Court Opinion

ID: 866864
Source: CourtListenerOpinion
Date Created: 2013-05-07 19:20:59.67269+00
Date Added: 2024-06-11T12:04:20.975246
License: Public Domain

Case: 11-16123        Date Filed: 05/07/2013       Page: 1 of 14

                                                                        [DO NOT PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS
                             FOR THE ELEVENTH CIRCUIT
                                   ___________________
                                       No. 11-16123
                                   ___________________
                          D.C. Docket No. 1:10-cr-20753-PAS-1

UNITED STATES OF AMERICA,
                                                             Plaintiff-Appellee,
                                              versus
NEIL FAGAN,
VELDORA ARTHUR,
PAMELA JOHNSON,
                                                             Defendants-Appellants.
                               ________________________
                      Appeals from the United States District Court
                          for the Southern District of Florida
                             ________________________

                                       (May 7, 2013)

Before MARCUS, BLACK, and SILER, * Circuit Judges.
SILER, Circuit Judge:

*
 Honorable Eugene E. Siler, Jr., United States Circuit Judge for the Sixth Circuit, sitting by
designation.
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      Defendants Neil Fagan, Veldora Arthur, and Pamela Johnson were convicted

of conspiracy to commit wire and mail fraud and several counts of mail fraud.

They appeal their convictions on multiple grounds including the denial of

severance and the sufficiency of the evidence. For the reasons that follow, we

AFFIRM.

                                         I.

      In 2005 and 2006, Fagan entered into several assignable real estate contracts

to purchase condominiums at the Hidden Bay complex in Aventura, Florida. He

ultimately assigned four contracts to three different buyers, including Arthur, for

considerably higher prices than he had negotiated with the sellers of each unit.

Johnson, through Service First Title, LLC, served as the settlement agent at each of

the four closings. Each transaction involved two different settlement statements

(HUD-1 form): one for the seller, listing the original contract price negotiated

between Fagan and the seller, and one for the lender, listing a much higher price.

The sellers were unaware that Fagan had assigned the contracts for a higher price.

In addition, each of the lender’s HUD-1s listed a non-existent, unrecorded second

mortgage held by either Regus Holdings, LLC or Land America Holdings and

Investment Group, LLC, both of which were owned and controlled by Fagan.

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      The loan applications handled by Johnson, and submitted to the lenders,

contained false information, including income, assets, and liabilities, about each of

the assigned buyers. Johnson falsely represented to the lenders that the closing

costs and escrow payments had been made prior to or during closing even though

these payments were made subsequent to the loan disbursements. In each sale,

after paying the seller the original contract price, Johnson disbursed the remaining

loan proceeds to Fagan, or one of his two companies, as a payoff for the mortgage

listed on the lender’s HUD-1 form. Fagan then used a portion of the proceeds to

pay closing costs and make escrow deposits. Fagan also made payments to the

assigned buyers, including Arthur, who never invested any of their own money in

the purchases. Johnson made several payments from the loan proceeds to her

mother.

      Fagan, Johnson, and Arthur were indicted and convicted for conspiracy to

commit wire and mail fraud and substantive offenses of mail fraud. Co-defendants

Patrick Brinson and Earl Silas, who were assigned buyers like Arthur, ultimately

pled guilty, while the others went to trial. Fagan was sentenced to 90 months’

imprisonment, and Johnson and Arthur were each sentenced to 57 months’

imprisonment.

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                                         II.

       All three defendants sought severance, or mistrial as a result of their joint

trial, either before or during trial, or both. The defendants argue on appeal that the

court erred by denying the motions. We review the district court’s decision for an

abuse of discretion. United States v. Lopez, 649 F.3d 1222, 1236 (11th Cir. 2011).

      The general rule “that defendants indicted together should be tried together .

. . is particularly applicable to conspiracy cases.” United States v. Cassano, 132

F.3d 646, 651 (11th Cir. 1998). Trial courts are required to “balance the rights of

the defendants and the government to a trial that is free from the prejudice that may

result from joint trials against the public’s interest in efficient and economic

administration of justice.” United States v. Novaton, 271 F.3d 968, 989 (11th Cir.

