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United States v. Bold

May 25, 2006


The opinion of the court was delivered by: District Judge Susan J. Dlott

Magistrate Judge Timothy Hogan


This matter comes before the Court on restitution claimant Trustcorp Mortgage Company's ("Trustcorp's") Motion to Clarify this Court's January 20, 2006 Order Adopting the Magistrate's Report and Recommendation on Restitution (doc. #32) (hereinafter "Restitution Order"). (Doc. #33.)*fn1 With the discussion at Part II.A below, Trustcorp's Motion (doc. #33) is DENIED. Also, for the reasons at Part II.B below, the Clerk of Court is DIRECTED to AMEND the Court's written Judgment for defendant Donald Powers, Jr. (doc. #19 to 1:05-cr-11) to omit all references to a $1,609,666.00 "restitution" obligation to Trustcorp.


In October 2005, this Court sentenced Defendants Bold, Roberson, Jasper, and Powers ("Defendants"), among other individuals, to terms of incarceration for their participation in a mortgage fraud or "flipping" conspiracy. (Doc. #32 at 2.) Representatives of Trustcorp, a bank that sustained losses on fraudulent loans, appeared at Defendants' sentencing hearings to petition the Court for awards of criminal restitution pursuant to the Victim and Witness Protection Act ("VWPA"), 18 U.S.C. § 3663 et seq., and Mandatory Victims Restitution Act ("MVRA"), 18 U.S.C. § 3663A. (Id.) In order to accommodate its upcoming medical leave while also ensuring a full hearing on restitution issues during the 90 days the statutes provide for entry of a final restitution order, the Court set Trustcorp's restitution demands against Defendants -- along with other restitution claims relating to the "flipping" scheme -- for hearing before Magistrate Judge Timothy Hogan. (Id. (citing in part 18 U.S.C. § 3664(d)(5), (d)(6).)

On December 1st and 8th, 2005, Magistrate Judge Hogan held an evidentiary hearing on restitution. (See, e.g., doc. #32 at 3.) Counsel for Trustcorp and Defendants appeared, along with the United States Attorney overseeing Defendants' prosecutions and sentencings. (Id.) The Magistrate opened the hearing by inviting participants to put on the record any agreements reached between Trustcorp and Defendants. (See, e.g., Report and Recommendation on Restitution ("R&R"), doc. #35, at 1.)*fn3 The Magistrate's R&R on the hearing, issued on December 16th, 2005,*fn4 describes those announced agreements as follows:

1. Trust Corp and Defendant Roberson agree that the appropriate restitution amount is $616, 292.02 for all properties except 1120 Eddy Street. Both Trust Corp and Roberson envision that the Court use its number as a starting point for its eventual restitution order.

2. Trust Corp withdraws its request for restitution with respect to Defendants Minger, Killinger and Bold because of out-of-court settlements . . .*fn5

3. Trust Corp and Defendant Jasper agree that an appropriate amount of restitution relative to 103 Winfield is $55,264 and have reached an out-of-court settlement to that end.

4. Trust Corp and Defendant Powers have reached an out-of-court settlement and agree that the appropriate amount of restitution is $500,000, payable as follows: $12,000 per year for 30 years and a final balloon payment of $140,000. $2500 to be paid on 12/31/05 and $2500 to be paid on 1/31/06 and both amounts to be credited to the $500,000 debt. Security for the debt to be provided by Defendant Powers and to be satisfactory to Trust Corp.

(Doc. #35 at 1-2.)

The body of the R&R is devoted to an examination of the legal and factual issues raised by the demands of another restitution claimant, the neighborhood group Price Hill Will ("Price Hill"), against Ronald Trester. (See generally id. at 2-11.) In light of the apparent settlements, the R&R does not present any of the facts or legal issues surrounding Trustcorp's restitution claims against Defendants. Instead, it simply notes in conclusion that "Trust Corp negotiated out-of-court settlements with all Defendants save Defendant Trester." (Id. at 12.)

On January 20, 2006, this Court entered an Order adopting, with additional analysis, the Magistrate Judge's R&R. (Doc. #32.) Like the R&R, the Order focuses largely on Price Hill's claim against Trester. (See id. at 6-20.) However, it does address Trustcorp's restitution claims against Bold, Roberson, Jasper and Powers. In its introductory discussion, the Court notes that it "does not rule on restitution against Defendants Charlene Bold, Horace Roberson, Donald Powers, Jr., and Steven Minger, in part because the relevant demands have been withdrawn pursuant to civil settlements." (Id. at 1.) The Court goes on to explain that While the [Magistrate's] hearing was initially designed to determine the propriety of all the restitution claims referenced above, all but one of those claims -- Price Hill Will's claim against Defendant Trester -- were gradually withdrawn as Trustcorp and Price Hill Will reached out-of-court settlements with the other Defendants. (Id. at 3.) The Order concludes with the following analysis as to Trustcorp's claims:

Trustcorp has withdrawn its demands against Bold, Roberson, Jasper, Powers and Killinger, pursuant to civil settlements. See Introduction and Part I, supra. Some decisions, however, suggest that private parties cannot "waive" application of criminal restitution statutes by entering into civil settlements, and that a court must still order restitution against a settling defendant unless it determines that the settlement in question entirely "offsets" the relevant losses or serves the penal purposes associated with restitution. See 18 U.S.C. ยง ...

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