USA v. Mullen et al

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
UNITED STATES OF AMERICA 	CRIMINAL ACTION
VERSUS 	NO: 20-106
RYAN P. MULLEN AND 	SECTION: “H”
DUANE A. DUFRENE
ORDER AND REASONS
Before the Court is the imposition of restitution owed by Defendants
Ryan Mullen and Duane Dufrene.
BACKGROUND
Defendants Ryan Mullen (“Mullen”) and Duane Dufrene (“Dufrene”)
pleaded guilty to one count of conspiracy to commit bank fraud in violation of
18 U.S.C. § 1349 and one count of conspiracy to commit money laundering in
violation of 18 U.S.C. § 1956(h). Defendants repeatedly effectuated a scheme
wherein Dufrene, through his corporate entities, would purchase a property at
a fair price. Then, Mullen, through his corporate entities, would obtain a loan
to 	purchase 	the 	property 	from 	Dufrene. 	Unbeknownst 	to 	the 	lender,
Defendants were using fraudulent documentation to inflate the purchase price
for the subject property and obtain a loan millions of dollars more than the
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price paid in the first transaction. Defendants would then use the loan meant
for the second transaction to pay for the first, pocketing the excess.
In March 2024, the Court sentenced Mullen and Dufrene, ordering
restitution to Keesler Federal Credit Union (“Keesler”) and Red Oak Capital
Group, LLC (“Red Oak”) pursuant to the Mandatory Victim Restitution Act.
On January 29, 2025, the Court held a hearing on the issue of restitution, at
which the Government called one witness, Paul Cleary, the President and COO
of Red Oak. At the hearing, the Court ordered the parties to file supplemental
briefing on the issue of restitution.
LEGAL STANDARD
The 	Mandatory 	Victim 	Restitution 	Act 	(“MVRA”) 	applies 	in 	all
sentencing proceedings for convictions of “an offense against property under
this title, . . . including any offense committed by fraud or deceit.”1 The MVRA
provides that restitution shall be awarded “to each victim in the full amount of
each victim’s losses as determined by the court and without consideration of
the economic circumstances of the defendant.”2 The Fifth Circuit has held that
“[t]he MVRA limits restitution to the actual loss directly and proximately
caused by the defendant’s offense of conviction” and “every dollar must be
supported by record evidence.”3 The Government bears the burden of proving
the amount of the victims’ losses by a preponderance of the evidence.4
1 18 U.S.C. § 3663A(c)(1)(A)(ii).
2 18 U.S.C. § 3664(f)(1)(A).
3 United States v. Beacham, 774 F.3d 267, 279 (5th Cir. 2014).
4 18 U.S.C. § 3664(e).
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LAW AND ANALYSIS
As part of their sentences, Mullen and Dufrene stipulated to jointly and
severally owing restitution to Keesler in the amount of $1,824,109.68.5 Dufrene
further agreed to restitution up to $1 million owed to Red Oak jointly and
severally with Mullen, leaving Mullen responsible for any excess amount due
to Red Oak.6 Thus, the sole question before the Court is the amount of
restitution owed to Red Oak by Defendant Ryan Mullen pursuant to the
Mandatory Victim Restitution Act.
The Government argues Red Oak is entitled to $1,974,119.06 in total
restitution. The Government’s calculation includes $122,377.05 in legal fees,
$1,470,753.38 	in 	carrying 	costs, 	and 	$380,988.63 	for 	costs 	Red 	Oak’s
representative 	incurred for 	management of 	the 	properties after seizure.7
Mullen has agreed to stipulate to restitution for Red Oak, limited to the
amounts it expended getting, maintaining, and improving the property for
sale, but argues the total amount owed should be offset by funds Red Oak held
in capital reserve accounts for these transactions.8
Paul Cleary, the government’s sole witness detailed the legal fees Red
Oak incurred to oppose bankruptcies filed by ONRD, Inc, one of Mullen’s
corporate entities involved in the scheme. The Court accepts Mr. Cleary’s
testimony as credible and finds that Red Oak suffered actual losses—caused
by the Defendants’ offensive conduct—in the amount of $122,377.05 for legal
5 Doc. 244 at 3.
6 See United States v. Gozes-Wagner, 977 F.3d 323, 346 (5th Cir. 2020) (“[T]here is no doubt
that [the district court] had the authority to hold [defendant] jointly and severally liable . .
