UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

UNITED STATES OF AMERICA, 

 Plaintiff, 

Case No. 15-cr-20382 

D-1 PAUL NICOLETTI, HON. VICTORIA A. ROBERTS

 Defendant. 

_______________________________________/

_______________________________________________________________

Craig A. Weier (P33261) James C. Howarth

Assistant United States Attorney Attorney for Defendant

211 W. Fort Street, Suite 2001 615 Griswold, Suite 820

Detroit, Michigan 48226 Detroit, Michigan 48226

(313) 226-9678 (313) 963-1455

craig.weier@usdoj.gov james-howarth@att.net

John K. Neal

Assistant United States Attorney

211 W. Fort Street, Suite 2001

Detroit, Michigan 48226

(313) 226-9644

john.neal@usdoj.gov

_______________________________________________________________

GOVERNMENT’S MOTION FOR CLARIFICATION

The United States of America, by and through its counsel, respectfully 

submits this Motion for Clarification of the Court’s Order Denying the

Government’s Motion in Limine to Bar Evidence, Examination, and 

Argument Suggesting that the Uninsured Status of Fifth Third Mortgage 

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Michigan, LLC Precludes a Finding of Guilt (Dkt. No. 128). The Court’s 

ruling contains language that, in the government’s view, would require the 

government to prove an element that it is not legally required to prove in order 

to convict the defendant of Bank Fraud pursuant to 18 U.S.C. § 1344(2). The 

government respectfully asks the Court to be heard on this issue on Monday 

morning, because clarity on this matter will fundamentally shape the nature of 

the government’s proofs and the structure of the trial. 

The parties do not dispute that the entity that actually loaned the funds 

at issue in this case was Fifth Third Mortgage Michigan. The parties further 

agree that Fifth Third Mortgage Michigan was not, pursuant to the law as it 

existed in 2005, a federally insured financial institution under the terms of 18 

U.S.C. § 20. Contrary to the language in the Court’s Order, the parties 

therefore do not have a “fundamental disagreement over who actually loaned 

the funds to Nicoletti.” It was Fifth Third Mortgage Michigan that did so. 

What the parties dispute is the import of this fact. The government 

maintains that the funds that flowed to Nicoletti as a result of his scheme came 

from Fifth Third Mortgage Michigan accounts maintained at Fifth Third Bank. 

Fifth Third Bank is and was a federally insured financial institution. The 

government will prove that all of the funds obtained through Nicoletti’s 

scheme were thus under the custody or control of a federally insured financial 

Case 2:15-cr-20382-VAR-MKM ECF No. 130, PageID.1269 Filed 04/27/19 Page 2 of 7
institution. Therefore, the government maintains that the insured status of 

Fifth Third Mortgage Michigan is legally irrelevant, which spurred the 

government to file its Motion in Limine on this point.

The Court’s Order states that “the insured status of the lender is an 

essential element of the case that the government must prove.” Respectfully, 

the government submits that this statement is legally incorrect, given the prong 

of the bank fraud statute upon which the government will seek to instruct the 

jury. The government intends to proceed under prong (2) of 18 U.S.C. § 1344, 

which criminalizes a scheme or artifice “to obtain any of the moneys, funds, 

credits assets, securities, or other property owned by, or under the custody or 

control of, a financial institution by means of false or fraudulent pretenses, 

representations, or promises.” 18 U.S.C § 1344 (2). The character of the lender 

is irrelevant under this prong of the statute. All that matters is that as part of 

the scheme to defraud “someone cause(d) a federally insured bank to transfer 

funds under its possession and control.” United States v. Warshak, 631 F.3d 266, 

313 (6th Cir. 2010)(emphasis in original). The government will be able to prove 

that here. 

Were the government proceeding under prong (1) of the bank fraud 

statute, which criminalizes a scheme “to defraud a financial institution,” then 

the “insured status of the lender” or victim would be relevant, as it would be 

Case 2:15-cr-20382-VAR-MKM ECF No. 130, PageID.1270 Filed 04/27/19 Page 3 of 7
an element of the offense. The government maintains that it could successfully 

proceed under prong 1, as Fifth Third Mortgage Michigan is ultimately owned 

by Fifth Third Bank, and a fraud on Fifth Third Mortgage Michigan would 

result in a loss to the insured parent entity. However, because the issue of 

whether defrauding a subsidiary is tantamount to defrauding a parent financial 

institution is currently under consideration by the Sixth Circuit,1 the 

government had hoped to forego any argument relative to Section 1344(1), and 

rely, instead, on Section 1344(2). By proceeding on the latter prong only, the 

government maintains that the trial will be greatly simplified and will not 

involve complex questions about parent-subsidiary relationships and affiliate 

ownership structures in the banking industry. 

