                              In the

    United States Court of Appeals
                For the Seventh Circuit
No. 13-3354

UNITED STATES OF AMERICA,
                                                  Plaintiff-Appellee,

                                 v.


JAMES A. SCALZO,
                                               Defendant-Appellant.

        Appeal from the United States District Court for the
                   Eastern District of Wisconsin.
         No. 2:12-cr-00262-LA-1 — Lynn Adelman, Judge.


  ARGUED FEBRUARY 18, 2014 — DECIDED AUGUST 21, 2014


   Before ROVNER, WILLIAMS, and TINDER, Circuit Judges.

   ROVNER, Circuit Judge. James A. Scalzo pled guilty to one
count of bank fraud, in violation of 18 U.S.C. § 1344, and one
count of money laundering, in violation of 18 U.S.C. § 1956.
The district court sentenced him to thirty-five months’ impris-
onment, and ordered him to pay restitution in the amount of
$679,737.23. On appeal, Scalzo challenges only the restitution
order. We affirm.
2                                                  No. 13-3354

                                 I.
    In 2008 and 2009, Scalzo was employed as a bank officer,
first at Fox River State Bank (the “Bank”) in Burlington,
Wisconsin, and then at Consumers Cooperative Credit Union
(the “Credit Union”), in Round Lake Beach, Illinois. Between
April 1, 2008 and October 31, 2009, he originated and approved
multiple loans for unknowing and unqualified borrowers
without adequate supporting financial information or collat-
eral. On the basis of these loans, he was charged in a two-count
Information with a scheme to defraud. As part of that scheme,
he forged borrowers’ signatures on loan documents, redirected
funds from the loans to his own personal use without the
knowledge of the borrowers, and took funds from some
fraudulent loans to pay off balances on previous fraudulent
loans in order to conceal the original fraud. The Information
listed nine loans as part of the scheme, six from the Bank and
three from the Credit Union. Although Scalzo pled guilty to
the Information that listed all of these loans as part of his
fraudulent scheme, he objected to the inclusion of two of the
Credit Union loans in the court’s restitution order. He asserted
that the government lacked a sufficient factual basis to estab-
lish that these two loans were fraudulent in nature, and he
complained that these loans were not part of the negotiated
plea with the government. Because the guidelines range was
the same whether or not these loans were counted as part of
the scheme, the court deferred ruling on restitution and
sentenced Scalzo to a term of imprisonment. The court then
invited further briefing on the disputed loans and notified the
parties that it intended to rule on restitution in ninety days.
No. 13-3354                                                          3

    Less than a week later, the government supplemented the
Presentence Investigation Report (“PSR”) with additional
information explaining the two disputed Credit Union loans,
and filed a “Restitution Memorandum” describing the role of
these two loans in Scalzo’s overall fraud scheme. According to
the government’s submissions, on June 25, 2008, while working
at the Bank, Scalzo originated a loan in the amount of $230,000
for P.D., a man with a low credit score and no collateral.1
Scalzo skimmed $35,500 off of P.D.’s loan and deposited it into
an account associated with Scalzo, in which P.D. had no
interest. Similarly, on July 25, 2008, Scalzo arranged a $125,000
Bank loan for C.P., without supporting documentation as to
the credit-worthiness of C.P. or the value of his collateral.
Scalzo siphoned $8500 from this loan for himself. Scalzo later
told C.P. that he needed to refinance the loan, and on October
13, 2008, Scalzo arranged a second loan for C.P. in the amount
of $158,000, again from the Bank. This time, Scalzo took $7500
for his own use. Neither borrower was aware that Scalzo had
misappropriated funds from their loans for his own use.
    Eventually, the Bank began to investigate P.D.’s loan and
determined that P.D. had a poor credit score and that there
was no collateral supporting the loan. The Bank contacted P.D.
to insist that he provide collateral, which he could not do.
Between April and August 2009, the Bank frequently contacted
P.D. seeking payment on his then-delinquent loan. By August
2009, Scalzo had left the Bank and was working for the Credit
Union. In September 2009, Scalzo suggested to P.D. that he


