2014 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-3-2014

USA v. Victor Patela

Precedential or Non-Precedential: Non-Precedential

Docket No. 13-2255

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Recommended Citation

"USA v. Victor Patela" (2014). 2014 Decisions. Paper 912.

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 13-2255

_____________

UNITED STATES OF AMERICA

v.

VICTOR PATELA

Appellant

____________

On Appeal from the United States District Court

for the District of New Jersey

(Case No. 11-cr-00491-1)

District Judge: Honorable Noel L. Hillman

____________

Submitted Pursuant to Third Circuit L.A.R. 34.1(a)

June 27, 2014

____________

Before: McKEE, Chief Judge, FUENTES and GREENAWAY, JR., Circuit Judges

(Filed: September 3, 2014)
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____________

OPINION OF THE COURT

____________

FUENTES, Circuit Judge:

A jury found Victor Patela guilty of five offenses relating to a 2004 scheme to 

fraudulently obtain a $1.9 million loan to purchase two apartment buildings. On appeal, 

Patela raises three issues and argues that each presents an independent ground to reverse 

his conviction. First, he argues that the District Court abused its discretion by admitting 

certain evidence of other acts. Second, he argues that the District Court failed to 

adequately remedy what the defense identified as “burden shifting” remarks by the 

prosecution. Third, he argues that the District Court erroneously instructed the jury on 

willful blindness. Considering each of these issues in turn, we find that the District Court 

did not abuse its discretion or otherwise err. We therefore affirm.

I. Facts

Victor Patela and his friend, Jose Dominguez, sought to purchase two apartment 

buildings in Elizabeth, New Jersey valued at $1.9 million. Neither Patela, a police officer, 

nor Dominguez, a bank employee, had much money, so they hatched a plan to purchase 

the property with “zero money down.” App’x 461-62.

The scheme hinged on Dominguez’s connection to his employer, Spencer Savings 

Bank. Knowing that the bank would only agree to eighty percent financing, Dominguez 
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colluded with the seller to falsely inflate the price of the apartment buildings so that 

eighty percent of the inflated price covered one hundred percent of the true price. 

Next, Dominguez had Patela form a limited liability company called “JVI Realty” and 

use it to apply for a mortgage loan with Spencer Savings Bank. The two deliberately 

concealed Dominguez’s involvement and financial stake in the deal. As part of the loan 

application, the bank requested a personal financial statement. Dominguez completed the 

form for Patela, overstating Patela’s assets by millions of dollars and exaggerating his 

experience as an owner of commercial real estate. 

Spencer Savings Bank also demanded “satisfactory evidence . . . as to the source of 

the $480,000 equity contribution” before it could approve the loan. Supplemental App’x 

45. Without any actual assets to speak of, Patela told the bank that he had contracted to 

sell a piece of property in Newark, NJ and that, when the deal closed, he would use the 

proceeds from that sale to pay the $480,000. In fact, Patela had already sold the same 

property in 2003. Nonetheless, Dominguez downloaded a blank real estate contract from 

the Internet and fabricated proof of the source of the equity contribution. The bank 

accepted their representations.

Having allayed the bank’s concerns about JVI Realty’s ability to pay, Patela and 

Dominguez had to find a way to actually come up with the money. They did so in part by 

taking out a second mortgage on the apartment buildings. The second mortgage directly 

violated several clauses in the Spencer Savings Bank loan agreement that forbade further 

encumbrances on the properties. Unaware of the second mortgage, Spencer Savings Bank 

approved JVI Realty’s application for the $1.9 million loan, and Patela and Dominguez 

purchased the Elizabeth apartments. 
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In 2008, JVI Realty defaulted on its loan and subsequently filed for bankruptcy in 

federal court. While reviewing the loan documents, a Spencer Savings Bank officer 

noticed that the signatures of the two parties to the fake real estate contract looked 

suspiciously similar to one another. The bank officer confronted Patela, who agreed to 

surrender the deed to the Elizabeth properties to Spencer Savings Bank in lieu of 

foreclosure. The bank sold the Elizabeth properties for a loss of more than $450,000. 

Federal agents arrested Patela and Dominguez for conspiring to commit bank fraud. 

Soon thereafter, a federal grand jury returned the indictment charging Patela with bank 

fraud, in violation of 18 U.S.C. § 1344; loan application fraud, in violation of 18 U.S.C. 

§ 1014; and bank bribery, in violation of 18 U.S.C. § 215(a)(1). Patela pleaded not guilty 

on all counts and opted for a jury trial. After the six-day trial, the jury returned a verdict 

of guilty on all counts. 

II. Discussion

On appeal, Patela raises three arguments: (1) the District Court erred in admitting 

certain character evidence pursuant to Rule 404(b) at trial; (2) the District Court erred by 

failing to grant a mistrial in response to the “burden-shifting” remarks made by the 

government during its rebuttal summation; and (3) the District Court erred in charging 

the jury on willful blindness. For the reasons that follow, we reject each argument.

