eight southern district of iowa united states versus jason springer sixteen thirty six ninety five southern district of iowa united states versus rick mcclintock sixteen thirty three eighty nine district of nebraska kurt vester versus daniel halleck and sixteen thirty two thirty eighth district of minnesota united states versus rex firman the first cases for argument are six hundred thirty four ninety eight and one the bank frauds fraud statute the first issue that i wanted to address is what is actually being charged as the scheme to defraud a financial institution and i think that if you look at the indictment and the instructions it appears that the scheme is filing a false hide one settlement statement but i think if you look at the evidence that was presented at the time of trial it looked to me like the government was trying to prove that the individual mortgage holders or their service servers could have obtained more money and should have been advised by the defendants one or more  defendants that there was a resale in the wings that was for more money i don't think that was charged and i'm going to try to address my jurisdictional arguments just of the settlement statement because i think that's all this alleged false hard won state is not right well you know i didn't interpret it that way because we're looking at two defendants we're looking at an attorney who is a closing attorney for and and trying to close the a to be transactions and then we're looking at a realtor who signed one affidavit requests with respect to one particular transaction you know i'm sorry how  he was charged with only one cow right and and but the clear to me that that he was was he didn't submit any kind of a no no he didn't what's more is there's no proved clearly with your that was not really that's a very interesting question don i appreciate that what was actually argued to the jury and this is why since i wasn't trial counsel i found the whole case a bit confusing is that they lied so everything was they lied they lied they lied and they didn't really try to tie it up with a potential for a loss to the bank or any particular intent with respect to getting something of value at about the la of some kind of aiding and abetting argument well that wasn't let me back up aiding and abetting was submitted in the jury instructions but the way the closing argument was framed it was just that it was a lie so anyway i and perhaps because i wasn't trial counsel i found it extremely confusing but i think to make the legal arguments it's necessary to kind of focus on the hard one and i don't think aiding and abetting on the one one individual who testified for the service or g m e c who had some personal knowledge said that she wouldn't have gone ahead without the affidavit with the closing however  affidavit wasn't required by the owner of the mortgage which was f h a and they had already for closed g m a c had already foreclosed on the work so they had an option to sell it at a sheriff's sale thoughts what they wanted to they didn't go forward with it so my suggestion is that you know there isn't really any proof that it without that affidavit they would have gone forward because they didn't want to sell it or sheriff's sale and they thought the fifty seven thousand six hundred dollars they got for it was better than they would get at the sheriff's sale so i mean i don't think there's really been any proof that you know the bank or we're not some other issue the g m a c wouldn't have gone through with it without that affidavit except for a statement made by the lady not required by hut so if they know there was a willing buyer out there willing to pay more now that's a very interesting question and i appreciate it they are buying the same thing the second people closing on the second are buying things that have been somewhat fixed up cleared up with that guarantee that you know there's not going to be any mortgages or other liens a lot of these properties had second mortgages or judgment liens or delinquent taxes these all had to be cleared up by someone and they were in this case cleared up by the trust through the efforts of mr springer so i don't think it's the same thing and i don't think that the the government even trying to say it's the same piece of property you know this was a difficult time for people looking to buy real estate because you know mortgages turned over from one person to another person to another person on a short sale they were always throwing in these various requirements for a short sale lot of buyers wouldn't if they knew it was a short sale they say forget it i'm not even going to try to do an offer on it it's too problematic we'll have to wait six months and we may end at the end of the line not get it people usually want to buy a house want to buy a house so no i don't think it was the same property now i'd like to revert back to my jurisdiction argument i do think that the government made some effort to prove that the institution that received the hard won were as an f d i c institution but i don't think they quite got there and the problem is i think the best evidence in this case of who the mortgage holder was is who was for close to who was the entity that was named in the foreclosure petition that were pending at the time of the sale not some statement very broad statement made by a witness regarding it so for example in first avenue their witness mrs senior indicated that it was wells fargo but in fact there was a pending foreclosure action and it was brought the name of wells fargo financial iowa three and you know this i could go on for every single transaction the people that were testifying except for ms bond personal knowledge and they didn't know what entity actually own the mortgage and i don't think that's going to be sufficient to prove jurisdiction here if you look at the cases that have been cited you there but thank you your honor i pre state that that's a good question i think they're both and that for that reason i think i can raise it in any level didn't have to be raised in particular at the trial court level c to that it was a mortgage lending institution or corporation i guess was and that i found very well if your if your or my argument is that they didn't prove it was a mortgage lending business either and at the time of the directed verdict the government pointed to the testimony of mr martin from hud but if you review his testimony he really didn't say a whole lot  he said that g m a c was an approved lender by f h a on their list and they made lots of loans and they were in various states i don't think that rises to the level of the requirement that it's affecting interstate commerce you know i looked at u s v jones which i didn't cite in my brief and i think there was a similar eight circuit case where i think you have to show something more than just good morning may it