Court Opinion

ID: 2965375
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:39:16.133958+00
Date Added: 2024-06-11T11:34:59.978236
License: Public Domain

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<pre>         United States Court of Appeals <br>                      For the First Circuit <br>                       ____________________ <br> <br>No. 97-1274 <br> <br>                          UNITED STATES, <br> <br>                            Appellee, <br> <br>                                v. <br> <br>                        KARLA LEE GRAHAM, <br>                      A/K/A KARLA ZAHORUIKO, <br> <br>                      Defendant - Appellant. <br> <br>                       ____________________ <br> <br>           APPEAL FROM THE UNITED STATES DISTRICT COURT <br> <br>                FOR THE DISTRICT OF NEW HAMPSHIRE <br> <br>          [Hon. Paul J. Barbadoro, U.S. District Judge] <br> <br>                       ____________________ <br> <br>                              Before <br> <br>                      Boudin, Circuit Judge, <br> <br>Godbold and Cyr, Senior Circuit Judges. <br> <br>                      _____________________ <br> <br>    Bjorn Lange, Assistant Federal Defender, Federal Defender <br>Office, for appellant. <br>    Jean B. Weld, Assistant United States Attorney, with whom <br>Paul M. Gagnon, United States Attorney, was on brief for appellee. <br> <br> <br> <br>                       ____________________ <br> <br>                          June 5, 1998 <br>                       ____________________

          GODBOLD, Senior Circuit Judge.  Karla Graham appeals from <br>her conviction and sentence for making false statements in loan <br>documents presented to a federally insured bank in violation of 18 <br>U.S.C.  1014.  We affirm both. <br>               I.  Factual and Procedural History <br>          The jury was entitled to find the following facts, either <br>as undisputed or based on sufficient evidence. <br>          Between 1987 and 1989 Karla Graham worked as a mortgage <br>account executive for Dime Real Estate Services of New Hampshire <br>(Dime-NH)a wholly owned subsidiary of Dime Savings Bank of New York <br>(Dime-NY) that provided residential mortgage loans.  Graham <br>originated the loans and was paid on commission.  During this time <br>the bank had a low-documentation lending program that approved loan <br>applications without verification of income, employment or assets <br>as long as the borrowers could make a twenty percent down payment <br>with their own funds.  Graham and her co-defendants found ways to <br>avoid the down payment requirement and submitted fraudulent loan <br>applications to the bank's underwriters in Massachusetts (Dime-MA).  <br>Dime-NY provided the funds for these mortgages, and all mortgages <br>were eventually assigned to Dime-NY.  Dime-NY is a federally <br>chartered savings bank with deposits insured by the Federal Deposit <br>Insurance Corporation (FDIC). <br>          After a large scale investigation into Dime's operations, <br>a federal grand jury returned a sixty-count indictment against <br>Graham and six co-defendants.  Graham was charged in eleven counts <br>of the indictment.  Two of these counts were severed and later <br>dismissed by the government.  Graham was tried by a jury on the <br>remaining counts.  Count 1 charged her with conspiring to make <br>false statements for the purpose of influencing Dime-NY on loan <br>applications in violation of 18 U.S.C.  371.  Counts 17 through 26 <br>charged her with knowingly submitting materially false statements <br>on ten different loan applications, HUD-1 Settlement Statements, <br>and Fannie May Affidavits for the purpose of influencing Dime-NY in <br>violation of 18 U.S.C.  1014.  The jury returned a verdict of <br>guilty on counts 18 and 25 and not guilty on the remaining counts.  <br>The district court sentenced her to eighteen months imprisonment on <br>each count to be served concurrently and a term of one year <br>supervised release. <br>                  II.  Discussion of the Issues <br>A.  Selective Prosecution and Conflict of Interest <br>          Graham asserts that her conviction violated her right to <br>due process because it was the product of selective prosecution on <br>the part of the government.  She maintains that the district court <br>erred in failing to hold an evidentiary hearing on the issue of <br>selective prosecution.  Graham points to the fact that Dime Bank- <br>New York was not indicted on criminal charges after it gave a <br>$2,000,000 donation to a nonprofit housing program in Manchester, <br>New Hampshire.  