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United States v. Sullivan

United States Court of Appeals, Seventh Circuit

August 28, 2014

UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
DANIEL SULLIVAN and JOHN J. SULLIVAN, Defendants-Appellants

Argued February 19, 2014

Page 713

Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 10 CR 821 -- Rubé n Castillo, Chief Judge.

For United States of America, Plaintiff - Appellee (12-3631, 12-3670): Timothy J. Storino, Attorney, Office of The United States Attorney, Chicago, IL.

For Daniel Sullivan, Defendant - Appellant (12-3631): Kent R. Carlson, Attorney, Carlson & Associates, Chicago, IL.

For John J. Sullivan, Defendant - Appellant (12-3670): Michael I. Leonard, Attorney, Leonard Law Offices, Chicago, IL.

Before BAUER, FLAUM, and HAMILTON, Circuit Judges.

OPINION

Page 714

Bauer, Circuit Judge

Defendants-appellants, Daniel Sullivan and John J. Sullivan, are brothers who owned a group of companies that offered remodeling services to homeowners: New Look Home Services, J& D Home Services, A-Z Home Services, and Contract Services. While the appellants provided honest work on construction jobs when their clients paid in cash, they fabricated a far more profitable, but illegal scheme. By promising homeowners that they could remodel their homes at a discount, the appellants duped numerous people into refinancing their homes and paying the loan proceeds directly to one of the appellants' companies. Once they had the money, the appellants left the job sites unfinished and the homeowners' finances in disrepair.

The appellants targeted neighborhoods on the South and West sides of Chicago. Some of the appellants' employees worked as telemarketers and cold-called homeowners. Daniel Sullivan told telemarketer Martin Kelliher to look for " elderly, ignorant homeowners," and John Sullivan added that " [t]he more ignorant, the better. Also, the older, the better." Reading from a script provided by the appellants, employees asked unsuspecting homeowners if they needed remodeling work; if they said yes, the employees offered free in-person estimates. The appellants also hired employees to distribute flyers advertising their discounted remodeling services door-to-door

Page 715

and used a company to mass mail flyers to residents of these target neighborhoods.

Once these advertising efforts stimulated leads, the appellants either visited the homeowners themselves or sent their salesmen, James Browning and Pat Rooney. John Sullivan told Browning to have customers sign blank contracts " in case we ever need to amend something to suit us better" or the blank contracts " could be used as a release." John Sullivan maintained the predatory sales mantra, telling Browning that the small cash remodeling jobs " keep[] the track open, but the refinancing, we get rich with those."

The appellants referred the homeowners to specific loan officers, usually Jeff Kleinberg and Angelo Petropoulos, who completed the refinancing. The appellants required the homeowners to sign letters of direction, so the title companies sent checks directly to the appellants' companies. With the checks from the refinance in hand, the appellants then required the homeowners to sign over the checks because they needed payment before the remodeling work could begin. The appellants hired subcontractors to do some of the work, but then abandoned the remodeling jobs before completion. From 2002 to 2006, the appellants collected over $1.2 million from over forty homeowners who were victims of the scheme.

In January 2011, a grand jury returned an indictment charging Daniel and John Sullivan with wire fraud in violation of 18 U.S.C. § 1343. They were prosecuted in the same trial. The government presented testimony from six victimized homeowners; testimony from J& D Home Services employees; testimony from a subcontractor who worked on J& D Home Services projects; documents from the appellants' business and personal records; and testimony from various bankers and investigators who verified the financial transactions. The jury found Daniel and John Sullivan guilty of two counts of wire fraud each.

At the sentencing hearing, the district court found that the loss calculation for the appellants' scheme was more than $400,000 but less than $1,000,000 and accordingly increased the appellants' offense level. The district court also applied five separate offense level enhancements because the appellants' conduct involved: (1) vulnerable victims; (2) a violation of a prior court order; (3) sophisticated means; (4) mass-marketing or ten to forty-nine victims; and (5) ...


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