2001) (internal quotation marks omitted). However, “potential for prejudice” is

not enough, and instead, the prejudice must be “compelling.” Lopez, 649 F.3d at

1234 (citing Zafiro v. United States, 506 U.S. 534, 538, 539-41 (1993)).

      The Supreme Court has indicated that joined defendants are only entitled to

severance in two situations: where there is a serious risk that a joint trial would

either (1) compromise a specific trial right of one of the defendants or (2) prevent

the jury from making a reliable judgment about guilt or innocence despite a

limiting instruction. Zafiro, 506 U.S. at 539; Lopez, 649 F.3d at 1234-35. Because

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the defendants have not alleged the denial of a specific trial right, they are limited

to showing that the jury was prevented from making a reliable judgment about

their guilt or innocence despite the limiting instructions that were given. Lopez,

649 F.3d at 1235.

      Each defendant argues that the court should have severed their trials because

of their mutually antagonistic defenses. Fagan’s defense was that his contract

assignments were negotiated at arms’ length, that he was not involved with the

lenders, and that his co-defendants fraudulently completed their loan applications

without his knowledge. Johnson’s defense was that she was an unknowing conduit

for the fraud of her co-defendants and at worst, she conducted her duties

negligently. Arthur’s defense was that she was given closing documents by Fagan,

that she signed them without reading them, and that she relied on Johnson to

properly conduct the closings. She argued that she was just trying to make an

investment and that Fagan was the sole mastermind behind the fraud.

      Even so, “[m]utually antagonistic defenses are not prejudicial per se,”

Zafiro, 506 U.S. at 538, because “co-defendants do not suffer prejudice simply

because one co-defendant’s defense directly inculpates another, or it is logically

impossible for a jury to believe both co-defendants’ defenses.” United States v.

Blankenship, 382 F.3d 1110, 1125 (11th Cir. 2004). Instead, “a defendant must

show that the joint trial caused him such compelling prejudice that he was deprived
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of a fair trial.” United States v. Hill, 643 F.3d 807, 834 (11th Cir. 2011) (citing

Zafiro, 506 U.S. at 537-41).

       The defendants have failed to make this showing. Johnson simply asserts

that their defenses were mutually antagonistic and therefore they suffered the

requisite prejudice.     This falls far short of showing “compelling prejudice.”

Fagan’s argument relies exclusively on pre-Zafiro cases and fails to recognize the

standard pronounced in Zafiro. Fagan has failed to give any specific examples of

how he or the other defendants suffered compelling prejudice as a result of the

joint trial.

       Arthur argues that she suffered specific prejudice because Fagan’s counsel

acted as a second prosecutor and pursued a closing argument against her that the

government chose to forgo or could not make in good faith. In order to grant a

new trial based on a co-defendant’s closing argument, we must find the argument

“both improper and prejudicial to a substantial right of the defendant.” United

States v. Garcia, 405 F.3d 1260, 1272 (11th Cir. 2005) (internal quotation marks

omitted).      When a curative instruction is given, we will reverse “only if the

evidence is so highly prejudicial as to be incurable by the trial court’s admonition.”

Id. (internal quotation marks omitted). Here, the court indeed instructed the jury

that opening and closing arguments by the lawyers were not evidence.

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      The comments Arthur complains of do not rise to the necessary level, as

indicated by the fact that Arthur’s counsel failed to object during Fagan’s closing

argument. Additionally, the district court gave the precise limiting instructions

suggested by the Supreme Court for use in a joint trial. See Zafiro, 506 U.S. at

540-41. This cured any potential prejudice because “juries are presumed to follow

their instructions.” Richardson v. Marsh, 481 U.S. 200, 211 (1987). Thus, the

district court did not abuse its discretion in denying the defendants’ requests for

severance and mistrial.

                                        III.

      We review the sufficiency of the evidence de novo, viewing the evidence in

the light most favorable to the verdict and making all inferences and credibility

determinations in favor of the verdict. United States v. Chirino-Alvarez, 615 F.3d

1344, 1346 (11th Cir. 2010).

      A.    Count One: Conspiracy

      Fagan and Johnson argue that the government failed to present sufficient

evidence to support their convictions for conspiracy in count one of the indictment.

