On July 7, 2016, the Second Circuit reversed convictions on three substantive counts of defrauding BNC Mortgage (“BNC”), finding that the defendant could not be convicted of making a false statement to a federally insured financial institution based on the federally insured status of its parent company.
The trial evidence showed that Bouchard and his co-conspirators engaged in a mortgage fraud scheme wherein one of the principal lenders that was victimized was BNC. Although BNC was not a federally insured financial institution, its parent company, Lehman Brothers, was federally insured. The Second Circuit found that because BNC was not federally insured, and there was no evidence showing that Bouchard knew that BNC’s parent company was Lehman Brothers, the government had no jurisdiction to bring the substantive charges.
The conspiracy charges against Bouchard were upheld based on fraudulent misstatements made directly to a different federally insured bank. The Second Circuit also remanded the case for resentencing on separate grounds. Specifically, the Presentence Investigation Report (“PSR”) calculated the appropriate sentencing guidelines range based on acquitted conduct. Although it downwardly departed, the district court erroneously adopted the PSR’s guidelines calculation without making a particularized finding that the acquitted conduct had been proven by a preponderance of the evidence.