     Case: 11-60813     Document: 00512009439         Page: 1     Date Filed: 10/04/2012




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                            FILED
                                                                          October 4, 2012
                                     No. 11-60813
                                   Summary Calendar                        Lyle W. Cayce
                                                                                Clerk

UNITED STATES OF AMERICA,

                                                  Plaintiff-Appellee

v.

MICHAEL LANCE PERSAC,

                                                  Defendant-Appellant


                   Appeal from the United States District Court
                     for the Southern District of Mississippi
                             USDC No. 3:05-CR-117-1


Before WIENER, ELROD, and GRAVES, Circuit Judges.
PER CURIAM:*
        Michael Lance Persac, a mortgage broker, pleaded guilty of conspiring
with others to commit wire and mail fraud to facilitate the approval and
issuance of residential mortgage loans to possibly unqualified borrowers. The
district court sentenced Persac to a 30-month term of imprisonment and to a
three-year period of supervised release.
        Persac has appealed his sentence. He contends that the district court
erred in determining the amount of the loss attributable to his fraudulent

       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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                                   No. 11-60813

conduct and that the court erred in admitting, during the sentencing hearing,
Government Exhibit PE-1, which was a spreadsheet prepared by an Internal
Revenue Service (IRS) Special Agent listing and summarizing disputed loss
amounts.
      The district court’s methodology in reaching its loss calculation at
sentencing is governed by the advisory federal Sentencing Guidelines. United
States v. Goss, 549 F.3d 1013, 1016 (5th Cir. 2008). After United States v.
Booker, 543 U.S. 220 (2005), sentences are reviewed for procedural error and
substantive reasonableness under an abuse of discretion standard. United
States v. Johnson, 619 F.3d 469, 471-72 (5th Cir. 2010) (citing Gall v. United
States, 552 U.S. 38, 50-51 (2007)).        The district court’s interpretation or
application of the Guidelines is reviewed de novo, and its factual findings are
reviewed for clear error. Id. at 472. “There is no clear error if the district court’s
finding is plausible in light of the record as a whole.” United States v. Harris,
597 F.3d 242, 250 (5th Cir. 2010) (internal quotation marks and citation
omitted). This court reviews “de novo the district court’s method for determining
loss, while clear error applies to the background factual findings that determine
whether or not a particular method is appropriate.” United States v. Brooks, 681
F.3d 678, 713 (5th Cir. 2012) (internal quotation marks and citation omitted),
petitions for cert. filed (Aug. 9 and 12, 2012) (Nos. 12-5812 and 12-5847). The
district court is only required to make a reasonable estimate of loss and its
findings are entitled to appropriate deference. Id. at 713-14; see also Goss, 549
F.3d at 1019; U.S.S.G. § 2B1.1, comment. (n.3(C)) (2010).
      Under the Guidelines, financial losses are determined by using the greater
of actual loss or intended loss.      § 2B1.1, comment. (n.3(A)).       In Goss, we
determined that actual loss in a mortgage fraud case is “determined by
deducting the value of the collateral from the total loan amounts.” United States
v. Murray, 648 F.3d 251, 255 (5th Cir. 2011) (discussing Goss, 549 F.3d at 1017-
18), cert. denied, 132 S. Ct. 1065 (2012); see also § 2B1.1, comment. (n.3(E)(ii).

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We stated that, in determining the amount of the actual loss in cases involving
fraudulently procured mortgage loans, sentencing courts should “examine each
loan individually in order to determine the fair market value of the loan’s
collateral and whether it should be deducted.” Goss, 549 F.3d at 1018.
      The district court found that, as a result of Persac’s fraudulent conduct,
the lenders suffered actual losses when borrowers failed to pay their loans as
agreed and when the lenders wrote down the principal balances of loans in
settlement of civil litigation brought against them by borrowers complaining of
predatory lending practices. The losses were determined by examining either
(1) the proceeds recovered by the lender after foreclosing and/or selling the
collateral securing the loans as real estate owned or (2) the losses claimed by the
lenders. Based on the probation officer’s findings in the presentence report and
testimony presented by the Government at a sentencing hearing, the district
court found that the total loss related to loans brokered by Persac was
$574,413.99, which fell within the range of $400,000 and $1,000,000 on the
guideline loss table and resulted in a 14-level increase in Persac’s offense level.
See U.S.S.G. § 2B1.1(b)(1)(H).
      He argues that the district court’s methodology for determining the loss
was not consistent with this court’s opinion in Goss, because the district court
did not ascertain the amount of the actual losses sustained by the lenders.
Persac contends that Government Exhibit PE-1 should not have been admitted
into evidence and considered by the district court in determining the loss
because it was based on incomplete and unreliable information.
      Persac’s main contention is that the district court erred in determining the
losses sustained with respect to the loans that were modified in settlement of the
civil litigation. He notes that the reasons why the lenders entered into the loan
modifications are unknown, and he contends that the mere fact that the
principal balances in the modified loans were reduced provides an inadequate
basis for determining that the lenders sustained losses on those loans. Persac