please the court this appeal raises a host of issues most of which were not raised in any form at the trial but in any event having raised them on appeal none of them have merit and i will start with the aiding and abetting theory with respect to mr mack a heinecke a judge arnold the government did indeed argue the aiding and abetting theory at trial we argued it quite clearly in the theory was this it's found on page thirteen seventeen of the transcript that's the portion of our closing argument where we address this the argument was that mr america harnick aided and abetted the execution of this scheme by signing th false affidavit it was an anti flipping affidavit and the affidavit said that there was no agreement to no agreement currently in place to resell the house at a higher price there explicitly was such an agreement currently in place so that affidavit was simply false there was an agreement to buy the house for sixty five dollars he knew there was over i'm sorry and there was evidence that he knew that i think there was powerful evidence that he knew it because he was  realtor for both transactions so in other words he was the realtor on the transaction in which nate smith bought it for sixty five thousand and then he was a realtor the same day for the second transaction which he sold it for eighty six thousand dollars so there's no question that was false and the signing of that affidavit was necessary to the execution of this scheme because it was necessary to the closing of the short sale transaction the representative from mortgage and that witness testified about g mac but further the government heard testimony from a russian official with hut about this same company and it was only one of us our guest alexander well i think alexander is a different case for a couple of reasons one is that an alexander the government only had a stipulation and so there's a stipulation that bank of america is insured by the f b i see alexander was a false statement to a bank case so there is a piece of paper where the false statement occurred in that piece of paper says bank of america and and so the question now xander is is bank of america the same as bank of america and but we don't have a single piece of paper here we have a larger scheme involving a number of false hoods instructed that they had to find that mortgage was a mortgage lending business and we the witness is referred to by shorthand at trial as g mac which is not unusual to not use the full name of an entity or a lot of to go off in different directions i take the court's point i think that that becomes clear when this issue is raised for the first time on appeal and i would for other point out that in the end there was no argument at trial that we had multiple entities indeed mr macca hynix attorney got up in his closing statement and said we're not really seriously fighting in this case about whether or not g mac was a mortgage lending institution or those who are a planner or best is what you're saying yes and  and that's all just good to get the record site that's in the transcript at page thirteen forty two and thirteen forty three and to be clear the evidence from the hard witness was that g mac was a lender that it was that it made hundreds if not thousands of mortgage loans that were approved by the f h a and that it made those loans in states across the country that is more than sufficient to show that it is a mortgage lending business there was no contention in the end that there was some other entity that that belong to this transaction and i think that's true more generally for all of these transactions indeed it was part of the defense in this case all of the other institutions were f d i c insured so  lending business and part of the defense strategy was that these were large sophisticated national big f b i insured banks and they were big boys and they could make their own decisions about whether these short sales were a good idea and they were really defrauded by these little guys in the morning that was the defense theory and so that not only did the defense not challenge this issue but there was a jointer of the parties on this issue that we were there there was no motion for judgment of acquittal on this he did raise it in the space you did he did your honor and then got up at closing and said that we're not disputing the g mac is a mortgage lending business which implicitly includes at the concession that g mac is the right entity here but the only entity the party is discussing made independent economic assessments about whether these transactions were a good idea and decided that they were so they were not harmed or defrauded that was a common theme from from particularly from mr springer  had a number of arguments most of which i think frankly he's abandoned on appeal one of his arguments was that the affidavit he signed was literally true that that was not supported by the evidence but in any case he does not appear to be pressing it today  didn't the witnesses generally testify in each instance that the f d i c insured entity that was involved was the one that was going to lose money yes so in each case we had representative loans the repertory specifically asked those banks did their institution face the risk of loss as a result of which would you make the link that the the institution that was going to make the loss was the one that was although we don't think that they had to lose money in order to new say institution you mean the f d i c insured institution yes and maybe if i could just briefly go through each count it might be helpful to the court so count one involved wells fargo and the jury heard testimony from a wells fargo representative who said that wells fargo was insured by the f t c that wells fargo was the investor who owned this mortgage that wells fargo approved the short sale and that wells fargo is the institution that lost money in the short sale none of that was contested at trial ever and the jury was entitle to credit count two involved bank of america there are two different ways the jury could have found that we met the element with respect to that cow first the manager from bank of america said that bank of america was servicing this loan and that the owner of the loan was wells fargo and i've just explained to you that the jury heard testimony that wells fargo was f bank of america faced a risk of loss because of their servicing agreement with wells fargo that they could be forced to buy back a loan for example if there was fraud that they didn't catch and so we none of that was contested  either with respect to count three and i'll go through the rest of these a little bit more quickly u s bank of bank employees said that u s bank was insured by the f b i see us bank was servicing this mortgage it was owned by freddie mac u s bank testified again that they faced the risk of loss because