1
 We will follow the government’s convention of identifying non-culpable
persons by their initials.
4                                                   No. 13-3354

obtain a Credit Union loan in order to pay off the Bank loan.
Scalzo then generated a loan to P.D.’s parents, K. and P.D., Sr.,
in the amount of $250,000, without ever meeting these new
borrowers. The collateral supporting that loan was a laundro-
mat owned by P.D.’s parents. Scalzo used an appraisal of the
laundromat from Wade Graves of Valuation Services, Inc., who
valued the property at $137,000, and the business and equip-
ment at $457,000. Scalzo had a regular working relationship
with Graves, but P.D.’s parents never met Graves and were
never asked to supply information about the laundromat to
Graves. The business valuation was based on assertions (the
record does not reveal who made these assertions) that the
laundromat grossed $500 per day and had a net income of
$89,425 per year. Although P.D.’s parents agreed to the loan,
they expected P.D., their impecunious son, to make the
payments. Had they been asked for information about the
value of the laundromat, they would have revealed that the
land was worth approximately $100,000, that the business had
never generated $500 per day and had never netted $89,425 per
year. Instead, the business had been marginally profitable for
the first four or five years of its twenty-year existence but had
then begun to lose money. P.D.’s parents had been trying
without success to sell the laundromat for several years.
   In the same time period that the Bank was investigating the
loan to P.D., C.P. defaulted on his $158,000 Bank loan, and the
Bank determined that there was insufficient collateral to cover
the loan. In the summer of 2009, after the Bank contacted C.P.
repeatedly regarding the loan, Scalzo called C.P. and advised
him that he needed to “pay off the [Bank] loan quickly.” To
accomplish this, Scalzo arranged a Credit Union loan for C.P.
No. 13-3354                                                    5

in the amount of $230,000. C.P. pledged as collateral the same
property that the Bank had determined was insufficient to
support the $158,000 loan. As with the Credit Union loan to
D.B.’s parents, C.P.’s loan application contained an inflated
appraisal of that property from Wade Graves.
    According to the government’s additional brief on restitu-
tion, the proceeds of these two Credit Union loans were used
to pay off the earlier, fraudulent Bank loans. But D.B.’s parents
and C.P. then defaulted on the Credit Union loans, causing
losses to the Credit Union totaling $493,710.23. The Credit
Union’s insurer, CUNA Mutual Group, covered $468,710.23 of
the loss and the Credit Union absorbed a $25,000 deductible.
    Although the district court told the parties that it intended
to defer ruling on restitution for ninety days, the court did not
set a specific briefing schedule for any additional submissions
on the restitution issue. The government, as we noted above,
filed its additional brief within a week of Scalzo’s sentencing.
Having received no additional briefing from Scalzo for 82 days,
the court decided to rule on restitution. Relying on the PSR, the
plea agreement and the government’s additional submissions,
the court found that Scalzo arranged the Credit Union loans in
order to conceal the fraud related to the Bank loans. The court
noted that the Credit Union loans to P.D.’s parents and to C.P.
had been listed as part of the fraudulent scheme detailed in the
Information to which Scalzo pled guilty, that both loans went
into default status, and that the Credit Union and its insurer
lost a substantial amount of money. Namely, CUNA Mutual
Group paid a “dishonest employee” claim of $468,710.23,
consisting of a $218,715.23 loss on C.P.’s Credit Union loan,
and a $249,995 loss on the loan to P.D.’s parents. The Credit
6                                                   No. 13-3354

Union itself lost the $25,000 deductible on its insurance policy.
To these amounts, the court added losses associated with other
loans that Scalzo does not challenge on appeal. Although
Scalzo had not responded to the court’s invitation to specifi-
cally brief his position on restitution, the court noted that
Scalzo had earlier objected to including the two Credit Union
loans as relevant conduct at the time of sentencing. Scalzo
argued at that time that these two loans were not themselves
fraudulent. The court rejected that claim, noting that Scalzo
pled guilty to the Information that included these two loans as
part of the fraudulent scheme. The court found that the loans
were in fact fraudulent because they were originated in order
to conceal the earlier fraud, that the borrowers then defaulted
and that the losses to the Credit Union and insurer would not
have occurred but for Scalzo’s fraud. The court also concluded
that Scalzo “knew or should have known” that the borrowers
who had defaulted on the earlier Bank loans had little or no
ability to pay the Credit Union loans. The court faulted Scalzo
for never meeting with P.D.’s parents and for relying on a
patently inflated appraisal of the collateral. As for the loan to
C.P., the court found that Scalzo relied on the same collateral
that had been found insufficient to secure a smaller loan at the
Bank. The court ordered restitution in the amount of
$679,737.23, a figure that included $493,710.23 from the two
disputed Credit Union loans.
    A few days after the court ruled, Scalzo’s attorney filed a
brief on the issue of restitution. The government filed a short
letter in reply. The court determined that Scalzo’s additional
brief was untimely, but because the government had an
opportunity to reply and thus was not prejudiced by Scalzo’s
No. 13-3354                                                       7

