The Ninth Circuit Court of Appeal overturned a $107 million forfeiture
order against Melissa Beecroft, who was convicted, along with others,
for her part in a mortgage fraud scheme that bilked lender banks for over
$52 million. In a statement from the court, they said the amount was excessive
and disproportionate to the maximum penalty.
The panel of judges reversed the award and sent the case back to district
court for reconsideration. Although the panel reversed the largest forfeiture
award, Miss Beecroft still faces stiff penalties for her conviction of
conspiracy to commit bank fraud and mail and wire fraud in connection
with a massive scheme related to the buying and selling of Las Vegas properties.
Beecroft, along with co-conspirators Steven Grimm and Eve Mazzarella, played
a role in a scheme that involved more than 400 straw buyers and 227 properties.
The straw purchases between 2003 and 2008 totaled more than $100 million
and caused banks to lose more than $52 million on the transactions. At
trial, prosecutors said that Beecroft, a former administrative assistant
at Grimm’s company, was involved in perpetrating fraud on 143 transactions,
and profiting more than $400,000 in commissions.
U.S. District Judge Robert L. Hunt, sentenced Beecroft to three years in
prison and five years of supervised release, also ordering her to pay
$2.3 million in restitution, $107 million in forfeiture, and an additional
$1.4 million in forfeiture on the other counts. Beecroft appealed the
restitution and forfeiture amounts claiming that they were excessive and
violated her rights under the Eighth Amendment.
In issuing his order for the three-judge Ninth Circuit panel, Judge Diarmuid
F. O’Scannlain wrote, “Without even an argument supporting
the propriety of the $107 million forfeiture, we have no choice but to
conclude that an order which so vastly outpaces the otherwise available
penalties for Beecroft’s criminal activity runs afoul of the excessive
Regarding the $2.3 million restitution order, the panel upheld the award
as it was proper under the Mandatory Victims Restitution Act. The panel,
therefore, rejected Beecroft’s unconstitutionality argument because
Beecroft failed to argue that the government’s and court’s
methodology in calculating the $2.3 million restitution award was excessive
and unconstitutional. Without there being an error in the loss calculation,
Beecroft could not show that the requiring her to pay back the victims
was excessive or grossly disproportionate to her crimes that, in part,
directly caused the loss in the first place.
As concerns the $1.4 million forfeiture order, the panel ruled that Beecroft
was jointly and severally liable for the amount skimmed because she was
“integral” to the fraud scheme that resulted in $107 million
in profits. As such, the panel rejected her argument that she shouldn’t
be responsible for the $1.4 million forfeiture order based on total loan
proceeds because she only made a small commission on each transaction.
The panel court, however, took a different course when they ruled that
the $107 million forfeiture amount ordered for her actions in the conspiracy
“stands apart” from the rest, stating that the amount is 100
times more than the maximum punishment allowed under law and over 5,000
times greater than the lower end of the authorized range. The panel court
noted that the sentencing guidelines for Beecroft’s crimes provided
a forfeiture range of $20,000 to $1 million.
In issuing the panel’s decision, Judge O’Scannlain wrote, “Even
accounting for the fact that Beecroft faced potentially significant prison
time as well, this is a tremendous disconnect between the forfeiture amount
and Beecroft’s legally available fine.”
The case was heard before the U.S. Court of Appeals for the Ninth Circuit,
under United States of America v. Melissa R. Beecroft, case number 12-10175.
Contact Geraci Law Firm at (949) 298-8050 today, and ask for
Jenny Park for more information.