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United States v. Woolsey

United States District Court, E.D. Michigan, Southern Division

February 15, 2018

UNITED STATES OF AMERICA, Plaintiff/Respondent,
RICHARD DEAN WOOLSEY, Defendant/Petitioner.



         I. Introduction

         This is a criminal case. Defendant/Petitioner Richard Dean Woolsey (Woolsey) was found guilty by a jury of conspiracy to commit mail and wire fraud and wire fraud. The Court sentenced Woolsey to 90 months imprisonment. Woolsey timely appealed. The Court of Appeals for the Sixth Circuit affirmed. United States v. Woolsey, No. 14-1693/2488 (6th Cir. Jan. 22, 2016).

         Before the Court is Woolsey's pro se motion under 28 U.S.C. § 2255. (Doc. 130). The government has filed a response (Doc. 145) and Woolsey a reply (Doc. 148). For the reasons that follow, the motion will be denied.

         II. Background

         The background, including the facts leading to Woolsey's convictions and relevant Court proceedings have been described by the Sixth Circuit as follows:

A. The Scheme
Sometime around 2006, Woolsey devised a plan to fraudulently buy sixteen cabins in Sevierville, Tennessee, for use as vacation rentals. The scheme worked as follows. Woolsey recruited straw buyers from among friends and family, including co-defendant Ryan Vinco (who is not a party to this appeal), marketing the properties as investment opportunities. He managed to set the purchase prices for these cabins higher than the sellers had agreed to accept, funneling the excess (about $150, 000 per cabin) to the real estate company that he owned in the form of commissions. Unbeknownst to the lenders, Woolsey, not the straw buyers, provided the money for the down payments and used rental income from the properties as well as money from the commissions to make the mortgage payments.
Woolsey overestimated the demand for these rentals, however, and it soon became evident that the rental income and commissions were going to be insufficient to keep up with the mortgage payments. To cover the shortfall, Woolsey decided to buy up homes in southeastern Michigan in order to flip them for a profit or to refinance them.
Woolsey and Vinco purchased dozens of homes in Michigan using a straw buyer ploy similar to the one used to buy the Tennessee cabins. These purchases involved $2, 500 payments to the straw buyers in exchange for their names and credit. As in Tennessee, the straw buyers did not pay the down payments and did not expect to pay the mortgages. Woolsey would then sell the properties and include large commissions to his real estate company, which he used to pay off the Tennessee mortgages and to help fund down payments for straw buyers.
The Michigan houses, however, failed to provide the necessary cash, and Woolsey and Vinco decided to make a last-ditch effort to keep up with the mounting mortgage obligations. Woolsey acted as straw buyer for a property in Northville, Michigan (the Clover Hill property). He applied for an $880, 000 loan, stating, falsely, that he intended to live in the house. An appraiser who worked for Woolsey then appraised the Clover Hill property at $1.1 million. In fact, the Clover Hill property was worth only about $663, 000. Woolsey convinced the seller to accept $610, 000 for the house, and the excess loan money went to Woolsey's real estate business as a commission.
Woolsey made only two payments on the mortgage, and the lender eventually foreclosed. Woolsey was indicted and convicted on charges of Conspiracy to Commit Mail and Wire Fraud and of Aiding and Abetting Wire Fraud.
B. Sentencing
Following Woolsey's convictions, the probation department recommended a sentencing range of 168-210 months based on a loss amount of at least $11 million. Woolsey submitted his own calculation, ostensibly to point out the errors in the government'|s proposed loss amount, which put the losses at roughly $2, 750, 000. At the sentencing hearing, the district court accepted Woolsey's lower number and reduced the guidelines range to 97-121 months. After explaining its calculation, the district court asked if “anyone ha[d] any objection . . . to anything I have said.” The government responded that it did not. And defense counsel stated that, “as far as the advisory guidelines, I would concur . . . I would concur with the guideline range at this point, your honor.” The district court varied downward from the guideline range and sentenced Woolsey to ninety months of imprisonment followed by three years of supervised release.
With regard to restitution, the government initially estimated the loss at $11 million. It based this determination on evidence and testimony at trial as well as from investigative subpoenas, payment histories, and public records. Woolsey disputed this amount, and the government revised its estimate by disregarding every property that Woolsey had said that he was not involved with, giving him credit for every payment he claimed to have made, and correcting the mortgage amounts he disputed. It then reduced the loss by the resale price of each piece of property. Thus, for example, it concluded that the lender on the Clover Hill property lost $488, 000 using the following calculation: Mortgage ($880, 000) -Mortgage Payments Made ($17, 000) - Resale Price ($375, 000). The district court accepted the government's approach and ordered Woolsey to pay $6, 167, 230.83 in restitution.

United States v. Woolsey, No. 14-1693/2488 at p. ...

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