UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

UNITED STATES OF AMERICA, 

 Plaintiff, CRIMINAL ACTION NO. 15-cr-20382 

 v. DISTRICT JUDGE VICTORIA A. ROBERTS 

PAUL NICOLETTI, MAGISTRATE JUDGE MONA K. MAJZOUB 

 Defendant. 

_______________________________/ 

OPINION AND ORDER DENYING DEFENDANT’S MOTION FOR DISCOVERY [28] 

 This matter comes before the Court on Defendant Paul Nicoletti’s Motion for Discovery. 

(Docket no. 28.) Defendant filed an Errata Sheet with regard to his Motion (docket no. 29), 

Plaintiff United States of America responded to Defendant’s Motion (docket no. 33), and 

Defendant replied to Plaintiff’s Response (docket no. 35). The parties have also filed a Joint 

Statement of Resolved and Unresolved Issues relative to Defendant’s Motion. (Docket no. 36.) 

The Motion has been referred to the undersigned for consideration. (Docket no. 30.) The Court 

has reviewed the pleadings and dispenses with oral argument pursuant to Eastern District of 

Michigan Local Rule 7.1(f)(2). The Court is now ready to rule pursuant to 28 U.S.C. § 

636(b)(1)(A). 

I. BACKGROUND 

On June 23, 2015, Defendant was indicted on one count of conspiracy to commit bank 

fraud in violation of 18 U.S.C. § 1349 and three counts of aiding and abetting bank fraud in 

violation of 18 U.S.C. §§ 1344 & 2. (Docket no. 1.) Specifically, the Indictment alleges that 

from approximately May 2005 to November 2005, Defendant, an attorney licensed in the State 

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of Michigan and the President of Continental Title Insurance Agency, Inc., did knowingly and 

willfully conspire with and aid and abet others to execute and attempt to execute a scheme to 

defraud and obtain money from Fifth Third Bank by securing three multi-million dollar 

mortgage/construction loans under material false and fraudulent pretenses and representations. 

(Id.) The Indictment also alleges that as part of the scheme and conspiracy, Defendant and his 

alleged co-conspirators employed straw buyers to serve as mortgage loan applicants for the 

purchase of real property that the conspirators wanted to purchase and develop. (Id. at 4.) It was 

also allegedly part of the scheme and conspiracy to provide false information in the loan 

applications regarding the income and assets of the straw buyers, the source of the down 

payments for the loans, and the intentions of the purported purchasers to use the properties as 

their primary residences to qualify the straw buyers for the loans. (Id. at 4-5.) According to the 

Indictment, Defendant’s role in the conspiracy was to knowingly facilitate the fraudulent real 

estate transactions by acting as the title agent, coordinating and conducting real estate closings, 

preparing HUD-1 Settlement Statements, and disbursing the proceeds of the mortgage loans. (Id. 

at 5-6.) 

Defendant filed the instant Motion for Discovery on August 5, 2016, through which he 

seeks a court order compelling Plaintiff to produce evidence of Fifth Third Bank’s alleged 

misconduct or improper practices related to the issuance and sale of mortgage loans during the 

time period relevant to the allegations in the Indictment, which evidence was allegedly generated 

through investigations conducted by other government agencies, such as the United States 

Department of Justice, the Securities and Exchange Commission, and the Residential MortgageBacked Securities Working Group. (Docket nos. 28 and 29.) 

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II. GOVERNING LAW

 Defendant asserts that the information requested is discoverable under Federal Rule of 

Criminal Procedure 16 and Brady v. Maryland, 373 U.S. 83 (1963). (Docket no. 29 at 11-12.) 

Under Rule 16, upon a defendant’s request, the government must permit the defendant to inspect 

and copy documents within its possession, custody, or control that are material to preparing the 

defense. Fed. R. Crim. P. 16(a)(1)(E)(i). Under Brady v. Maryland, a defendant’s due process 

rights are violated when the government withholds evidence favorable to the defendant that is 

material to guilt or sentencing. Brady, 373 U.S. at 87. Evidence is material under Brady “when 

there is a reasonable probability that, had the evidence been disclosed, the result of the 

proceeding would have been different.” Cone v. Bell, 556 U.S. 449, 469-70 (2009) (citing 

United States v. Bagley, 473 U.S. 667, 682 (1985)). Nevertheless, “[t]he Supreme Court has 

made clear that the Brady rule is not an evidentiary rule which grants broad discovery powers to 

a defendant.” United States v. Todd, 920 F.2d 399, 405 (6th Cir. 1990). “The Court also has 

made it clear that while the Brady rule imposes a general obligation upon the government to 

disclose evidence that is favorable to the accused and material to guilt or punishment, the 

government typically is the sole judge of what evidence in its possession is subject to 

disclosure.” United States v. Presser, 844 F.2d 1275, 1281 (6th Cir. 1988). 

