United States v. Chung Lo

231 F.3d 471 (2000) United States Court of Appeals for the Ninth Circuit 2000-11-01

criminal; real estate broker convicted by jury on eight mail fraud counts (plus conspiracy and related counts) for four fraudulent mortgage-loan transactions; appeal on sufficiency of the evidence of mailing (Count 13) and of furtherance (Counts 4-7, 9-11); four mail fraud convictions reversed, four affirmed (result: mixed)

Facts

  1. 1 Scheme or artifice to defraud satisfied conceded
    Lo then prepared new loan applications which she submitted to Greater Suburban Mortgage (“GSM”) for the purchase of the Hugo property. The new applications contained numerous false statements about the Bau-tistas’ financial circumstances.
  2. 1 Scheme or artifice to defraud satisfied conceded
    This time, the lending institution discovered the fraud in its review of the application and notified Lo that it would not grant the loan.
  3. 1 Scheme or artifice to defraud satisfied conceded
    Mail fraud includes two general elements: first, the government must prove that a defendant devised or intended to devise a scheme to defraud a victim of his money or property; second, it must prove that in executing the scheme, the defendant made use of or caused the use of the mails.
  4. 1 Scheme or artifice to defraud satisfied conceded
    There was more than sufficient evidence to prove that the scheme was fraudulent, and Lo does not contend otherwise.
  5. 5 Statutory mailing or carrier act satisfied conceded
    After the “sales” closed, the Alameda County Recorder’s office mailed the original grant deeds to Aglibot and Bosnich, the original deeds of trust to CMS and BHSC, and, some time later, a grant deed from Elma Aglibot to Jayson Bryant.
  6. 5 Statutory mailing or carrier act not no-evidence
    The GSM witnesses explained that when the mortgage company receives an application, it generates the document and, within three days from receipt of the application, sends it to the borrower.
  7. 5 Statutory mailing or carrier act not no-evidence
    The GSM witnesses also testified that because the law requires this document, GSM has a series of provisions in place to insure that it is mailed, including cross-checks by other loan departments.
  8. 5 Statutory mailing or carrier act not no-evidence
    No copy of the Truth in Lending notice in question was introduced at trial.
  9. 5 Statutory mailing or carrier act not no-evidence
    No GSM witness testified that he or anyone else at the company had ever seen the specific, critical document, that there was any record that it had ever existed, that it was ever in GSM’s loan files (whether at the time of trial or earlier) or that the loan file was ever complete.
  10. 5 Statutory mailing or carrier act not no-evidence
    Moreover, although the Bautistas, the putative borrowers, also testified at trial, they did not state that they had ever received the document, and they, also, did not produce a copy of it.
  11. 5 Statutory mailing or carrier act not no-evidence
    Obviously, as the chain of inferences based on usual practices gets longer, the probability that nothing went wrong in administering those practices lessens. At some point, a reasonable doubt arises concerning whether, as Murphy’s Law predicts, that which can go wrong did go wrong.
  12. 5 Statutory mailing or carrier act not no-evidence
    Yet, the mailing is, of course, an essential element of the crime, and is the gatekeeper for separating those cases that are the exclusive province of the states from those that may be tried in federal court under the mail fraud statute.
  13. 5 Statutory mailing or carrier act not no-evidence
    We therefore conclude that in this case the evidence of the required mailing is far too tenuous to be sufficient, and reverse Lo’s conviction on Count Thirteen accordingly.
  14. 5 Statutory mailing or carrier act satisfied conceded
    Lo does not dispute that the County Recorder mailed deeds to the lenders and to the owners, real and sham, of the two Oakland properties.
  15. 5 Statutory mailing or carrier act satisfied conceded
    . That Lo did not herself specifically plan the mailing is immaterial.
  16. 5 Statutory mailing or carrier act satisfied conceded
    Printed at the top of the recording documents were specific instructions to the Recorder to mail the deed to the appropriate party when recorded.
  17. 6 Mailing for execution of the scheme satisfied proved
    These mailings occurred after the loans had been funded and after the deeds had been recorded in the Recorder’s office.
  18. 6 Mailing for execution of the scheme satisfied proved
    The general principle upon which Lo relies is correct, for the government may not prevail without demonstrating that the mailings were incident to the execution of the scheme, rather than part of an after-the-fact transaction that, although foreseeable, was not in furtherance of the defendant’s fraudulent scheme.
  19. 6 Mailing for execution of the scheme satisfied proved
    Rather, as in Sampson and Schmuck, the mailing can occur after the defendant has obtained her fee, if “the mailing is part of the execution of the scheme as conceived by the perpetrator at the time.”
  20. 6 Mailing for execution of the scheme satisfied proved
    Lo’s plan was structured to make it appear that the properties had been sold, when in fact the sales were a sham.
  21. 6 Mailing for execution of the scheme satisfied proved
    The mailings could serve to “lull the victims” — in this case, the loaning banks — “into a false sense of security, postpone their ultimate complaint to the authorities, and therefore make the apprehension of the defendants less likely,” by assuring them that the conveyance of the property had gone forward in accordance with the usual procedures of the Recorder’s office and providing them with documentary proof thereof.
  22. 6 Mailing for execution of the scheme satisfied proved
    From the foregoing analysis we conclude that there was sufficient evidence to sustain the convictions on Counts Four, Five and Nine, the counts alleging mailing of a grant deed attesting to one of the original sham “sales,” and of the deeds of trust.
  23. 6 Mailing for execution of the scheme satisfied proved
    He testified that he was not expected to contribute any money toward the mortgage payments and that after a year he planned to quitclaim his interest in the property back to the Bryants.
  24. 6 Mailing for execution of the scheme satisfied proved
    Bosnich did not, however, quitclaim his interest in the MacArthur property a year later, but did so only after another several months, after the FBI approached him with questions about the fraudulent loan applications and informed him that his name was listed on the 79th Avenue property.
  25. 6 Mailing for execution of the scheme satisfied proved
    There is, however, sufficient evidence of a prior understanding that Bosnich would quitclaim the MacArthur deed back to the Bryants to permit the jury properly to find that the transfer of the MacArthur property to AgliboN-Bryant was part of the execution of Lo’s original plan, whether the precise timing was influenced by the FBI investigation or not.
  26. 6 Mailing for execution of the scheme not no-evidence
    Both Bosnich and Aglibot-Bryant denied knowing that their names were on the 79th Avenue property.
  27. 6 Mailing for execution of the scheme not no-evidence
    Neither they nor anyone else testified to a prior plan to deed back that property.
  28. 6 Mailing for execution of the scheme not no-evidence
    Nor is there any evidence that Lo ever told, or intended to tell, Bosnich or Agli-bot-Bryant that she had used their names on the 79th Avenue property loan.
  29. 6 Mailing for execution of the scheme not no-evidence
    This being the state of the evidence, no reasonable juror could conclude beyond a reasonable doubt that it was part of Lo’s fraudulent plan that Bosnich or Aglibot-Bryant would deed back the 79th Avenue property.
  30. 6 Mailing for execution of the scheme not no-evidence
    To this end, money from Brubaker was placed in an account in Aglibot-Bryant’s name. Brubaker was then repaid out of the escrow account before the MacArthur transaction closed. No mailings are charged with respect to that transaction.
  31. 6 Mailing for execution of the scheme not no-evidence
    It appears that Brubaker subsequently made a second loan to the Bryants which he secured with a deed of rents on the MacArthur property and which led to the mailing at issue in Count Six.
  32. 6 Mailing for execution of the scheme not no-evidence
    There is no basis in the evidence, however, for concluding that this second loan was part of Lo’s fraudulent scheme.