Opinion ID: 766939
Heading Depth: 3
Heading Rank: 1

Heading: Cedar Creek and Southern Grove

Text: 41 Counts 34 and 35 charged Neder with committing mail fraud in meeting Amerifirst's and Security's pre-construction sales requirements for the Cedar Creek and Southern Grove development loans, respectively. Neder met these development loan requirements through a scheme in which he solicited individuals to sign reservation agreements or sales contracts indicating their interest in or commitment to buying condominium units to be constructed at Cedar Creek and Southern Grove and then paid the deposits for those purported buyers. The language of the contracts did not reveal that it was Neder rather than the purported buyers who made the deposits, nor did Neder disclose to Amerifirst or Security that he paid the deposits. 8 42 Neder claims that his representations about the deposits were not material because Amerifirst and Security knew or should have known he was making these deposits. Neder points out that the reservation agreements and purchase contracts he submitted to Amerifirst and Security did not expressly state that the purchaser made the deposit; as a result, Neder contends that the contracts were literally true. At trial, Neder also introduced evidence that equity sharing agreements, where a developer would pay a deposit or down payment to provide an incentive for an individual to sign a purchase contract, were an accepted practice, common in the 1980s. According to Neder, if Amerifirst or Security truly cared who paid the deposits, they could have contacted the buyers to ask about the source of the deposits or clearly stated in the loan agreements that only the buyer, and not Neder, could make the deposit. 43 Neder's arguments relate to what Amerifirst and Security knew or should have known about who was making the required deposits, whether Amerifirst and Security reasonably relied on Neder's representations, and whether Neder's representations were actually false. Whether the element of falsity was satisfied for Counts 34 and 35 was already decided by the jury and is not an issue on remand. See Neder, 527 U.S. at ----, 119 S.Ct. at 1834, 1841. As for the other issues Neder raises, Neder's arguments about actual knowledge and reasonable reliance miss the point of the materiality inquiry, which is whether the falsehoods at issue had a tendency to influence or were capable of influencing Amerifirst's and Security's decisions about Neder's development loans. See Gaudin, 515 U.S. at 509, 115 S.Ct. at 2313; Gregg, 179 F.3d at 1315. 44 The tendency and capability of Neder's representations to influence Amerifirst's and Security's decisions were established by overwhelming evidence. Loan officers from both Amerifirst and Security testified that the reason they wanted Neder to establish that a certain number of prospective purchasers had signed either reservation agreements or purchase contracts and had made the required down payments was to provide an indication of the marketability of the condominiums Neder planned to build at Cedar Creek and Southern Grove, respectively. According to the loan officers, this marketability information was of great importance because it allowed them to gauge whether Neder would be able to make enough sales to repay the loan-in other words, the risk involved in lending money for the projects' development. The information that Neder had to offer to pay deposits to induce people to sign reservation agreements and contracts for Cedar Creek and Southern Grove would have indicated that the market for these condominiums was not as strong as Neder represented and that the risk involved in lending money for development would be greater. Because of the tendency and capability of Neder's representations to influence Amerifirst's and Security's decisions about these development loans, no jury rationally could have concluded that the representations were not material. Thus, the district court's failure to instruct on materiality was harmless error as to these counts.