of a buyback provision again there was no dispute about any of that at trial nobody suggested that we alleged the wrong victim counts four and six involved to the mortgage there was testimony that both of those loans were owned by citibank north america which the parties and the witnesses referred to as citibank that citibank was insured by the f b i see and we alleged city mortgages the victim because it challenged indeed as i said the defendants wanted to emphasize that these were marge and sophisticated banks i want to briefly address the variance issue that might opposing counsel began with there was no variance here because the indictment described the exact scheme that we proved to trial it was an eleven page speaking indictment it laid out all of the falsehoods and misrepresentations that we ended up it moving scheme they were the specific executions of that scheme but the broader scheme included all of the misrepresentations that ms donohue is complaining about they included the fact that this scheme was meant to deprive the banks of executions the problem with that argument is i think it's waived because it was raised for the first time in the reply but also the defendants certainly had an opportunity to move to strike pages one through seven of our indictment they did not and the jury was properly instructed on it and i would say finally there's just no support for the idea that a scheme can be no broader than it's specific executions indeed it is commonplace for the government to prove up particular executions that are part of a broader scheme probably of the execution alone had been had been the subject of a billion diapered there would have been a motion for bill of particulars without a doubt there would have exactly that problem and we gave the defendants notice very fair notice of the scheme and it was properly charged and again reduced to its simplicity what was the government's there a big percentage of the jury yes you are the government's theory was that the defendants lied to these banks in order to induce them to agree to short sales that was the government's theory and did you establish a dollar figure as far as far as any loss was concerned well we sought to prove up that dollar figure at sentencing but the rough dollar figure that we relied on at the trial was the difference between what these defendants bought the house for in the short sale so in the g mac example they buy it for sixty five thousand they sell it the same day the same house for eighty six isn't and we argued to the jury the bank was entitled to the benefit of that higher price which we argued was the market what about what about the argument that it's two different properties well it's not it's the same property  house sitting on fifty six treat in des moines iowa in urbandale iowa but here in iowa and if it was two different properties then the bank didn't the bank agreed to a short sale on that house and that short sale happened on  the same date that the resale transaction happened so if the property somehow changed then in agreeing to the short sale of the bank agreed to a short sale on a different property than that i'm not sure i totally understand the argument but it's something along the lines of the second sale is free of liens and other potential incumbrances and that's different than the short sale i think that's all to me only an argument about whether the banks actually lost money the argument is that the bank would have had to go into foreclosure proceeding the defendants were actually doing the banks a favor because in the end the banks didn't want to foreclose on these houses they wanted to get rid of them in the short sales i think that's really what the argument is getting at and that certainly was part of the defense at trial was go to ask what was the theory of the defense and now you've just told or no effect where they are going normal follower well they didn't say it like that because they didn't want to get up and say jury please notify but that that was the i mean that was one of the arguments there's no doubt about it  the problem with that argument is that the defendants we can argue if we want to know whether the banks lost money or the district court ultimately found at sentencing that the banks did lose money but that it was too hard to calculate it with precision  but none of that mattered for purposes of whether the government met the elements here the defendant still made false statements to these banks to induce them to agree to the short sales and for defendant spring or those false statements were the hard won statements that were the executions of the scheme and i'll just very briefly explain the government's theory about that and what we proved what the evidence showed was that all of those hard won statements were false and mr springer knew they were false all of them  that nathan smith or another defendant brought money to the closing that is what the hyde statement says that was never true mr smith never had money to pay for these short sales he had to wait resell the house the same day or a couple of days later at a higher price and use that money to fund his first transaction every representative from every bank said that if they had known that those hard ones were false they would not have approve the short sales if they had known that nate smith was going to resell that property for twenty thousand dollars more in one case nearly a hundred thousand dollars more they would not have approved though short sales that was our theory that's bankrupt or short sale they induce the banks to agree to give up that security interest there the jury couldn't possibly have found fraud unless it found that that happened because that was the only theory on which we proceeded at trial so security interest interest in the mortgage that the property interest is the interest on the mortgage and that is explicitly how we charge in this case it was fraud to induce banks to agree to short sales that's how we argued it and that's what the evidence shows there was no varian shouldn't worry about their ethical possible ways i could agree with the court that case might not have an enormous amount of jury appeal where you might argue about whether the government you would that the government well who knows what they got whether the government would try to make an example out of these people or whatever yes i think that's right and as we argue to the jury you don't get to lie to banks to cause them to give up something of value and then say no harm no foul congress has prohibited that so  thank you your honors i wanted to talk just briefly about the jurisdictional argument it's not playing air you can raise it any time and it doesn't matter whether i raise it on appeal or what kay says it's jurisdictional well a there is no federal crime dearest instance decided at the time it's filed isn't that now i