Opinion ID: 222737
Heading Depth: 1
Heading Rank: 3

Heading: James Green

Text: The government charged defendant James Green with four counts of wire fraud. Like Braziel, Green was a buyer. His cousin, co-defendant Joseph Green, recruited Green to purchase properties in exchange for cash. [4] Throughout the trial, Green argued that he was a victim of the fraudulent scheme, left holding the bag as the purchaser of properties that were supposed to be rehabilitated but were not. Green now raises five issues regarding his conviction. He also argues that the district court erred by sentencing him based on an improper loss calculation. We address each issue in turn.
Green appeals the district court's admission of certain loan documents under Federal Rule of Evidence 902(11). Rule 902(11) streamlines the admission of certain inherently reliable documents by allowing a party to introduce a record of regularly conducted activity without live testimony from a records custodian so long as the record is accompanied by a proper written certification from a custodian or otherwise qualified person. See Fed. R.Evid. 902(11). The Rule requires that the record be admissible under Rule 803(6), which creates a hearsay exception for business records and reports unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. Fed.R.Evid. 803(6). In advance of trial, the government filed notice of its intent to offer evidence pursuant to Rule 902(11). Green and his co-defendants objected, claiming that the records did not meet the Rule's requirements. Relevant to this appeal, they objected to the introduction of records certified by Charlene Batalla, a former employee of Equity Express mortgage brokerage firm, who was also a defendant in the scheme. They argued that Batalla, as a co-defendant, was not trustworthy as a custodian. In 2008, Batalla pled guilty to falsifying documents in the defendants' conspiracy. In 2009, Batalla certified as records made in the regular course of business the Equity Express loan files for five Chicago-area properties: 8544 South Givins Court, 1418 Portland Avenue, 155 East 153rd Street, 6851 South Prairie Avenue, and 1436 Parnell Avenue. Defendant Green was charged for his involvement in the purchases of the first four of those properties. At a pretrial conference, the district court reviewed the certificates and overruled the objection, finding the certificates to be sufficient under Rule 902(11). After severance, Green renewed his trustworthiness objection to the Batalla certification. At a second pretrial conference, Green's counsel further argued that he had a right to cross-examine Batalla about the fact that James Green didn't put any of this information on these papers. The government replied that if Batalla were to testify, she would answer only three questionsWere these documents created in the ordinary course, were they maintained, and were they created at or near the time of the documents?and that anything else regarding the documents would be outside the scope of her testimony. The district court again overruled the objection and admitted the documents and certification. Despite all this attention to the certification and attached loan files, they were hardly used at trial. The government moved the files into evidence at the start of trial but never referred to them. Rule 902(11) is a powerful and efficient short-cut, but it includes important built-in safeguards that cannot be taken lightly. Those safeguards include providing opposing counsel with advance notice of any Rule 902(11) certifications to give that party a fair opportunity to challenge the certifications, which could involve calling the certificate's signer to testify as Green demanded here. See Fed.R.Evid. 902(11); see also United States v. Adefehinti, 510 F.3d 319, 327-28 (D.C.Cir.2008) (amended opinion). We have noted that in some circumstances a Rule 902(11) certification will not implicate a defendant's Confrontation Clause rights because the certificate itself is not testimonial. See United States v. Ellis, 460 F.3d 920, 927 (7th Cir.2006). But the Rule does not give a party license to dump business records into evidence without giving an adverse party an opportunity to question the certificate's signer where such questioning may be warranted. See Adefehinti, 510 F.3d at 328 (commenting that [i]n an appropriate case, the Rule's opportunity to challenge may include cross-examination, while also noting that the Rule 902(11) certificate does not fall within the guarantee provided by the Confrontation Clause). The government was treading on dangerous ground by using Rule 902(11) here to introduce not just these but hundreds of other records to prove the truth of the matters asserted without regard to the many layers of hearsay and the Confrontation Clause rights that those records may have implicated. [5] In any event, we need not decide whether the district court erred by admitting evidence based on the Batalla certification because any such error would have been harmless. At oral argument, we asked the government to file a supplemental memorandum identifying the portions of the record that addressed counsel's objections to the Batalla certification, as well as the portions of the record that corroborate or support the contents of the Equity Express documents admitted based on her certification. The parties' supplemental materials show that many of the documents within each file were duplicates of business records maintained by other lenders that were also admitted without objection. The most relevant loan application materials (the applications purportedly signed by Green containing false information) were also included in other exhibits that came in through trustworthy certifications to which Green did not object. Given this overlap and the limited use of the files, Green has not shown that he was prejudiced by the Equity Express records certified by Batalla. In the absence of prejudice, we need not reach Green's arguments that Batalla's certificate of authenticity failed to meet the requirements of Rules 803(6) and 902(11) or that its use violated his Sixth Amendment right.
