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A former banker from St. Paul, Minnesota is appealing his 3.5-year prison term for his involvement in a sophisticated loan scheme, hoping to get a third bite at the sentencing apple.
Fourth time's the charm, maybe? If not, well, at least we'll know a little more about what "actual loss" means for sentencing purposes in fraud cases.
John Markert, the former president of Pinehurst Bank in St. Paul, was convicted in 2012 for trying to cover up a Pinehurst customer's $1.9 million overdraft with a straw borrower scheme. Essentially, a customer unlawfully withdrew the $1.9 million and Markert helped put together a so-called nominee loan scheme, where the overdraft was covered by five new borrowers. The package of five loans, totaling $1.9 million, was crafted to keep the Highland Park bank in business.
Markert was acquitted of bank fraud by the jury, but found guilty of misapplication of bank funds. U.S. District Judge Ann Montgomery sentenced Markert to 3.5 years after his 2012 trial. Markert appealed both his conviction and his sentence.
This past October, a three-member panel of the Eighth Circuit Court of Appeals unanimously ordered Montgomery to re-sentence him. The decision made by the three-member panel hinged on how the bank's loss was determined.
The panel disagreed with trial court's decision that the amount of loss should equal the bank's exposure, totaling $1.9 million. They preferred an "actual loss" approach, primarily because in reality, the bank didn't lose any money at all.
Myron Bright, wrote in a dissent that the evidence wasn't sufficient to support Markert's conviction, and that he'd reverse his conviction and release him from prison. But James Loken and Kermit Bye supported upholding his conviction.
At a December hearing, Montgomery re-imposed her original sentence of 3.5 years, saying that even after factoring in repayments on the loans that had been made when she sentenced Markert, the 3.5-year term was still at the low end of the sentence she could have given him, reports the St. Paul Pioneer Press.
With Markert's case on appeal yet again, the discussion will largely turn on the definition of "actual loss."
Last time, the panel pointed out that Markert's case was decided before the Sentencing Commission adopted extensive revisions to the guidelines and commentary governing the calculation of loss for theft and fraud offenses, revisions intended to resolve several issues that had split the circuits.
Under the revised guideline, "actual loss" is now defined as "the reasonably foreseeable pecuniary harm that resulted from the offense."
"Actual loss" under the revised guideline is a "net loss" concept based upon "the difference between what the victim paid and what the victim recovered plus any other forms of reasonably foreseeable pecuniary harm that resulted from the offense."
Since the sentencing guidelines were revised after Markert's case was decided -- and the previous appeals panel noted that -- it'll be interesting to see what the appeals panel says this time around (and whether there's going to be an all-out brawl over Montgomery's refusal to pay their last order any heed).
It's not clear yet which judges on the Eighth Circuit will hear Markert's latest appeal.
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