Court Opinion

ID: 4148684
Source: CourtListenerOpinion
Date Created: 2017-02-27 21:01:06.630549+00
Date Added: 2024-06-11T07:46:28.758773
License: Public Domain

FILED
                            NOT FOR PUBLICATION
                                                                            FEB 27 2017
                     UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                             FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                        No. 14-10004

               Plaintiff - Appellee,             D.C. No. 2:11-cr-00217-LDG-
                                                 CWH-1
 v.

NICHOLAS LINDSEY,                                MEMORANDUM*

               Defendant - Appellant.

                    Appeal from the United States District Court
                             for the District of Nevada
                  Lloyd D. George, Senior District Judge, Presiding

                       Argued and Submitted March 18, 2016
                            San Francisco, California

Before: GRABER,** GOULD, and FRIEDLAND, Circuit Judges.

      Nicholas Lindsey appeals his jury conviction and sentence for nine counts of

wire fraud in violation of 18 U.S.C. § 1343 and one count of aggravated identity

           *
         This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      **
         After oral argument in this case, and our former opinion and memorandum
disposition filed June 28, 2016, and after the petition for rehearing or rehearing en
banc was filed on August 19, 2016, Judge Graber on January 26, 2017, replaced
Judge Noonan on this panel.
theft in violation of 18 U.S.C. § 1028A. The district court sentenced Lindsey to

consecutive sentences of 108 months for wire fraud and 24 months for identity

theft. The court also imposed $2,286,911 in restitution. Lindsey timely appealed.

We have jurisdiction under 18 U.S.C § 3742(a) and 28 U.S.C. § 1291. In an

opinion filed concurrently with this memorandum disposition, we hold that lender

negligence in verifying loan application information, or even intentional disregard

of the information, is not a defense to fraud, so evidence of such negligence or

intentional disregard is inadmissible as a defense against charges of mortgage

fraud. We further hold that evidence of individual lender behavior is not

admissible to disprove materiality, but evidence of general lending standards in the

mortgage industry is admissible to disprove materiality. Finally, we hold that

Lindsey was not denied the right to present a complete defense. In this

memorandum disposition, we address the remainder of Lindsey’s claims, affirming

in part as to the convictions, and vacating the sentence and remanding because of

our rulings on the obstruction of justice enhancement and the restitution

calculation. We also deny Lindsey’s application for bail pending appeal.

      1. In his opening brief, Lindsey contended that there were three sidebar

conferences that do not appear in the trial transcript concerning Lindsey’s chosen

defense, the admission of expert witness testimony by unqualified individuals, and

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Lindsey’s decision to testify on his own behalf. Lindsey argues that the lack of a

transcript leaves him unable to prove that he preserved his objections as to the first

two issues, subjecting him to a more difficult standard of review on appeal than he

would face if his objections were preserved. As to the third issue, Lindsey argues

that the lack of transcript prevents him from proving that he was not properly

warned of the risks of testifying. Although court reporters are required to record

all proceedings in open court, see 28 U.S.C. § 753(b)(1), to warrant a reversal a

defendant must suffer prejudice from an incomplete transcript. United States v.

Carrillo, 902 F.2d 1405, 1409 (9th Cir. 1990). After Lindsey’s opening brief was

filed, the government provided transcripts of one of the previously sealed sidebars.

The transcript of this sidebar showed that Lindsey had preserved his objections to

the expert witness testimony. Although the transcript does not reveal whether

Lindsey preserved his materiality claim, we review Lindsey’s materiality claim de

novo, as opposed to under the more deferential plain error standard, in the opinion

filed concurrently with this memorandum disposition. Accordingly, we conclude

that Lindsey suffered no prejudice as a result of the court reporter’s failure to

transcribe these sidebars with respect to preservation of the objections regarding

the expert witness and materiality issues. As to the unrecorded sidebar in which

the district court canvassed Lindsey regarding his decision to testify, the record is

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insufficient to tell whether this omission from the transcript was prejudicial to

Lindsey. For example, there is no declaration from Lindsey or his trial attorney

regarding whether Lindsey voluntarily testified. This claim is more appropriate for

a habeas corpus proceeding, in which Lindsey may supplement the record with

evidence if he is able to demonstrate that the omission of this sidebar from the

transcript was prejudicial. See 28 U.S.C. § 2255(b). His current claim of error

from lack of sidebar transcript relating to his decision to testify is therefore denied

without prejudice to his renewing that claim if able to do so in a habeas corpus

petition properly filed under 28 U.S.C. § 2255.

      2. The district court did not abuse its discretion in permitting lenders’

employees to testify as lay witnesses rather than as expert witnesses. Under

Federal Rule of Evidence 701, a lay witness’s testimony must be, inter alia,

“rationally based on the witness’s perception.” A lay witness’s testimony “based

upon personal observation and recollection of concrete facts” satisfies that

standard. United States v. Beck, 418 F.3d 1008, 1015 (9th Cir. 2005) (quoting

United States v. Allen, 787 F.2d 933, 935 (4th Cir. 1986), vacated on other

grounds, 479 U.S. 1077 (1987)). Lindsey has offered no explanation for why the

witnesses’ testimony, which was based on their personal observations while

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working for the lenders—rather than on scientific, technical, or specialized

knowledge—did not qualify as lay testimony.

