In the

United States Court of Appeals

For the Seventh Circuit ____________

Nos. 02-1662 & 02-1949

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

MICHAEL BERKLEY AND

VAL JEAN HILLMAN,

Defendants-Appellants.

____________

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 00 CR 31—Charles R. Norgle, Sr., Judge.

____________

ARGUED FEBRUARY 18, 2003—DECIDED JUNE 20, 2003

____________

Before RIPPLE, DIANE P. WOOD, and EVANS, Circuit

Judges.

EVANS, Circuit Judge. Val Jean Hillman certainly isn’t

the first buyer to pay an exorbitant sum of money for a

house in Chicago. But he was more than willing to do so.

That’s because his purchase came as part of an elaborate

series of flip transactions in which buyers acquired property for up to ten times their value, then left mortgage

lenders holding an empty bag.

Under the direction of mastermind Henry White, one

schemer paid fair market value to purchase each of

seven Chicago properties. Then, misrepresenting the
2 Nos. 02-1662 & 02-1949

value of the property and hiding the true identities of the

buyers and sellers and the source of funds for the down

payments, a second schemer obtained inflated mortgage

loans to finance a subsequent purchase of each property

at a tremendously inflated price. For each property, the

second buyer then defaulted on the mortgage, taking the

money from the inflated mortgage and leaving the mortgage lender with property worth substantially less than

the amount of the loan. Altogether, White and friends

ran off with more than $2 million that never would have

been available to them absent fraudulent appraisals that

persuaded lenders to authorize mortgage loans on the

properties.

Hillman, who was a patent attorney at Motorola, served

as an investor and a buyer in the scheme, providing down

payments for the inflated sales to straw buyers, then

getting that money back plus a substantial profit after

the sales closed. In two of the properties at issue in this

appeal, the schemers used fraudulent appraisals to obtain

mortgages from UMG Funding, Inc., a mortgage broker

who later sold one of the mortgage loans to Plaza Home

Mortgage Bank (as described in count 1 of the indictment) and the other to Capstead Mortgage Corporation

(count 3). The underwriters who approved the loans for

UMG testified that UMG would not have made the loans

if it had known the true nature of the purchases.

Hillman and Michael Berkley, a loan processor for UMG,

were charged along with six others in a seven-count

indictment. After their six cohorts pleaded guilty, Hillman

and Berkley went to trial. A jury found Hillman guilty on

three counts of wire fraud affecting a financial institution in violation of 18 U.S.C. §§ 2 and 1343. The jury also

found Berkley guilty on one of two similar counts. The

district court sentenced both men to 27 months imprisonment and ordered them to pay hundreds of thousands of

dollars in restitution. Hillman and Berkley appeal their
Nos. 02-1662 & 02-1949 3

convictions, essentially challenging the sufficiency of the

evidence but acknowledging, because they failed to lodge

a motion for a judgment of acquittal at the close of all

the evidence or within 7 days after the adverse verdict,

that they must show plain error to prevail. See United

States v. Taylor, 226 F.3d 593, 596 (7th Cir. 2000). Therefore, we will reverse their convictions only if we find a

manifest miscarriage of justice. And we can make that

finding only “if the record is devoid of evidence pointing

to guilt, or if the evidence on a key element of the offense

was so tenuous that a conviction would be shocking.” United

States v. Meadows, 91 F.3d 851, 854-55 (7th Cir. 1996).

Though he does not explicitly admit to his part in the

schemes described in counts 1 and 3 of the indictment,

Hillman does not really deny his role, either. Instead, he

claims the indictment was so narrowly written that it

did not include his conduct, and, as a result, the district

court should have entered a judgment of acquittal.

UMG’s role in the schemes provides the basis for Hillman’s claim. The schemers tricked UMG into granting

the mortgage loans, which it then sold to Plaza Home

and Capstead. Hillman makes two intertwined claims: that

the government’s evidence showed only an intent to defraud UMG, not the “lenders,” as described in the indictment; and that the district court constructively amended

the indictment with its jury instructions, which allowed

for a conviction if the jury found a scheme to defraud “a”

financial institution, not just one of the institutions named

in the indictment.

Counts 1 and 3 of the indictment charged Hillman with

wire fraud in violation of 18 U.S.C. § 1343 and aiding and

abetting the violation by “knowingly divis[ing] and

intend[ing] to devise a scheme and artifice to defraud Plaza

Home Mortgage, Texas Commerce Bank, Fidelity Bank, and

private mortgage lenders, including Long Beach Mortgage,
4 Nos. 02-1662 & 02-1949

Capstead Mortgage Corporation, Residential Funding

Corporation, and Ryland Mortgage (collectively, the ‘Lenders’) . . . .” Hillman argues that since the indictment

charged him solely with intending to defraud Plaza

Home and Capstead (and not UMG), the government

should have been required to prove he had the specific

intent to defraud Plaza Home and Capstead. Hillman is

correct in claiming that the government did not prove that

he intended to defraud Plaza Home or Capstead, nor could

it have. Hillman intended only to defraud UMG—after

fraudulently convincing UMG to supply the initial loans,

Hillman didn’t know or care whether or to whom UMG

would sell them.

The government uses similar logic to make the opposite

argument. It admits that it cannot prove that Hillman had

the specific intent to defraud any particular financial

institution because Hillman did not care which lender or

broker possessed the mortgage when the borrowers defaulted. That means, according to the government, that

requiring it to prove that Hillman had the specific intent

to defraud a particular financial institution makes no

sense because that would be an impossible burden to carry.

