Opinion ID: 218749
Heading Depth: 3
Heading Rank: 2

Heading: Hill's Convictions for Mail Fraud

Text: Hill also contends that his convictions for mail fraud and conspiracy to commit mail fraud (Counts 19, 35, 36, and 38) should be reversed because the government failed to prove that the mails were used in furtherance of his scheme to defraud. Mail fraud consists of the following elements: (1) an intentional participation in a scheme to defraud a person of money or property, and (2) the use of the mails in furtherance of the scheme. United States v. Sharpe, 438 F.3d 1257, 1263 (11th Cir.2006) (quotation marks omitted). The only mailings alleged by the indictment were of the file-stamped copies of transfer deeds and lien documents by the county clerk's office that were mailed to the closing attorneys who then saw that the lenders got copies. Hill argues that those mailings were not done in furtherance of his scheme to defraud because they did not occur until the scheme had already succeeded. The government has conceded that the mailings by the clerk's office were not sufficiently essential to the fraudulent scheme unless they were necessary to lull the lenders into believing that the fraudulent transactions were actually legitimate. In order to fall within the scope of 18 U.S.C. § 1341, a mailing must constitute part of the execution of the fraud. United States v. Evans, 473 F.3d 1115, 1118-19 (11th Cir.2006). To be part of the execution of the fraud, however, the use of the mails need not be an essential element of the scheme. It is sufficient for the mailing to be incident to an essential part of the scheme or a step in [the] plot. Schmuck v. United States, 489 U.S. 705, 710-11, 109 S.Ct. 1443, 1447-48, 103 L.Ed.2d 734 (1989) (citations and quotation marks omitted). There does come a point at which a mailing will no longer be considered part of the execution of a fraudulent scheme. After a scheme has reached fruition mailings generally cannot have been `for the purpose of executing' the scheme, as 18 U.S.C. § 1341 requires. United States v. Georgalis, 631 F.2d 1199, 1204 (5th Cir.1980); see also United States v. Adkinson, 158 F.3d 1147, 1163 (11th Cir. 1998) (We have not hesitated to reverse mail fraud convictions where the underlying scheme has reached fruition prior to the mailing.). But there is a lulling exception to that rule. Under the lulling exception, mailings are sufficiently a part of the execution of a fraudulent scheme if they are used to lull the scheme's victims into a false sense of security that they are not being defrauded, thereby allowing the scheme to go undetected. Georgalis, 631 F.2d at 1204. And a lulling mailing may be incident to an essential part of the scheme even after the fraud has been successfully perpetrated if the mailing is critical to conceal the scheme. For example, in Schmuck, a used car distributor sold cars to dealers at inflated prices after he rolled back the odometers. 489 U.S. at 707, 109 S.Ct. at 1446. Then, in order to complete sales to innocent buyers, the dealers mailed title applications to the state motor vehicle agency to transfer title from the dealer to the buyers. Id., 109 S.Ct. at 1446. The Supreme Court upheld Schmuck's conviction for mail fraud based on the mailing of the title applications by the dealers even though Schmuck had already successfully swindled the dealers by the time the mailings were done. Id. at 715, 109 S.Ct. at 1450. The Court concluded that a reasonable juror could have inferred that the continued success of Schmuck's fraudulent scheme was inextricably intertwined with his good relationships with the defrauded dealers, which were in turn dependent on the passage of title from dealer to buyer. Id. at 711-12, 109 S.Ct. at 1448-49. Therefore, even though the mailings did not occur until after Schmuck's own deals were completed and he had the fruits of the fraud in hand, the mailings furthered his scheme to defraud because they were essential to prevent the dealers from discovering that they had been duped. Id., 109 S.Ct. at 1448-49. Hill argues that, unlike Schmuck, the mailings by the clerk's office in this case were not in furtherance of any scheme to defraud because they were not necessary for him to obtain funds from the lenders or to buy or sell the properties. As the government points out, however, Hill's scheme was ongoing. In order to keep it going, the closing attorneys had to receive file-stamped copies of deeds and lien documents from the clerk's office, and that office used the mail to get those documents to the closing attorneys. The closing attorneys then forwarded the documents in the completed loan packages to the lenders. Otherwise, the lenders would have realized that the straw buyers had no real interest in the property, and the fraud machine would have come to a grinding halt. The mailings of the file-stamped copies of the documents oiled the machinery and kept it running. But for those documents, Hill would not have been able to avoid detection as long as he did, and there would