Sixth Circuit Revives 2010 RICO Suit

The National Law Journal this past week reported that the U.S. Sixth Circuit Court of Appeals reversed a trial judge's July 2010 grant of summary judgment to the defendants on two Racketeer Influenced and Corrupt Organizations Act claims, reviving the borrower's civil racketeering claims against a lender, mortgage broker and two principal brokerage employees for allegedly inflating his home appraisal to push him unto a costlier mortgage.

The case, Wallace v. Midwest Financial & Mortgage Services Inc. concerned homeowner Harold Wallace's 2006 $425,000 refinancing through MortgageIT to pay for home improvements, the article said. "Broker Midwest hired an appraiser who valued Wallace's house at $500,000, nearly twice what he paid just two years earlier, and, as a result, he alleged, he ended up with a high-cost, adjustable-rate mortgage. Wallace claimed that MortgageIT paid Midwest a premium to steer borrowers into larger, higher interest loans."

Sixth Circuit Judge R. Guy Cole Jr. wrote that the question was whether a fraudulent scheme furthered by the appraisal proximately caused Wallace's financial injuries, and that "Once we accept that Wallace was an intended target of the defendants' alleged scheme to induce borrowers to agree to loans with high interest rates and other unfavorable terms—as we must at this stage in the litigation—the link between the scheme and the type of injury Wallace suffered is plain to see."

The article also said that Cole however also added that “the record offered essentially no support for Wallace's contention that MortgageIT manifested an agreement to commit an unlawful act," on which point the court sustained Eastern District of Kentucky Judge David Bunning. “[the district court],” the Sixth Circuit here explained, “did not rely on its faulty proximate-cause analysis to reach this conclusion. Instead, the court correctly noted that ‘yield spread premiums are not illegal per se under’ federal law, and found nothing in the record that suggested MortgageIT conspired to provide a specifically illegal yield spread premium in this case. More generally, MortgageIT had no obvious relationship or communications with Midwest Financial outside of the formal application process and payment of such premiums—certainly nothing on the order of an illicit agreement. At most, it might be said that MortgageIT knew of the appraisal based scheme given its review of the application materials and then agreed to the overarching objective by paying yield spread premiums. (Eastern District’s decision)

FastCase Invigorated

Legal research service/ publisher, Fastcase, has released its own new software version to identify overturned or reversed case law in its "Authority Check" application, Law.com's Law Technology News yesterday reported.

Fastcase, the article recounted, "has provided data visualization timelines, citation analysis and integrated citation history into search results, but, up to now, had no flags or symbols like its competition, LexisNexis's Shepard's Citations or West's KeyCite, to indicate that a case had been overturned or reversed. 'Bad Law Bot' now brings red flags to Authority Check to indicate a case is 'bad law' and should no longer be used as authoritative precedent." [Fastcase's announcement]

California’s “gay therapy” bill in Federal Appeals Court

While the Supreme Court in Washington is busy mulling over the fates of California's Proposition 8, which amended that state's constitution to eliminate the right of same-sex couples to marry in Hollingsworth v. Perry, and United States v. Windsor, challenging federal Defense of Marriage Act ("DOMA"),which defines marriage as being between a man and a woman, the Ninth Circuit out of San Francisco this week was again hearing a case on yet another aspect of same-sex relationships & marriage: this time challenging a ban on "sexual orientation change efforts" that was passed by the California Legislature and signed into law by Gov. Jerry Brown last fall -- a so-called "first-of-its-kind law" that prohibits licensed mental health professionals in California from offering therapies aimed at making gay and lesbian teenagers straight – and whether that violates the civil rights of practitioners and parents. (SB 1172)

USAToday.com reported that that ban, passed by the State of California Sept. 30, 2012, had been scheduled to take effect Jan. 1, but was put on hold by the 9th Circuit pending resolution of two closely watched cases – which spurred similar legislation still being considered by lawmakers in New Jersey.

Suits had been filed seeking to enjoin the implementation of the new law, resulting in two Sacramento-based trial judges handling the cases last December to reach differing conclusions on whether the ban violates the U.S. Constitution, according to USAToday: one refused to block the law after ruling that the plaintiffs were unlikely to prove the prohibition unfairly tramples on their civil rights and should therefore be overturned. The other said he found the First Amendment issues presented by the ban to be compelling and ordered the state to temporarily exempt the three people named in the case before him. The New York Times had this article at the time.

The Ninth Circuit has the cases consolidated.

