mortgage fraud prosecution and turns first to the case of marie mendez ms mendez was the wife of one of the sons of the family business and she basically was employed in administrative capacity doing more or less ministerial things the government points out it one time she notarized the document  she was responsible for signing some checks and she herself she did sign though a false loan application she signed an application there was no showing at trial despite all the evidence and all the effort the government put into this case no showing at trial that she had any that those false statements were on the application when she signed it or even and it's to one document there was even a mission by the government that there was a forgery so that she did not g medical center that her income was ten thousand eight hundred dollars a month and the apartment would be her primary residence right her signature is on that document yeah and all of those statements that are also on that document were fal the sort of the strict liability standard that if your signature appears on a document that has false statements then you must have known those those statements must have been on the document when you signed it and you must have known that they were going to be there that sort of thing and so even in it even in a vacuum that evidence is not proof of a knowing false statement but we don't have a vacuum here we have a case where the government presented to substantial evidence and it was undisputed that the coeur engine of these false applications was the mortgage application or a mortgage broker company that put all this information in after people signed it they do they gathered signatures and they fill things in yeah i thought we are court though has  if we were to address that question in a vacuum i think the answer could go either way i personally think that it's it's not enough to meet the beyond a reasonable doubt standard but we're not in a vacuum is my point in this case because in this case the government's case the government presented the witnesses who actually put this information in the documents they presented them at trial they call them asa dolls they call these people and it was this overwhelming evidence that this is not how it went that they took care of what was in it and the there was not a single witness the most  those deal with her not a single witness said this information was on there when she signed it and so in that context that's not substantial evidence of wrongdoing again and we're talking usually in these cases when these we have we're talking about strong  use your name so you know that's going to be fun funny and that's one thing they're not there's none of those circumstantial indicia that are coming out there were three apartments where he signed papers for them so yes i think she signed three blank papers she signed papers as to which some of the information was blank on three of them yes that's correct and that's what i mean the evidence was that was well i mean the jury can consider that time and time again you sign well i'm papers that have major holes in them every time you go to buy an apartment and how can she how can she have a primary residence three different apartments what was she couldn't but again that's information that's put on there as far as this record shows unknown to with when that is put on there and she's filling out paperwork for three different apartments she's given she's given a stack of paper work on apartment she's purchasing by the mortgage broker who says i'm handling everything the mortgage broker actually testifies at trial so the government wants it's a government witness a mortgage company everybody's plug figure but wants to show anything to show that she knows that there's something false in those documents when she's signing them to govern has the opportunity to do that the government doesn't do that ok and then she's signing checks and  companies that did they have any functions other than to receive money in connection with this was their testimony as to other things these companies did well there's no testimony that she knew what these companies did she's the only testimony is that she has an administered ministerial responsibility to the companies i mean that's the point in an ordinary case you have you have witnesses or you don't have witnesses have they had the witnesses they have the people there and he have the opportunity if there is any evidence that she knows that something that she is doing that in and of itself is not unlawful then then they could present it and are well for ignorance charge in this case there was a deliberate ignorance charge and that goes back to some of the exclusion of the evidence because the whole deliberate ignorance theory was a little bit skewed if memory is supposed to be deemed to be irresponsible for science signing documents without filling out to make sure every detail is correct ahead of time and relying on the mortgage company then why why is it not appropriate for her to have the opportunity to show what the environment was that the banks didn't even look at this information so why is she supposed to be looking at this information why can't she just trust the mortgage broker the only thing the bank cares about is whether the property is worth you know substantially more than the loan amount and so if again particularly in this context of this case and given that type of restriction on the defen evidence it's particularly inappropriate to deem her culpable up on on a deliberate ignorance or in any other theory that the plain fact was that she's a spouse who buys three properties and there's no id there's just it's just ambiguous we just don't know did she know with