A. Other bad acts evidence

Patela contends that the District Court erroneously admitted other bad acts evidence 

against him. The government sought to admit evidence that Patela submitted false 

information on a 2007 residential loan application and had included false information in 
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JVI’s bankruptcy petition. The District Court held a pretrial hearing to determine whether 

this evidence was permissible under Rule 404(b) and concluded that it was. Patela objects 

to this conclusion and further argues that the prejudicial effect of the evidence 

outweighed any probative value in violation of Rule 403. “We normally review 

evidentiary rulings for abuse of discretion, but we exercise plenary review over whether 

evidence falls within the scope of Rule 404(b).” United States v. Smith, 725 F.3d 340, 

344-45 (3d Cir. 2013) (quotation marks omitted).

“Evidence of a crime, wrong, or other act is not admissible to prove a person’s 

character in order to show that on a particular occasion the person acted in accordance 

with the character.” Fed. R. Evid. 404(b)(1). For a court confronted with other bad acts 

evidence, “[t]he prime inquiry is whether the evidence is probative of a material issue 

other than character.” United States v. Boone, 279 F.3d 163, 187 (3d Cir. 2002). Rule 

404(b)(2) permits other bad acts evidence when the proponent offers the evidence to 

prove “motive, opportunity, intent, preparation, plan, knowledge, identity, absence of 

mistake, or lack of accident.” But “the proponents of Rule 404(b) evidence must do more 

than conjure up a proper purpose—they must also establish a chain of inferences no link 

of which is based on a propensity inference.” Smith, 725 F.3d at 345.

The fact that Patela (1) committed mortgage loan fraud in 2007 and (2) made 

misrepresentations before the bankruptcy court in 2009 spoke to issues beyond Patela’s 

character. The evidence demonstrated his capacity to knowingly perpetrate fraud without 

assistance from or manipulation by Dominguez. Moreover, the evidence rebutted Patela’s 

claim of ignorance, and his claim that he lacked the sophistication to defraud Spencer 

Savings Bank. Patela repeatedly argued that Dominguez alone committed the fraud and 
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that Patela was an innocent dupe. The government presented the other bad acts evidence 

to cast doubt on those theories. Because other bad acts evidence may be admitted to rebut 

claims of ignorance, mistake, or lack of intent, such as Patela’s, we conclude that the 

District Court properly admitted the evidence. See Boone, 279 F.3d at 187.

Alternatively, Patela argues that the District Court improperly balanced the probative 

value of the evidence against the risk of jury confusion and prejudice. Rule 403 instructs 

courts to “exclude relevant evidence if its probative value is substantially outweighed by 

a danger of one or more of the following: unfair prejudice, confusing the issues, 

misleading the jury, undue delay, wasting time, or needlessly presenting cumulative 

evidence.” Fed. R. Evid. 403. We review a District Court’s Rule 403 decisions for abuse 

of discretion. United States v. Universal Rehab. Servs. (PA), Inc., 205 F.3d 657, 669 (3d 

Cir. 2000).

The District Court concluded that the evidence was “important to the Government’s 

proof” to show knowledge and intent, and that its “prejudicial effect or risk of confusion 

to the jury” was not significant. App’x 150. Given that we allow district courts 

particularly broad discretion when it comes to this “on-the-spot balancing of probative 

value and prejudice,” we accept the District Court’s considered balancing here. United 

States v. Finley, 726 F.3d 483, 491 (3d Cir. 2013) (quoting Sprint/United Mgmt. Co. v. 

Mendelsohn, 552 U.S. 379, 384 (2008)).

B. The government’s “burden-shifting” remarks

Next, Patela argues that the District Court erred by failing to grant a mistrial to 

remedy any prejudicial effect of certain remarks made by the prosecutor during rebuttal 
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summation. As a preliminary matter, the parties disagree about whether Patela properly 

raised this issue before the District Court and, consequently, whether we must review for 

plain error. The confusion traces back to defense counsel’s objection to the government’s 

summation, which addressed the issue of a mistrial in noncommittal language: “I could 

be asking for a mistrial . . . and maybe I should have.” App’x 1037. We will assume 

without deciding that Patela did move for a mistrial and, thus, that we review the District 

Court’s denial for abuse of discretion. Applying that standard, we conclude that the 

District Court acted within its discretion when it denied a mistrial and responded with a 

curative jury instruction instead.

To determine whether the District Court erred by failing to grant a mistrial, we look to 

“the scope of the improper comments in the overall trial context, the effect of any 

curative instructions given, and the strength of the evidence against the defendant.” 

