Opinion ID: 3003270
Heading Depth: 2
Heading Rank: 1

Heading: Giving the Ostrich Instruction 2

Text: The district court instructed the jury that to sustain the charge of wire fraud, the government must prove, inter 2 As the court recently explained, this instruction derives its name from the incorrect belief “that ostriches when frightened bury their head in the sand.” United States v. Black, 530 F.3d 596, 604 (7th Cir. 2008), cert. granted, 129 S. Ct. 2379 (2009). In truth, when an ostrich senses danger and can’t run away, “it flops to the ground and remains still, with its head and neck flat on the ground in front of it” and merely looks as if it has buried its head in the sand. Id. (citation omitted). 16 No. 08-3216 alia, that the defendant “knowingly devised or participated in the scheme to defraud, as described in the indictment.” The court further instructed: When the phrase “knowingly” is used in these instructions, it means that the defendant realized what he or she was doing and was aware of the nature of his or her conduct, and did not act through ignorance, mistake or accident. Knowl- edge may be proved by the defendant’s conduct, and by all the facts and circumstances sur- rounding the case. You may infer knowledge from a combination of suspicion and indifference to the truth. If you find that a person had a strong suspicion that things were not what they seemed or that some- one had withheld some important facts, yet shut her eyes for fear of what she would learn, you may conclude that she acted knowingly, as I have used the word. This instruction is substantially the same as Instruction 4.06 of the Federal Criminal Jury Instructions of the Seventh Circuit (1999), but more on the similarity later. We review the district court’s decision to give the ostrich instruction for an abuse of discretion, viewing the evidence in the light most favorable to the government. United States v. Carani, 492 F.3d 867, 873 (7th Cir. 2007), cert. denied, 128 S. Ct. 932 (2008). Our review is limited, seeking to determine whether the ostrich instruction correctly stated the applicable law. See United States v. Curry, 538 F.3d 718, 731 (7th Cir. 2008). It is considered No. 08-3216 17 within the context of all of the instructions as a whole to determine if they adequately and correctly informed the jury of the applicable law. Id. The “ostrich” instruction “explain[s] to the jury that the legal definition of ‘knowledge’ includes the deliberate avoidance of knowledge.” United States v. Carrillo, 269 F.3d 761, 769 (7th Cir. 2001); see also United States v. Severson, No. 08-1508, 2009 WL 1751545, at  (7th Cir. June 23, 2009) (stating that the ostrich instruction “explains to the jury that guilty knowledge also includes the deliberate avoidance of knowledge”); Black, 530 F.3d at 604 (“An ostrich instruction tells the jury that to suspect that you are committing a crime and then take steps to avoid confirming the suspicion is the equivalent of intending to commit the crime.”). This instruction is appropriate when the defendant claims a lack of guilty knowledge, and the government has presented evidence sufficient for a jury to infer that the defendant deliberately avoided the truth. Severson, 2009 WL 1751545, at ; Carani, 492 F.3d at 873. The focus of the instruction is on the defendant, not a reasonable person. United States v. Carrillo, 435 F.3d 767, 782 (7th Cir. 2006). Evidence of deliberate avoidance can be placed in two general categories. The first is physical avoidance, which is where the defendant physically acts to avoid confirming her suspicions. Black, 530 F.3d at 604; Carrillo, 435 F.3d at 780. Sticking one’s head under the hood of a vehicle during a drug deal is an example. See United States v. Diaz, 864 F.2d 544, 551 (7th Cir. 1988). The second category of deliberate avoidance is psychological avoidance, which is “a mental act—’a cutting off of one’s normal 18 No. 08-3216 curiosity by an effort of will.’ ” Carrillo, 435 F.3d at 780 (quoting United States v. Giovannetti, 919 F.3d 1223, 1229 (7th Cir. 1990)). An example comes from United States v. Leahy, 464 F.3d 773 (7th Cir. 2006), cert. denied, 128 S. Ct. 46 (2007), where the defendant insurance broker was exposed to numerous and obvious red flags throughout a business relationship, was aware of problems with an audit, yet asked no questions and, when confronted with an allegation of insurance fraud, did not disagree. Id. at 794-96. Psychological avoidance, which supports an ostrich instruction, is to be distinguished from a defendant’s simple lack of mental effort, lack of curiosity, or ordinary ignorance, which does not. Black, 530 F.3d at 604; Carrillo, 435 F.3d at 780. “The circumstances surrounding the defendant may be sufficient to infer that, given what the defendant knew, [s]he must have forced [her] suspicions aside and deliberately avoided confirming for [herself] that [s]he was engaged in criminal activity.” Carani, 492 F.3d at 873 (citing Carrillo, 435 F.3d at 781). The focus is on what the defendant knew and whether that knowledge raises a reasonable inference that she remained deliberately ignorant of facts constituting criminal knowledge. Carrillo, 435 F.3d at 781. This case principally implicates the psychological branch of knowledge avoidance. The ostrich instruction must be given cautiously so as not to allow a jury to convict a defendant for mere negligence, effectively eliminating the knowledge requirement. Id. This concern may be addressed by carefully considering whether the evidence supports an inference of deliberate avoidance. See id. at 782-84. No. 08-3216 19 The government points to the following evidence in support of the ostrich instruction: ! Ramirez knew that virtually all her business came from Uribe, not from former customers or referrals; ! she knew that the persons referred by Uribe could not qualify for mortgages, yet sought 100% financing on the purchase price of the homes they wanted to buy; ! from April through mid-July 2005, Ramirez assisted seven bad-credit clients referred by Uribe in finding homes; ! she filled out the purchase contracts and then Uribe crossed out or whited out the buyers’ names; ! Uribe told Ramirez that the changes in the contracts upset the title company, so she started sending him blank contract forms; ! in the seven transactions Ramirez received finalized contracts that listed the buyer as someone other than the person(s) to whom she had shown the house and who she knew would live in the house; ! Ramirez knew that Luis Gonzalez appeared as the purported buyer in three purchase transac- tions during a six-week period from mid-April through May 2005; ! she was aware that the properties would not be occupied by someone named Luis Gonzalez; 20 No. 08-3216 ! she had never met anyone named Luis Gonza- lez and did not know whether he was a real person; ! Ramirez attended three closings where Luis Gonzalez was named the buyer on the con- tracts; ! at those closings she witnessed Rafael Cruz sign the contracts in Gonzalez’s name; ! Ramirez previously had sold Cruz a property, so she knew his name was not Gonzalez; ! she knew Cruz would not live in those homes; ! Ramirez admitted that by the third transaction she knew that Cruz was pretending to be someone he was not; ! nonetheless, she continued to associate with and participate in real estate transactions involving Uribe and Cruz; ! Ramirez asked Uribe how he was able to get so many mortgage applications using one per- son’s identity, and he explained that as long as they closed the loans within thirty or sixty days, the credit reporting companies would not pick it up; ! Ramirez knew that Maria Moreno appeared as the purported buyer of two properties in purchase transactions dated three weeks apart in June and July 2005; No. 08-3216 21 ! Ramirez knew that Maria Moreno would not occupy these properties and she had never met anyone named Maria Moreno; ! Ramirez attended one closing for which Maria Moreno was the purported buyer and was present when Cruz’s wife Juana Angelito signed the contract as Moreno; ! Ramirez knew Angelito and knew that she would not take possession of the property; and ! Ramirez’s commissions quickly skyrocketed and she outpaced all of the other agents in her office based almost exclusively on trans- actions involving clients with bad credit who could not qualify for mortgages. All of these circumstances suggest that Ramirez consciously turned a blind eye to the true nature of these transactions. Yet there is even more evidence to support the district court’s decision to give the ostrich instruction: ! in late 2004, Ramirez showed properties to Cruz and his wife, Angelito; when they found a home at 286 Chaparral, she asked him whose name the property would be in; and he said that it would not be in his or his wife’s name and she should contact Uribe who would have that information; ! Uribe told Ramirez that he applied for the mortgage for 286 Chaparral using the identity 22 No. 08-3216 of Jorge Itoralde, and Cruz complained to her about how much he had to pay Itoralde to use his