late brief, the court accepted Scalzo’s brief. In that brief, Scalzo
argued again that the disputed loans were not fraudulent, that
during plea negotiations the government represented that
there were no losses related to those loans, and that there was
no meeting of the minds in the plea agreement on the two
disputed loans. Scalzo contended that there was no evidence
that he knew or should have known that the appraisals of the
collateral were inflated. Nor did the government identify any
false information in the loan files. Scalzo explained that he did
not object to the inclusion of those loans in the Information or
the plea agreement because neither loan affected the guidelines
range. In reply, the government noted that, not only did both
the Information and the plea agreement expressly list the two
loans as part of the fraudulent scheme, the plea agreement also
stated:
      The defendant agrees to pay restitution as ordered
      by the court. The defendant agrees that such restitu-
      tion shall include any losses sustained by [the] Bank
      and [the] Credit Union as the result of fraud attribut-
      able to the defendant in the loans he originated
      while in their employ during the time period encom-
      passed by the information; … and losses sustained
      by any other person directly harmed by the defen-
      dant’s conduct in furtherance of the fraud scheme.
R. 3, at 17.
    The court then issued a second order, reaffirming the initial
restitution order. R. 21. The court rejected Scalzo’s contention
that the government had failed to demonstrate fraudulent
conduct with respect to the disputed loans because (1) Scalzo
8                                                     No. 13-3354

pled guilty to an Information that listed these loans as part of
the fraudulent scheme; (2) the evidence demonstrated that the
loans were made in an effort to cover up earlier fraud at the
Bank; (3) the loans helped conceal from the borrowers that
Scalzo had skimmed money for himself from the original Bank
loans; and (4) Scalzo made the loans with the knowledge that
the borrowers had little or no ability to pay and that the
collateral was insufficient. The court also concluded that the
Credit Union and its insurer were victims under the Manda-
tory Victim Restitution Act of 1996 (“MVRA”), 18 U.S.C.
§ 3663A, and that the plea agreement also supported an award
of restitution for losses to the Credit Union and its insurer. The
court therefore upheld its earlier restitution order. Scalzo
appeals.
                                  II.
    On appeal, Scalzo challenges the restitution award on three
grounds. First, he contends that the court erred when it failed
to make a complete accounting of the loss to CUNA, the Credit
Union’s insurer. Second, he maintains that the Credit Union
loans to P.D.’s parents and to C.P. were not criminal in nature
and therefore should not be included in the restitution order.
And third, he asserts that the government did not prove by a
preponderance of the evidence that he caused CUNA’s loss.
The MVRA “requires certain offenders to restore property lost
by their victims as a result of the crime.” Robers v. United States,
134 S. Ct. 1854, 1856 (2014). The district court's authority to
order restitution is reviewed de novo. United States v. Hosking,
567 F.3d 329, 331 (7th Cir. 2009). We review the district court’s
determination of the restitution amount for abuse of discretion,
viewing the evidence in the light most favorable to the govern-
No. 13-3354                                                     9

ment. United States v. Orillo, 733 F.3d 241, 244 (7th Cir. 2013);
United States v. Swanson, 483 F.3d 509, 516 (7th Cir. 2007). “We
will disturb a restitution order only if the district court relied
upon inappropriate factors when it exercised its discretion or
failed to use any discretion at all.” United States v. Havens, 424
F.3d 535, 538 (7th Cir. 2005).
    Although Scalzo challenged the inclusion of the two loans
in the restitution order, he did not challenge the specific
amount awarded or the factual basis for the amount in the
district court. Normally, we would limit our review in these
circumstances to plain error, but the government has waived
Scalzo’s forfeiture by responding to his argument on the
merits. United States v. Prado, 743 F.3d 248, 251 (7th Cir. 2014);
United States v. Tichenor, 683 F.3d 358, 363 (7th Cir. 2012). We
will therefore address the merits.
   Restitution awarded under the MVRA is governed by the
procedures set forth in 18 U.S.C. § 3664:
     For orders of restitution under this title, the court
     shall order the probation officer to obtain and
     include in its presentence report, or in a separate
     report, as the court may direct, information suffi-
     cient for the court to exercise its discretion in fash-
     ioning a restitution order. The report shall include,
     to the extent practicable, a complete accounting of
     the losses to each victim, any restitution owed
     pursuant to a plea agreement, and information
     relating to the economic circumstances of each
     defendant.
10                                                    No. 13-3354

