Court Opinion

ID: 4090884
Source: CourtListenerOpinion
Date Created: 2016-10-19 21:00:35.11697+00
Date Added: 2024-06-11T14:36:06.930568
License: Public Domain

United States Court of Appeals
                       For the First Circuit

No. 16-1008

                      UNITED STATES OF AMERICA,

                              Appellee,

                                 v.

                        MICHAEL P. O'DONNELL,

                        Defendant, Appellant.

            APPEAL FROM THE UNITED STATES DISTRICT COURT
                  FOR THE DISTRICT OF MASSACHUSETTS

           [Hon. Douglas P. Woodlock, U.S. District Judge]

                               Before

                Torruella and Barron, Circuit Judges,
                      and Lisi,* District Judge.

     James L. Sultan, with whom Charles W. Rankin and Rankin &
Sultan were on brief, for appellant.
      Mark J. Balthazard, Assistant United States Attorney, with
whom Carmen M. Ortiz, United States Attorney, was on brief, for
appellee.

                          October 19, 2016

     *   Of the District of Rhode Island, sitting by designation.
            BARRON, Circuit Judge.            Michael O'Donnell appeals from

his conviction on one count under 18 U.S.C. § 1344, the Bank Fraud

Act.    We affirm.

                                         I.

            O'Donnell was indicted under the Bank Fraud Act (the

Act) on June 15, 2015.           The Act provides:

            Whoever knowingly executes, or attempts to
            execute, a scheme or artifice--

                   (1) to defraud a financial institution;
            or

                 (2) to obtain any of the moneys, funds,
            credits, assets, securities, or other property
            owned by, or under the custody or control of,
            a financial institution, by means of false or
            fraudulent pretenses, representations, or
            promises;

            shall be fined not more than $1,000,000 or
            imprisoned not more than 30 years, or both.

18 U.S.C. § 1344.

            The        indictment      alleged     that     O'Donnell     violated

subsections (1) and (2) of the Act.              Specifically, the indictment

alleged that he "knowingly executed and attempted to execute a

scheme and artifice to defraud Countrywide Bank, FSB, a federally-

insured financial institution, and to obtain money . . . and other

property owned by and under the custody and control of Countrywide

Bank,    FSB,     by     means    of    false    and      fraudulent    pretenses,

representations,         and   promises,   concerning       material    facts   and

matters in conjunction with a mortgage loan in the amount of

                                           - 2 -
$44,000    for     property       located    at      40   Harbor    Street,     Salem,

Massachusetts."

           Following indictment, O'Donnell waived his right to a

jury trial and opted for a bench trial.                   He also entered into a

stipulation.        The    stipulation       set     forth   the   following    facts

concerning the scheme alleged in the indictment.

           While        serving    as    a    self-employed        loan    originator

operating through his loan originator business, AMEX Home Mortgage

Corporation, O'Donnell completed loan applications and submitted

them to mortgage companies on behalf of individuals seeking to

purchase or refinance property.                 In 2007, O'Donnell sought to

defraud mortgage lenders in connection with the refinancing of the

property in Salem, Massachusetts referenced in the indictment.

           The scheme began with O'Donnell's efforts to obtain a

mortgage loan on a different property, which was owned by a woman

named   L.T.       In     connection     with      that   transaction,      O'Donnell

submitted a mortgage loan application containing false information

about L.T. to Homecomings Financial Network, Inc.                    O'Donnell also

paid, from a bank account controlled by AMEX, approximately $37,000

that L.T. was supposed to put down herself to secure the loan for

that property.

           After O'Donnell was successful in securing the mortgage

loan in L.T.'s name, O'Donnell then sought to secure a second

mortgage    loan     in     L.T.'s      name,      this   time     for    the   Salem,

                                             - 3 -
Massachusetts property named in the indictment.    O'Donnell sought

this loan in order to obtain the $37,000 that he had put down to

secure the first loan in L.T.'s name.

          O'Donnell submitted the application for this second loan

to a different entity from the one to which he had submitted the

application for the first loan.     The stipulation referred to the

entity to which O'Donnell submitted the second loan application as

follows: "Countrywide, where Countrywide Home Loans employees

underwrote and processed the application."

          This second loan application contained many of the same

false statements that were in O'Donnell's application for the first

loan in L.T.'s name.   O'Donnell also provided fraudulent responses

to various follow-up inquiries in the course of seeking this second

loan.   When this second loan closed, O'Donnell pocketed most of

the proceeds.