identity; ! Ramirez had received training on the impor- tance of accuracy in drawing up sales con- tracts; ! she was aware that her boss Mary Roberts, who had greater experience and training, questioned the transactions with Uribe because they involved the same lender and same attorney; ! Ramirez claimed at trial that she believed the persons who signed as the buyers were “co- signers,” yet none of the seven contracts identi- fies a “co-signer” and none contains the name of her buyer; ! she testified before the grand jury that she told Uribe that Gonzalez was buying properties so fast, she was embarrassed to show the con- tracts around her office; ! she also testified before the grand jury that the woman who lived with Cruz showed up at closings pretending to be someone else; and ! Ramirez’s practices in filling out purchase contracts for transactions involving Uribe diverged from the typical process described by Roberts: Typically, the agent completes the purchase contract with the buyer, provides it to the seller or seller’s agent and, only after No. 08-3216 23 the seller has approved the contract, forwards it to the lender. Ramirez, by contrast, provided partially completed or blank purchase con- tracts to Uribe who changed or filled in the buyer information and then returned the forms to Ramirez, apparently before she pro- vided the forms to the seller’s agent. In deciding whether the evidence supports the ostrich instruction, we should consider all of these circumstances together because each of them was known to Ramirez. See United States v. Conner, 537 F.3d 480, 487 (5th Cir. 2008) (“Alone, each might not have justified a deliberate ignorance instruction, but when taken together they present facts that justify the instruction.”). Ramirez argues that the government presented evidence that she had direct knowledge of the scheme to defraud, but not a single piece of evidence of deliberate avoidance. However, evidence need not “be placed in either an actual knowledge category or a deliberate avoidance category.” Carrillo, 435 F.3d at 784. The government may present evidence that supports both theories. Id. Much of the evidence described above supports both theories. Take, for example, Ramirez’s own testimony that she saw Cruz in the room at the second Gonzalez closing and afterwards he called her, saying words to the effect of “I’m Cruz, or Luis Gonzalez, or whoever I’m supposed to be.” This could support a finding that at that point in time Ramirez knowingly participated in the fraud. It also could support an inference of deliberate avoidance: If Ramirez was unaware of the fraudulent 24 No. 08-3216 scheme at that time, Cruz’s presence at a closing that he seemingly had no reason to attend should have raised her suspicions. But she didn’t question his presence. Ramirez’s testimony about the third Gonzalez transaction presents another illustration of the dual nature of the information she possessed. She admitted that as of that point, she knew Cruz was posing as and signing for Gonzalez. This could support a finding that Ramirez knew she was participating in the scheme to defraud. It also could support a reasonable inference that Ramirez deliberately avoided discovering whether the person who signed for Maria Moreno at the two subsequent Moreno closings was in fact Maria Moreno. “A person’s knowledge of his or her cohorts’ involvement with illegal or suspicious activities is a fact we have consistently found significant in giving an ostrich instruction.” Carrillo, 435 F.3d at 783. Similar circumstances were presented in United States v. Nguyen, 493 F.3d 613 (5th Cir. 2007), where the court held that the ostrich instruction was warranted. The defendants, the Nguyen brothers, were involved in a mortgage scheme that used inflated appraisals, false documentation, and “straw borrowers” to obtain home financing loans. The Nguyens worked at a title company and acted as the notary, escrow, and closing agents for several real estate transactions which were part of the scheme. They completed and submitted forms to loan companies regarding bogus sales; they notarized straw borrowers’ false affidavits stating their intent to occupy the homes; and they put cashier’s check numbers on No. 08-3216 25 forms showing a down payment was received, though they never saw the actual check or inquired about the check. Id. at 617. The Nguyens repeated these practices many times within a short time frame, and they often used the same straw borrowers. Id. at 618. The court concluded that the government had