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complains that the district court did not consider, in analyzing the loss related
to the 12 loans that were modified, that the collateral securing the loans was not
liquidated and that the borrowers continued to make payments. He contends
that, as a result of the post-modification payments by the lenders, the original
loan amounts “will probably ultimately be fully recovered by the lenders.” In a
related argument, Persac contends for the first time on appeal that the lenders
improperly included lost interest in estimating the amount of their loss on the
modified loans. He argues, “If the lender is going to get its principal back on the
modified loans, then there is no ‘unpaid principal’ on those loans, and the only
reason there is ‘a loss on the original amount of the loan’ . . . is because the
lender is counting interest the lender will not receive.” He complains also that
the district court failed to consider principal and interest payments made by the
borrowers prior to foreclosure or modification. Persac contends that he should
not have been held accountable for losses resulting from the failure of some
borrowers to make payments prior to modification or foreclosure on advice of
counsel related to the civil litigation. Persac complains that the district court’s
findings were based in large part on information provided by the lenders. Noting
that the lenders had been accused of engaging in predatory lending, he implies
that the information provided by them is unreliable. He contends that the
lenders would have been motivated to inflate their losses for tax reasons. We
have considered Persac’s contentions and have concluded that they are without
merit.
      “In determining a sentence, the district court is not bound by the rules of
evidence and may consider any relevant information without regard to its
admissibility provided the information considered has sufficient indicia of
reliability.” United States v. Taylor, 277 F.3d 721, 723-24 (5th Cir. 2001).
Government Exhibit PE-1 was incorporated in the presentence report.           The
presentence report “generally bears sufficient indicia of reliability to be
considered by the trial court as evidence in making the factual determinations

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required by the sentencing guidelines.” United States v. West, 58 F.3d 133, 138
(5th Cir. 1995) (internal quotation marks and citation omitted). Although the
relevance and reliability of the exhibit is properly before the court, the
admissibility of the exhibit, as an evidentiary matter, is beside the point and has
not been considered. See id.
      In support of his contention that he should be credited for the post-
modification payments of the borrowers who remained in possession of their
homes, Persac relies on the court’s statement in Goss, that, in determining the
loss in a case involving mortgage fraud, the district court should “deduct the fair
market value of collateral likely to be recovered from the total value of the
loans.” Goss, 549 F.3d at 1019. He also relies on this court’s opinion in Murray,
648 F.3d at 255.
      The unrebutted evidence presented at the sentencing hearing showed that
the losses in this case were based on the unpaid principal balances (UPBs) of 22
loans brokered by Persac. Any pre-foreclosure or pre-modification payments of
principal by the borrowers were reflected in the UPBs. The UPBs of 12 of the
loans were modified and written down prior to the sentencing hearing in
settlement of the civil litigation brought by the borrowers against the lenders.
Sums by which those loans were written down were forgiven and could never be
recovered from the borrowers. Post-modification payments by the borrowers
were in satisfaction of the remaining principal balance and interest accruing on
that balance only.
      Because the principal balances were modified, the sums forgiven by the
lenders were no longer secured by the collateral and the lenders could not have
liquidated the collateral in satisfaction of those forgiven debts. For that reason,
Goss and Murray are inapposite and no credit related to the value of the
collateral was appropriate with respect to the modified loans. See Goss, 549 F.3d
at 1018 (recognizing that it is not always appropriate to give a credit for the
value of collateral). Because the borrowers’ post-modification payments were in

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                                  No. 11-60813

satisfaction of the post-modification unpaid principal and interest accruing
thereon only, those payments were irrelevant to the question whether the
lenders sustained a loss with respect to sums that were forgiven pursuant to the
settlement agreement. Persac’s contentions that he should not have been held
accountable for losses resulting from the failure of some borrowers to make
payments prior to modification or foreclosure on advice of counsel related to the
civil litigation and that the information provided by the lenders was inherently
unreliable are speculative and have no support in the record. There is no
evidence that the lenders inflated the amount of its losses or that the
information provided by them was inaccurate.
      Persac has not shown that the district court erred in determining that the
lenders sustained pecuniary losses when they modified loans in settlement of the
civil litigation; nor has he shown that the district court’s finding that the losses
were equal to the amount by which the loans were written down was an
unreasonable estimate of the amount of the lenders’ losses on those loans. See
Brooks, 681 F.3d at 713-14; § 2B1.1, comment. (n.3(A)(i)). Persac has failed to
show that the district court committed a procedural error in determining the
amount of the lenders’ losses at sentencing and he has failed to show that the
district court’s estimate of the amount of the losses was unreasonable. See
Brooks, 681 F.3d at 713-14; Johnson, 619 F.3d 471-72.            Accordingly, the
judgment of the district court is AFFIRMED.




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