The elements of conspiracy to commit mail or wire fraud include: “(1) agreement

between two or more persons to achieve an unlawful objective; (2) knowing and

voluntary participation in that agreement by the defendant; and (3) an overt act in

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furtherance of the agreement.” United States v. Broughton, 689 F.3d 1260, 1277

(11th Cir. 2012). “A defendant’s knowing participation in a conspiracy may be

established through proof of surrounding circumstances such as acts committed by

the defendant which furthered the purpose of the conspiracy.” United States v.

Vera, 701 F.2d 1349, 1357 (11th Cir. 1983). Thus, agreement and participation do

not have to be explicit, but may be “inferred from circumstantial evidence.”

United States v. Prince, 883 F.2d 953, 957 (11th Cir. 1989).

      The evidence presented at trial overwhelmingly supported the defendants’

convictions. There were wire transfers, faxes, and mailings connected to the fraud

in which both Fagan and Johnson knowingly participated. Additionally, both

Fagan and Johnson financially profited from the conspiracy. The circumstantial

evidence of Fagan’s otherwise unexplained payments to Brinson, $105,000, and

Arthur, $316,000, were enough to show that there was an agreement and that

Fagan participated in the scheme. Johnson’s three checks to her mother from the

loan proceeds of units 3615 and 3711, totaling approximately $22,000, necessarily

inculpated her in the scheme as well.

      B.    Counts Two through Five: Mail Fraud

       Mail fraud consists of “(1) an intentional participation in a scheme to

defraud a person of money or property, and (2) the use of the mails in furtherance

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of the scheme.” United States v. Downs, 870 F.2d 613, 615 (11th Cir. 1989).

Fagan and Arthur first argue that the government failed to present evidence that

there was an interstate carrier involved and that even if there was, the government

failed to prove what was sent and why.                 This argument is meritless.           The

government submitted evidence demonstrating that essential documents were

either sent via facsimile or mailed through an interstate carrier. Specifically, the

evidence at trial showed that documents necessary to the closings were sent via

Federal Express and DHL from Johnson to each of the lenders. The receipt of

these documents was verified by evidence showing that the lenders’ files included

the executed closing records.

       Second, Fagan and Johnson 1 argue that the evidence against them in counts

two through five was insufficient because they did not provide, or even know

about, the false information on the loan applications. They contend that they were

not involved in any agreement to defraud and that they were unaware of the other

co-defendants’ acts and intentions. These arguments are also meritless. The

evidence at trial overwhelmingly indicated that both Fagan and Johnson

intentionally participated in the scheme to defraud. For each sale, Johnson falsely

1
  Arthur has attempted to adopt the sufficiency arguments raised by her co-defendants.
However, “the fact-specific nature of an insufficiency claim requires independent briefing” to
reach the merits where the defendants performed different roles and the evidence against each
differs. United States v. Khoury, 901 F.2d 948, 963 n.13 (11th Cir. 1990). Accordingly,
Arthur’s attempt to adopt Fagan’s and Johnson’s sufficiency arguments is not allowed.
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represented to the lenders that closing costs and escrow payments were made

before or during closing. Additionally, Johnson included Fagan’s non-existent and

unrecorded mortgages on the lender’s HUD-1s for each sale.                 Johnson also

submitted two different HUD-1s for each sale, indicating vastly different prices

and non-matching mortgages. Most importantly, Johnson received approximately

$22,000 from Fagan for her participation in the scheme.

      For his part, Fagan accepted substantial loan disbursements for non-existent

mortgages and then used that money to pay the closing costs and escrow deposits

for properties in which he was not the purchaser. Additionally, Fagan allowed

Johnson to take approximately $22,000 of the loan proceeds for her part in the

scheme. Thus, the direct and circumstantial evidence presented against Fagan and

Johnson substantially supports their convictions for counts two through five.

                                         IV.

      The defendants have raised a litany of additional trial errors, some that were

objected to at trial, and some that were not. First, Fagan and Arthur contend that

the district court erred by limiting their presentation of evidence at trial, including

the court’s exclusion of testimony and Arthur’s polygraph evidence. We have

carefully reviewed the record and find this contention to be without merit. The

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court acted within its sound discretion when it excluded this evidence at trial.

United States v. Tobin, 676 F.3d 1264, 1272 (11th Cir. 2012).