III. ANALYSIS 

 “To obtain a conviction for bank fraud under 18 U.S.C. § 1344, the government must 

demonstrate three elements: ‘(1) that the defendant knowingly executed or attempted to execute 

a scheme to defraud a financial institution; (2) that the defendant did so with the intent to 

defraud; and (3) that the financial institution was insured by the FDIC.’” United States v. 

Warshak, 631 F.3d 266, 312 (6th Cir. 2010) (quoting United States v. Everett, 270 F.3d 986, 989 

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(6th Cir. 2001)). Consistent with the common-law definition of “fraud,” the government must 

also demonstrate that the alleged falsehood made by the defendant was material. United States v. 

Gordon, 493 F. App'x 617, 629 (6th Cir. 2012) (citing Neder v. United States, 527 U.S. 1, 22 

(1999)); United States v. Murray, 152 F. App’x 492, 494 (6th Cir. 2005) (citing Neder, 527 U.S. 

at 25). “In general, a false statement is material if it has a natural tendency to influence, or is 

capable of influencing, the decision of the decisionmaking body to which it was addressed.” 

Neder, 527 U.S. at 16 (citations and internal quotation marks omitted). 

 Defendant asserts that the evidence he seeks is relevant to the element of materiality. 

(Docket no. 29 at 3.) Specifically, Defendant believes that the evidence will show that Fifth 

Third Bank systemically approved volumes of fraudulent loan applications without regard to the 

accuracy of the information therein or to the borrower’s ability to pay, in an effort to generate 

profits. (Id. at 3, 12-14.) Defendant explains that this evidence will negate the element of 

materiality because it indicates that any misrepresentations or omissions in the loan applications 

would not have had a tendency to influence the decision makers at Fifth Third Bank to approve 

or deny the loan applications. (Id. at 3.) Defendant expounds that “[i]f the decision-makers at 

Fifth Third did not care whether representations in loan applications were accurate so long as the 

representations qualified the applicants for the loans that they were seeking, Fifth Third cannot 

have been defrauded, because any misrepresentations were not material to their decisions.” (Id. 

at 10-11 (footnote omitted).) 

 Plaintiff asserts that where it has been over fourteen months since the Indictment and 

Defendant has already received thousands of pages of discovery, Defendant’s request for “what 

may well amount to hundreds of thousands of additional records and investigative materials 

underlying three civil cases and enforcement actions and settlements involving Fifth Third Bank 

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[] in entirely unrelated matters in different jurisdictions” is improper. (Docket no. 33 at 4-5.) 

Plaintiff continues that the discovery Defendant seeks has no bearing on the materiality of the 

misrepresentations alleged in this case. (Id. at 5.) Plaintiff argues in this regard that materiality 

in federal fraud cases is judged under an objective standard, that is, whether the 

misrepresentation was one capable of influencing a reasonably prudent lender, and it has nothing 

to do with whether the misrepresentation actually influenced or was capable of influencing Fifth 

Third Bank subjectively. (Id.) Plaintiff further argues that it does not have possession of or 

access to the documents Defendant seeks, as they are in the possession of other government 

agencies. (Id. at 6, 20-23.) 

 Defendant replies that the materials sought are relevant because Fifth Third Bank’s 

underwriting and lending practices were at issue in the subject government investigations. 

(Docket no. 35 at 1.) Defendant also replies that the objective “reasonably prudent lender” 

standard of materiality advocated by Plaintiff is contrary to Supreme Court precedent, 

particularly Neder, supra, which Defendant asserts defines materiality with regard to the actual 

decisionmaker. (Id. at 1-6.) According to the parties’ Joint Statement of Resolved and 

Unresolved Issues, the parties have been unable to resolve the issue of whether the test for 

materiality is objective or subjective, but they agree that if it is determined to be an objective 

standard, then the discovery Defendant seeks is not material to his defense under Rule 16 or 

Brady. (Docket no. 36 at 1-2.) 

 The law of this Circuit is well settled that the element of materiality in fraud cases is 

governed by an objective standard. In United States v. Jamieson, 427 F.3d 394 (6th Cir. 2005), 

the Sixth Circuit held that “a scheme to defraud, as prohibited by the mail fraud statute,1

 ‘must 

 

1

 “The bank, mail and wire fraud statutes all employ identical ‘scheme to defraud’ language and thus are to be 

interpreted in pari materia.” United States v. McAuliffe, 490 F.3d 526, 532 n.3 (6th Cir. 2007) (citations omitted). 

