purposes of the Guidelines, and therefore ordered restitution in the amount of $1, 385, 444.83.

         Ritchie timely noted this appeal.


         "We review a district court's restitution order for abuse of discretion." United States v. Freeman, 741 F.3d 426, 431 (4th Cir. 2014). "Federal courts do not have the inherent authority to order restitution, but must rely on a statutory source to do so." United States v. Davis, 714 F.3d 809, 812 (4th Cir. 2013) (quotations marks omitted). As such, "[d]iscretion in ordering restitution 'is circumscribed by the procedural and substantive protections' of the statute authorizing restitution." United States v. Leftwich, 628 F.3d 665, 667 (4th Cir. 2010) (quoting United States v. Henoud, 81 F.3d 484, 487 (4th Cir. 1996)).


         We begin with a brief overview of the relevant statutory provisions. Outside of the probation context, restitution to victims of federal crimes is governed predominately by either the VWPA or the MVRA. See United States v. Abdelbary, 746 F.3d 570, 574 (4th Cir. 2014). The structure and language of the VWPA and MVRA are substantively the same, and the procedures for imposing and enforcing restitution pursuant to both statutes are set out in 18 U.S.C. § 3664. See 18 U.S.C. §§ 3663(d), 3663A(d).

         The critical difference between the statutes rests in the sentencing court's discretion: The VWPA authorizes a sentencing court to impose restitution, but requires the court to "consider the financial resources of the defendant" in determining whether, and in what amount, to award restitution to victims of certain federal offenses. See id. § 3663(a)(1)(B)(i). By contrast, "the MVRA mandates restitution in the full amount of the victim's loss" caused by certain federal offenses, irrespective of a defendant's financial condition or ability to pay. United States v. Dawkins, 202 F.3d 711, 715-16 (4th Cir. 2000) (citing 18 U.S.C. § 3663A).

         Ritchie lodges several challenges against the restitution order. First, he says that the district court abused its discretion by failing to identify the basis for ordering restitution. On the merits, Ritchie contends that a violation of 18 U.S.C. § 1001 is not an "offense against property" and that Bank of America is not a "victim" of Ritchie's offense within the meaning of the MVRA. Finally, he contends that the district court incorrectly calculated the amount of restitution due. We address each contention in turn.


         The district court did not state the basis for ordering restitution. Ritchie argues that this silence constitutes an abuse of discretion that requires remand. The government responds that the record is clear that the district court ordered restitution pursuant to the MVRA.[3] We agree with the government.

         Where a district court fails to state the basis for ordering restitution, our precedent permits us to review the record to ascertain the ground relied on for the order. See Freeman, 741 F.3d at 431-32 (conducting a "close review of sentencing transcript[, ] . . . judgment documents, " and plea agreement to determine basis for restitution order after district court failed to identify statutory authority for its order at sentencing). In Ritchie's case, we have little trouble concluding that the district court imposed restitution under the MVRA.

         To begin with, Ritchie stipulated in the plea agreement that the district court could order restitution under the MVRA, the VWPA, or as a condition of supervised release. And the PSR set forth explicitly that "[t]he provisions of the Mandatory Victim Restitution Act of 1996 apply to [Ritchie's] Title 18 offense, " J.A. 311, and further that, "[p]ursuant to [the MVRA], restitution could be ordered in this case." J.A. 318. Equally illuminating, the PSR said nothing about the VWPA or the statutes governing conditions of supervised release under its discussion of restitution.

         At the sentencing hearing, the district court confirmed that Ritchie and his lawyer had read the PSR and had no objections to it beyond the issue of actual loss for purposes of the Guidelines calculation. Thus, on this record evidence, specifically the PSR-duly adopted by the court and reviewed by Ritchie and his counsel-the district court clearly accepted the PSR's explicit finding that restitution could be ordered pursuant to the MVRA.

         Ritchie's reliance on Leftwich to urge a different conclusion is unavailing. In Leftwich, we vacated a restitution order after the district court failed to identify the statutory authority under which it had acted and neglected to conform to the statutory requisites of either the VWPA or the MVRA before ordering restitution. 628 F.3d at 668-69. As was the case with Ritchie, Leftwich knew from the plea agreement that the court could order restitution pursuant to the VWPA or the MVRA. Id. at 666. However, neither the Presentence Report nor the district court's statements from the bench in Leftwich identified the statutory authority for the award. Id. at 667. Thus, with no record evidence available to clarify the district court's basis for ordering restitution, we reasoned that "[t]he failure of the district court in this case to specify the statute under which it ordered restitution prevents us from effectively determining whether the court properly exercised its discretion in fashioning that restitution order." Id. at 667.

         Our concerns in Leftwich about appellate review of "the district court's exercise of discretion over the unknown" are not present here. Id. at 669. Rather, it's evident in this case that the district court ordered restitution pursuant to the MVRA.[4]


         Ritchie next contends that, if the district court imposed restitution under the MVRA, it erred because his offense of conviction is not an "offense against property" within the meaning of the restitution statute. To get there, Ritchie applies the "categorical approach, " under which courts "focus[ ] solely on the elements of the offense of conviction, comparing those to the commonly understood elements of the generic offense ...

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