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7th Circuit affirms lower court in elaborate mortgage fraud case

June 1, 2012

The 7th Circuit Court of Appeals has affirmed a District Court’s conviction and sentence for a man who defrauded buyers and lenders in northern Indiana.

In United States of America v. Michael Sheneman, No. 11-3161, Michael Sheneman and his son executed a scheme in which they sold more than 60 homes to four buyers with no real estate experience, two of whom were not United States citizens. The Shenemans falsified mortgage documents, misrepresenting citizenship status, income and employment, and forging signatures. They also deposited large sums of money into the buyers’ bank accounts to mislead lenders about the buyers’ assets.

Sheneman was subsequently convicted of four counts of wire fraud and sentenced to 97 months imprisonment. On appeal, he challenged the sufficiency of the evidence supporting his conviction, as well as the District Court’s application of two sentencing enhancements.

The 7th Circuit rejected Sheneman’s claim that he was an unwitting participant in the scheme, holding that he played a crucial role in every aspect of its execution from beginning to end.

Sheneman had argued that the District Court erred in applying a two-level enhancement because the scheme did not involve the use of sophisticated means. But the 7th Circuit held that the father and son used their knowledge of the real estate market and lending industry to avoid detection for several years and used other tactics to mislead buyers and lenders.

Sheneman also protested the sentence enhancements for a loss of more than $1 million and gaining more than $1 million in gross receipts from a financial institution, claiming his son’s conduct alone is what caused those losses. But the 7th Circuit held that Sheneman was involved in the overall scheme that caused those losses and could have reasonably foreseen that fraudulent funding was being secured for unqualified buyers. It therefore affirmed the District Court in all regards.

 

 

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