Opinion ID: 766939
Heading Depth: 2
Heading Rank: 1

Heading: Land Acquisition Loans

Text: 33 In Counts 2 through 12, 21 through 23, 26 through 28, and 30 through 33, Neder was charged with defrauding lenders in obtaining land acquisition loans by (1) submitting inflated appraisals; (2) submitting sales contracts between his nominee corporations and limited partnerships that falsely stated that down payments had been made to the corporations; (3) concealing that the land was being purchased from the original landowners at prices lower than the inflated prices being paid by the limited partnerships; (4) misrepresenting or failing to disclose the nature of his interest in the nominee corporations; and (5) failing to disclose that he was depositing in his personal account the excess loan proceeds his corporations received from the sales to his limited partnerships. 34 Neder's main argument that these representations were not material is that the lenders either knew or should have inquired about what Neder was doing but did not care that Neder was using the corporations as nominees in a land-flipping transaction, netting the down payment, and depositing the excess loan proceeds in his personal account. Neder introduced evidence that these practices were common in the 1980s and argued that the lenders had a duty to inquire about whether Neder was engaging in them. Neder also claims that these falsehoods were not material because he personally guaranteed the loans and, as a result, the lenders were fully secured. However, Neder's arguments are really about what the lenders knew or should have known and whether the lenders reasonably relied on Neder's representations-not whether Neder's representations were material. 35 Indeed, the evidence overwhelmingly establishes that Neder's representations about his appraisals, purchase prices, down payments, control over the nominee corporation, and receipt of the corporation's excess loan proceeds were material, whether considered individually or collectively, because they tended to influence or were capable of influencing the lenders' decisions. The Government elicited testimony from all of the lenders that if they had known the truth, they would not have approved Neder's land acquisition loans on the same terms and conditions, if at all. Each of these representations related to the core requirements for a land-acquisition loan. In particular, the lenders testified that the representations about prices and down payments were crucial to their decisions about approving the loans and about how much money to lend. 36 Regarding the appraisals, Neder points out that he was acquitted on Counts 13 to 20, which charged him with making false statements, in violation of 18 U.S.C. 1014, for submitting these appraisals to the lenders. Neder argues that the jury must have found that the appraisals were not false and that, based this finding, the jury might also have concluded that the appraisals were not material, if given the opportunity. However, Neder does not contend that the appraisals did not tend to influence or were not capable of influencing the lenders' decisions; Neder's challenge is directed at whether the element of falsity-and not materiality-was satisfied with regard to the appraisals. Neder's challenge to the jury's determination that the element of falsity was satisfied for purposes of the bank, mail, and wire fraud counts was not raised before the Supreme Court, and the Supreme Court remanded this case for us to consider only the materiality of Neder's falsehoods. See Neder, --- U.S. at ----, 119 S.Ct. at 1841. Thus, the jury's verdict having determined falsity, we are limited to deciding only whether Neder's false appraisals were material. Because, as already discussed, there was overwhelming evidence that these appraisals tended to influence and were capable of influencing the lenders' decisions, a rational jury could not have concluded that the appraisals were not material. 37 Count 32 also merits special discussion. For Count 32, the Government introduced evidence that the lender, Greyhound, had required Neder to verify the source of the $1,020,900 down payment he supposedly had paid. In response to this request for verification, Neder had submitted an affidavit to Greyhound, falsely swearing that the source of the deposit was a trust for the benefit of his children. At trial, Neder offered evidence that after he submitted the affidavit, the loan was restructured and became a collateral loan, based solely on the value of the land. Consequently, the representations about Neder's down payment were no longer a basis for the loan. In his closing argument, Neder argued that after this change, the representations in the affidavit were meaningless to Greyhound. 38 From this evidence that the loan became a collateral loan, a jury rationally could have concluded that Neder's representations about making the down payment were not material to Greyhound. However, this does not mean Neder's conviction on Count 32 must be reversed. Neder's representations about the down payment were only one aspect of the scheme relating to the Greyhound loan, and as discussed previously, the Government is not required to prove the materiality of every allegation of fraudulent activities appearing in an indictment for a fraud conviction. See United States v. Toney, 598 F.2d 1349, 1355-56 (5th Cir.1979). 39 In Count 32, Neder also was charged with making false representations about his purchase price, control over the nominee corporation, and receipt of the excess loan proceeds. The evidence relating to the materiality of each of these representations was so overwhelming that no jury rationally could have found that the representations were not a material matter. The Government introduced evidence that Greyhound was influenced in its decision to make a collateral loan by Neder's representations about the purchase price. If Greyhound had known that Neder controlled both the seller-corporation and buyer-partnership, and that the actual, initial purchase price paid by Neder's corporation was so much less than the inflated price, the evidence indicates that Greyhound would not have agreed to make a collateral loan, or at least would not have lent Neder as much money as it did. Neder would have received only seventy to seventy-five percent of the much lower, actual purchase price rather than seventy to seventy-five percent of the inflated price. Thus, even assuming the false statements concerning the down payment were not material, the jury verdict would have been the same for Count 32. 40 Because, for each of these land-acquisition fraud counts, no jury rationally could have concluded that the element of materiality had not been established, the district court's instructional error was harmless.