The government’s position on liability under § 1344(2) is affirmed in 

both the pattern jury instructions in the Sixth Circuit and in Supreme Court 

and Sixth Circuit case law. Sixth Circuit pattern instruction 10.03B makes 

clear that no intent to defraud a bank is required, that the bank need not suffer 

a loss or risk of loss, nor that the false or fraudulent pretenses, representations, 

or promises were made to the bank. See Sixth Cir. Pattern Instruction 10.03B (3). 

Pursuant to the instruction, the government must prove that “ that the 

 1 United States v. Banyan and Puckett, Nos. 17-6410, 17-6493 (CA6, 2018).

Case 2:15-cr-20382-VAR-MKM ECF No. 130, PageID.1271 Filed 04/27/19 Page 4 of 7
defendant knowingly executed or attempted to execute a scheme to obtain any 

of the money, funds, or property under the custody or2 control of a bank, by 

means of false or fraudulent pretenses, representations or promises.” Id. The 

pattern jury instructions go on to include elements concerning materiality, 

fraudulent intent, and the federally insured status of the bank, but do not

require proof of intent to defraud a bank, proof that the bank suffered a loss,

proof that false representations were made to the bank, or proof that the bank 

was exposed to a risk of loss. See Id. 

The Sixth Circuit’s pattern jury instructions are based upon Supreme 

Court and Sixth Circuit case law construing Section 1344(2). The Supreme 

Court has held that no intent to defraud the bank is required for liability to 

arise under Section 1344(2). See Loughrin v. United States, 573 U.S. 351, 360-361 

(2014). The Supreme Court further noted that no risk of loss to the financial 

institution is required under Section 1344(2), stating that “the broad language 

in § 1344(2) describing the property at issue—‘property owned by or under the 

custody or control of’ a bank—appears calculated to avoid entangling courts in 

technical issues of banking law about whether the financial institution or, 

alternatively, a depositor would suffer the loss from a successful fraud.” Id. at 

 2 Words “custody or” added to comport with statutory language. 18 U.S.C. § 1344(2).

Case 2:15-cr-20382-VAR-MKM ECF No. 130, PageID.1272 Filed 04/27/19 Page 5 of 7
366, n.9. And the Sixth Circuit has been extremely plain on the elements of 

Section 1344(2); the Circuit has stated “[i]t is sufficient if the defendant in the 

course of committing fraud on someone causes a federally insured bank to 

transfer funds under its possession and control.”Warshak, 631 F.3d at 313. 

If the government is required to prove that an insured entity was the 

ultimate “victim” or “lender,” in this case, then the Court will have added an 

element to 1344(2), which is not apparent in the jury instructions. If that 

element is imported into the government’s proposed jury instructions, then the 

government’s theory of liability under Section 1344(2) will have been 

essentially merged with the elements of Section 1344(1). This will change the 

jury instructions and therefore the entire structure of the government’s case. 

The government submits that this would be erroneous and would 

unnecessarily complicate the proceedings. The government therefore 

respectfully requests that the parties be heard on this matter on Monday 

morning. 

Respectfully Submitted,

MATTHEW SCHNEIDER

United States Attorney

s/John K. Neal s/Craig A. Weier

John K. Neal Craig A. Weier

Assistant U.S. Attorney Assistant U.S. Attorney

Case 2:15-cr-20382-VAR-MKM ECF No. 130, PageID.1273 Filed 04/27/19 Page 6 of 7
211 W. Fort St., Suite 2001 211 W. Fort Street, Suite 2001

Detroit, Michigan 48226 Detroit, Michigan 48226

(313) 226-9644 (313) 226-9678

john.neal@usdoj.gov craig.weier@usdoj.gov

CERTIFICATE OF SERVICE

On April 27, 2019, the undersigned filed the foregoing using the Court’s 

Electronic Filing System which automatically serves a copy to all counsel of 

record.

S/John K. Neal

Assistant United States Attorney

Case 2:15-cr-20382-VAR-MKM ECF No. 130, PageID.1274 Filed 04/27/19 Page 7 of 7