Green also contends that certain testimony offered by witnesses for the government prejudiced him by misleading the jury about the charges against him. The jury heard three government witnesses read slight variations of the following passage from loan application materials submitted in connection with Green's loans: Borrower understands that it is a federal crime punishable by fine or imprisonment or both to knowingly make any false statement concerning any of the above facts, as applicable under the provisions of Title 18 USC, Section 1014. I declare that the foregoing agreement is true and correct. . . . At its first mention, defense counsel requested a limiting instruction directing the jury that Green had not been charged with violating Section 1014. After the government responded that it was offering the evidence to show Green's knowledge, the court asked both counsel to review the issue overnight and raised the possibility of striking the reference or giving a limiting instruction the following day. The next morning, prosecutors and defense counsel agreed on an instruction that the court gave the jury. The court told the jury that it had heard some evidence regarding statements in loan documents about that it's unlawful to violate particular statutes. That evidence, the particular statute actually isn't at issue here other than it'sthe government is offering it with respect to knowledge and intent. Similar passages referencing 18 U.S.C. § 1014 were read and referenced again by two witnesses and by the government during closing argument. On appeal, Green argues that the government's repeated references to section 1014 confused the jury. He contends that, as a result of this testimony, the jury convicted Green based on statutory violations not charged. But Green forfeited this argument by not objecting to the admissibility of the statements when they were offered. Rather, upon their introduction, Green's counsel requested, and the court gave, a limiting instruction to avoid the very confusion Green claims still permeated his trial. In light of Green's forfeiture, we review the introduction of the testimony for plain error only. United States v. Jaimes-Jaimes, 406 F.3d 845, 847 (7th Cir.2005). We find none. Although the references to another provision of law perhaps posed some risk of confusing the jury, the court's limiting instruction alleviated that risk. The references were not so prejudicial so as to render the instruction ineffectual. See United States v. Curry, 538 F.3d 718, 728 (7th Cir.2008) (noting that we assume a jury follows an instruction unless the evidence is so powerfully incriminating that they cannot reasonably be expected to put it out of their minds). Even if Green had not forfeited his objection, we would have little trouble agreeing with the district court that the passages were admissible to help prove that Green knew he was required to provide true information and knew it was wrong to provide false information, and finding that the limiting instruction was sufficient to protect against any potential prejudice.
Green next contests the ostrich instruction given by the court at the government's request. The instruction explained to the jury members that in their consideration of Green's knowledge about the fraud, the legal definition of knowledge includes the deliberate avoidance of knowledgea combination of suspicion and indifference to the truth. We review a decision to give an ostrich instruction for abuse of discretion, viewing all evidence in the light most favorable to the government. United States v. Severson, 569 F.3d 683, 689 (7th Cir.2009). A district court may give an ostrich instruction where (1) a defendant claims to lack guilty knowledge, i.e., knowledge of her conduct's illegality, and (2) the government presents evidence from which a jury could conclude that the defendant deliberately avoided the truth. United States v. Garcia, 580 F.3d 528, 537 (7th Cir.2009). The purpose of an ostrich instruction is to inform the jury that a person may not escape criminal liability by pleading ignorance if he knows or strongly suspects he is involved in criminal dealings but deliberately avoids learning more exact information about the nature or extent of those dealings. United States v. Carani, 492 F.3d 867, 873 (7th Cir.2007), quoting United States v. Carrillo, 435 F.3d 767, 780 (7th Cir.2006). In Garcia, we explained that a case in which a defendant admits his association with a group but denies knowledge of its illegal activity despite circumstantial evidence to the contrary is a paradigm case for use of the instruction. 580 F.3d at 537. The evidence presented at Green's trial could be interpreted to show exactly that: Green deliberately avoided determining conclusively that he was engaged in criminal activity. Green was aware that his co-defendants had offered to obtain false documents for him and that they had done so for others in the past. In fact, Green testified that he questioned his co-defendants about the legality of what they were doing on several occasions. This evidence alone, demonstrating knowledge of his cohorts' involvement in suspicious activities, warranted an ostrich instruction. See United States v. Ramirez, 574 F.3d 869, 877 (7th Cir.2009). Green did more. He also signed blank loan applications and accompanied his codefendants to banks where they would withdraw money and obtain cashier's checks in an effort to make it appear as though Green was presenting his own money for the properties. He did not inspect the properties before he bought them, and he never met some of the individuals who he represented on his loan materials would be renting the properties. On the basis of this ample evidence, the district court acted well within its discretion to provide an ostrich instruction.
Green asserts that the cumulative effect of the errors made by the district court deprived him of a fair trial. Since we find no error on the part of the district court, the cumulative error doctrine does not apply.
