FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

NICHOLAS LINDSEY,

Defendant-Appellant.

No. 14-10004

D.C. No.

2:11-cr-00217-

LDG-CWH-1

OPINION

Appeal from the United States District Court

for the District of Nevada

Lloyd D. George, Senior District Judge, Presiding

Argued and Submitted March 18, 2016

San Francisco, California

Filed June 28, 2016

Before: John T. Noonan, Ronald M. Gould,

and Michelle T. Friedland, Circuit Judges.

Opinion by Judge Gould
2 UNITED STATES V. LINDSEY

SUMMARY*

Criminal Law

Affirming the defendant’s convictions in a mortgage

fraud case, the panel held that lender negligence in verifying

loan application information, or even intentional disregard of

the information, is not a defense to fraud, and so evidence of

such negligence or intentional disregard is inadmissible as a

defense against charges of mortgage fraud.

The panel further held that, when 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.

COUNSEL

William H. Gamage, Gamage & Gamage, Las Vegas,

Nevada, for Defendant-Appellant.

Peter S. Levitt (argued), Assistant United States Attorney;

Elizabeth O. White, Appellate Chief; Daniel G. Bogden,

United States Attorney; United States Attorney’s Office, Las

Vegas, Nevada; for Plaintiff-Appellee.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
UNITED STATES V. LINDSEY 3

OPINION

GOULD, Circuit Judge:

We address the admissibility of certain evidence in

mortgage fraud cases. We affirm the convictions, rejecting

appellant’s contentions that evidence was improperly

excluded and that he was denied the ability to present a

defense. In a separate memorandum disposition filed

concurrently, we reject other challenges to the convictions

and some challenges to the sentence.

Nicholas Lindsey, a former mortgage loan officer and real

estate broker, appeals his convictions and sentence for nine

counts of wire fraud and one count of aggravated theft. For

several years, Lindsey was involved in a complex mortgage

fraud scheme that involved convincing individuals to “buy”

residential properties in exchange for financial assistance. In

some cases, Lindsey built up these individuals’ credit ratings

and deposited money into their bank accounts in order to

fraudulently secure mortgages. He also submitted falsified

loan documents to lenders in order to make the individuals

appear more creditworthy, including falsely stating the

applicants’ earned income. The properties secured through

this scheme were destined for foreclosure, creating large

losses for financial institutions1 while Lindsey benefitted

1 As reflected in the Presentence Report and as testimony at sentencing

indicated, the loans and/or properties at issue in this case appear to have

been purchased from the original lender by a second financial institution. 

Thus the victims in this case—at least for the purposes of restitution—is

the second financial institution that suffered losses at the time of

foreclosure, not the original lenders.
4 UNITED STATES V. LINDSEY

financially from commissions, rent payments, and diverted

escrow monies.

Lindsey was charged with wire fraud under 18 U.S.C.

§ 1343, which requires the government to prove that the

defendant made “material” fraudulent representations, i.e.,

representations that had “a natural tendency to influence, or

[were] capable of influencing” the decisions of the lenders

who made the loans. United States v. Gaudin, 515 U.S. 506,

509 (1995) (quoting Kungys v. United States, 485 U.S. 759,

770 (1988)); Neder v. United States, 527 U.S. 1, 16 (1999). 

At his trial, the district court precluded Lindsey from

presenting evidence of lenders’ practices and policies. He

appeals his convictions on the ground that he was denied his

constitutional right to present a defense. We have jurisdiction

under 18 U.S.C. § 3742(a) and 28 U.S.C. § 1291, and we hold

that lender negligence in verifying loan application

information, or even intentional disregard of the information,

is not a defense to fraud, and so evidence of such negligence

or intentional disregard is inadmissible as a defense against

charges of mortgage fraud. We further hold that, when 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.

I

Lindsey worked for Clear Mortgage, Inc. in Nevada as a

mortgage loan officer and team leader for a mortgage group. 

During his employment with Clear Mortgage, Lindsey

recruited straw buyers for Las Vegas real estate, and, in the

process, made false statements in loan applications. In one

illustrative example presented at trial, Lindsey recruited
UNITED STATES V. LINDSEY 5

Madelon Bridges, a woman living in Louisiana with only fifty

dollars to her name, to “purchase” Villa Del Mar, a house in

Las Vegas worth $720,000. Lindsey flew Bridges to Las

Vegas and promised to pay off her debt and give her $10,000

in exchange for acting as a straw buyer. Bridges gave

Lindseyher personal identification information, including her

social security number and fingerprints, and Lindsey paid off

her debt and transferred money into her bank account. 