Though true in a sense, the government’s argument

misses Hillman’s point. Hillman doesn’t contend that the

government should always have to prove the specific

intent to defraud a particular financial institution in cases

like this, only that the government brought the specific

intent requirement upon itself by failing to include UMG

in the indictment. Citing United States v. Leichtnam,

948 F.2d 370, 377 (7th Cir. 1991) (“an indictment . . . may

not be broadened, so as to present the trial jury with

more or different offenses than the grand jury charged”),

Hillman says that the government made the decision to

proceed on a narrow indictment. As a result, it is stuck with

that choice and must prove that Hillman intended to

defraud Plaza Home and Capstead, not UMG. In fact,
Nos. 02-1662 & 02-1949 5

Hillman conceded during oral argument that the government could have written a broader indictment that would

have precluded his appeal on counts 1 and 3.

That concession, along with Hillman’s related claim that

the district court constructively amended the indictment

by broadening it in its jury instructions, highlights the

fine line the government must walk in crafting an indictment. With a narrow indictment, the government runs

the risk of being too specific, leading to claims of unfair

surprise like the one Hillman makes here if the evidence

goes beyond the scope of the indictment. But drafting

an overly broad indictment runs the risk of opening the

government up to the very same charge of unfair surprise because a broad indictment also fails to warn the

defendant of the true nature of the allegations. See United

States v. Trennell, 290 F.3d 881, 888 (7th Cir. 2002) (“[T]he

Fifth Amendment requires . . . giv[ing] the defendant

reasonable notice so that he may prepare a defense”

(internal quotations omitted)).

Here, the government was close enough to the line to

give Hillman reasonable notice and opportunity to plan

his defense. Hillman argues that, by stipulating to the

fact that UMG was “in the business of brokering mortgage loans to mortgage lenders,” UMG cannot be one of

the unnamed “private mortgage lenders” listed along

with Plaza Home, Capstead, and others in the indictment.

But the fact that UMG was defined as a broker does not

mean that it was not also a lender. UMG generally acts

as a broker, making loans and then selling them. For the

short time in each of those deals after UMG has made the

loan but before it can sell it, however, UMG acts as a

private mortgage lender. In that sense, UMG was listed

with Plaza Home and Capstead in the indictment, even

though the economic reality of the transaction made

Plaza Home and Capstead the true victims of the scheme.
6 Nos. 02-1662 & 02-1949

More significantly, several parts of the indictment refer

specifically to UMG and its role. Paragraphs 16 and 17

describe the fraudulent securing of the $352,000 mortgage

loan for the 4553 South Ellis property (count 1), and

paragraph 21 specifically names UMG Funding in describing the sale of that mortgage to Plaza Home. Similarly,

paragraph 39 describes UMG Funding’s role with respect

to the property at 4547 South Ellis (count 3). Taken as

a whole, the indictment describes UMG as a victim and

adequately put Hillman on notice of that fact. Therefore,

the district court did not commit plain error in failing

to enter a judgment of acquittal on counts 1 and 3.

Similarly, the district court did not err by constructively

amending the indictment in its jury instructions. The

district court may have broadened the indictment by

allowing the jury to convict if it found intent to defraud

any financial institution (as opposed to one specifically

named or a “private mortgage lender” as defined in the

indictment), but we need not reverse the judgment because that constructive amendment does not “constitute

a mistake so serious that but for it the [defendant] probably would have been acquitted . . . .” Trennell, 290 F.3d

at 887 (internal quotations omitted). Had the jury instruction been limited to the financial institutions named or

referred to in the indictment (including UMG as a “private

mortgage lender”), the jury almost certainly would have

reached the same result, as all of the evidence the jury

considered went to Hillman’s dealings with those financial institutions.

Hillman also argues that the district court erred in failing to enter a judgment of acquittal on count 4 of the

indictment, which charged Hillman for his role in a similar

flip transaction on a different property. Hillman claims

the government failed to prove that he knew there was a

scheme to defraud, so the government could not have

proven that he intended to participate in the scheme.
Nos. 02-1662 & 02-1949 7

Hillman supplied the buyers of the property described in

count 4 with $46,000 for a down payment, then promptly

received a check for $56,000.

Hillman’s argument has little merit. He knew about

the schemes White had orchestrated, having already

participated in several of them. As evidence of that knowledge, the government showed that Hillman had approached White to demand a larger share of the illegally

obtained profits. Finally, evidence showed that when

Hillman was shown an appraisal for $425,000 (nearly 10

times the property’s fair market value), he “kind of laughed

about it.” Therefore, a reasonable jury had plenty of

evidence to conclude that Hillman was a knowing and

willing participant in the scheme.

Berkley also claims the government failed to present

sufficient evidence to support his conviction. Berkley

was working as an office manager at UMG when he met

White, who brought Berkley into the scheme by offering

him $5,000 to help with the loan application for one of

the properties. Berkley wrote up the loan application,

overstating the buyer’s income and assets in the process

and falsely stating that the buyer intended to live in the

property. The application also falsely stated that the buyer would provide the down payment and that the buyer

had $65,000 on hand at AFG International, a company

controlled by White. Berkley then submitted the loan

application to Chicago Financial Services, a mortgage

broker which in turn sent the loan package to Ryland

Mortgage Corporation. Ryland approved the request and

granted a $336,000 loan. A week after the deal closed,

White paid Berkley $6,500.

Berkley admits to working on the loan application but

claims that he was not aware that the information he

was providing was false. As a result, he says he did not

have the intent to defraud required under 18 U.S.C. § 1343.
8 Nos. 02-1662 & 02-1949

At trial, though, an FBI agent testified that Berkley told

him that he knew the buyer would not be supplying

the down payment, and that the buyer could not have

had $65,000 at AFG International. That evidence was

sufficient for a reasonable jury to find that Berkley knew

he was providing false information, thus satisfying the

intent requirement.

AFFIRMED.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—6-20-03