Source: https://www.leagle.com/decision/infco20170809133
Timestamp: 2017-08-19 15:01:24
Document Index: 463068837

Matched Legal Cases: ['§ 1344', '§ 1344', '§ 20', '§ 27', '§ 1344', '§ 1344', '§ 1344']

U.S. v. SPRINGER | Nos. 16-3498, 16-3695. | By ARNOLD | Leagle.com
Nos. 16-3498, 16-3695.
United States of America, Plaintiff-Appellee, v. Jason Springer, Defendant-Appellant. United States of America, Plaintiff-Appellee, v. Rick Makohoniuk, Defendant-Appellant.
Judith Mack O'Donohoe , for Defendant-Appellant.
Marc Krickbaum , for Plaintiff-Appellee.
Virginia Bruner , for Plaintiff-Appellee.
This story begins with two other people—Nathan Smith and Patrick Steven. Smith and Steven created a business to help people who were struggling to repay mortgage-secured loans by negotiating with lenders to modify the terms of those loans. They discovered that some homeowners did not want to modify their loans but wanted instead to escape them by selling their homes and paying off the debt. Many of these homeowners, however, owed more than their homes were worth, so a sale could not satisfy the debt in full. Nonetheless, lenders sometimes allowed homeowners to sell their homes for less than the remaining debt and would accept the proceeds in full satisfaction of the debt. Lenders agreed to these so-called "short sales" partly because of the high costs of foreclosure. So in addition to negotiating loan modifications, Smith and Steven began negotiating short sales with lenders on behalf of cash-strapped homeowners.
The appellants first maintain that insufficient evidence supports their convictions for bank fraud under 18 U.S.C. § 1344(1), a crime that occurs when someone "knowingly executes, or attempts to execute, a scheme or artifice . . . to defraud a financial institution." Makohoniuk moved for judgment of acquittal on the ground that the government had failed to prove that the entity he defrauded was a "financial institution" under § 1344(1). To be a "financial institution," the entity must be, as relevant here, insured by the FDIC or a "mortgage lending business." 18 U.S.C. § 20(1), (10). The government maintained that the entity Makohoniuk defrauded—GMAC—was indeed a mortgage lending business, that is, "an organization which finances or refinances any debt secured by an interest in real estate, including private mortgage companies and any subsidiaries of such organizations, and whose activities affect interstate or foreign commerce." 18 U.S.C. § 27. The district court agreed with the government that GMAC was a mortgage lending business and therefore denied Makohoniuk's motion. We review the denial of a motion for a judgment of acquittal based on evidence sufficiency de novo, and we will affirm unless, viewing the evidence in a light most favorable to the government and accepting all reasonable inferences that can be drawn in favor of the verdict, no reasonable jury could have found the defendant guilty. United States v. Chatmon, 742 F.3d 350, 352 (8th Cir. 2014).
But when courts refer to an element connected to interstate commerce as jurisdictional, they are talking about how Congress got power to criminalize certain acts or to legislate over a particular field. See Torres v. Lynch, 136 S.Ct. 1619, 1624-25 (2016). In other words, they are talking about legislative jurisdiction. That does not mean that the government's failure to establish a connection with interstate commerce in a particular case deprives the court of jurisdiction over that case. See United States v. Foster, 443 F.3d 978, 981 (8th Cir. 2006). It just means the government loses because it failed to prove an element of the offense. We therefore reject Springer and Makohoniuk's argument and review for plain error.
Springer and Makohoniuk next argue that there was insufficient evidence that the appellants intended to cause a financial loss. We have specifically held that the government need not show an intent to cause a financial loss to prove bank fraud under § 1344(1). United States v. Staples, 435 F.3d 860, 867 (8th Cir. 2006). Springer and Makohoniuk maintain, though, that a recent Supreme Court decision undermines that case. See Shaw v. United States, 137 S.Ct. 462 (2016). There, the Court reviewed a challenge that a conviction under § 1344(1) could not stand because the defendant intended to cheat a bank depositor and not the bank itself. Since the Court made it clear that § 1344(1) "demands neither a showing of ultimate financial loss nor a showing of intent to cause financial loss," id. at 467, we fail to see how Shaw calls into question our holding in Staples. It is true that the Court said later in the opinion that "[t]he parties agree, as do we, that the scheme must be one to deceive the bank and deprive it of something of value," id. at 469, but we think it clear that "financial loss" means something narrower than "something of value." The Court in Shaw in fact recognized that financial institutions can suffer losses like the right to use property or a chance to bargain knowing all the facts even if the financial institutions get a quid pro quo of appropriate value or do not suffer unreimbursed loss. Id. at 467. Shaw therefore does not undercut our holding in Staples. It supports it.
We likewise reject the appellants' related argument that the jury instructions were faulty because they did not mention a risk of loss. Appellants argue that, without a risk-of-loss qualification, the instructions invite bank-fraud convictions for trivial misrepresentations like the day of the week on which a transaction occurred. We disagree that the court's instructions put the appellants at risk of being convicted of bank fraud based on trivial irrelevancies, because the instructions required that the appellants' misrepresentations or factual concealments and omissions be "material," meaning that they must have "a natural tendency to influence, or [be] capable of influencing, the decision of the institution in deciding whether to engage or not to engage in a particular transaction." We are convinced that the "materiality" qualification obviates any fear that the court's instructions could allow the jury to convict the appellants for harmless misrepresentations.
The appellants further contend that the government proved facts at trial that differed from the facts it had alleged in the indictment. As part of the Sixth Amendment guarantee that the accused shall "be informed of the nature and cause of the accusation," the government cannot materially vary the proof presented at trial from the allegations in the indictment. See United States v. Villarreal, 707 F.3d 942, 962 (8th Cir. 2013). The primary concern is whether the indictment fully and fairly apprised the defendants of the charges they must meet at trial. United States v. Thomas, 791 F.3d 889, 897 (8th Cir. 2015).
We are unable to agree with the appellants' related contention that submission of an aiding-and-abetting instruction was error. They assert that the instruction was inappropriate because, "in light of the irrelevant and prejudicial information in the record, it seems to justify the jury in interpreting the `scheme and artifice' as considerably broader than what was charged." But again, the charges were not limited to the false HUD-1s only; the jury could, in fact should, consider the underlying scheme to defraud, which explains how the defendants duped the financial institutions into approving the short sales. For the same reasons, we reject the appellants' argument that the government violated Federal Rule of Evidence 404(b) by admitting evidence of the underlying scheme.