She also notes that the U.S. Attorney in charge of <br>the case resides in the New Hampshire community that received the <br>donation.  Further complicating this picture is the fact that Dime- <br>NY was partially owned by the FDIC and that the decision not to <br>indict the bank came just before a successful public offering of <br>shares in the bank, thus benefitting the FDIC by ensuring that the <br>sale would not be marred by threats of future criminal liability.  <br>By cumulating all of these circumstances, Graham suggests that she <br>was selectively prosecuted either because she did not have the <br>wealth to avoid criminal liability through civic contributions or <br>because a government conflict of interest kept the bank from being <br>prosecuted. <br>          An improper selective prosecution arises when a defendant <br>"has been singled out for prosecution when others similarly <br>situated have not been prosecuted and the prosecutor's reasons for <br>doing so were impermissible."  U.S. v. Magana, 127 F.3d 1, 8 (1st <br>Cir. 1997); see also U.S. v. Peagarcano-Soler, 911 F.2d 833, <br>837-38 (1st Cir. 1990).  The prosecutor is presumed to have acted <br>"in good faith for reasons of sound governmental policy." <br>Peagarcano-Soler, 911 F.2d at 837 (citing U.S. v. Saad, 652 F.2d <br>1126, 1135 (1st Cir. 1981)).  But if the defendant alleges facts <br>that tend to show that she has been selectively prosecuted and that <br>raise a reasonable doubt about the propriety of the government's <br>purpose, then she is entitled to an evidentiary hearing unless the <br>government "puts forward adequate countervailing reasons to refute <br>the charge and . . . the court is persuaded that the hearing will <br>not be fruitful."  U.S. v. Goldberg, 105 F.3d 770, 776 (1st Cir. <br>1997) (internal quotations and citations omitted). <br>          Although Graham may have presented enough evidence to <br>create a prima facie case of selective prosecution by suggesting <br>that the bank's monetary charitable contribution precluded its <br>prosecution, the government refuted this presumption with adequate <br>reasons for its decisions.  Specifically the government offered a <br>list of eight factors it considered in its decision not to indict <br>Dime-NY:  (1) Dime's merger with Anchor in 1995; (2) the fact that <br>current senior management was not in those positions during the <br>years of suspected criminal activity; (3) the bank and its <br>shareholders had suffered significant losses from the fraudulent <br>conduct of former employees; (4) the newly formed institution had <br>implemented stringent fraud detection procedures; (5) the <br>rehabilitative step of contributing $2,000,000 to the Manchester <br>Neighborhood Housing Services, Inc.; (6) the implementation of the <br>Dime Borrowers Associations Borrowers Assistance Program II; (7) <br>payment of $150,000 to the Dime Borrowers Associations; and (8) the <br>continued cooperation of Dime-NY in the ongoing grand jury <br>investigation. <br>          The district court considered this list of factors and <br>found that it adequately explained the government's actions and <br>that no evidentiary hearing on the issue of selective prosecution <br>was needed.  The court further found that the accusations of <br>government conflict of interest were not substantial enough to <br>raise any presumption of prosecutorial misconduct.  <br>          We review a district court's decision not to hold an <br>evidentiary hearing on selective prosecution for abuse of <br>discretion.  Goldberg, 105 F.3d at 776 (citing U.S. v. Gary, 74 <br>F.3d 304, 313 (1st Cir.), cert. denied, 116 S. Ct. 2567 (1996)).  <br>In deciding whether the district court should have granted an <br>evidentiary hearing on the issue of selective prosecution we are <br>faced with a "judgment call--tempered on appeal by the deferential <br>standard of review--as to the force and specificity of the <br>allegations, the strength of the response, and the likelihood that <br>a hearing would be helpful."  Goldberg, 105 F.3d at 776 (citing <br>U.S. v. Lpez, 71 F.3d 954, 963-64 (1st Cir. 1995), cert. <br>dismissed, 117 S. Ct. 38 (1996)).  In this case the district court <br>carefully considered both Graham's allegations and the government's <br>explanation before denying an evidentiary hearing. <br>          Although the timing of the donation may have created a <br>reasonable doubt about the propriety of the government's purpose, <br>we agree that the government adequately refuted the charge so that <br>a hearing was not necessary.  Furthermore we also agree that <br>Graham's allegation of conflict of interest concerning the FDIC's <br>financial interest in the bank does not create a presumption of <br>improper prosecutorial selection.  