United States v. Mastrangelo, 172 F.3d 288, 297 (3d Cir. 1999). “We review a district 

court’s decision not to grant a mistrial on the grounds that the prosecutor made improper 

remarks in closing argument for abuse of discretion, and, if error is found, we apply 

harmless error analysis.” United States v. Molina-Guevara, 96 F.3d 698, 703 (3d Cir. 

1996) (citations omitted).

The prosecutor made the first challenged remark in response to defense counsel’s 

summation argument that Patela’s 2007 residential mortgage fraud was irrelevant to the 

charges. He said, “So what does the defendant have to say about that?” App’x 1003. 

Taken out of context, the question might suggest that Patela owed the jury a response. 

The District Court, however, determined that the statement was made “in the context of 
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fair rebuttal.” App’x 1034. We agree. The prosecutor’s remark introduce his arguments 

about why the defense’s theory of innocent mistake could not be credited. App’x 1003.

The second challenged remark had a similar purpose. The prosecutor said:

The defendant was under oath during that [JVI Realty] bankruptcy 

proceeding. Did he mention Jose Dominguez at all? Did he mention him 

when he said that he took the second mortgage? Of course not. And that’s 

supposed to be evidence of the defendant’s innocence. Right? That years 

later in 2009, JVI plummets, falls apart, he files for bankruptcy, and 

because he identified the prohibited second mortgage on the petition, that 

that proves that he didn’t know anything was wrong with it[?]

App’x 1004 (emphasis added). This statement followed defense counsel’s summation, 

during which she emphasized the fact that Patela was forthcoming about his second 

mortgage on the apartment buildings during the 2009 bankruptcy proceedings. She said: 

“If he committed a fraud, and he knew that he couldn’t let anyone know because the 

second mortgage was evidence of that fraud, why would he trade $300,000 to shed light 

on that fraud?” App’x 987. In other words, if Patela were guilty of fraud, he would not 

have revealed the unauthorized second mortgage because that violation is part of the 

fraudulent scheme. We construe the prosecutor’s remarks to address this assertion and 

not to imply that Patela had a burden to prove his innocence. 

In any event, the District Court addressed a jury instruction to remedy any confusion 

generated by the exchange: 

I want to note for you that during the government’s rebuttal, the 

government questioned whether certain evidence highlighted by the defense 

was, ‘supposed to be evidence of the defendant’s innocence.’ This 

statement should not be taken by you to suggest that the defendant has any 

burden to prove his innocence. As I have said, the burden to prove guilt 

beyond a reasonable doubt stays with the government throughout trial.
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App’x 1065. The instruction emphasized that the burden of proof remained on the 

prosecution, not Patela, therefore eradicating any confusion on the matter.

Considering the context of the remarks, the curative instruction, and the overall 

strength of the evidence tending toward Patela’s conviction, the District Court acted 

within its discretion when it rejected the mistrial motion.

C. Willful blindness instruction

Finally, Patela challenges the District Court’s decision to instruct the jury on the 

concept of willful blindness. “We review a district court’s determination that the trial 

evidence justified [a willful blindness] instruction for abuse of discretion.” United States 

v. Stadtmauer, 620 F.3d 238, 252 (3d Cir. 2010). “The Government need not present 

direct evidence of conscious avoidance to justify a willful blindness instruction.” Id. at 

259 (emphasis in original). And “assuming there to be sufficient evidence as to both 

theories, it is not inconsistent for a court to give a charge on both willful blindness and 

actual knowledge.” United States v. Wert-Ruiz, 228 F.3d 250, 252 (3d Cir. 2000).

The record developed at trial justified a jury instruction on willful blindness. Patela 

contended that he had no knowledge of the fraudulent representations made to the bank. 

At the same time, however, evidence showed that Patela signed certain loan documents 

that contained false information and that he knew those documents would be submitted to 

the bank. On the basis of this evidence, the jury could reasonably infer that Patela 

deliberately failed to review documents in order to distance himself from the fraud.

Even if the District Court had improperly decided to instruct the jury on willful 

blindness, the error would have been harmless. Where there is substantial evidence 
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supporting a finding of actual knowledge, and “the instruction itself contain[s] the proper 

legal standard,” we find the error harmless. See, e.g., Stadtmauer, 620 F.3d at 260 n.26 

(quotation marks omitted). That would be the case here. Patela does not directly 

challenge the sufficiency of the evidence proving his actual knowledge of the fraud, nor 

do we see any basis for such a challenge.

III. Conclusion

Having considered each of Patela’s arguments, we find that none merit reversal. The 

District Court correctly ruled to admit the other bad acts evidence, remedied any 

confusion caused by the government’s remarks made during the rebuttal summation, and 

acted within its discretion when it elected to instruct the jury on willful blindness. 

Accordingly, we affirm the District Court’s judgment.