Lindsey also had Bridges sign a loan application that falsely

represented, inter alia, that she intended to live at the

property she was applying for a loan to purchase, paid $3,300

a month in rent, was gainfully employed, and had a sizeable

bank account. After she was approved for the loan, Lindsey

used Bridges’s personal information to apply for another loan

and purchase another home in her name without her

knowledge. When Lindsey did not make mortgage payments

as promised, Villa Del Mar went into foreclosure, negatively

affecting Bridges’ credit rating and causing losses to the

lender. Lindsey perpetrated similar frauds with five straw

buyers—including his sister—on nine home loans, and eight

different properties. From this scheme, Lindsey profited by

receiving significant commissions, rent payments, and

diverted escrow monies.

Lindsey was arrested and indicted on nine counts of wire

fraud under 18 U.S.C. § 1343 and one count of aggravated

identity theft under 18 U.S.C. § 1028A. Before trial, the

government suspected that Lindsey was planning to defend

himself by claiming that the lenders were at fault for failing

to verify the information in the fraudulent loan applications. 

The government filed a motion in limine to prevent Lindsey

from introducing evidence of lender negligence. The district

court declined to rule on the issue, concluding that a final
6 UNITED STATES V. LINDSEY

ruling “would be more appropriately made in the context of

the development of the evidence at trial.”

At trial, the district court warned Lindsey’s attorney to

“stay away” from the issue of lender negligence in his

opening statement. When defense counsel described 2006 to

2007 as “a wild time” of mortgage lending and attempted to

describe the types of loans at issue as “stated income” and

“no income, no assets,”2

the district court sustained the

government’s objections and warned counsel again to “stay

away” from the issue of lender negligence. The district court

subsequently told the parties that it was “inclined” to exclude

evidence of lender negligence from the rest of trial.

During trial, Lindsey’s counsel questioned a witness

about previous bad loans that her employer, a lender, had

provided. The government objected. The question was

stricken during a sidebar in which the prosecutor informed

the district court that it had already ruled on the issue of

lender negligence, and he argued that defense counsel’s

question was irrelevant. The district court sustained the

objection, striking the question from the record.

The jury convicted Lindsey of all counts. The district

court sentenced Lindsey to consecutive sentences of 108

months for wire fraud and 24 months for identity theft, for a

2 During opening statements, Lindsey’s counsel urged that a “stated

income” loan “means that the lender will rely on the borrower to state

their income and state their assets,” and that a “no income, no assets” loan

means “the lender did not appear to know about the income or assets on

that particular loan.” On appeal, Lindsey describes “the stated/no doc loan

type as a loan that banks offered [] which allowed applicants to provide no

back up documentation for their income and assets.”
UNITED STATES V. LINDSEY 7

total of 132 months. The court also imposed $2,286,911 in

restitution. Lindsey timely appealed.

II

To convict a defendant of wire fraud, the jury must find

beyond a reasonable doubt: “(1) the existence of a scheme to

defraud; (2) the use of wire, radio, or television to further the

scheme; and (3) a specific intent to defraud.” United States

v. Jinian, 725 F.3d 954, 960 (9th Cir. 2013). In order to

prove a “scheme to defraud,” the jury must find that the

defendant employed “material falsehoods.” Neder, 527 U.S.

at 20. “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.’” Id. at 16 (alteration in the original) (quoting

Gaudin, 515 U.S. at 509).

The element of materialityis evaluated under an objective

test, in which the Court must examine “the intrinsic

capabilities of the false statement itself, rather than the

possibility of the actual attainment of its end.” United States

v. Peterson, 538 F.3d 1064, 1072 (9th Cir. 2008) (quoting

United States v. Facchini, 832 F.2d 1159, 1162 (9th Cir.

1987)). To be material, “the statement need have only the

propensity or capacity to influence or affect [the lender’s]

decision. Materiality, therefore, is not measured by effect or

magnitude.” Facchini, 832 F.2d at 1162 (citations omitted). 