anything wrong or not we don't have what is the key in a circumstance a conspiracy case of finding conduct that would not have been engaged in but for knowledge of the conspiracy that's what's absent and we when you have circumstantial evidence that's what takes it from just being speculative to something to prove something i mean to suggest that one day you ought to do before you sit down is addressed the sentencing issue about her  theories that because a variance was imposed the error is harmless and i'd have thought the government argued a little more than that it cited the sago mine case decided that that the government that the district court had pointed to enough evidence to make it clear why it was what its finding was with respect to her relevant conduct i'm not saying i'm persuaded by their argument but i'm i'm saying i thought that's what the argument was i f i may be missing some of their own that may they may have made your may be exactly right or are i i put i just don't see that there's anything in the record that substantiates that i think what's in the record is a finding of minimal minimal participation so that to me that's actually contradictory to a finding of of of of the full scope of relevant conduct so i don't see that i know that they cite that they cite that while the district went ahead made finding she was  in minimum i think it was a minor participant the disks were found but again that finding would tend to cut against saying she must necessarily have had knowledge of the entire scope of things the  thought the way i read this the district court was saying well what she did was minimal in the context of this scheme but this scheme was huge and therefore she it's more than  a small participation in that if you look at it in the context of what this scheme was what she did was significant but so i think that's what he was saying it's one is like absolute and one is a comparison and that's how i read it i'm not sure i disagree that's a possible reading i suppose as well but again that i don't think that meets the test which is a relatively rigorous test these guideline application decisions are essentially life and death type decisions it may not have worked out that way for her in this case because she did get a variance but that's a life and death decision so it's that's why they if you find it you know it's a loss of twenty seven million dollars  house and it makes a big difference i want to ask you something about the loss what do you thing about the secondary purchasers that somehow there should have been an extra loss calculation i don't we have a  loss between the amount that was originally land and the collateral and then what are you saying what your argument about the secondary purchaser well the phenomenological argument first begins with the fact you have this great variance between restitution and loss so that we don't we have a lack of inherent lack of reliability in in what where these calculations are coming from and when you get to the actual claims of loss by anybody the amount  six million dollars or some million dollars less than what the government claims the actual losses so we already know there's something wrong with it the other problem with the sub successor linder problem comes with it comes to the problem of again and this goes back to some extent to the  the banks know and when did they know it of who was responsible for the loss at a certain point it's in with what the initial linder does with the loan to the sub successor lender is not necessarily attributable to the  initial borrower i know what you're saying well they sold probably these mortgages in a package and so so they sold them and there's a loss somewhere i mean why for purposes loss does it matter who suffered the loss for restitution that might matter but why does it matter who suffered the loss in part if the governor has a footnote about this in terms of the cumulative nature of the loss the banks suffer has already suffered one hundred thousand dollars loss in other words the bank knows there's problems with this loan this is this this loan is on the on the downslide we're going to we're going to farm it off to somebody else ok then that that loss at that point the successor person isn't that the loss of that successor has from purchasing a lot at a discount a mortgage is already been damaged i don't know that that consequential los down the stream downstream loss is automatically attributed to the initial borrower and that could be in touch that's not just to address the mortgage crisis problem in general but in the specific context of our argument at trial that the banks were doing this no but we can look at intended loss as well right yes yes but the intent yes and if the intended loss of course here in reality based scheme you know in terms of their mines the reality of their mines was there was no intended l it was the these were very successful real estate developers who had sold hundreds and hundreds of condominiums and always done well and the intended loss that's why i think the government relies on actual loss ok mr  based on this course president united states versus by you that would be a permissible and permissible inference for a reasonable jury to drop but in addition to that in this case there is considerable evidence to support a finding of knowledge for instance as you're on a point out before i think is asserting that the mortgage brokers had that there was testimony that in some instances the mortgage mortgage brokers were capable of producing documents in support of applications or changing applications there's no evidence that this particular applications where changed in any way is trying to draw from some generalized testimony