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Ninth Circuit:
Mastermind of Massive Fraud Scheme to Stay Put in Prison
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals has affirmed an order denying a compassionate release to Charles Head who was sentenced in 2014 to 35 years in prison based on having masterminded a massive mortgage fraud scheme that preyed on desperate homeowners who were facing foreclosures.
District Court Judge Kimberly J. Mueller of the Eastern District of California rejected Head’s motion on June 6, 2022. A Ninth Circuit panel, in a memorandum opinion on Tuesday, observed that Mueller “denied the motion based solely on” her “conclusion that the 18 U.S.C. § 3553(a) [sentencing] factors did not support relief,” declaring:
“The district court’s analysis was not improper.”
Addressing “the nature and circumstances of the offense”—a factor under §3553(a)(1)—Mueller said:
“Head’s crimes, while non-violent, were extremely serious and harmful: He led two large and sophisticated schemes that resulted in a loss of at least $22,658,446.42, including to many persons who lost their homes.”
Changed Posture Claimed
Turning attention to “the history and characteristics of the defendant,” also under §3553(a)(1), she rejected Head’s assertion that a different picture is presented now than when he was sentenced because two unrelated crimes he was alleged to have committed are no longer factors.
The judge acknowledged that his conviction for possession of an assault rifle has been overturned and he has been adjudged “factually innocent” of the crime. However, she pointed out, under sentencing guidelines, a term of 180 years could have been imposed, but she chose a lesser term of 35 years, “a 145-year downward variance from the 180-year Guidelines recommendation.”
Mueller said if exoneration on the weapons charge had occurred before the Sept. 3, 2014 sentencing for mail fraud, “this would not have changed the Guidelines range of life imprisonment” and would not “have changed this court’s ultimate conclusion that the appropriate sentence for Head’s crimes” was 35 years.
Also removed from the picture, Head argued, is the allegation that, while on pre-trial release on the mail fraud charges, he ran an “escort service” in Pittsburgh. Mueller said in her order:
“[U]nlike the charge for possession of an assault rifle, Head does not claim he was innocent of this offense. Rather, the case was dismissed for failure to prosecute….In any event, those then-pending charges contributed neither to Head’s total offense level nor to his criminal history category, and the court did not rely on them in making its sentencing decision.”
Sentencing Goal
Under §3553(a)(2)(A), a sentence should be designed “to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense.”
Mueller commented:
“Head has served 134 months of his original 420-month sentence; this amounts to roughly 32 percent of his original sentence. A nearly 70-percent reduction of Head’s original 420-month sentence would not reflect the seriousness of his offense, promote respect for the law, or fulfill the need for ‘just punishment.’ ”
A court must also consider, under §3553(a)(2)(C), what sentence is needed “to protect the public from further crimes of the defendant.” The judge acknowledged:
“On the record before it, the court cannot conclude that Head has a violent nature or that he would put the community in physical danger if released.”
She added, however:
“On balance, the relevant sentencing factors weigh against granting Head’s motion for compassionate release.”
Alternate Approach
Head argued, in the alternative, that if Mueller won’t slash his sentence to time served based on a compassionate release, she should bump it down to avoid disparity in his prison term and that of his 18 co-conspirators, taking into account “his extraordinary post-sentencing rehabilitation” and other factors. Mueller responded:
“[W]hile the court acknowledges and commends Head for his post-sentencing rehabilitation, it cannot say his progress rises to the level of ‘extraordinary.’ It does not warrant reconsidering whether maintaining Head’s sentence creates an unjustified sentencing disparity between Head and his codefendants, a question this court has addressed on numerous occasions.”
She added:
“The court once again notes that there was good reason for Head’s receiving the greatest sentence. He was the leader and organizer of the massive mortgage fraud and foreclosure rescue fraud conspiracies for which he is serving time.”
Ninth Circuit’s Affirmance
Tuesday’s Ninth Circuit opinion sets forth:
“Head…contends that the § 3553(a) factors weigh in favor of release because his criminal history score has been lowered, his prison disciplinary history has been insignificant and his rehabilitative efforts extensive, and his sentence is much longer than those of his codefendants. We disagree. The district court did not abuse its discretion in concluding that, even though Head had made rehabilitative efforts and did not present a danger to the community, the nature and circumstances of his offenses, his unique leadership role in the two conspiracies, and the time remaining on his below-Guidelines sentence did not support compassionate release.”
Signing the opinion were Ninth Circuit Judges Mark J. Bennett, Eric D. Miller, and Lawrence VanDyke.
The case is United States v. Head, 22-10154.
U.S. Attorney’s Explanation
The U.S. Attorney’s Office for the Eastern District of California on May 30, 2013, upon the jury’s conviction of Head that day in the first of two trials on separate charges, commented that “[u]ltimately, the victim homeowners were left with no home, no equity, and with damaged credit ratings.” Explaining the scheme, it said:
“The evidence at trial established that the defendants solicited homeowners facing foreclosure, promising to help the homeowners avoid foreclosure and repair their credit. Instead, through misrepresentations, fraud, and forgery, the defendants led the victims to complete transactions that substituted straw buyers for the victim homeowners on the titles of properties without the homeowners’ knowledge.”
It continued:
“These straw buyers were often friends and family members of the defendants, or were solicited on the Internet. Once the straw buyers were on title to the homes, the defendants applied for mortgages to extract the maximum available equity from the homes. The defendants then shared the proceeds of the ill-gotten equity and the ‘rent’ that the victim homeowners paid them.”
The office said that “between January 2004 and June 2006, the defendants obtained over $90 million in fraudulent loans, caused estimated losses of over $50 million, and stole title to over 300 homes.”
Order for Restitution
In sentencing Head, Mueller ordered payment by him of restitution in the amount of $9,534,240.21 in connection with the first case and $7,563,710.26 stemming from losses by victims in the second case. It appears unlikely that any appreciable portion of those amounts will be remitted.
Mueller on April 14 denied Head’s motion for an order lowering payments from the $240 he has been paying to $25 per quarter. The inmate submitted that the prison in which he is presently incarcerated does not have an inmate work program and his father is no longer giving him money.
Head proposed paying off victims at a rate of $25 per quarter.
The judge said that Head must exhaust his administrative remedies before making his motion.
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