18 U.S.C. § 3664(a). See also Hosking, 567 F.3d at 332 (the district
court is required to base its restitution order, to the extent
practicable, on a complete accounting of the loss). “If the
presentence report or other report of the loss is insufficient for
this purpose, the court may require additional documentation
or hear testimony.” Hosking, 567 F.3d at 332–33. See also 18
U.S.C. § 3664(d)(4). In this instance, the PSR specified that
CUNA Mutual Group lost $468,710.23 on the Credit Union
loans to C.P. and to D.B.’s parents. That is less than the
$480,000 total of the original amount loaned. When combined
with the $25,000 deductible absorbed by the Credit Union,
however, the total loss exceeds the original loan amount by
approximately $13,700. Scalzo speculates that this amount
might include costs that are not qualified as losses under the
MVRA or that were not proximately caused by his actions.
    In determining the amount of restitution due, a “district
court ‘may rely on the information contained in the PSR so
long as it is well supported and appears reliable.’” United States
v. Panice, 598 F.3d 426, 439 (7th Cir. 2010) (quoting United States
v. Heckel, 570 F.3d 791, 795 (7th Cir. 2009)). A defendant bears
the burden of showing that the PSR is inaccurate or unreliable,
and a simple denial of its accuracy does not discharge this
burden. Panice, 598 F.3d at 439. The burden of demonstrating
the accuracy of the restitution information in the PSR shifts to
the government only when a defendant creates real doubt as
to the information's reliability. Panice, 598 F.3d at 439; Heckel,
570 F.3d at 795–96. Our review of the PSR and supplemental
materials demonstrates that the court did not abuse its discre-
tion in relying on the information supplied by CUNA to the
probation officer. The PSR specifies that these losses were
No. 13-3354                                                                   11

related directly to the loans themselves. CUNA informed the
probation officer that the company did not include in the loss
amount the $50,000 litigation costs that the company incurred.
The Credit Union itself included only the amount it lost as a
deductible on its insurance policy and did not include staff
time, legal costs or increased insurance premiums it incurred
as a result of Scalzo’s actions. Nor did it include a $40,000 fee
it paid to a consultant to review its business practices or any
other costs that it had yet to ascertain. The district court did not
specifically address the $13,700 difference between the loan
totals and the restitution ordered, and Scalzo did not raise it
until the appeal. At oral argument, the government explained
that the difference might be attributable to a third Credit Union
loan to borrower M.S. but that the district court had no
opportunity to explore the issue because Scalzo did not object
to the amount of restitution on this basis below. In the absence
of any such objections below, the district court did not abuse its
discretion in relying on the well-supported and apparently
reliable loss information presented in the PSR. Panice, 598 F.3d
at 439.
   Nor is there any basis to Scalzo’s claim that the two
challenged loans were not criminal in nature. As the district
court noted, Scalzo pled guilty to an Information that listed
these two loans as part of the overall bank fraud scheme. See 18
U.S.C. § 1344.2 The plea agreement also listed these two loans


2
  Section 1344 provides: “Whoever knowingly executes, or attempts to
execute, a scheme or artifice – (1) to defraud a financial institution; or (2) to
obtain any of the moneys, funds, credits, assets, securities, or other property
                                                                  (continued...)
12                                                          No. 13-3354

