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United States v. Scalzo

United States Court of Appeals, Seventh Circuit

August 21, 2014

UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
JAMES A. SCALZO, Defendant-Appellant

Argued February 18, 2014

Page 740

Appeal from the United States District Court for the Eastern District of Wisconsin. No. 2:12-cr-00262-LA-1 -- Lynn Adelman, Judge.

For United States of America, Plaintiff - Appellee: Carol L. Kraft, Attorney, Office of The United States Attorney, Milwaukee, WI.

For James A. Scalzo, Defendant - Appellant: Michael J. Cohn, Attorney, Pledl & Cohn, Milwaukee, WI.

Before ROVNER, WILLIAMS, and TINDER, Circuit Judges.

OPINION

Page 741

Rovner, Circuit Judge.

James A. Scalzo pled guilty to one count of bank fraud, in violation of 18 U.S.C. § 1344, and one count of money laundering, in violation of 18 U.S.C. § 1956. The district court sentenced him to thirty-five months' imprisonment, and ordered him to pay restitution in the amount of $679,737.23. On appeal, Scalzo challenges only the restitution order. We affirm.

I.

In 2008 and 2009, Scalzo was employed as a bank officer, first at Fox River State Bank (the " Bank" ) in Burlington, Wisconsin, and then at Consumers Cooperative Credit Union (the " Credit Union" ), in Round Lake Beach, Illinois. Between April 1, 2008 and October 31, 2009, he originated and approved multiple loans for unknowing and unqualified borrowers without adequate supporting financial information or collateral. On the basis of these loans, he was charged in a two-count Information with a scheme to defraud. As part of that scheme, he forged borrowers' signatures on loan documents, redirected funds from the loans to his own personal use without the knowledge of the borrowers, and took funds from some fraudulent loans to pay off balances on previous fraudulent loans in order to conceal the original fraud. The Information listed nine loans as part of the scheme, six from the Bank and three from the Credit Union. Although Scalzo pled guilty to the Information that listed all of these loans as part of his fraudulent scheme, he objected to the inclusion of two of the Credit Union loans in the court's restitution order. He asserted that the government lacked a sufficient factual basis to establish that these two loans were fraudulent in nature, and he complained that these loans were not part of the negotiated plea with the government. Because the guidelines range was the same whether or not these loans were counted as part of the scheme, the court deferred ruling on restitution and sentenced Scalzo to a term of imprisonment. The court then invited further briefing on the disputed loans and notified the parties that it intended to rule on restitution in ninety days.

Less than a week later, the government supplemented the Presentence Investigation Report (" PSR" ) with additional information explaining the two disputed Credit Union loans, and filed a " Restitution Memorandum" describing the role of these two loans in Scalzo's overall fraud scheme. According to the government's submissions, on June 25, 2008, while working at the Bank, Scalzo originated a loan in the amount of $230,000 for P.D., a man with a low credit score and no collateral.[1] Scalzo skimmed $35,500 off of P.D.'s loan and deposited it into an account associated with Scalzo, in which P.D. had no interest. Similarly, on July 25, 2008, Scalzo arranged a $125,000 Bank loan for C.P., without supporting documentation as to the credit-worthiness of C.P. or the value of his collateral. Scalzo siphoned $8500 from this loan for himself. Scalzo later told C.P. that he needed to refinance the loan, and on October 13, 2008, Scalzo arranged a second loan for C.P. in the amount of $158,000, again from the Bank. This time, Scalzo took $7500 for his own use. Neither borrower was aware that Scalzo had misappropriated funds from their loans for his own use.

Eventually, the Bank began to investigate P.D.'s loan and ...


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