The jury convicted Green of fraud in connection with the property transactions at 8544 South Givins Court, 1418 Portland Avenue, and 155 East 153rd Street, and acquitted him of the charge in connection with 6851 South Prairie Avenue. He argues that the government failed to prove that he had the intent to defraud any lender and that therefore he should have been acquitted on all counts. He concedes that he participated in the scheme and that a wire fraud occurred, but he contends he was actually a victim of the schemeunaware of the illegality of the transactions and not intending to defraud the lenders. Green's challenge fails because the testimony at trial, along with the documentary evidence, was sufficient for a jury to find beyond a reasonable doubt that Green engaged in wire fraud for each of the three properties underlying his convictions. Early on, Green worked through his cousin and recruiter Joseph Green. Joseph Green testified that he told defendant Green in their earliest conversations about real estate that Green would be paid for his transactions and that he could get assistance obtaining false pay stubs and W-2s when necessary. The jury heard that one of Green's co-schemers, James Robert Thomas, told Green that he had to purchase false documents to qualify for a loan for the South Givins property in early 2005. James Robert Thomas also told Green that Green did not have to repay the seller second mortgage that had been arranged for him and that was listed on his loan application for the South Givins house. Beginning with the transaction at 1418 Portland Avenue, Green worked more closely with the financiers of the scheme rather than through his cousin. James Robert Thomas testified that he paid Green after the closings at the Portland property and East 153rd Street in April and May 2005. At trial, Green himself admitted that he accepted money for his role as the purchaser of all three properties without notifying lenders about these transactions. Further, the jury heard that, at his cousin's instruction, Green falsely represented to lenders that he worked for a company called The Art of Construction. Viewing this testimony in the light most favorable to the prosecution, a reasonable fact finder could have found that Green intended to defraud lenders through his participation in the scheme.
Green was sentenced to 37 months in prison based in part on an aggregate loss amount of $189,500. He contests the district court's calculation of the loss amount attributable to him. We review loss calculations for clear error. See United States v. Powell, 576 F.3d 482, 497 (7th Cir.2009). We have stated on many occasions that loss calculations need only be a reasonable estimate of the loss. See United States v. Borrasi, 639 F.3d 774, 783 (7th Cir.2011); U.S.S.G. § 2B1.1, note 3(C) (The court need only make a reasonable estimate of the loss.). For Green to succeed, he must show that the court's loss calculations were not only inaccurate but outside the realm of permissible computations. United States v. Radziszewski, 474 F.3d 480, 486 (7th Cir.2007), quoting United States v. Lopez, 222 F.3d 428, 437 (7th Cir.2000). At his sentencing hearing, Green introduced evidence showing that some of the properties involved in the fraud were sold at public auction and requested that proceeds from the sales, at which the lenders were the highest bidders, be credited against the loss. The district court rejected Green's calculations. Green re-asserts his argument on appeal, claiming that the district court improperly calculated the loss amount by not using the prices at which the lenders obtained title to the properties at the public auctions. Green's suggested calculation misses the mark. Where a lender forecloses and acquires the property at public auction by making a credit bid ( i.e., a bid that offers to cancel the outstanding principal, interest, and related fees in return for title to the property), the credit bid is not a reliable measure of the actual market value of the property. See generally River Road Hotel Partners, LLC v. Amalgamated Bank, ___ F.3d ___, ___ (7th Cir.2011); In re Philadelphia Newspapers, LLC, 599 F.3d 298, 320-21 (3d Cir.2010) (Ambro, J., dissenting) (explaining credit bidding in Chapter 11 bankruptcy context). [6] In a typical fraudulent mortgage scheme, a credit bid is highly likely to overvalue the property. The whole point of the fraud was to fool the lender into lending far more than the market value of the property, and then to disappear, leaving the lender with a property worth far less than the loan. Using a credit bid based on the fraudulently inflated loan amount to measure loss would surely understate the actual loss. Thus, in this situation, it would have been an error for the district court to use Green's proposed method of calculating loss. Here, the district court correctly determined the appropriate loss amount using the formula we outlined in United States v. Radziszewski . The court subtracted the sale price the lender received after it recovered possession of the property from the amount of its original loan, as in Radziszewski. See 474 F.3d at 486-87; see also United States v. Serfling, 504 F.3d 672, 679 (7th Cir.2007) (upholding district court's loss calculation which subtracted the price obtained for collateral from the amount of loan proceeds, and rejecting calculation proposed by defendant based on fraudulent appraisal); U.S.S.G. § 2B1.1, note 3(E)(ii) (loss shall be reduced by the amount the victim has recovered at the time of sentencing from disposition of the collateral, or if the collateral has not been disposed of by that time, the fair market value of the collateral at the time of sentencing). The district court used this method that we have previously upheld for the same situation and that properly captures the loss suffered by the lenders. We find no error and uphold Green's sentence.