as a direct part of the charged fraud scheme. See United States
v. Randle, 324 F.3d 550, 556 (7th Cir. 2003) (“we distill three
situations in which restitution is authorized under the MVRA:
first, to a victim directly harmed by the offender's ‘specific
conduct that is the basis of the offense of conviction’; second,
to a victim who is directly harmed by the offender's conduct in
the course of committing an offense that involves ‘as an
element a scheme, conspiracy, or pattern’; third, if the parties
so agreed in a plea agreement”). By pleading guilty, Scalzo
admitted the essential elements of the offense, one of which
was a scheme to defraud that expressly included these loans.
United States v. Kilcrease, 665 F.3d 924, 929 (7th Cir. 2012) (a
guilty plea provides an adequate factual basis for the essential
elements of the offense). “An unconditional guilty plea is not
ordinarily considered a forfeiture. It is a knowing, voluntary
relinquishment of the defendant's right to go to trial and
contest the factual basis of an indictment.” United States v.
Adigun, 703 F.3d 1014, 1022 (7th Cir. 2012), cert. denied, 133 S.
Ct. 2046 (2013). Scalzo now claims that he did not agree with
the plea agreement’s characterization of these loans as fraudu-
lent but explains that he did not object to their inclusion
because the amounts of these loans did not affect his guidelines
sentencing range. But having admitted the facts in the Informa-
tion through his plea agreement and through his answers to



2
  (...continued)
owned by, or under the custody or control of, a financial institution, by
means of false or fraudulent pretenses, representations, or promises; shall
be fined not more than $1,000,000 or imprisoned not more than 30 years, or
both.”
No. 13-3354                                                    13

the court during his change-of-plea colloquy, Scalzo may not
now deny them.
    Moreover, the district court specifically found that the loans
played a significant role in the overall fraud scheme by serving
to obscure the fraudulent nature of three earlier Bank loans
and also to conceal from the borrowers that Scalzo had helped
himself to some of the original loan proceeds. Under the
MVRA, the Credit Union and its insurer are entitled to recover
losses incurred as part of the overall scheme. See 18 U.S.C.
§ 3663A(a)(2) (“For the purposes of this section, the term
‘victim’ means a person directly and proximately harmed as a
result of the commission of an offense for which restitution
may be ordered including, in the case of an offense that
involves as an element a scheme … any person directly harmed
by the defendant's criminal conduct in the course of the
scheme … .”). Additionally, in some cases restitution may be
ordered for certain direct and foreseeable consequences of a
crime, even if the conduct at issue does not constitute an
element of the crime itself. United States v. Rand, 403 F.3d 489,
494 (7th Cir. 2005). Whether the Credit Union losses are
characterized as occurring in the course of the charged scheme
or as a direct and foreseeable consequence of the scheme, the
court did not abuse its discretion in including these amounts in
the restitution calculation.
    Finally, we reject Scalzo’s claim that the government failed
to prove by a preponderance of the evidence that he caused the
losses to the Credit Union and its insurer. Scalzo complains
that the losses were the result of the borrowers’ defaults, not
any criminal conduct on his part. Victims seeking to recover
their losses from a defendant must prove that the defendant
14                                                            No. 13-3354

caused the loss, and must demonstrate that the loss would not
have occurred but for the defendant's misconduct. United States
v. Allen, 529 F.3d 390, 396 (7th Cir. 2008). We have already
concluded that these loans were criminal in nature, as Scalzo
conceded in his plea agreement and as the district court
correctly found. As for causation, perhaps the most revealing
evidence in the record is that CUNA paid the claims under the
“dishonest employee” provision of the Credit Union’s insur-
ance policy, recognizing that the losses were caused by actions
Scalzo took that were contrary to his employer’s interests in
originating these loans. R. 16, at 3. Scalzo made the loans to
borrowers he knew were poor risks, using inflated appraisals
of their collateral, in order to conceal earlier fraudulent loans
at the Bank. According to the PSR, Scalzo urged both C.P. and
P.D. (and his parents) to borrow from the Credit Union in
order to pay off their defaulted loans at the Bank once the Bank
began investigating the loans and pressing for payments. That
the unqualified borrowers then defaulted on the new loans was
an easily anticipated consequence of the scheme.3 The Credit
Union and its insurer would not have suffered losses on these
two loans but for Scalzo’s fraudulent scheme. In short, the
district court did not abuse its discretion in concluding that
Scalzo caused the losses to the Credit Union and its insurer.
                                                            AFFIRMED.



3
  Indeed, if Scalzo had not arranged the Credit Union loans to pay off the
fraudulent Bank loans, the Bank would have suffered the loss instead of the
Credit Union. Scalzo may not avoid liability for his fraud by simply shifting
the loss from one financial institution to another.