think jurisdiction is has to be proven as a as a part of a case you have to prove you have jurisdiction and i don't think they did prove it and i think i am able to raise that at any time and there's not a sort of difference so if there was no provable false statement which is an element of let's assume it's an element of all that's not just diction and what's jurisdictional is that it has to involve a federal all they didn't really prove what the false statements were ok so we heard the government say well it was they didn't tell the banks that they could that they had or could line up these other sales the first thing you have to look at there is that did any of these entities have a resale restriction none of them did except g m ace see there was one that had a paragraph ten that was kenyan had a paragraph ten that had something about sale restrictions don't resell within thirty days and the offer i don't think as a closing attorney there was any way you would have noticed that nobody mentioned it except you know in question at t of trial i don't think that was clearly made an element of the transaction so the only transaction that had a resale restriction of any kind was g m ac and as i pointed out before g m a c was just apparently deciding they wanted this affidavit and hired specifically said they had a waiver they don't care when you resell it they did have a restriction that they wouldn't finance was resell within ninety days and they waived it during this period of two thousand and ten and two thousand and eleven so i don't see and there's nothing on the higher ed that says we have to declare if it's going to be resold contemporaneously or otherwise so what that government did at the time of trial is say hey guys were switching theories now what we really believe is that they lost money because there was a potential that they wouldn't be paid off by  ultimate transaction so for example if the b d c transaction and phone through there wouldn't be money going to the bank and my point there is hey there's no loss first of all on the first three transactions charged jason springer paid the mortgage off out of his own trust account not have any funds received from the b c transaction and he was a guarantor of the title he didn't title opinion there was some testimony there from the title guarantee he is on the hook anyway because he said he was going to be able to get clear title through that property have to pay pay it regardless the banks were never at any risk of loss from the fact that the they didn't have cash and then that got all cobbled up is a cash or is it a check or does it have to be funds directly from the borrower could be funds from a mortgage and other mortgage i mean it was one of the most ridiculous records i ever seen if you know how to close a real estate transaction doesn't make any sense nobody cares whether you have a bag of cash with you got a mortgage with your aunt josie's giving you some money they don't care the purpose of the hide if you look at it it's just to say we're taking this much money in and we're paying these things out and at the end of the day you're going to have clear title and one other thing i wanted to say about this lost business  if they banks didn't get paid they didn't have to release their mortgage there was absolutely no possibility of the banks losing any money related to whether it was a cash or a personal check or whatever and jason was i have a theory which i will offer which is i think most of the u s attorneys are very intelligent and you know what they're doing but they never did the nuts and bolts of a real estate transaction you know i'm from a small town in northeast iowa and i do about twenty of them a year for forty years i've done plenty and you know i just don't think they understand the nuts in the bolts of it there was absolutely no way that they could have lost any money by virtue of how they closed the transactions when they were simultaneous or where the money came from jason springer gave a title opinion that's in the record he's on the lookout the theory was more of an unknown not necessarily that they were going to lose money but they lost the opportunity to make more money given that there were these willing buyers out there willing to pay more in the short sale situation ok and you know i understood that as well but what i would answer to that is why  my my defendants in particular mr springer and mr mcewan you calf to run to any of these loan servicers which mostly they were loans serve cers rather than mortgage holders and tell them hey there's go be a resale like i say they don't have any resale restrictions except for the g m e c i don't think they prove jurisdiction in that case and i don't think they prove that g m a c would have gone forward they foreclosed already on the property they could have done a sheriff's sale before deciding to do this short sale so obviously and i think from the testimony they appraise the property and they thought that was a good deal so you know at the end of the day what false statement got  made and by mr mcewan you did know that it was going to be close i'm not arguing that because he was representing the buyer this is why got himself involved he represented the buyer on the b to c sale and so you know his main incentive was to try to avoid having the whole thing fall through for the people that he knew and he was representing but and i agree that i did wave the argument on appeal  regarding the falsity of the affidavit and the reason that i did was because i have to interpret the facts in the light most favorable to the government and i didn't feel that the record justified that but i don't think it matters i don't think they proved that mr made a false statement other than that one affidavit to g m a c which i think didn't have anything to do with the price of tea in china because it wasn't required by hyde she testified had made the final decision and if you look at the paperwork there was a sheet from that said it was ok to go ahead at the price they went ahead and there are specific testimony from martin we don't care when you resell it there's no restrictions so i guess at the end of the day i think th a paper tiger i mean they're they're building it up and they're switching boogie men from one count to another they just lumped it all together for example i didn't or them ever explain whether there was resale restrictions or not it make if it was one day five days ten days or whatever later because there was no see her restriction i mean i think we've basically ended up cooking up we didn't like the fact that they made more money and we want to punish them and i think that's at the end of the day that's the whole case and i don't think it has any merit and i wish you would be first thank you for the argument on both sides the case is now submitted and we will take it under consideration