      3. The district court did not plainly err in permitting testimony regarding

prior bad acts. Although the admission of testimony that Lindsey possessed stolen

cars or worked without a mortgage license was likely erroneous under Federal Rule

of Evidence 404(b), Lindsey has not shown how the admission of this evidence

affected his substantial rights, i.e., changed the outcome of the trial. See United

States v. Bracy, 67 F.3d 1421, 1433 (9th Cir. 1995).

      4. The district court did not abuse its discretion in applying the

enhancement for abuse of a position of trust. Under U.S.S.G.§ 3B1.3, the district

court may increase the offense level by two if the “defendant abused a position of

public or private trust . . . in a manner that significantly facilitated the commission

or concealment of the offense.” This enhancement is appropriate for defendants

who possess professional or managerial discretion. U.S.S.G. § 3B1.3, cmt. n.1; see

also United States v. Laurienti, 731 F.3d 967, 973 (9th Cir. 2013) (“[T]he presence

or lack of professional or managerial discretion represents the decisive factor in

deciding whether a defendant occupied a position of trust.” (internal quotation

marks omitted)). Lindsey was employed as a mortgage loan officer and a team

                                           5
leader for his mortgage group, and he used that position of authority to perpetrate

the scheme.

      5. The district court did not abuse its discretion in applying the sophisticated

means enhancement. Under U.S.S.G. § 2B1.1(b)(10)(C), the district court may

increase the offense level by two for crimes of “sophisticated means,” defined as

an “especially complex or especially intricate offense conduct pertaining to the

execution or concealment of an offense,” including, for example, soliciting

operations in a separate jurisdiction. Id. § 2B1.1, cmt. n.9(B). This enhancement

applies when the criminal scheme is extensively planned and is more sophisticated

than a routine offense. United States v. Aragbaye, 234 F.3d 1101, 1108 (9th Cir.

2000), superseded by statute on other grounds as recognized by United States v.

McEnry, 659 F.3d 893, 899 n.8 (9th Cir. 2011). Lindsey was convicted of

operating a scheme in which he solicited straw buyers from other states, paid them

for their identities, and controlled the mortgaged properties to generate income.

This scheme was extensively planned and more sophisticated than a routine

mortgage fraud.

      6. The district court found that Lindsey perjured himself during trial and

applied an obstruction of justice enhancement, but did not explain at sentencing

why the perjury was material or willful. Accordingly, we must vacate the sentence

                                          6
and remand for the district court to fully explain its reasoning on the enhancement.

See United States v. Jimenez-Ortega, 472 F.3d 1102, 1103 (9th Cir. 2007) (per

curiam).

      7. We also vacate the amount of restitution and remand for further

proceedings. The Presentence Report and testimony at sentencing suggests that the

victims in this case are the financial institutions that suffered losses at the time of

foreclosure, as opposed to the lenders who made the original loans. The correct

restitution calculation in this circumstance begins with the amount the victim paid

for the loan and/or collateral, and subtracts the amount recouped from the resale of

the collateral at foreclosure. See United States v. Luis, 765 F.3d 1061, 1067 (9th

Cir. 2014); see also Robers v. United States, 134 S. Ct. 1854, 1856 (2014).

However, Agent Burris’ testimony regarding the calculation of restitution is not

entirely clear. We cannot discern from the record whether the victims purchased

loans or collateral properties, or both. Also, it is not clear whether Agent Burris

began her calculations with the original loan amount, or with the amount the

second financial institution paid for the loan and/or collateral. If Agent Burris’

calculations began with the original loan amount, then the restitution calculation

was erroneous. Accordingly, we remand for the district court to recalculate the

amount of restitution in accordance with Luis and Robers.

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      8. Lindsey has also filed a motion for bail pending appeal. See Fed. R. App.

P. 9(b).1 The district court found that Lindsey had not shown by clear and

convincing evidence that he was not a danger to the safety of any other person or

the community, or that he was not likely to flee. See 18 U.S.C. § 3143(b)(1)(A).

We review these findings for clear error, see United States v. Handy, 761 F.2d

1279, 1283 (9th Cir. 1985), and conclude that the district court’s conclusions were

not clearly erroneous.

      In United States v. Reynolds, we held that “danger may, at least in some

cases, encompass pecuniary or economic harm.” 956 F.2d 192, 192 (9th Cir. 1992)

(order). This is an appropriate case in which to conclude that the economic or

monetary harms caused by Lindsey show his dangerousness. Lindsey ran an

elaborate mortgage fraud scheme that targeted vulnerable and impoverished

individuals and convinced them to act as straw buyers for properties in Las Vegas.

He also stole their identities and purchased other properties without their

knowledge. When the scheme caused foreclosures on the properties, Lindsey

profited while lenders lost money and the straw buyers were left with ruined credit.

      1
        Although on appeal Lindsey erroneously labeled this a motion pursuant to
Fed. R. App. P. 9(a), which describes the standard for release before judgment of
conviction, we construe it as a Fed. R. App. P. 9(b) motion, as this is a post-
conviction motion.

                                          8
This conduct shows that Lindsey is a danger to individuals and the community, and

that the district court’s findings were not clearly erroneous. We reject the

challenge on appeal to the district court’s denial of bail pending appeal.

      AFFIRMED IN PART, VACATED AND REMANDED IN PART.

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