. .”).
7 Doc. 244 at 1.
8 Doc. 245.
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fees. The Court, after reviewing the record, accepts the government’s values as
to the $1,470,753.38 in carrying costs and the $380,988.63 for Red Oak’s
representative’s costs, including amounts Red Oak expended to maintain and
operate 	the 	property. 	In 	total, 	Red 	Oak 	expended 	$1,974,119.06, 	with
$603,624.99 being sourced from the capital reserve accounts and $1,370,494.07
being “new” money Red Oak spent.9
The Court, however, agrees with Mullen that the amount of restitution
owed should be offset by the value held in capital reserve accounts. The funds
held in reserve escrow are monies Defendants borrowed but were never used
by or paid out to Defendants. Red Oak retained control of these funds and
ultimately 	used 	them 	to 	pay 	for 	legal 	fees, 	carrying 	costs, 	and 	owner’s
representative’s costs. Ordinarily, the value of the capital reserve accounts
would factor into the calculation of Red Oak’s losses, namely the difference
between the loaned amounts and the value of the properties returned for sale.10
Defendants would therefore be entitled to offset the fraudulent loan balances
by the amounts retained by Red Oak to calculate the value of the property
returned.11 But, by “authoriz[ing] the government to proceed with only seeking
the legal fees and carrying costs/expenses,” the Government has opted not to
introduce evidence of the difference between “the value of the property on the
date of sentencing” and “the value (as of the date the property is returned) of
any part of the property that is returned.”12 Without evidence supporting Red
9 Doc. 244 at 21.
10 See Robers v. United States, 572 U.S. 639, 641 (2014) (“[T]he specific property lost by a
victim, which, in the case of a fraudulently obtained loan, is the money lent. . . . [A]
sentencing court must reduce the restitution amount by the amount of money the victim
received in selling the collateral . . . .”).
11 Id.
12 Doc. 244 at 5; 18 U.S.C. § 3663A(b)(1)(B).
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Oak’s losses in property value, the Court must find that the Government has
failed to demonstrate by a preponderance of the evidence that Defendants owe
Red Oak the $603,624.99 once held in the capital reserve accounts. Given that
the capital reserve account balances were used to pay Red Oak’s expenses, the
Court may only impose restitution for the “new” money Red Oak expended—
$1,370,494.07. Accordingly, the Court finds that Defendants are entitled to a
credit of $603,624.99 that Red Oak held in the capital reserve accounts, and
the total amount of restitution owed to Red Oak is therefore $1,370,494.07. As
Dufrene has agreed to stipulate to jointly and severally owing the first $1
million with his co-defendant, the Court finds that Mullen is solely responsible
for the remaining $370,494.07.
CONCLUSION
For the foregoing reasons, the following restitution order is entered. An
Amended Judgment reflecting the following shall issue separately.
IT IS ORDERED that Defendants Duane Dufrene and Ryan Mullen
jointly and severally owe restitution in the following amounts:
• 	$1,824,109.68 to Keesler Federal Credit Union;
• 	$1,000,000.00 to Red Oak Capital Group, LLC;
IT IS FURTHER ORDERED that Defendant Ryan Mullen is ordered
to pay restitution in the following amounts:
• 	$370,494.07 to Red Oak Capital Group, LLC;
Restitution is due and payable immediately and shall begin while the
Defendants are incarcerated. 	Upon release, any unpaid balance shall be paid
by Duane Dufrene at a rate of $150 per month. Likewise, upon release, any
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unpaid balance shall be paid by Ryan Mullen at a rate of $150 per month. The
payments are subject to increase or decrease, depending upon the defendant’s
ability to pay. The Court finds that Defendants do not have the ability to pay
interest on the restitution. The Court will waive the interest requirement in
this case.
Restitution payments shall be made to the Clerk, United States District
Court, and are to be forwarded to the following address:
U.S. CLERK’S OFFICE
Attn: FINANCIAL SECTION
500 POYDRAS STREET
ROOM C151
NEW ORLEANS, LA 70130
The 	U.S. 	Bureau 	of 	Prisons, 	U.S. 	Probation 	Office 	and 	the 	U.S.
Attorney’s Office are responsible for the enforcement of this order.
New Orleans, Louisiana this 3rd day of November, 2025.
____________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE
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