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Sentencing – Restitution

By: WISCONSIN LAW JOURNAL STAFF//August 22, 2014//

Sentencing – Restitution

By: WISCONSIN LAW JOURNAL STAFF//August 22, 2014//

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Sentencing – Restitution

In a bank fraud prosecution, it is not a defense to a restitution order that the losses were caused by the borrowers’ defaults rather than the defendant’s fraud.

“[W] reject Scalzo’s claim that the government failed to prove by a preponderance of the evidence that he caused the losses to the Credit Union and its insurer. Scalzo complains that the losses were the result of the borrowers’ defaults, not any criminal conduct on his part. Victims seeking to recover their losses from a defendant must prove that the defendant caused the loss, and must demonstrate that the loss would not have occurred but for the defendant’s misconduct. United States v. Allen, 529 F.3d 390, 396 (7th Cir. 2008). We have already concluded that these loans were criminal in nature, as Scalzo conceded in his plea agreement and as the district court correctly found. As for causation, perhaps the most revealing evidence in the record is that CUNA paid the claims under the ‘dishonest employee’ provision of the Credit Union’s insurance policy, recognizing that the losses were caused by actions Scalzo took that were contrary to his employer’s interests in originating these loans. R. 16, at 3. Scalzo made the loans to borrowers he knew were poor risks, using inflated appraisals of their collateral, in order to conceal earlier fraudulent loans at the Bank. According to the PSR, Scalzo urged both C.P. and P.D. (and his parents) to borrow from the Credit Union in order to pay off their defaulted loans at the Bank once the Bank began investigating the loans and pressing for payments. That the unqualified borrowers then defaulted on the new loans was an easily anticipated consequence of the scheme. The Credit Union and its insurer would not have suffered losses on these two loans but for Scalzo’s fraudulent scheme. In short, the district court did not abuse its discretion in concluding that Scalzo caused the losses to the Credit Union and its insurer.”

Affirmed.

13-3354 U.S. v. Scalzo

Appeal from the United States District Court for the Eastern District of Wisconsin, Adelman, J., Rovner, J.

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