not have been as many fraudulent loans and as much illicit gain. Because the scheme depended on the observance of normal filing procedures, it was not fully consummated before the mailings were sent, even though the loans had already been processed. See United States v. Evans, 473 F.3d 1115, 1120 (11th Cir.2006). When, as here, the scheme includes not only obtaining the benefit of the fraud but also delaying detection of the fraud by lulling the victim after the benefit has been obtained, the scheme is not fully consummated, and does not reach fruition, until the lulling portion of the scheme concludes. Id. Even so, Hill argues that his mail fraud convictions cannot be based on the lulling theory because it was not alleged in the indictment or charged to the jury. It is true that [t]his Court cannot affirm a criminal conviction based on a theory not contained in the indictment, or not presented to the jury. United States v. Elkins, 885 F.2d 775, 782 (11th Cir.1989) (citation omitted). However, that simply means that a court cannot permit a defendant to be tried on charges that are not made in the indictment against him. Stirone v. United States, 361 U.S. 212, 217, 80 S.Ct. 270, 273, 4 L.Ed.2d 252 (1960); see also Georgalis, 631 F.2d at 1205 (A variance between indictment and proof is fatal only when it affects the `substantial rights' of the defendant by insufficiently notifying him of the charges against him so that he may prepare a proper defense.). Hill was not convicted of any charges that were not contained in the indictment, nor were his rights violated because the indictment failed to notify him of the charges he faced. It specifically charged that Hill committed mail fraud by, among other things, causing the title and lien documents to be mailed in furtherance of a scheme to defraud lenders. [30] As for the jury not being instructed on the lulling theory, the Supreme Court has upheld a mail fraud conviction based on that theory even though the jury was not specifically instructed on it. See United States v. Lane, 474 U.S. 438, 452-53, 106 S.Ct. 725, 734, 88 L.Ed.2d 814 (1986). In Lane, the Court held that [t]he jury was properly instructed that each charged mailing must have been made both `for the purpose of executing the scheme to defraud' and prior to the scheme's completion, and further that mailings `which facilitate concealment of the scheme' are covered by the statute. Id. (citations and emphasis omitted). That was enough in the Supreme Court's view. The jury in this case was also instructed on the three components that the Supreme Court identified in Lane as a sufficient basis for the lulling theory: (1) the mailing must have been done for the purpose of executing the scheme to defraud; (2) the mailing must have occurred before the scheme was complete; and (3) the statute covers a representation that conceals a material fact. [31] See id. Under the Lane decision Hill's contention that the jury was not sufficiently instructed on the lulling theory fails. The remaining question is whether the government was required to put on evidence that if the lenders had not received file-stamped documents regarding the loans they had made and their security interests, they would have become wise to Hill's scheme and quit dealing with him and his associates. If evidence was required, there was enough of it. As we discussed earlier, see supra, Part V, Section A, representatives of several lendersincluding a representative of Alliance Mortgage, the lender for the loan at issue in Count 35testified that their institutions would not have approved the loans if they had known that information in the applications had been falsified. There was a stipulation that if the lenders for the loans at issue in Counts 36 and 38 had known those applications contained false information about owner-occupancy, appraisals, earlier sales, the source of any down payment, the existence of quitclaim deeds, or money paid to the borrower for use of his or her credit, that knowledge would have affected their decisions. An underwriter and attorney for a title insurance company even instructed her closing attorneys to cease closing on any loans involving Hill once she learned of the scheme, and a bank's underwriter added Farmer, Hill, and one of their closing agents to the bank's exclusionary list after an internal audit uncovered several instances of fraud in loan applications. And one of Hill's closing attorneys testified that a lender's receipt of the closing package, including the deeds that had been filed and mailed back from the clerk's office, was a vital part of the transaction. All of that evidence was more than enough to prove beyond a reasonable doubt that the mailings were an essential part of the overall scheme, that they occurred before the scheme had reached fruition, and that they were necessary to conceal the fraud from the lenders and to keep the scheme going. Hill's convictions for mail fraud and conspiracy to commit mail fraud (Counts 19, 35-36, and 38) are supported by the evidence.