We have found no case law to <br>support the preclusion of the Department of Justice from cases <br>involving banks in which the FDIC has an interest.  Accordingly, we <br>find no abuse of the district court's discretion in denying <br>Graham's request for an evidentiary hearing or in denying her <br>motion to dismiss. <br>B.  Sufficiency of the Opening Statement <br>          Graham contends that she should have been granted a <br>judgment of acquittal after the government's opening statement <br>because it failed to point to proof for every element of each count <br>contained in the indictment.  Graham concedes that the government <br>did mention proof for the elements of the two counts upon which she <br>was convicted.  The decision to grant a motion for acquittal after <br>a prosecutor's opening statement is discretionary and should be <br>made only where the statement contains a clearly admitted fact that <br>must defeat its case.  See U.S. v. Ingraldi, 793 F.2d 408, 414 (1st <br>Cir. 1986); U.S. v. Capocci, 433 F.2d 155, 158 (1st Cir. 1970). <br>Furthermore, we have held that a district court's denial of a <br>motion for acquittal on the basis of the government's opening <br>statement is not reviewable and that any error in this respect can <br>be raised in a challenge to the sufficiency of the evidence. <br>Ingraldi, 793 F.2d at 414. <br>          Graham asserts that the district court erred by failing <br>to recognize its discretion to grant the motion.  Instead the <br>district court correctly recognized that it did not have the <br>discretion to grant a motion for acquittal at the close of the <br>government's opening statement in this situation.  The prosecutor <br>admitted no fact that clearly defeated the government's case.  <br>Failure to outline all of the evidence in the opening statement did <br>not create a right to an acquittal.  See Ingraldi, 793 F.2d at 414.  <br>In fact the government does not have an obligation to make any <br>opening statement.  Id. <br>          We have no power to review the denial of Graham's motion <br>for acquittal after the government's opening statement, but even if <br>we did, we would find that the district court did not err. <br>C.  Sufficiency of the Evidence <br>          Graham was convicted of violating 18 U.S.C.  1014, which <br>makes it unlawful to "knowingly make[] any false statement or <br>report, or willfully overvalue[] any land, property or security, <br>for the purpose of influencing in any way the action of . . . any <br>institution the accounts of which are insured by the Federal <br>Deposit Insurance Corporation."  18 U.S.C.  1014.  Graham contends <br>that her conviction was insufficiently supported because the <br>government failed to prove that she purposefully sought to <br>influence a federally insured bank.  Dime-NH, out of which Graham <br>operated, is not insured by the FDIC.  She contends that at the <br>most, the evidence showed that she intended to influence Dime-NH or <br>Dime-MA, which approved the mortgage applications.  However Dime-NH <br>and Dime-MA are wholly owned subsidiaries of Dime-NY, which is a <br>federally insured institution.  Dime-NY was the entity actually <br>financing all of Graham's mortgages and all mortgages were <br>eventually assigned to it.  Nonetheless, Graham asserts that <br>because she was based in New Hampshire and submitted all of her <br>documents to the Dime-NH office, the government failed to prove <br>that her purpose was to influence a federally insured bank. <br>          Graham's assertion fails for two reasons.  First, this <br>court has held that "the government does not have to show the <br>alleged scheme was directed solely toward a particular institution;  <br>it is sufficient to show that defendant knowingly executed a <br>fraudulent scheme that exposed a federally insured bank to a risk <br>of loss."  U.S. v. Brandon, 17 F.3d 409, 426 (1st Cir. 1994) <br>(holding that "it is also unnecessary for the government to prove <br>that a defendant knows which particular bank will be victimized by <br>his fraud as long as it is established that a defendant knows that <br>a financial institution will be defrauded.") (citing U.S. v. Barakett, 994 F.2d 1107, 1110-11 (5th Cir. 1993); U.S. v. Morgenstern, 933 F.2d 1108, 1114 (2d Cir. 1991)).  In this case as <br>in Brandon, proof that Graham knew she was defrauding a bank was <br>sufficient to prove a violation of the statute. <br>     Second, even if the statute required that the government <br>prove that Graham knew she was fraudulently influencing a federally <br>insured bank, the evidence offered by the government was sufficient <br>to do so.  