WASHINGTON â?? More than 100 borrowers who were overcharged on mortgage loans as a result of a wire fraud conspiracy have asked a federal appellate court, in a case of first impression, to recognize victims of financial crimes as "crime victims" under the federal Crime Victims' Rights Act, and entitled to restitution. The borrowers, represented by former federal district judge, Paul G. Cassell of the University of Utah S.J. Quinney College of Law and Alan E. Tannenbaum of Levin Tannebaum in Sarasota, Fla., filed a petition for a writ of mandamus in the 11th U.S. Circuit Court of Appeals on Dec. 2. The petition asks the appellate court to direct the U.S. District Court for the Middle District of Florida to recognize the borrowers as victims of the crime charged in U.S. v. Coon, No. 8:08-CR-441-T-17. "We think this is going to set an important precedent that persons harmed by financial crimes are entitled to exercise rights under the CVRA, particularly the right to restitution," said Cassell, a noted victims' rights advocate. "We're not saying every collateral or incidental effect creates victim status. The statute requires direct and proximate harm. We think we clearly fit it here." Philip W. Coon has pleaded guilty to the federal offense of conspiring with others to commit wire fraud. The fraud involved Coon overcharging borrowers on their mortgage loans, personally profiting from those overcharges and thus depriving his bank employer of its right to his honest services. The point-skimming scheme resulted in the borrowers paying thousands of dollars in extra charges as well as in interest on the extra points. Coon stole more than $1.1 million through the scheme. At Coon's plea hearing, the borrowers asked to be heard as crime victims. Coon's defense counsel argued that the bank was the only victim. The government, when asked for its position by the hearing magistrate judge, "tentatively" said the borrowers were not victims because there was no fiduciary duty between them and Coon. After the magistrate judge decided not to hear the borrowers, they filed motions in the district court showing how they had been directly harmed by the conspiracy. The district court concluded that the bank was the only victim and denied their motions. In the 11th Circuit mandamus petition, Cassell and Tannenbaum argue that Congress passed a remedial statute "designed to broadly extend rights to all persons who have suffered harm 'as a result of' a crime. Numerous appellate courts have held, they argue, that a crime can harm many different people in many different ways, "yet they are all entitled to their rights as `victims' if the harm was directly and proximately caused by the crime." In re Janis W. Stewart v. U.S. District Court, No. 08-16753-G. The district court, they argue, did not challenge the borrowers' facts, but concluded â?? erroneously â?? that because the criminal information alleged that Coon had deprived the bank of its right to his honest services, the bank was the only victim. The petition also contends the magistrate judge committed legal error by refusing to hear an oral objection to the Coon plea by the borrowers' counsel, and instead holding that a previously filed, written motion was required. The CVRA states that victims have a right to be "heard" at plea and other hearings, according to Cassell, and there is no other requirement. The petition urges the 11th Circuit to apply ordinary appellate review of their claims and not the heightened, demanding standard applied to those seeking mandamus relief in other contexts because the plain language and legislative history of the CVRA contemplates ordinary appellate review. "There is a clean circuit split now on what standard of review applies to crime victims' petitions," said Cassell, noting that the 2d, 9th and 3d circuits use ordinary appellate review, and the 5th and the 10th apply the heightened mandamus standard of "clear and indisputable" error. In response to the petition, Coon's counsel, James E. Felman of Kynes, Markman & Felman in Tampa. Fla., told the court, "The Petition is a study in the avoidance of both the actual crime of conviction and of the fact that it did not cause any harm to [Stewart] or any other borrower. The United States stipulated in Mr. Coon's plea agreement that his conduct did not cause harm to the home buyer/borrowers: `The additional one percent charged as a result of the conspiracy did not affect the amount paid by the borrower as the builder/seller was responsible for the payment of all closing costs.' " The government, in its response, agreed, saying Coon's admission, under oath, supported the district court's decision that the borrowers were not victims of the conspiracy. "Moreover, although the borrowers submitted several documents from the loan files that may suggest the closing costs may have been paid by the borrower out of the loan proceeds, those documents paint an incomplete picture of the loan transactions involved in this case," said U.S. Attorney A. Brian Albritton, adding that the borrowers fail to meet the heightened mandamus review standard of "clear and indisputable" error.
Wow, that makes alot of sense....I'm pretty sure the bank wasn't the one who paid that 1.1 million that he stole....I dont see how they can logically say that the borrowers(and sellers/builders) weren't victims even though they are the ones paying the thousands of extra dollars. one word.....retarded.
The law often assumes that people in arm's-length transactions will act according to their best interests, and thus when there's a willing buyer and a willing seller there's no crime even if the deal is stupid. OTOH, If you throw out such concepts as fiduciary duty in this instance, it makes far more sense that the customers were robbed ... heck, the bank pocketed more money because of the guilty party's actions. It's a bit of a stretch to say that the bank was deprived of its employees' honest services.
It's all just one part of the big picture that started this credit crisis, uninformed consumers not doing their homework.....