about what the mortgage brokers were doing in some instances were capable of doing evidence that when some of the false loan applications were filed just generally that they already contained the false information when they were signed i don't believe there was a discussion as to when the particular applications when the information was in put but in the the overall one way or another i believe that's correct but in this  particular scheme worked was that the mendez were recruiting through recruiters that were recruiting straw purchasers and the straw purchasers were compensated and they were willing to to to essentially loan their lied after the fact in two thousand and nine two thousand and ten in connection with the mortgage the was extended in this case from that to from her willingness to lie in connection with this your case that these were the letter she sent to them about the  hardship letters that she sent about the mortgage and claimed that she didn't have money in her bank account when in fact she did correct correct visit with will be the letters where she misrepresented her financial condition she also submitted three af davit in connection with the applications that were clearly title i had a bit of occupancy where she stated that this would be the residences would be her primary residence of course she cannot have three primary residence let alone three primary residence where she stayed at within a twenty five day where she planned to stay within the twenty five day period in addition she marry mendus also had considerable involvement in the overall family scheme she  was first of all she was saying two types of shoes and two types of checks for she was in charge of signing checks that would funnel rental proceeds from because some of these properties were being rented back over to the to the str purchase recruiters so that they did so that it could be used depending on the particular agreement with a particular recruiter to make some of the mortgage payments of were made for a couple years after three years in some cases with respect to the conspiracy separate from that and that separate from this chat check sign activity she also signed checks the funnel mortgage proceeds themselves in three instances back to recruiter sh proceeds the came either directly from from the from the title company or in one instance or in two instances through from the macro entity that was owned by her mother in law to funnel the proceeds to shock own so that those pro e something seventeen right i was attempted to touch on that just a second ago yes she was the treasurer and a director and treasurer of l seventeen which is a shell company that was used to fund all the mortgage count sixteen in one thousand in your brief you concede that the officer off that the government offered no evidence tying stella to come on and off could a jury infer still is involvement in a crime based on her involvement in the overall scheme and business absolutely and this goes back to the sufficiency standard and to that discourse precedent that the jury is entitled to draw inferences based on conspiracy she for instance induced employees and for family members to service officers and corporations that are bank accounts and make transactions including starting a bank account that was eventually used to funnel funds to an offshore more than two million dollars to an offshore account in switzerland all of that evidence is sort of circumstantial evidence it is pro but it and that collars the juries rational reasonable doubt the inferences that the jury to reasonably draw from the evidence as to participation in specific transactions now as to specifically to count sixteen and nineteen involving these are counts that involve struck first as a recruiter a cone with respect to  villa's over to and i'll seventeen which is the gist we're standing just alluded to was the company that was operated by her son michael and daughter and daughter in law marie from there those funds where  overall overall fraud scheme in this case there was no there was no pinkerton instruction given in this case was there but there was no pinkerton instruction given in this case however the court the jury because we could reasonably rely on really indistinguishable from how the rest of the operation of the of the rest of the scheme operated the only difference perhaps is there were no direct contact between between stella mendez and this particular apportionment of loss my opponent points to martin that's a case that has to do with restitution for good reason restitution treats loss differently from the guidelines there is titian context the point that the objective is to make the victim whole and for that reason unless there is a showing that the specific loss can be linked to a specific victim there is no restitution that was the only issue that was discussed and in martin now martin did side the in the context of the guidelines sort of a different purpose the purpose is to provide a metric of the scope of the fraud and that's that metric is completely irrelevant whether a particular the primary lender as opposed to a secondary findings does not preclude the does not preclude appellate review and therefore does not want a reversal where the court's decision are based on clearly identifiable evidence in this case cleared and then the siegelman case go on to explain what think clearly and then a full dinner possible evidence was you know i read this part of the transcript i didn't see where the district court made this kind of finding with respect to mari the senate back to the district court the district court's going to do the same thing again but but but given what the law is i'm not sure you've got it so if i may address this