Graham was a loan originator for Dime-NH, and she had <br>been sent to training at Dime-NY.  The evidence showed that at this <br>training she was informed of the history and structure of Dime Bank <br>and was given instruction on all of its loan programs.  In fact <br>Graham admitted that she often relied on Dime Bank's size and <br>prominence to solicit new borrowers.  Given the small size of the <br>New Hampshire operation, she must have been referring to its <br>parent, Dime-NY.  Graham was not an unsophisticated private <br>borrower, but an employee of Dime Bank specifically instructed on <br>how the loan process worked.  This circumstantial evidence was <br>sufficient to prove that she understood that Dime-NY ultimately <br>provided the funding for the loans although they originated in New <br>Hampshire and were approved by Dime-MA. <br>     The government offered sufficient evidence to support <br>Graham's convictions under 18 U.S.C.  1014. <br>D.  The Court's Questioning of the Witnesses <br>     Graham contends that the trial court's questioning of <br>certain witnesses deprived her of a fair trial and created <br>prejudice in favor of the government.  Because Graham failed to <br>contemporaneously object to the court's comments, we review the <br>district court's questioning for plain error.  Fed. R. Crim. P. <br>52(b). <br>     "A trial judge retains the common law power to question <br>witnesses and to comment on the evidence."  U.S. v. Gonzlez- <br>Soberal, 109 F.3d 64, 72 (1st Cir. 1997)(citations omitted).  After <br>reviewing the instances of which Graham complains we find no error <br>on the part of the district court.  At most, the court sought to <br>clarify testimony given by the witnesses in question and helped to <br>move the proceedings along in an orderly fashion.  Considering the <br>wide latitude granted a trial judge in managing a trial, we find no <br>error so obvious that it could rise to the level of substantial and <br>fundamental prejudice required by plain error review.  See U.S. v. Ortiz, 23 F.3d 21, 26 (1st Cir. 1994) (discussing plain error <br>standard of review). <br>E.  Loss Calculation for Sentencing <br>     Although the two counts on which Graham was convicted <br>involved no loss to the victim, she was sentenced based on related, <br>acquitted conduct after the district court found by a preponderance <br>of the evidence that she had participated in a conspiracy that <br>resulted in a loss of $1.46 million to the victim.  This loss <br>resulted in a total offense level of 17 which imposes a sentencing <br>range of 24-30 months.  After Graham pointed out that the loss <br>attributed to her was substantially higher than the loss attributed <br>to other similarly situated defendants who had cooperated with the <br>government, the government recommended a downward departure for <br>Graham on the ground that the loss figure overstated her <br>culpability.  The district court agreed and granted Graham a two- <br>level downward departure resulting in a sentence of 18 months on <br>each count to be served concurrently.  <br>     Graham contends that the disparity in loss calculations <br>violated her right to due process and equal protection because it <br>was the result of sentencing factor manipulation.  In response to <br>the district court's questioning on this issue, the government <br>explained that any disparity was the result of early guilty pleas <br>and cooperation agreements by other defendants.  The district <br>court accepted this explanation and Graham did not specifically <br>object to this ruling or ask for an evidentiary hearing on the <br>issue.  We find no plain error in the district court's decision. <br>     Even assuming that Graham could prove that the government <br>improperly manipulated her loss calculation, the district court's <br>downward departure remedied her grievance.  "[W]here government <br>agents have improperly enlarged the scope or scale of the crime, <br>the sentencing court 'has ample power to deal with the situation <br>. . . by departing from the [guideline sentencing range].'"  U.S.v. Montoya, 62 F.3d 1, 3 (1st Cir. 1995) (quoting U.S. v. Connell, <br>960 F.2d 191, 196 (1st Cir. 1992)).  To the extent that Graham's <br>appeal suggests that the departure was inadequate, absent an error <br>of law this court has no jurisdiction to consider the extent of a <br>permitted departure.  U.S. v. Webster, 54 F.3d 1, 4 (1st Cir. <br>1995).  We find no such error of law. <br> <br>                         III. Conclusion <br>     We AFFIRM Graham's conviction and sentence under 18 <br>U.S.C.  1014.</pre>

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