Opinion ID: 194928
Heading Depth: 2
Heading Rank: 1

Heading: The Wire Fraud Convictions

Text: 14 To prove wire fraud the government must show: 1) a scheme to defraud by means of false pretenses, 2) the defendant's knowing and willful participation in the scheme with the intent to defraud, and 3) the use of interstate wire communications in furtherance of the scheme. United States v. Serrano, 870 F.2d 1, 6 (1st Cir.1989). To support convictions of aiding and abetting wire fraud, the government must prove that the defendant associated [herself] with the underlying venture, participated in it as something [she] wished to bring about, and sought by [her] actions to make it succeed. United States v. Clifford, 979 F.2d 896, 899 (1st Cir.1992) (citing Nye & Nissen v. United States, 336 U.S. 613, 619, 69 S.Ct. 766, 769, 93 L.Ed. 919 (1949)). 15 Neither Pezzullo nor Dolber challenges the existence of a scheme to defraud. The scheme is shown by DeNunzio's and Monteiro's lengthy testimony about the details of their plan to trick the lending institutions into making risky loans that were warranted by neither the final purchaser's ability to repay the loan nor the particular property's true market value. Pezzullo and Dolber also do not challenge the use of interstate wire communications to effectuate the plan, as demonstrated at trial by testimonial and physical evidence of the use of fax machines and telephone conversations throughout the scheme. 16 Pezzullo and Dolber, however, claim that they were unaware of the scheme and therefore were not knowing and willful participants in it. We hold, however, that the jury reasonably could have concluded from the voluminous evidence at trial that both Pezzullo and Dolber knowingly participated in the scheme with intent to defraud, and also aided and abetted the fraud.
17 Pezzullo participated in all the double closings, almost all of which took place at the office of the Cassiere & Pezzullo law firm. Fred Strangis testified that Pezzullo's role was to prepare all the papers and as you're signing them, would bring them to you, try to get you to read them, try to explain them to you. Frank Andrews and Dennis Griffin, two other straw final buyers, and Marlissa Pina, representing one of the controlled corporate purchasers, corroborated Strangis' testimony. 18 Because the lending institutions give higher mortgages to individuals who live in the property they buy, Strangis signed Residential Loan Applications and Owner Occupancy Affidavits, which Pezzullo gave him, stating that he intended to occupy the property. Strangis was the final purchaser of four properties, however, and at closings on December 12, 1990, February 6, 1991, April 12, 1991, and April 15, 1991, he signed forms stating that four different properties would be his primary residence. Other straw final purchasers similarly signed multiple owner-occupancy documents at the closings: Peter Pina within one month and a half signed three such forms; Jeanette Monteiro within a four-month period twice signed such documents; Dennis Griffin in one month signed two such documents; and Frank Andrews within three months signed two. Pezzullo witnessed the signing of each of these documents. 19 All of the lenders required that the purchaser bring a twenty percent down payment to the closing. Neither the straw buyers making the second purchases nor the corporations making the first purchases brought down payments with them. Instead, Cassiere or Pezzullo notified Monteiro before the closing of the amount of the down payment and he would bring a cashier's check for that amount to the closing. Nonetheless, the HUD-1 Settlement Statements that Cassiere filled out at the closings reported that the buyers had brought the money. 20 The only function of the officers of the corporations that DeNunzio and Monteiro controlled was to sign legal documents designed to keep Monteiro's and DeNunzio's roles hidden. Pezzullo, however, was aware that DeNunzio and Monteiro controlled the corporations, since Half & Half used the Cassiere and Pezzullo offices as its corporate address. At the double closings where each property was first sold and then purchased, neither Cassiere nor Pezzullo told the corporate officers what the documents they were signing meant, or that they were buying and selling real property. 21 Pezzullo handled the distribution of the proceeds from the second half of the flip. The proceeds were the difference between the loan amount [from the lender] minus the first sale price, minus any closing costs. After Cassiere and Pezzullo had completed the deeds on the two sales following the double closings, Pezzullo disbursed the funds that came from the final purchaser's mortgage. Pezzullo gave Monteiro the amount due to the original owner from the first half of the flip, returned the down payments to Monteiro and DeNunzio, and distributed the remaining proceeds to Monteiro and DeNunzio for them to divide. In addition to distributing the mortgage funds, Pezzullo prepared disbursement sheets noting the funds received and the funds disbursed. 