          The key issue at trial concerned whether O'Donnell's

fraudulent scheme to secure the second loan targeted Countrywide

Bank, FSB, as the indictment alleged, or only Countrywide Home

Loans, as O'Donnell contended.    The identification of the intended

target was crucial because O'Donnell stipulated that Countrywide

Bank, FSB was a "financial institution" within the meaning of the

Act, while the government did not dispute that Countrywide Home

Loans was not.

                                   - 4 -
            In ruling from the bench at the close of evidence, the

District Court explained that it had determined that the record

showed that O'Donnell was "on notice" that Countrywide Bank, FSB

was "part of this transaction in some form" in the second loan

transaction.    With that finding in place, the District Court then

found that O'Donnell was guilty of "attempt[ing]" to execute --

though not of actually executing -- a scheme or artifice described

in subsections (1) and (2) both because O'Donnell had intended to

defraud Countrywide Bank, FSB and because he had intended to obtain

money and property that was under Countrywide Bank, FSB's custody

and control.    This appeal followed.

                                 II.

            "We review a bench trial conviction de novo, examining

the facts and inferences in the light most favorable to the

verdict."     United States v. Ngige, 780 F.3d 497, 503 (1st Cir.

2015) (citing United States v. Tum, 707 F.3d 68, 69 (1st Cir.

2013)).     The ultimate question is whether "any rational trier of

fact could have found the essential elements of the crime beyond

a reasonable doubt."    United States v. Grace, 367 F.3d 29, 33 (1st

Cir. 2004) (quoting United States v. Casas, 356 F.3d 104, 126 (1st

Cir. 2004)).    "[T]his court need not believe that no verdict other

than a guilty verdict could sensibly be reached, but must only

satisfy itself that the guilty verdict finds support in a plausible

                                   - 5 -
rendition of the record."        United States v. Hatch, 434 F.3d 1, 4

(1st Cir. 2006).

            We start with the Supreme Court's most recent case

construing the Act, Loughrin v. United States, 134 S. Ct. 2384

(2014).    Loughrin makes clear that subsections (1) and (2) of the

Act set out two routes to proving criminal liability under the

statute. See id. at 2389-92. Loughrin also makes clear that proof

that the defendant violated either subsection is sufficient to

support a conviction under the Act.        Id.   Because we conclude that

the evidence in this case was sufficient to prove a violation under

subsection (1), we confine our analysis to what the evidence shows

regarding that portion of the Act.1        See United States v. Gaw, 817
F.3d 1, 4 (1st Cir. 2016) ("[W]e must affirm each count if the

evidence   is   sufficient   for   the    jury   to   have   convicted   [the

defendant] under any one of the relevant theories of liability

presented to the jury as to that count.").

            Under   subsection     (1),   a   defendant      who   "knowingly

executes or attempts to execute" a scheme or artifice to defraud

a "financial institution" violates the Act.2            O'Donnell contends

     1 Our prior cases did not always distinguish between the two
subsections of the statute in the way that Loughrin now requires.
     2 In contrast to subsection (1), under subsection (2),
Loughrin makes clear, the government must show that "the defendant
intend[ed] 'to obtain any of the moneys . . . or other property
owned by, or under the custody or control of, a financial
institution.'"   Loughrin, 134 S. Ct. at 2389 (quoting 18 U.S.C.
§ 1344(2)). Thus, under subsection (2), a defendant may be

                                      - 6 -
that because the District Court found him guilty under subsection

(1) only of "attempt[ing]" to defraud a financial institution

(rather than of actually "knowingly execut[ing]" such a scheme),

the government was required to show that O'Donnell specifically

intended to defraud Countrywide Bank, FSB and that he took a

substantial step towards doing so.        The government does not appear

to disagree.       The government instead simply contends that the

evidence sufficed to show that O'Donnell did specifically intend

just that.

              O'Donnell's contrary argument proceeds in the following

steps.   He    first   argues   that,   under   the   "attempt"   prong   of

subsection (1), the government had to prove that he specifically

intended to defraud a "financial institution."           He thus contends

that the government had to prove that he specifically intended to

defraud Countrywide Bank, FSB, and not simply Countrywide Home

Loans.   After all, the parties agree that only Countrywide Bank,

FSB is a "financial institution" under the Act.          For that reason,

convicted for violating the Act if he used fraudulent means to
attempt to obtain money or property that he knew was "owned by, or
under the custody or control of, a financial institution."
Loughrin, 134 S. Ct. at 2388 (citing 18 U.S.C. § 1344(2)). And,
a conviction on that basis is proper even if the defendant made no
"false or fraudulent pretenses, representations, or promises"
directly to the financial institution.     Id.  Still, under that
subsection, the government must show that the "moneys . . . or
other property" sought by the defendant were "owned by, or under
the custody or control of, a financial institution," which, in
this case, would be Countrywide Bank, FSB and not Countrywide Home
Loans. Id.