presented evidence sufficient to raise an inference of subjective knowledge. Id. at 620. The court said that participation in a single suspicious transaction might be insufficient to support the ostrich instruction, id. at 620, but explained that “[t]he sheer intensity and repetition in the pattern of suspicious activity coupled with the [defendants’] consistent failure to conduct further inquiry” did, id. at 622. And so it was with Ramirez, who faced a similarly intense and repetitious pattern of highly suspicious activity. She knew that the clients Uribe referred to her could not qualify for mortgages yet sought 100% financing on the purchase price of the homes they wanted to buy. She provided Uribe with incomplete or blank purchase contracts. Every finalized contract she received from Uribe listed as the buyer someone other than the person with whom she had worked. Her buy- ers’ names were nowhere to be found on the purchase contracts. Furthermore, Luis Gonzalez was the purported buyer for three purchases in a six-week period, and Maria Moreno was the purported buyer in two purchases in less than three weeks. Cruz even told her that he was taking on the Gonzalez persona, as needed. Ramirez knew that the persons who would occupy the homes were not on the contracts. 26 No. 08-3216 And there is even more: viewing the evidence in the light most favorable to the government, as we must, Ramirez attended three closings where she witnessed Rafael Cruz, whom she knew was not Gonzalez, sign the contracts as Luis Gonzalez, the purported buyer. Even accepting Ramirez’s version of the facts, she attended two closings where she saw Cruz even though he had no legitimate reason to be there. She knew that Cruz was not the person to whom she had shown the houses and that he would not live in the houses. Ramirez even admitted that she attended the third Gonzalez closing at which time she understood Cruz was claiming to be Gonzalez! Yet she was quick to say that she never saw Cruz sign anything, which by itself could rea- sonably be understood as an effort to hide her head in the sand. The evidence thus reveals “a paradigm case” for giving an ostrich instruction: Ramirez acknowledges her association with Uribe and his cohorts, “but, despite circumstantial evidence to the contrary, denies knowledge of the group’s illegal activity.” United States v. Paiz, 905 F.2d 1014, 1022 (7th Cir. 1990), abrogated on other grounds by Gozlon-Peretz v. United States, 498 U.S. 395 (1991); Diaz, 864 F.2d at 550. Yet Ramirez failed to ask questions—other than the one to Uribe about how he was able to use a name so many times—or take any other action. Uribe’s response to her that credit reporting companies wouldn’t pick it up if they acted quickly enough itself should have prompted further questions. But even if that by itself didn’t heighten Ramirez’s suspicions, when considered together with the other events as they unfolded—Ramirez questioned Uribe about this before any of the Gonzalez No. 08-3216 27 closings—such a response would have made her strongly suspicious that things were not as they seemed to be. And the fact that Ramirez accepted Uribe’s explanation that everything was fine, without question, further supports an inference that she deliberately hid her head in the sand to avoid learning the truth. See United States v. Newell, 315 F.3d 510, 528-29 (5th Cir. 2002) (holding ostrich instruction appropriate where principal in advertising agency accepted client’s representations that charges were for legitimate marketing expenses without any proof that marketing-related expenses were incurred, hesitated in seeking legal advice, and persisted in questionable practices even after a coworker had questioned her about them). We acknowledge that distinguishing between deliberate avoidance and simple lack of mental effort, lack of curiosity, ordinary ignorance, or mere negligence often involves “close calls.” See United States v. McClellan, 165 F.3d 535, 549 (7th Cir. 1999). But in cases such as this, we should defer to the district court’s exercise of discretion to give the ostrich instruction. Id. And this is so even in cases in which there is evidence of direct, or actual, knowledge. See Carrillo, 435 F.3d at 783-84 (finding no abuse of discretion in giving ostrich instruction where some evidence established direct knowledge and some evidence raised an inference of deliberate ignorance). Accordingly, we conclude the district court did not abuse its discretion by giving the ostrich instruction to the jury. 28 No. 08-3216