It is noteworthy to note as well that "Due to the level of interest in this case, the Ninth Circuit has created a separate page on its website to notify the media and public of procedures and rules for admission to proceedings, as well as access to case information in these proceedings."

Same Sex Legal Issues: Free Program April 19

Free You and the Legal System program for the public Friday, April 19 at 12 noon at the Hamilton County Law Library:
Same Sex Legal Issues
Speaker: Scott Knox
Please call to register in advance: 513.946.5300.

The discussion will focus on:
* If someone gets married in another state, does it affect her/his rights in Ohio?
* Updates on the US Supreme Court case

Please note that this is not a CLE event; it is intended for the general public. However, legal professionals are welcome to attend and may want to pass along the program announcement to clients, staff and community organizations.

You and the Legal System is brought to you as a public service by the Hamilton County Law Library, in conjunction with the Cincinnati Bar Association’s Lawyer Referral Service. Save the date for the next event in the series: Thomas Richards will discuss foreclosure on May 17.

Federal mandatory minimum sentence bill introduced

The National Law Journal/Law.com last month had an article about Senators Patrick Leahy (D-Vt.) and Rand Paul (R-Ky.) having introduced the Justice Safety Valve Act which seeks to allow judges sentence offenders below the statutory requirements "if the court finds it necessary to do so" -- an option currently available in some drug cases, this law would extend that discretion to all federal crimes.

Reference was made to a 3-month survey of federal district court judges done by the U.S. Sentencing Commission back in June 2010, which found that, while 38% of the judges responding to the survey thought "mandatory minimum sentence generally appropriate," roughly the same number (40%) "strongly agreed" that "the statutory safety valve should be expanded to include… all offenses with a mandatory minimum; only 8% "strongly disagreeibg".. Fully, 24% of the respondent judges in that survey felt "Congress should amend 28 USC § 994(b)(2) to allow broader ranges on the sentencing table," while 34% "strongly agreed that the sentencing guidelines should be 'de-linked' from statutory mandatory minimum sentences (i.e., the guideline ranges should be set by the Commission independently from mandatory minimum sentences)." [Survey of United States District Judges]

Leahy & Paul’s bill, now in the Senate's Judiciary Committee, seeks:

Section 3553 of title 18, United States Code, is amended by adding at the end the following:

`(g) Authority To Impose a Sentence Below a Statutory Minimum To Prevent an Unjust Sentence-

(1) GENERAL RULE- Notwithstanding any provision of law other than this subsection, the court may impose a sentence below a statutory minimum if the court finds that it is necessary to do so in order to avoid violating the requirements of subsection (a).

(2) COURT TO GIVE PARTIES NOTICE- Before imposing a sentence under paragraph  
(1), the court shall give the parties reasonable notice of the court's intent to do so and anopportunity to respond.

(3) STATEMENT IN WRITING OF FACTORS- The court shall state, in the written statement of reasons, the factors under subsection (a) that require imposition of a sentence below the statutory minimum.

(4) APPEAL RIGHTS NOT LIMITED- This subsection does not limit any right to appeal that would otherwise exist in its absence.'.

18 U.S.C. § 3553(f), often referred to as the "safety valve," provides that a court must impose a sentence without regard to statutory mandatory minimum penalties for certain drug trafficking offenses if certain criteria are met.
With Senators Leahy and Paul's bill in the Senate, amendments to the Sentencing Commission Guidelines just completed the public commentary phase of that process. Included there was a request for public comment "regarding whether, pursuant to 18 U.S.C. 3582(c)(2) and 28 U.S.C. ' 994(u), any proposed amendment published in this notice should be included in subsection (c) of '1B1.10 (Reduction in Term of Imprisonment as a Result of Amended Guideline Range (Policy Statement)) as an amendment that may be applied retroactively to previously sentenced defendants."

Ohio debtor prisons' re-emergence

An article in the Sandusky Register yesterday morning again brought up the question of "debtors' prisons" still in fact being in existence in the United States, not in name, but rather, in essence, fact, with The American Civil Liberties Associated having asked for action from the Ohio Supreme and appeals courts to stop supposed illegal practices.

In October 2010, the American Civil Liberties Union released a study entitled, 'In for a Penny: The Rise of America's New Debtors' Prisons,' which profiled five states, including Ohio, that imprison people who cannot afford to pay court-imposed fines. As a result of this report and the related media coverage, the ACLU of Ohio began to receive reports from people throughout Ohio who had been ensnared in debtors' prisons. Many of these stories highlighted problems in Huron County, a small, rural county in north central Ohio. This prompted the ACLU of Ohio to launch a full-scale investigation, the results of which have now been released.