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involve misrepresentations or omissions reasonably calculated to deceive persons of ordinary 

prudence and comprehension.’” Jamieson, 427 F.3d at 415 (quoting Berent v. Kemper Corp.,

973 F.2d 1291, 1294 (6th Cir. 1992) (quoting Walters v. First Tenn. Bank, 855 F.2d 267, 273 

(6th Cir. 1988))). Notably, the Jamieson court found that a plain reading of Neder did not 

change this requirement. Id. at 415-16. Moreover, as recently as this year, the Sixth Circuit held 

that “[t]o satisfy the materiality requirement, the fraudulent scheme must ‘be credible enough to 

deceive persons of ordinary prudence and comprehension.’” United States v. Bravata, 636 F. 

App'x 277, 283 (6th Cir. 2016), cert. denied, No. 15-9456, 2016 WL 3002210 (U.S. Oct. 3, 

2016) (quoting Jamieson, 427 F.3d at 416). See also United States v. Benchick, No. 13-cr20453, 2014 WL 4181970, at *3 (E.D. Mich. Aug. 21, 2014) ((“The test for determining whether 

a misrepresentation is material is an objective standard.”). Furthermore, as both Plaintiff and 

Defendant point out, the Sixth Circuit’s Pattern Jury Instructions for bank fraud employ an 

objective standard: “A misrepresentation or concealment is ‘material’ if it has a natural tendency 

to influence or is capable of influencing the decision of a person of ordinary prudence and 

comprehension.” (Docket no. 33 at 12 (quoting Sixth Circuit Pattern Criminal Jury Instructions, 

§ 10.03, ¶ 2(D) (2013)); docket no. 35 at 3.) 

 Additionally, courts in this Circuit and others nationwide have addressed and rejected 

arguments virtually identical or substantially similar to those advanced by Defendant regarding 

the element of materiality in bank fraud cases. In United States v. Benchick, supra, the defendant 

argued that the alleged inaccuracies in his loan applications were immaterial because the 

applications were submitted at a time when the lending culture of the subject banks was such that 

anyone could get a loan, regardless of the content of the loan applications. 2014 WL 4181970, at 

*3. The court held that the defendant’s argument was without merit because materiality is 

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governed by an objective standard, and the defendant’s allegedly false statements could 

influence a bank’s decision to approve or deny a loan. Id. The court reasoned that the banks’ 

alleged negligence in lending would only speak to the question of whether the banks actually 

relied on the false statements, not to the materiality of the defendant’s alleged 

misrepresentations. Id. (citing United States v. Ovist, No. 3:11-CR-00076-BR, 2013 WL 

119674, at *2 (D. Or. Jan. 9, 2013)). See also United States v. Reynolds, 189 F.3d 521, 525 (7th 

Cir. 1999) (“Evidence that the bank would not have relied on [the defendant’s] representations . . 

. does not establish that the representations were immaterial.”); United States v. Appolon, 715 

F.3d 362, 368 (1st Cir. 2013) (“The fact that [the] loan application explicitly sought [] 

information from the applicant [regarding income, assets, and intent to reside in the property, all 

of which assess creditworthiness,] indicates that [the defendant’s] responses were capable of 

influencing [the bank’s] decision.”); United States v. Lindsey, 827 F.3d 865, 867 (9th Cir. 2016) 

(“[W]hen a lender requests specific information in its loan applications, that information is 

objectively material as a matter of law, regardless of the lenders' policies or practices with 

respect to use of that information.”). 

In light of the precedent discussed above, this Court finds that Defendant’s argument that 

the element of materiality in fraud cases is governed by a subjective standard lacks merit. 

Notably, Defendant has failed to support his argument with any binding post-Neder authority, 

and the Court finds none. Through Jamieson and Bravata, supra, the Sixth Circuit has made 

clear that materiality as an element of fraud is determined under an objective standard. And, as 

both Defendant and Plaintiff conceded in the Joint Statement of Resolved and Unresolved Issues, 

where materiality is determined on an objective basis, the discovery Defendant seeks through the 

instant Motion regarding Fifth Third Bank’s lending practices is not material to his defense under 

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Federal Rule of Criminal Procedure 16 or otherwise discoverable under Brady v. Maryland. (See

docket no. 36 at 1-2.) Accordingly, the Court will deny Defendant’s Motion for Discovery. 

 IT IS THEREFORE ORDERED that Defendant’s Motion for Discovery [28] is 

DENIED. 

NOTICE TO THE PARTIES 

 Pursuant to Fed. R. Civ. P. 72(a), the parties have a period of fourteen days from the date 

of this Order within which to file any written appeal to the District Judge as may be permissible 

under 28 U.S.C. § 636(b)(1). 

Dated: November 16, 2016 s/ Mona K. Majzoub 

 MONA K. MAJZOUB 

 UNITED STATES MAGISTRATE JUDGE 

PROOF OF SERVICE

 I hereby certify that a copy of this Opinion and Order was served upon counsel of record 

on this date. 

Dated: November 16, 2016 s/ Lisa C. Bartlett 

 Case Manager

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