U.S. v. Litos

In prosecution on wire fraud charge stemming from defendants’ scheme to defraud bank out of money loaned to alleged buyers of defendants’ properties, when said buyers misrepresented to bank that they had made certain down payments on said properties, where defendants had actually made said down payments, Dist. Ct. erred in granting govt.’s motion for imposition of $893,015 restitution order to repay bank for its losses. Although bank had incurred said losses, instant restitution order was improper, where record showed that: (1) bank had failed to conduct any inquiry regarding statements made on loan applications; and (2) bank would have discovered that none of prospective buyers could have made instant down payments or could have repaid mortgage had bank investigated instant loan applications. As such, Ct. remanded matter back for further consideration as to whether defendants should be fined in amount of restitution order so as to disgorge instant profits from defendants, but not reward bank for its reckless conduct. Ct. also ignored appellate waiver contained in plea agreement to said wire fraud charge made by one defendant, after finding that it would be unjust to enforce instant appellate waiver, where said defendant would be fully responsible for payment of restitution order to bank under circumstances where restitution order was wrongfully imposed.