"Having found egregious evidence of debtors' prison practices in Huron County in that first study, Ohio's ACLU expanded its investigation to ten other counties across the state: Hamilton, Cuyahoga, Erie, Greene, Montgomery, Muskingum, Richland, Warren, Williams, and Wood counties," the new report states.

"The investigation of Ohio uncovered conclusive evidence of these practices in 7 of the 11 Ohio counties examined, with courts in Huron, Cuyahoga, and Erie counties being among the worst offenders. In the second half of 2012, over 20% of all bookings in the Huron County Jail were related to failure to pay fines. In Cuyahoga County, the Parma Municipal Court jailed at least 45 people for failure to pay fines and costs between July 15 and August 31, 2012. During the same period in Erie County, the Sandusky Municipal Court jailed at least 75 people for similar charges." (Current 'Outskirts of Hope' report )

Articles have appeared in the Cleveland Plain Dealer, Dayton Daily News, CBSnews and on MSNBC.com the passed two days, with the Dayton Daily News' saying "routinely jailling Ohioans for owing court fines and fees violates the state's constitution and laws, and is against the 1983 U.S. Supreme Court ruling in Bearden v. Georgia, 461 U.S. 660, calling on the Ohio Supreme Court to issue administrative rules to require courts to hold hearings to determine whether a defendant is unable to pay fines owed or if they're just unwilling. Even if a defendant is just refusing to pay, he or she is supposed to be credited $50 per day spent in jail against the debt."

The issue had come up nationally last summer with The New York Times carrying an article about indigent and low-income people, "mushrooming of fines and fees levied by money-starved towns across the country and for-profit businesses that administer their system," and the inevitabilities of the three coming together with growing numbers of poor people, ending up jailed and in debt for minor infractions. A 2011 Wall Street Journal  had noted, "More than a third of all U.S. states allow borrowers who can't or won't make payments on credit-card or auto loan balances and other bills to be jailed,with judges having signed off on more than 5,000 such warrants since the start of 2010 in nine counties with a total population of 13.6 million people." ( Prior Post )

Ohio Supreme Court Chief Justice Maureen O'Connor reportedly responded that the report raises issues that "can and must receive further attention."

Ohio sentencing law revisions

At once being hailed as landmark legislation and the first substantive revision & updating of Ohio sentencing law in 15 years, Ohio House Bill 86, two years ago, also generated its share of concern, apprehension, and confusion as well -- so much so that the General Assembly and Ohio Criminal Sentencing Commission were early on being reported as being in the process of weighing those changes even as the corrections overhaul went into effect.

All told, there were at least four summaries/explanations released at the onset:

• The Ohio Judicial Conference issued summaries on the bill generally (here), Juvenile Justice
Provisions more specifically (here), and an outline of Changes in Juvenile Bindovers (here)

• The Ohio Public Defender's website had a summary by the Franklin Public Defender's Office

• The Ohio Prosecuting Attorneys' Association had a briefing on major Fully Retroactive H.B. 86 Changes to Judicial Release

• The Ohio Sentencing Commission compiled a summary & analysis of HB 86 ..

Now Senate Bill 160, passed Dec. 20th.. and going into effect on March 22nd., clears up at least some of the ambiguity in sentencing those who commit fourth and fifth degree felonies, allowing Ohio judges to now sentence those who commit fourth and fifth degree felonies, the lowest felony levels, to prison for a first time offense in more cases..

The issue became controversial, David Diroll, criminal sentencing commission director, was quoted by the Supreme Court's news service as saying, because certain sexual offenders and persons who betrayed the public trust, like theft in office, were no longer eligible for prison. "The new legislation means judges can now directly sentence an offender with a fourth or fifth degree felony to prison on a first offense if the crime involves a firearm, physical harm in many situations, a bail or bond violation, a violation of a community sanction imposed earlier, any sexual offense, any criminal act done for hire, or if the offender abused certain positions of trust such as in public office or law enforcement."

Senate Bill 160 also contained provisions relating to mandatory post-release controls for third degree felonies to go with the fourth & fifth degree provisions; judicial releases, crime victim notice provisions; “80%-of-service-served, and release from confinement of convict serving terms for serious felony mechanisms, mandatory community control sanctions, sexually violent predator sentencing provisions, and the inclusion of voluntary manslaughter “committed with a sexual motivation as a sexually oriented offense under sex offender registration & notification provisions.” [ Bill 160's legislative analysis ]