A northern Indiana couple convicted in a mortgage fraud scheme has lost its second appeal of the spouses’ sentences, with the 7th Circuit Court of Appeals ruling in its second opinion in the case that the district court did not err in calculating loss or imposing time served.
In 2005, Adrian Tartareanu and Minas Litos established a house-flipping business known as Red Brick Investment Companies. Together with Daniela Tartareanu — the only Red Brick employee with a real estate license — the company helped buyers with bad credit or limited finances apply for mortgage loans and sold 45 houses to these buyers between 2007 and 2009.
Though Red Brick provided down payments funds for each sale, the company falsely stated on loan applications that its buyers used their own money. The trio also helped buyers lie about their creditworthiness by reporting fictitious incomes and nonexistent bank accounts. After closing, Red Brick once again made undisclosed payments to their buyers to ensure they could make at least two payments on their loans before defaulting.
In 2008, Bank of America began an investigation into loan officer Stephanie Riggs’ loan files, which included 32 Red Brick sales loans. Riggs admitted the loan applications possibly contained false information, leading to her termination and the Tartareanus’ convictions on 16 counts of wire fraud and one count of conspiracy to commit wire fraud.
The U.S. District Court for the Northern District of Indiana initially sentenced Adrian to three years in prison and Daniela to 21 months and ordered the couple to pay Bank of America $893,015 in restitution, but the 7th Circuit Court of Appeals remanded for resentencing in February 2017 after finding the bank was not a proper restitution victim. On remand, the district court imposed the same sentences and ordered each defendant to pay a $30,000 fine, finding an intended loss of between $1.5 and $3.5 million, including a $1.3 million loss to Bank of America. The court also rejected Daniela’s request for a “minor role reduction,” finding each Red Brick employee had an equal part in the scheme.
The 7th Circuit upheld the Tartareanus’ new sentences on Thursday, with Judge William Bauer first writing the district court properly included Bank of America’s losses in the intended loss calculation. Intended loss includes the total amount of money the defendants intended to place at risk, Bauer said, regardless of whether an entity such as Bank of America – which the court previously found was complicit in the scheme — can truly be considered a “victim.”
The appellate panel also upheld the decision to deny Daniela’s request for a minor role reduction, pointing to evidence of her role in issuing kickback and down payment checks, signing intentionally inaccurate documents and engaging in similarly fraudulent activity. Finally, the circuit court found the Tartareanus waived their argument that the district court failed to address their affidavits and other documents — which they claimed demonstrated their belief that they were operating within the law – because defense counsel told the district judge the court had adequately addressed their arguments in mitigation.
The cases are United States of America v. Adrian Tartareanu and Daniela Tartareanu, 17-2759 and 17-2761.