Opinion ID: 215330
Heading Depth: 2
Heading Rank: 2

Heading: Dziemit's Role and the Evidence Against Her

Text: Prior to her involvement in the scheme, Dziemit worked as a mortgage lender associated with various companies, many of which were owned and operated by her boyfriend, Tony Maresca. Dziemit's primary activity was the completion of loan paperwork for the -5- companies, and she worked out of her home in Connecticut. At times, Dziemit would also make loans to third parties, drawing upon Maresca's mortgage companies or her own personal accounts to supply the funds. Each time Dziemit completed a loan, she executed a mortgage and a promissory note, and she profited from the loan based on the interest that it accrued. Maresca was a long-time friend of Ronald Mitchell. Mitchell owned and operated a carpet underlay supply business known as Remco, and later, as Mansfield Rug, which sold padding. At some point in his career, Mitchell, doing business as Remco, sold padding to retail operations that he obtained from legitimate businesses. His company had no employees other than himself. In 1999 or 2000, Dziemit began working with Mitchell as part of Remco,3 and she became a partner of the company for a few years. Around this time, Dziemit and Mitchell, along with Maresca, met with Adams at a Building 19 store to initiate a business relationship. Mitchell and Dziemit testified at trial about their dealings with Adams and the transactions that were involved. According to their testimony, Adams would communicate to Mitchell a specific amount of money that Mitchell, d/b/a Remco, was to lend 3 Evidence at trial also demonstrated that Dziemit was involved with Mansfield Rug, a successor in name to Remco, to the extent that she received at least two checks from the Mansfield Rug bank account. -6- to Adams, purportedly so that Adams could purchase rugs. Then, Adams would send Mitchell an IFC purchase order that included a description of product ostensibly being supplied by Remco and the amount that Remco was to charge IFC on an eventual invoice. The invoice amount was always greater than the loan amount, and the two figures in no way corresponded. Mitchell would then fax the purchase order to Dziemit and communicate to her the amount of the loan to Adams. Dziemit, acting in her lending capacity, would lend to Mitchell the money to be advanced to Adams. Except for the first loan executed, Dziemit did not secure any notes or mortgages evidencing or securing these loans.4 Then, switching hats and acting as a Remco partner, Dziemit would advance the money to Adams, or at times, to Britto. Many of these advances were completed via wire transfers. Although Mitchell and Dziemit claimed that Adams used this advanced money to buy the merchandise that was listed on the purchase order and that was ostensibly being supplied by Remco, neither of them ever saw any product that was bought or shipped, and they never sought to visit a warehouse. 4 At one point in January 2001, Mitchell, not Dziemit, obtained a mortgage on Adams' property. Dziemit claimed to have an assignment on the mortgage, but she never produced this during discovery or at trial. Even if Dziemit had a mortgage on Adams' property, she did not have one on Mitchell's property, even though the money she lent went to Mitchell, doing business as Remco. -7- Beyond the purchase order, there was no documentation that the product existed. Approximately two or three weeks after Dziemit advanced money to Adams, Adams would alert Remco to submit an invoice to IFC. Dziemit drafted the bulk of the invoices and either she or Mitchell would mail them. Upon receipt of the invoice, IFC would send a check to Dziemit's post office box, or, at least one time, directly to Dziemit's home. Dziemit would endorse the check from IFC and deposit it into the account from which she initially borrowed the funds, which could have been her personal account or the account of one of Maresca's companies; Dziemit did not keep good records, and many of the transactions were recorded as handwritten notations on various papers. Dziemit would then send Adams a portion of the profit and share the remainder with Mitchell. At no time throughout her involvement was Dziemit ever actually engaged in the sale of padding, Remco's purported business. When Dziemit testified at trial, she walked the jury through a sample transaction, using a $25,000 loan she made to Mitchell and then advanced to Adams on November 18, 1999. On January 19, 2000, approximately two months later, Dziemit received an invoice payment from IFC for $41,550.04. She deposited that amount into one of her mortgage accounts, wired just over $10,000 to Adams as his share of the profit, and split the remainder of the -8- gains with Mitchell. Dziemit personally profited $2915.28 from this loan. She agreed that this transaction indicated what would have been a 66 percent interest rate on an annual basis for the $25,000 loan, much more than what she would have earned on a typical secured mortgage loan.5 Sometime in late 2001, Dziemit ceased being a partner in Remco. She did, however, continue to loan funds to Mitchell, and these loans, along with a profit, were repaid to her. She also received money both during the time she was a partner and later, through 2003, even when she did not advance any funds. In total, Dziemit completed approximately 35 transactions for Remco, and each transaction took less than an hour. She estimated that for these 35 hours of work, she made approximately $130,000. Dziemit admitted at trial that these transactions were a departure from her normal course of business. Dziemit had never before lent money to one of her business partners, nor had she ever lent money without receiving security. Dziemit estimated that she advanced a total of approximately $1.4 million to Mitchell for the transactions. Apparently, of the total amount lent, she had security for only $40,000. Further, never before in her business did