22 Paul Pires, as Half & Half's president, first bought and then sold property in nine of the flips. At each closing, in Pezzullo's presence, he signed a HUD-1 form and a statement certifying that he had received a copy of the HUD-1 form, yet neither Cassiere nor Pezzullo ever gave him that document. 23 George Gundensen, president of CenTrust Corporation, one of the lending institutions, testified that the closing attorney is expected to fill in all blank spaces in loan documents before having the mortgagor sign the documents. Some of the final buyers signed forms at the closing, however, that were completely blank. In fact, Cassiere and Pezzullo discussed in Marlissa Pina's presence that they were asking her to sign a blank document. 24 Had the lending institutions been informed that the same law firm had closed twice on the same property on the same day and with such wide price disparities, they would have either suspend[ed] the loan for further information or cancell[ed] the loan. Because of the large difference between the two sale prices, the lending institution would have believed that it would be making a loan on a piece of property, the value for which wouldn't support the amount of the loan being made. 25 The foregoing evidence, together with additional evidence in the record we have not discussed, justified the jury's conclusion that Pezzullo both committed wire fraud and aided and abetted its commission.
26 Although Dolber never participated in the closings, she had a vital role in making the scheme work. Her appraisal forms, which she submitted to Rate Line, supported the high second sale price and thus resulted in the higher mortgages. The lenders relied heavily on the accuracy of Dolber's appraisals. As noted, every appraisal she submitted on the thirteen land flips for properties was identical to the second sale prices, or, in three instances, slightly higher. 27 DeNunzio testified that he wanted to use Dolber as the appraiser because he knew from talking to her that she would bring in property values as high as possible, and that she would use non-arm's length transactions for sales comparisons. By non-arm's length transactions, DeNunzio meant that the comparable sales used were not a true sale with a wanting borrower and a wanting seller. Instead, the comparable sales she used often were previous flips that Rate Line had established, and, therefore, did not reflect true market value. 28 Monteiro accompanied Dolber in viewing some of the appraised properties. He told her of the proposed sale price for the second half of the flip. Usually, the appraised value was very close to the intended sale price. Dolber appraised at the value needed, so we [Rate Line] continued to use her. 29 There was ample evidence upon which the jury could conclude that Dolber frequently misstated the conditions of the appraised properties, making them appear more valuable than they were. Thus, in her appraisal of 69 Turner Street, Dolber wrote that the property was in need of cosmetic and minor roof repair, the bathrooms were fully functioning, the [k]itchen cabinets are adequate, two units are rented at this time, and the third unit will be occupied by the owner. She rated the property's functional utility as average. Strangis, who was the final purchaser and was present during Dolber's appraisal, testified that the property was [b]asically a shell of a house, and it was not occupied at the time of her inspection or any time since. 30 It had a lot of broken windows.... The porch was broken off, a couple of the gutters were gone. The inside had had no plumbing. Most of the wiring was gone; whatever was still there was hanging out of the ceiling.... [I]f there were any tubs and toilets were left in they were turned upside down. There were no stoves, no cabinets.... 31 It was nowhere near liveable.... A lot of the places didn't have doors. 32 In her appraisal of 34 Harvard Street, Dolber wrote that [a]ll three units are rented at this time. Monteiro testified that none of the units was rented at the time of the appraisal. Dolber described the property as having been maintained in average to good condition, with all mechanical and electrical services [ ] fully functioning. Martin Pina, the final purchaser of this property, testified that it was in very bad condition. There was no plumbing, no pipes, no copper at all in the building, it had been stripped out. The building was being used by drug users. There were syringes on the inside of the building.... [T]here was a lot of structural damage on the inside. Although Dolber certified in her appraisal that she personally inspected the subject property, both inside and out, Monteiro and DeNunzio testified that Dolber never entered the premises during her appraisal, and Dolber admitted as much to DeNunzio. Furthermore, Dolber wrote that the property was divided into three units, but Pires testified that there were six units. Dolber described 11 Lebanon Street as needing only minor cosmetic repair and that it appear[e]d to be in average condition. Monteiro testified that all of the copper pipes were removed from within the house and that both the interior and exterior of the house were in poor condition. Dolber reported that there were no units vacant, but Monteiro testified that the property was unoccupied at the time of appraisal. George Strangis testified that there was no plumbing in the basement, it had been all ripped out, only one of the three hot water heaters stood upright, and it was not connected, the other two were laying on their side, [t]he bathroom ceiling on the first floor ... had been partially ripped down, and [t]he heating systems weren't operational. 