                                        - 7 -
an attempt to defraud Countrywide Home Loans would not be an

attempt to defraud a "financial institution" and thus would not be

a crime under subsection (1).

            O'Donnell then contends that the evidence shows that, at

most, Countrywide Bank, FSB "may have been involved in some way in

the transaction."   As a result, O'Donnell contends, he cannot have

been found guilty under subsection (1), because the evidence in

the record that supports a finding that O'Donnell knew that

Countrywide Bank, FSB was involved "in some way" is insufficient

to show that he specifically intended to defraud Countrywide Bank,

FSB.3

            To support this argument about the insufficiency of the

evidence, O'Donnell contends that the record reveals what he

characterizes as only a "perfunctory reference" to Countrywide

        3
       We note that the government expressly argued to the District
Court that a showing that there was a "risk of loss" to the
financial institution was required under subsection (1), and it
appears that the District Court made its finding of guilt under
subsection (1) on the understanding that a "risk of loss" showing
was required. O'Donnell does not challenge on appeal, however,
the "risk of loss" finding that the District Court made. We thus
treat as waived any argument by O'Donnell regarding the "risk of
loss" issue.    The first time he directly addresses the risk of
loss issue is in his reply brief, where he merely notes that the
Supreme Court may "illuminate the scienter requirement" for
subsection (1) in Shaw v. United States, 781 F.3d 1130 (9th Cir.
2015), cert. granted, 136 S. Ct. 1711 (2016). In Shaw, the Ninth
Circuit, post-Loughrin, held that a conviction under subsection
(1) does not require the government to prove a risk of loss to the
financial institution. Id. at 1136. Other circuits however, pre-
Loughrin, have reached the opposite conclusion. See, e.g., United
States v. Staples, 435 F.3d 860, 866 (8th Cir. 2006).

                                  - 8 -
Bank, FSB in the papers that he received in connection with his

application for, and the approval of, the second loan transaction.

He   also   notes   that   most   of   the   loan   documents   that   he   saw

referenced Countrywide Home Loans and not Countrywide Bank, FSB.

Further, he points out that the documents that he did see and that

referred to Countrywide Bank, FSB, also contained references to

Countrywide Home Loans.           Thus, he contends that, although the

evidence shows that he may have specifically intended to defraud

Countrywide Home Loans, the evidence that he knew of Countrywide

Bank, FSB's involvement in the transaction is simply too slight to

show that he specifically intended to defraud Countrywide Bank,

FSB.

             The first of the documents that O'Donnell received that

referred to Countrywide Bank, FSB, however, was not just any

document.     It was the loan conditions sheet, which contained the

loan's terms and the conditions for its approval.                  And that

document did not just contain any reference to Countrywide Bank,

FSB.   It made the following statement: "Thank you for submitting

your loan to Countrywide Bank, FSB.! We sincerely appreciate your

business."    (emphasis added).

             O'Donnell does not deny receiving this document.                In

fact, the record shows that he responded to the document by

supplying the specific and detailed information (fabricated though

it was) that the conditions sheet sought.

                                        - 9 -
            In addition, O'Donnell received another document that

referenced Countrywide Bank, FSB.              This second document was the

final loan approval document.             This document informed O'Donnell

that, by submitting the information requested by the conditions

sheet, he had met the requirements that it had set forth.                      And

this second document made the same statement that the conditions

sheet had made: "Thank you for submitting your loan to Countrywide

Bank, FSB.! We sincerely appreciate your business."               Moreover, the

record shows that, after receiving this second document, O'Donnell

received a check made out to his business in consequence of the

loan application's approval.

            Given the documents that O'Donnell concededly saw in

carrying out his fraudulent scheme, the nature of their references

to Countrywide Bank, FSB, and what the record shows about what

happened after he received each document, the record clearly

supports a finding that O'Donnell was aware that Countrywide Bank,

FSB -- and not just Countrywide Home Loans -- was involved in

approving the loan that O'Donnell was seeking to obtain through

fraudulent means.

            Moreover, O'Donnell received these documents referencing

Countrywide       Bank,   FSB   while    he   was   concededly    engaged     in   a

fraudulent scheme to secure a loan via false statements.                    And he

was,   by   his    own    account,   a   sophisticated    actor    in   the   loan

origination business.           He thus fairly could have been understood

                                         - 10 -
to have been aware, as we observed more than two decades ago, that

"financial transactions are becoming increasingly integrated and

complex" and that "the effects of fraudulent actions against one

institution      are    increasingly         likely     to    spill   over    and

detrimentally affect others."            Brandon, 17 F.3d at 427.            As a

result, the documents at issue sufficiently support the reasonable

inference that, because O'Donnell was "on notice" of Countrywide

Bank,    FSB's    involvement    in     the    loan's    approval,    O'Donnell

specifically intended to defraud Countrywide Bank, FSB and not

simply Countrywide Home Loans.           See United States v. Munyenyezi,

781 F.3d 532, 536 (1st Cir. 2015) (explaining that on sufficiency

review we must "tak[e] the evidence and reasonable inferences in

the light most helpful to the prosecution"); United States v.

