Opinion ID: 4214000
Heading Depth: 4
Heading Rank: 2

Heading: allowing MDR to continue operating as a

Text: loan correspondent for two years (2005 and 2006) when no V-Forms were on file; (3) the fact that the V-Forms were not considered when making the decision to insure any specific loan; and (4) HUD’s decision to stop regulating loan correspondents entirely.[30] We cannot agree. First, the Government’s actions following its discovery of his fraud support, rather than undercut, a finding of materiality. Although new loans were issued, the Government also 29 Appellant’s Br. 15. Mr. Luce also continues to argue that he did not knowingly make a false statement. According to Mr. Luce, the district court “improperly [found] scienter proven as a matter of law by making credibility determinations about Mr. Luce’s testimony.” Id. at 16. Specifically, he makes a linguistic argument that, because the V-form certifications only speak to “a proceeding … that could result … in a criminal conviction,” R.88-7 at 36, and he believed himself to be innocent, he did not knowingly make a false statement. Reply Br. 22–24. We cannot accept this submission. The V-forms ask whether Mr. Luce could be convicted, not whether he should or would be convicted. Furthermore, even if Mr. Luce subjectively believed himself to be innocent, the FCA’s knowledge requirement is met by “deliberate ignorance” or “reckless disregard” of the truth. 31 U.S.C. § 3729 (b)(1)(ii)–(iii). Both are present here. 30 Appellant’s Br. 15. 20 No. 16-4093 began debarment proceedings, culminating in actual debarment. There was no prolonged period of acquiescence. Second, Mr. Luce’s contention that HUD allowed MDR to operate without V-forms for two years is simply not supported by the evidence. Although the V-form for 2006 could not be located, the Government submitted undisputed evidence that, had MDR failed to submit the V-form, HUD 31 would have terminated MDR’s FHA-approval. 31 See R.100-1 at 17 (Second Declaration of Julie Shaffer, Director of HUD’s Philadelphia Home Ownership Center). Mr. Luce also maintains that the Government failed to establish that he signed and submitted a 2006 V-form. See Appellant’s Br. 16. We disagree. “The standard for summary judgment is well established: with the court drawing all inferences in the light most favorable to the non-moving party, the moving party must discharge its burden of showing that there are no genuine issues of material fact and that he is entitled to judgment as a matter of law.” Spierer v. Rossman, 798 F.3d 502, 507 (7th Cir. 2015). Thereafter, “[i]f the moving party has properly supported his motion, the burden shifts to the nonmoving party to come forward with specific facts showing that there is a genuine issue for trial.” Id. Here, the Government moved for summary judgment, arguing that Mr. Luce filed a 2006 V-form. The Government could not locate the form, so it introduced (1) evidence that MDR had paid an associated registration fee in 2006, in addition to (2) the declaration of Director Shaffer, who stated that the 2006 form must have been received “because HUD would have terminated MDR’s FHA-approval had it not submitted the V-form.” R.100-1 at 17. This shifted the burden of production to Mr. Luce. In support of his burden, Mr. Luce submits that (1) the Government has failed to locate the actual V-form, (2) a Government witness did not recall seeing a V-form in 2006, and (3) Passi was in charge of day-to-day operations at MDR during the relevant time period, so he may have signed the form. See Reply Br. 24. Addressing these arguments in order, the first does not sufficiently counter the Government’s production of payment No. 16-4093 21 Third, Mr. Luce’s argument that the certification was not tied to any particular loan misses the mark; the V-form certification was a threshold eligibility requirement that, by extension, was tied to every loan. That is to say, without the V-form, he could not have originated a single mortgage. Finally, the contention that HUD stopped regulating loan correspondents in 2010 is simply inaccurate. Rather, the 2010 amendments required that loan correspondents seek a sponsorship relationship with approved mortgagees, who in turn records and the affidavit of Director Schaffer; rather, it simply states the Government has failed to meet its burden, which is insufficient. See Szymanski v. Rite-Way Lawn Maint. Co., 231 F.3d 360, 364 (7th Cir. 2000) (“[A] party will be successful in opposing summary judgment only when they present definite, competent evidence to rebut the motion.” (quoting Smith v. Severn, 129 F.3d 419, 427 (7th Cir. 1997)) (alteration in original)). As to the second argument, the fact that a Government witness did not recall seeing the form is tangential to the actual question—whether the form, in fact, was submitted. Finally, as to the possibility that someone else signed the form, this argument is countered by the submission of the 2003, 2004, 2007, and 2008 forms, which all carried Mr. Luce’s signature. We have emphasized that a party “cannot thwart summary judgment by asking a court to make inferences based on flights of fancy.” Kodish v. Oakbrook Terrace Fire Prot. Dist., 604 F.3d 490, 508 (7th Cir. 2010). It is difficult to see how Mr. Luce’s argument that Passi may have signed the 2006 V-form is anything other than a “flight[] of fancy” given that all of the other V-forms in the record contained Mr. Luce’s signature and given that Mr. Luce refused to testify that he did not sign a 2006 V-form. Notably, Passi (the very individual Mr. Luce contends committed fraud by signing the 2006 V-form) voluntarily alerted the authorities to MDR’s fraud. The district court accordingly was correct in granting summary judgment as to the 2006 V-form. 22 No. 16-4093 32 assume responsibility for the loan correspondents. This structural shift in no way suggests that the actions of loan correspondents are not material; if anything, it demonstrates that their actions are of sufficient import that further supervision by an intermediary is required. The district court did not err in finding that Mr. Luce’s false certification on the V-form was material as a matter of law.