In sum, “the government does not have to prove actual

reliance upon the defendant’s misrepresentations” to satisfy

the element of materiality. Neder, 527 U.S. at 25 (quoting

United States v. Stewart, 872 F.2d 957, 960 (10th Cir. 1989)).
8 UNITED STATES V. LINDSEY

Lindsey contends that the district court erred by

preventing him from presenting evidence about the “stated

income/no doc” loans, thus barring him “from challenging the

materiality of false statements on a loan type that invites the

applicant to state their income without justification or

support.” According to Lindsey, this prevented him from

presenting a complete defense, a right that is constitutionally

protected. See Crane v. Kentucky, 476 U.S. 683, 690 (1986)

(“[T]he Constitution guarantees criminal defendants a

meaningful opportunity to present a complete defense.”)

(internal citations and quotation marks omitted). We review

a district court’s decision to preclude a defendant’s proffered

defense de novo. See United States v. Ibarra-Pino, 657 F.3d

1000, 1003 (9th Cir. 2011); United States v. Forrester,

616 F.3d 929, 934 (9th Cir. 2010).

Whether trial courts may admit evidence of a lenders’

decision-making process—including evidence that lenders

have been careless in approving undeserving loans, or even

intentional in disregarding relevant information—is an issue

that has been debated in this Circuit’s lower courts. See

United States v. Kuzmenko, No. 2:11-CR-0210 JAM, 2014

WL 7140640, at *6 n.5 (E.D. Cal. Dec. 12, 2014) (collecting

cases and noting that “[w]hether, and to what extent, a jury

must know about the lenders’ decision-making process in a

mortgage fraud prosecution would appear to be an issue over

which reasonable minds might disagree”). We understand the

desire to see lenders shoulder responsibility for their role in

the mortgage crisis of the last decade. See Nevada v. Bank of

Am. Corp., 672 F.3d 661, 670–71 (9th Cir. 2012) (“The

Center for Responsible Lending estimates that from 2009 to

2012, foreclosures on neighboring homes will result in lost

home equity in nearly one million homes across Nevada,

amounting to total lost home equity of $54.5 billion. The city
UNITED STATES V. LINDSEY 9

of Las Vegas has the second highest foreclosure rate in the

nation. Considering the devastating effect of the foreclosure

crisis on Nevada, it is unsurprising that the Attorney General

would exercise her statutory right to” prosecute deceptive

trade practices by mortgage lenders) (footnotes omitted). 

However, that does not mean that lenders can be victimized3

by intentional fraudulent conduct with impunity merely

because the lenders were negligent, or even because the

lenders intentionally disregarded the information in a loan

application. Two wrongs do not make a right, and a lenders’

negligence, or even intentional disregard, cannot excuse

another’s criminal fraud.

Several of our sister circuits have held that a fraud

victim’s negligence is not a defense to criminal charges under

the federal fraud statutes. See United States v. Colton,

231 F.3d 890, 903 (4th Cir. 2000) (“The susceptibility of the

victim of the fraud, in this case a financial institution, is

irrelevant to the analysis: If a scheme to defraud has been or

is intended to be devised, it makes no difference whether the

persons the schemers intended to defraud are gullible or

skeptical, dull or bright.”) (internal citations and quotation

marks omitted); see also United States v. Svete, 556 F.3d

1157, 1165 (11th Cir. 2009) (en banc) (“A perpetrator of

fraud is no less guilty of fraud because his victim is also

guilty of negligence.”); United States v. Allen, 201 F.3d 163,

167 (2d Cir. 2000) (per curiam) (“The victim’s negligence in

3 We use the words “victimized” and “victim” in this context to describe

the original lenders, while acknowledging that the entities that actually

lost money in this scheme at the time of foreclosure—the victims in this

case for the purposes of restitution—were actually those financial

institutions that purchased the loan and/or collateral from the original

lenders.
10 UNITED STATES V. LINDSEY

permitting a crime to take place does not excuse the

defendant from culpability for [the] substantive offense.”);

United States v. Coyle, 63 F.3d 1239, 1244 (3d Cir. 1995)

(“The negligence of the victim in failing to discover a

fraudulent scheme is not a defense to criminal conduct.”);

United States v. Kreimer, 609 F.2d 126, 132 (5th Cir. 1980)

(“The victim’s negligence is not a defense to criminal

conduct.”).