Dziemit earn money from a loan based on a profit, rather than 5 As explained to the jury, Dziemit's payment represented approximately 11 percent of the loaned $25,000, which, extrapolated to a yearly rate, demonstrated that Dziemit would have made 66 percent on the loan. -9- on the accrued interest. Indeed, in all of her previous lending activities, Dziemit knew the percentage she would earn on a loan, but with respect to the loans to Mitchell, she did not know how much she would earn on a particular loan at the time she made the advance. Additionally, there was no relationship between the amount Dziemit advanced and the ultimate profit that she earned. C. The Discovery of the Fraud and the Subsequent Suit In March 2005, IFC terminated Adams for poor performance. The buyer hired to replace Adams began to notice various discrepancies between purchases Adams allegedly made and the product available for retail sale. After delving through records, the new buyer contacted Mitchell about several missing deliveries ostensibly from Mansfield Rug. Mitchell, trying to stave off any inquiries into the transactions, forwarded a fake bill of lading that he created with the help of Britto. He also misled the buyer into believing that he had a warehouse full of goods and that other documents related to any deliveries were destroyed and therefore unavailable for verification. Around this time, IFC's accounts payable department performed an internal investigation, which ultimately uncovered the scheme. The department determined that it had paid almost $10 million in fraudulent invoices from Remco, Mansfield Rug, and CCC. On August 10, 2005, IFC brought suit against Adams, Britto, Williams, CCC and its officers, Mitchell, and Dziemit, -10- among many others, for violations of RICO and Massachusetts state law. In 2006, it settled with CCC and its officers and employees. In 2007, it filed a suggestion of apparent death as to Britto, who had been suffering from a grave liver disease. Prior to Britto's death, IFC videotaped his deposition, wherein Britto confessed to the scheme, implicated Adams and Williams, and denied the knowing involvement of Dziemit and Mitchell. In 2008, an agreement for judgment was entered against Mitchell for over $3 million, and default judgment was entered against Williams. By July 21, 2008, only Dziemit and Adams remained to stand trial for the following claims: (1) violations of RICO; (2) conspiracy to violate RICO; (3) common law fraud; and (4) as to Adams only, breach of fiduciary duty. The district court reserved for itself IFC's Chapter 93A claim against Dziemit and Adams. On July 29, 2009, the district court charged the jury, and the following day, the jury returned its verdict. It found both Adams and Dziemit liable to IFC for violations of RICO and common law fraud. It further found Adams, but not Dziemit, to have engaged in conspiracy to violate RICO, and it found Adams liable for breach of fiduciary duty. The jury awarded IFC $5 million in damages against Adams, and $250,000 against Dziemit. Pursuant to the RICO statute, the district court trebled these damages and awarded IFC $522,281 in costs, including attorneys' fees. -11- A flurry of post-trial motions ensued, only some of which are relevant for present purposes. IFC moved for entry of judgment against Adams and Dziemit on the Chapter 93A count. The district court denied the motion in an electronic order issued that same day, stating, Because full damages were determined by the jury and trebled by the Court pursuant to 18 U.S.C. § 1964(c), the Chapter 93A claim is rendered duplicative and redundant and plaintiff's motion is denied. IFC sought reconsideration, which the district court also denied. Thereafter, Dziemit renewed her motion for judgment as a matter of law, for which she initially moved at the close of IFC's case-in-chief and at the close of trial, arguing that there was insufficient evidence to find that she knowingly and willfully engaged in any fraud, or was willfully blind to the scheme. The district court denied this motion as well. In her subsequent appeal, Dziemit now argues that IFC failed to present sufficient evidence to establish that she knowingly and willfully committed two or more acts of mail and/or wire fraud, rendering the RICO and common law fraud verdicts void. She also argues that the district court erred in providing the jury with a willful blindness instruction as to the common law fraud claim, and, to the extent that the instruction was proper, there was still insufficient evidence to prove that she was willfully blind. -12- IFC cross-appealed. It argues that although the district court was correct to reserve the Chapter 93A claim for itself, the court erroneously denied IFC's motion for judgment on the claim because IFC presented sufficient evidence to support it. Lastly, Dziemit appeals the district court's order that she post an appeal bond that includes attorneys' fees as costs on appeal. IFC sought a bond pursuant to Federal Rule of Appellate Procedure 7, after Dziemit filed her notice of appeal, to ensure payment of its appellate costs, including attorneys' fees. The district court granted IFC's motion and required Dziemit to post a bond for $10,000, of which $5000 was meant to cover appellate fees. Because we find that IFC presented sufficient evidence to support the jury's verdict that Dziemit violated RICO and committed common law fraud, and because we find no plain error in the district court's jury instructions, we affirm the judgment against Dziemit. Because we affirm the judgment against Dziemit, we decline to rule on IFC's Chapter 93A claim at IFC's request. Lastly, we affirm the issuance of the appeal bond and hold that an appeal bond may include appellate attorneys' fees if the applicable statute underlying the litigation contains a fee-shifting provision that accounts for such fees in its definition of recoverable costs and the appellee is eligible to recover them. -13-