in the time that i have remaining listener what i will say that even under melinda martinez i think the court suggests that if there is additional evidence that specifically points to the fact that the sentence will not have been different there will be a room even under melinda martinez aside from  the paid out she's in the business she's in the family business then taking the money out to pay others so the rent could be paid that is an activity that is not limited to the council conviction it does not take a rocket scientist to figure out this is not a direct way of doing business now those findings were made in the context of a different hands meant for the role in connection with the role but i just responded pointed out before the reason why the court ultimately despite these finding to these findings this findings i think i was a mimic very clear that this record the sentencing court concluded the memory managers was in fact responsible for the entire scope of the fraud as a matter of a fact to the evidence as to whether the evidence would be sufficient to make such a finding and its arguments about whether the district court made an individualized finding or not that's correct that's correct mr brown chaney we let you go over evidence simply doesn't add up to substantial evidence of their that they knew anything about the transaction that was a criminal and and with marie the government has relied i think added to the factors that i didn't discuss in  amount when it is the three years after actually i think it's even longer than that after she she writes when when the mortgages she can't afford to pay the mortgages anymore she writes a note back to the bank which is a hardship note and in that notice as i don't have any personal accounts it doesn't you know that's that's what's in the record and whether it's not some long detailed financial affidavit that's false or anything like that it's i don't i don't i don't have any personal account actually an ambiguous kind of assertion but basically it's a hardship letter it's not it's not some thing that you can relate back and say oh then she must have known the what was in that in that quote with the also going to put in that document so i just don't think it adds up enough it's not like they cited another case from this circuit were it relates back to the original intent you can tell the subsequent act relates back to the original that you can tell the person was lying about and x because at a separate subsequent time they said something that directly contradicted x this is not that kind of thing this is this is using something that somebody might when they're in financial hardship years later say it has it's ambiguous to the extent it's false in any event because they are in the financial hardship it doesn't relate back to the initial thing it is that doctrine should not be further extended than what it naturally is the other other things about these checks again the government every time the government uses the word shell corporation it has a sort of its head has a derogatory meaning a shell corporation if it's really a shell corporation going to be something that hides the owner this is not a shell corporation this is maureen mendez and her husband michael own a company that owns apartments and there was the rental payments go into the rental company that receives it that is in their name and then that money goes out to another company that is in their name that is the company that pays out monies for expenses so they just have the money in money coming into one of their companies not going to go in order to make it a shell company just because the government says indicts it doesn't make it a shell company it has it has a purpose it has an excellent financial and accounting purpose and it's not a shell because you can see right through you can see it is them there on the sun  punch it in you see the names and so again those are not the badges of fraud that you have and calling the shell doesn't change that the fact that the payments go out to people that they're dealing with in the in in the real estate business that doesn't prove that she knows some other thing that the when this is themselves testified we never had any conversation with her do we have conversations other people yeah we can point to this we want to this will go to this one but the wife of the younger the son of the son down this line who works as a clerk in the in the real estate company no we didn't have those conversations so these are the there's a sort of a slice of thin unflustered up quality to these things that i hope the court will try to add a grain of salt to very different from that in the government's argument today which is it's wrong you can say that when you have if conduct is permeated by criminal activity you know which of it's drug dealers and every other single thing they do then you could say well then the seventh transaction they knew they also knew there was drugs involved but this wasn't that type of situation this was a company that had hundreds and hundreds of little you know had had hundreds and hundreds of legitimate transactions and we you have to take them on a transaction by transaction basis stell has does not know because the government does not show that every single transaction that everybody in involved in is involved in is criminal so that when a given non criminal activity in and of itself goes on and still is involved that doesn't that the government is referring to it's simply saying it's simply going back to this deliberate ignorance concept that the court was using that we felt or disadvantage in relation to the trial issue which is the context is so critical to understanding what people's intent actually i