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United States v. Chittenden

United States Court of Appeals, Fourth Circuit

July 25, 2018

UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
LORENE CHITTENDEN, Defendant-Appellant. UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
LORENE CHITTENDEN, Defendant-Appellant. UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
LORENE CHITTENDEN, Defendant-Appellant. UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
LORENE CHITTENDEN, Defendant-Appellant.

          On Remand from the Supreme Court of the United States. ( S.Ct. No. 17-5100)

          Joseph Ray Pope, WILLIAMS MULLEN, Richmond, Virginia, for Appellant.

          Christopher John Catizone, OFFICE OF THE UNITED STATES ATTORNEY, Alexandria, Virginia, for Appellee.

          Before GREGORY, Chief Judge, KEENAN, and FLOYD, Circuit Judges.

          GREGORY, CHIEF JUDGE

         Lorene Chittenden was convicted of bank fraud and conspiracy to commit bank and mail fraud for her role in a fraudulent mortgage scheme. Although Chittenden received only $231, 000 in proceeds from these crimes, the district court ordered her to forfeit over $1 million to cover proceeds that her co-conspirators had received and dissipated. In United States v. Chittenden, 848 F.3d 188 (4th Cir. 2017), we affirmed Chittenden's conviction and sentence. The Supreme Court later decided Honeycutt v. United States, 137 S.Ct. 1626 (2017), vacated our original decision in this case, and remanded for us to reconsider our holding in light of Honeycutt. Chittenden v. United States, 138 S.Ct. 447, 447-48 (2017) (mem.). For the reasons below, we now vacate the district court's forfeiture orders and remand for further proceedings. All other aspects of the district court's judgment are reaffirmed.

         I.

         In 2013, a federal grand jury indicted Lorene Chittenden for originating and submitting fraudulent mortgage loan applications.[1] At the government's request, the district court restrained nearly all of Chittenden's assets pending the outcome of the charges. After a seven-day trial, a jury convicted Chittenden of one count of conspiracy to commit bank and mail fraud, under 18 U.S.C. § 1349, and ten counts of bank fraud, under 18 U.S.C. § 1344. The evidence showed that Chittenden, a loan officer at George Mason Mortgage, earned hundreds of thousands of dollars in loan commissions by falsely inflating the incomes of unknowing, first-time homebuyers. Higher stated incomes resulted in larger loans, and because each commission was a percentage of the loan, larger loans generally meant higher loan commissions. Chittenden worked in concert with numerous realtors who received hefty real estate commissions by selling houses to her clients. Similar to the loan commissions, each real estate commission was a percentage of the house's sale price such that higher sale prices resulted in greater profits for the realtors.

         Post-trial, the district court entered a forfeiture order under 18 U.S.C. § 982(a)(2), pursuant to the procedures in 21 U.S.C. § 853.[2] The order consisted of a $1, 513, 378.82 money judgment "representing the foreseeable proceeds of the offenses of which the defendant has been found guilty." J.A. 1967. The court noted that Chittenden personally had received only $231, 000 in fraudulent loan commissions and that none of Chittenden's restrained assets were proceeds traceable to the fraud-indeed, the government had stipulated as much. But, relying on our decision in United States v. McHan, 101 F.3d 1027 (4th Cir. 1996), the court concluded that Chittenden was jointly and severally liable for the reasonably foreseeable proceeds of the conspiracy.

         Thereafter, because the government had not recovered any proceeds from Chittenden's co-conspirators, it moved for forfeiture of Chittenden's untainted, restrained assets to satisfy the entire $1, 513, 378.82 money judgment. Under 21 U.S.C. § 853(p), a court "shall order the forfeiture of any [untainted] property of the defendant" when, "as a result of any act or omission of the defendant," the proceeds of the underlying crime have been placed beyond the court's reach. The district court found that Chittenden's co-conspirators had dissipated, comingled, or transferred their respective proceeds such that the government was unable to locate or seize them. Relying on McHan again, the court determined that § 853(p) required forfeiture of Chittenden's untainted assets as a substitute for her co-conspirators' proceeds that the government could not recover. However, the court found that the government had failed to prove that $250, 000 of co-conspirator proceeds and all $231, 000 of Chittenden's proceeds were in fact out of reach. Accordingly, the court entered a second order reducing the amount of untainted assets the government could take from $1, 513, 378.82 to $1, 032, 378.82.

         Chittenden appealed to this Court, challenging the initial seizure of her assets, the validity of her conviction, and the forfeiture orders. See Chittenden, 848 F.3d at 192. Specifically, she argued that the government's pretrial seizure of her assets violated her Sixth Amendment right to counsel, that the government failed to present sufficient evidence to support her convictions, that the district court erred in admitting certain hearsay evidence, that the government constructively amended the indictment, that the district court lacked jurisdiction to enter the forfeiture order, and that the district court improperly ordered forfeiture of her untainted assets based on her co-conspirators' acts of dissipating the conspiracy proceeds. Id. at 194-204. We rejected each of these arguments and affirmed the district court's judgment. Id. Chittenden petitioned the Supreme Court for review.

         Following our decision, the Supreme Court decided Honeycutt v. United States, 137 S.Ct. 1626 (2017). The Court held that 21 U.S.C. § 853(a)(1)-which mandates forfeiture of proceeds from certain drug crimes-limits such forfeiture "to property the defendant himself actually acquired as the result of the crime." Id. at 1635. "[T]he statute does not countenance joint and several liability" for property the defendant's co-conspirators alone obtained. Id. at 1632-33. The Court also stated that when tainted property falls outside the government's reach, § 853(p) does "not authorize the Government to confiscate substitute property from other defendants or co-conspirators; it authorize[s] the Government to confiscate assets only from the defendant who initially acquired the property and who bears responsibility for its dissipation." Id. at 1634.

         In light of this decision, the Supreme Court granted Chittenden's writ of certiorari, vacated our original judgment, and remanded the case to us for further consideration. Chittenden v. United States, 138 S.Ct. 447, 447-48 (2017) (mem.). We requested supplemental briefing on what impact, if any, Honeycutt ...


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