33 Dolber made similar misstatements regarding the condition and occupancy of other properties she appraised. Although she stated that three units at 18 Winthrop Street were rented at the time, Fred Strangis and Frank Andrews testified that only one of the four units was then rented. Dolber described 23 Temple Street as having been maintained in average to good condition with all mechanical and electrical services [ ] fully functioning, and reported that [a]ll three units are rented at this time. Martin Pina, however, testified that at the time of the appraisal the property was boarded up, had no electricity, the plumbing had been filled with some type of Ethyl glycol or antifreeze to stop the pipes from bursting, there was no water, and nobody lived in the building. Dolber also repeatedly appraised multiple properties for the same purchaser, and each time reported that the particular property would be owner-occupied. Thus, in her appraisals she certified that Fred Strangis would occupy four properties, Griffin would occupy two, Andrews would occupy two, and Peter Pina would occupy three. 34 The appraisal form required the appraiser to compare the subject property with recent sale prices of similar properties in the neighborhood, which are known as comparable sales. In her appraisals, Dolber relied on data from the publication County Comps, which listed the sale prices for closed sales, as a source of information about comparable sales. Thus, for example, in her appraisal of 79-81 Keith Street, Dolber used three comparable sales and identified County Comps as her data source. 35 The County Comps she relied on, however, showed that each of the properties she used as comparable sales had been sold twice within a short period for vastly different prices. Similarly, in her appraisal of 85 Ford Street, Dolber relied on County Comps for her comparable sales. County Comps showed one of those properties as involving two sales on the same day, with the second price more than double the first price. 36 Dolber's actions in connection with her proposed acquisition of 30-32 Water Street showed her awareness of how the fraudulent scheme was operating and her willingness to participate in it. She asked DeNunzio to handle a loan for her on the property and proposed that her nephew, Adam Belanger, and his wife, Karen, serve as straw buyers since Dolber had a bad credit rating. After DeNunzio told Dolber that the Belangers would not qualify for a loan because they did not earn enough money, Dolber told DeNunzio that she would give Karen a job, and asked how much salary Karen needed to earn to qualify for the loan. 37 Dolber sent DeNunzio a verification of employment form for Karen from Whitinsville Water Company, a company Dolber's father owned, which was blank where the employment numbers should have been filled in on the form. Dolber told DeNunzio to fill in the blanks, but when he told her he could not do that, she undertook to do so. Thereafter, DeNunzio received a completed verification-of-employment form, a W-2 statement, and a pay stub for Karen Belanger. Both Samuel Carpinetti, Whitinsville Water Company's general manager, and Karen Belanger testified that Karen never worked for the company. 38 Dolber argues that the government's proof failed because it did not establish the appraised properties' fair market value. She cites no precedent, however, and we know of none, that requires the government to prove a precise fair market value as an element of the crime of wire fraud. To the contrary, she notes that market value was not in and of itself an element of the offenses with which Ms. Dolber was charged. Furthermore, the evidence justified a jury conclusion that Dolber's appraisals falsely represented the condition and thereby the value of the properties. 39 Again, citing no case law to support her contention, Dolber argues that the jury was left to speculate as to what conduct on the part of Ms. Dolber was inappropriate, because the government did not point to any code of professional ethics that governed her behavior. Violation by the defendant of a code of ethics is not an element of the crime of wire fraud. 40 Dolber presented a version of the facts which portrayed her as an innocent victim of DeNunzio's scheme to defraud the lenders. The foregoing evidence, and other evidence we have not discussed, however, provided the jury with an ample base for rejecting Dolber's claim, and concluding that she committed wire fraud and aided and abetted its commission.