In United States v. Ciccone, we rejected the defendant’s

argument that the government was required to prove that the

defendant’s fraud was calculated to defraud persons of

ordinary prudence and comprehension. 219 F.3d 1078, 1083

(9th Cir. 2000). We held that “the wire-fraud statute protects

the naive as well as the worldly-wise . . . . the lack of guile on

the part of those solicited may itself point with persuasion to

the fraudulent character of the artifice.” Id. (internal

quotation marks omitted) (quoting United States v. Hanley,

190 F.3d 1017, 1023 (9th Cir. 1999), superceded on other

grounds by statute). Although Ciccone discussed the

elements of wire fraud, not permissible defenses, its

reasoning is also persuasive here. We join several of our

sister circuits in holding that a victim’s negligence is not a

defense to wire fraud. Evidence of lender negligence is thus

not admissible as a defense to mortgage fraud.

Lindsey maintains on appeal that he did not seek to

introduce evidence of lender negligence at trial, but rather

“evidence of the materiality of falsehoods that may have

appeared on loan applications.” Without saying so explicitly,

Lindsey may be arguing in substance that he wanted to

introduce evidence that the banks were willing to approve the

loans regardless of the information included in the application
UNITED STATES V. LINDSEY 11

forms. This implies something more than lender negligence,

and approaches intentionality.

But the conduct of the lender cannot provide an effective

defense based on alleged lack of materiality. Materiality is an

objective test “not measured by effect or magnitude,”

Facchini, 832 F.2d at 1162, but rather by “the intrinsic

capabilities of the false statement itself,” Peterson, 538 F.3d

at 1072 (quoting Facchini, 832 F.2d at 1162). We have

previously held that “misrepresentation may be material

without inducing any actual reliance. What is important is

the intent of the person making the statement that it be in

furtherance of some fraudulent purpose.” United States v.

Blixt, 548 F.3d 882, 889 (9th Cir. 2008) (quoting United

States v. Halbert, 640 F.2d 1000, 1009 (9th Cir. 1981) (per

curiam)).

In determining whether a false statement is material,

courts must ask the question whether the statement

objectively had a natural tendency to influence, or was

capable of influencing, a lender to approve a loan. See

Facchini, 832 F.2d at 1162; 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, and instead would have made an exception

for him, does not establish that the representations were

immaterial . . . . the proper inquiry addresses not the

defendant’s ability to influence, but rather the nature of the

statements made.”). The First Circuit recently created a

bright-line approach on this issue that we conclude is

persuasive, and we follow it here. In United States v.

Appolon, a mortgage fraud case, the defendant argued that the

government failed to present evidence regarding the lender’s

loan evaluation process, and thus could not satisfy the
12 UNITED STATES V. LINDSEY

materiality element of wire fraud. 715 F.3d 362, 368 (1st Cir.

2013). The First Circuit explained that the loan application

had specifically requested information regarding the

applicant’s income, assets, and intent to reside in the

property, and held that “[t]he fact that [the lender’s] loan

application explicitly sought this information from the

applicant indicates that [the straw buyer’s] responses were

capable of influencing its decision.” Id.; see also United

States v. Prieto, 812 F.3d 6, 14 (1st Cir. 2016) (“Even in the

face of anecdotal evidence that, at the time, residential

mortgage lenders were devoting scant resources to the

verification of applicants’ income levels, it is nevertheless

fair to presume that a loan applicant’s stated income level and

plans for using the property in question would have a ‘natural

tendency’ to influence a lender’s decision. Why else, after

all, did the lender demand the information and Prieto take the

risk of providing false information?” (internal citations

omitted)).

We adopt the First Circuit’s bright-line test, and hold, as

a matter of law, that when a lender requests specific

information in its loan applications, false responses to those

specific requests are objectively material for purposes of

proving fraud. Applying this test to Lindsey’s case, the

district court properly excluded evidence that the lenders

were allegedly negligent or intentional in disregarding

Lindsey’s fraudulent representations when approving loan

applications. This subjective evidence had no bearing on the

objective materiality inquiry. The government introduced

evidence that the lenders specifically requested information

about, inter alia, employment, income, and assets, and that
UNITED STATES V. LINDSEY 13

Lindsey provided false information with the intent to

fraudulently secure loans. We affirm Lindsey’s convictions.

AFFIRMED.