Ortiz,   966 F.2d 707,   712    (1st    Cir.    1992)   (explaining    that

"factfinders may draw reasonable inferences from the evidence

based on shared perceptions and understandings of the habits,

practices, and inclinations of human beings").4

           To be sure, there is no evidence that O'Donnell was aware

that Countrywide Bank, FSB was a "financial institution."                    But,

     4 O'Donnell's contention that the loan at issue in this case
was not an "integrated transaction," as was true of the loan
involved in United States v. Edelkind, 467 F.3d 791, 798 (1st Cir.
2006), is beside the point. Here, the evidence was sufficient to
support a finding that O'Donnell had the specific intent to defraud
Countrywide Bank, FSB even if the transaction was not of that
"integrated" type, and nothing in Edelkind precludes such an
assessment of this record.

                                        - 11 -
there is no dispute that it is.         And we have long held that the

defendant need not have scienter of that necessary fact in order

to be found guilty under the Act.           See United States v. Brandon,

17 F.3d 409, 425 (1st Cir. 1994) ("The fact that it should turn

out    that    the   financial   institution    actually     defrauded      was

federally insured is a fortuitous stroke of bad luck for the

defendants but does not make it any less of a federal crime.").

Nor does anything in Loughrin hold otherwise, as the Court had no

occasion to address that question.             Thus, to the extent that

O'Donnell means to contend that Loughrin requires us to depart

from our precedent on this point, we see no basis for reaching

such a conclusion.

              O'Donnell   next   contends    that,   even    if     the   record

supports the inference that he specifically intended to defraud

Countrywide Bank, FSB, the government still had to show that he

took a "substantial step" towards executing that fraudulent scheme

in order for him to be convicted of "attempt[ing]" to execute such

a scheme.     But, as we have already pointed out, the record reveals

that   O'Donnell     responded   to   the    conditions     sheet    in   which

Countrywide Bank, FSB thanked him for submitting his loan by

sending fraudulent information in order to secure the loan.                 The

sending of such information in response to that request qualifies

as a "substantial step" because it is an act "of such a nature

that a reasonable observer, viewing it in context, could conclude

                                      - 12 -
beyond a reasonable doubt that it was undertaken with a design to

violate the statute."      See United States v. Dworken, 855 F.2d 12,

19-20 (1st Cir. 1988).

             In so concluding, we recognize that the record shows

that   O'Donnell    sent   his   response   containing    the   fabricated

information to Countrywide Home Loans -- rather than to Countrywide

Bank, FSB.     And we recognize, too, that the papers that O'Donnell

received in connection with the loan transaction referred to both

Countrywide Home Loans and to Countrywide Bank, FSB.            But, as we

have explained, the nature of the references in those documents to

Countrywide Bank, FSB are such that the record adequately supports

the inference that O'Donnell specifically intended to defraud that

latter entity and not simply the former one.             Thus, the record

sufficiently supports the finding that, by submitting fraudulent

information to secure the loan in response to the conditions sheet

that thanked O'Donnell for submitting his loan to Countrywide Bank,

FSB, O'Donnell was taking a substantial step in his attempt to

execute a fraudulent scheme directed at that same entity, even

though he sent the response itself to Countrywide Home Loans.

             Finally, O'Donnell argues that it was legally impossible

for him to commit attempted bank fraud if he did not commit the

completed crime, given that he specifically intended to defraud

only Countrywide Home Loans and that he was not found guilty of

doing anything more than attempting to defraud Countrywide Bank,

                                     - 13 -
FSB.   This contention necessarily rests, however, on the premise

that the evidence showing O'Donnell's awareness of Countrywide

Bank, FSB's involvement in the loan transaction is insufficient to

support   the   finding   that   O'Donnell   specifically   intended   to

defraud Countrywide Bank, FSB.       But, as we have explained, that

premise is mistaken, given the documents thanking O'Donnell for

submitting his loan to Countrywide Bank, FSB and O'Donnell's

admitted sophistication in the loan origination business. Thus,

O'Donnell's legal impossibility argument is without substance.

                                   III.

           For the foregoing reasons, the conviction is affirmed.

                                    - 14 -