      Next, Arthur argues that the government’s expert witness, Reuben

Schneider, made a comment on cross-examination that required a mistrial.

Schneider testified that he thought that the defense should have to prove that the

signatures purporting to be that of Arthur’s were in fact not hers. The court

admonished Schneider and gave the jury a curative instruction. Any error here was

cured by the court’s instruction. See Richardson, 481 U.S. at 211 (juries are

presumed to follow their instructions).

      Third, Arthur argues that the court committed reversible error when it failed

to timely give a curative instruction for the improper questioning of her character

witness, Kamal Rashad. Although the court did not immediately give a curative

instruction, Rashad’s refusal to accept the premise of the guilt-assuming

hypothetical question and the court’s curative instruction, given at the next day of

trial, rendered any error here harmless. See United States v. Guzman, 167 F.3d

1350, 1353-54 (11th Cir. 1999) (holding the government’s use of guilt-assuming

questions to a character witness on cross-examination to be a harmless error

because of the witness’s defusing response and the strong evidence against the

defendant).

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      Fourth, Arthur argues that the government made several improper comments

in its rebuttal during closing arguments. Some of the comments raised on appeal

were objected to at trial, while some were not. Claims of prosecutorial misconduct

ordinarily are reviewed de novo; however, if not raised below, review is limited to

plain error review. United States v. Merrill, 513 F.3d 1293, 1306-07 (11th Cir.

2008). For comments by the prosecutor during closing arguments to constitute

reversible prosecutor misconduct, the comments must have been improper and

there must be a reasonable probability that, but for the remarks, the outcome of the

trial would have been different. United States v. Eckhardt, 466 F.3d 938, 947

(11th Cir. 2006). We have carefully reviewed the record and find that any error

here was harmless and cured by the court’s curative instruction. Moreover, the

evidence against Arthur was overwhelming and thus reversal would be

inappropriate. See id.

      Fifth, Arthur argues that the district court’s rulings and comments

demonstrated an appearance of partiality and bias against her. To determine if a

judge gave the appearance of partiality or bias at trial we ordinarily review the

conduct for an abuse of discretion. United States v. Verbitskaya, 406 F.3d 1324,

1337 (11th Cir. 2005). However, because the objection was not raised below, the

claim is reviewed only for plain error. United States v. Rodriguez, 627 F.3d 1372,

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1379-80 (11th Cir. 2010).     We have carefully reviewed the record and find

Arthur’s contention to be without merit.

      Sixth, Arthur argues that the court should have given her proposed theory-

of-defense instruction. We review rulings on proposed jury instructions for an

abuse of discretion. Tobin, 676 F.3d at 1272. Arthur’s argument here is meritless.

“District courts have broad discretion in formulating jury instructions,” United

States v. Mintmire, 507 F.3d 1273, 1293 (11th Cir. 2007), and are “not bound to

use the exact words and phrasing requested by defense counsel,” United States v.

Gonzalez, 975 F.2d 1514, 1517 (11th Cir. 1992). Upon review, we “need only

ascertain whether the charge, when viewed as a whole, fairly and correctly states

the issues and the law.” Id. Here, the good faith instruction given by the court

sufficiently addressed Arthur’s defense according to the evidence that was

presented and the available defenses under the law.

      Seventh, Arthur asserts that the district court improperly commented about

making a record for appeal. Any error here was cured when the court clarified to

the jury that a clear record would need to be made for review, no matter the

outcome of the case.

      Eighth, Arthur contends that the government violated Rule 16 of the Federal

Rules of Criminal Procedure by failing to give her notice of its intent to introduce

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her 2006 federal tax return into evidence. Arthur has failed to show any prejudice

here. Although she claimed that she filed an amended return that would have

countered the government’s purpose for admitting the return—to show she was

hiding the $316,000 payment she received from Fagan—she failed to produce any

documentary evidence of an amended return or request further time to counter the

government’s evidence.

      Lastly, all three defendants argue that the accumulation of errors committed

at trial entitle them to a reversal of their convictions and a new trial. In light of the

small number of errors committed at trial, the curative and limiting instructions

given by the court, and the weight of the evidence against the defendants, we reject

this argument.

      AFFIRMED.

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