The opinion of the court was delivered by: Matthew F. Kennelly, District Judge
The Court issues this Memorandum Opinion to elaborate upon the grounds upon which it excluded certain evidence in defendant Yasmeen Sturdivant's trial for wire fraud. The Court made an oral ruling excluding the evidence on the afternoon of Friday, January 9, 2009, after hearing extensive argument. Defense counsel then moved for a mistrial on the ground that given the volume and prejudicial nature of the excluded evidence, the jury could not be expected to put it aside even if instructed to do so. The Court granted defense counsel's motion. This Memorandum Opinion is being issued on Wednesday, January 13, 2009.
The indictment in this case charged Yasmeen Sturdivant and her husband, Steven Sturdivant, with wire fraud, and also charged Mr. Sturdivant with bankruptcy fraud. Mr. Sturdivant entered a guilty plea and did not go to trial; he awaits sentencing.
The indictment alleged that from 1996 through March 2006, Mr. and Ms. Sturdivant schemed to defraud nine named lenders in connection with mortgage loans, by intentionally misrepresenting their income, assets, debts, and liabilities, the purchase prices for the properties and the down payments they provided to the sellers, and their intention to repay the loans. The indictment further alleged the following particulars:
-the defendants falsified their employment income to make it appear they qualified for the loans they sought;-they provided false and altered tax returns to substantiate their false statements about their income;-they inflated the purchases prices of two of the properties to increase the amounts they could borrow;-they falsely represented they had provided certain funds as down payments;-they submitted altered checks to support their claims about the down payments;-they overstated the rental income that two of the properties generated;-they provided false information about their bank balances;-they caused checks to be disbursed on two of the loans, in 1998, to "Yasmeen Khan" to disguise their receipt of the check, to repay a nonexistent first mortgage in one instance and as nonexistent earnest money in another instance;-they stalled collection efforts by filing multiple bankruptcy cases;-they refinanced the loans in greater amounts than they owed on earlier loans to obtain proceeds for themselves;-they conducted a "sham sale" of one property in 2005 to generate proceeds for themselves and to pay off a loan; and
-Mr. Sturdivant quitclaimed his interests in the properties to Ms. Sturdivant to stave off collection efforts.
The three wire fraud charges alleged wire transfers that took place on various dates 2005 and 2006.
The evidence at trial concerned purchases of, and mortgage loans on, four properties. The properties were located on South Kimbark Avenue in Chicago, South Dorchester Avenue in Chicago, South Greenwood Avenue in Dolton, and Sara Court in Crete. With regard to the Kimbark property, an apartment building, the government offered evidence concerning the purchase of the property in 1998, a refinancing in 2002, and another refinancing in 2006. The government's evidence concerning the Dorchester property, a two-flat building, involved its purchase in 1998, a refinancing in 2004, and the alleged "sham sale" in 2005. With regard to the Greenwood property, the government's evidence concerned the purchase of the property in 1998. The government's evidence regarding the Sara Court property involved its purchase in 2005.
The evidence that the Court excluded involved, primarily, the 1998 and 2002 transactions. In each of the 1998 transactions, Mr. Sturdivant purchased the property in his name alone. In addition, and significantly for present purposes, Mr. Sturdivant applied for and obtained financing in his own name for each of those purchases. There was no evidence that Ms. Sturdivant applied (either herself or jointly) for financing in connection with the 1998 transactions or that she took title of any of the properties in 1998 either in her own name or jointly with Mr. Sturdivant. The same was true of the 2002 refinancing of the Kimbark property; Mr. Sturdivant applied for and obtained the refinancing exclusively in his own name. In other words, the claimed false statements to lenders in 1998 and 2002 were made in loan applications that Mr. Sturdivant signed and submitted to obtain financing in his name alone.
The evidence regarding the 2004-2006 transactions was different. At the time of each of those transactions, Ms. Sturdivant owned the property (Mr. Sturdivant having deeded it over to her) or was purchasing it. The applications for financing were made in her name. The Court did not exclude the government's evidence regarding these transactions.
Over half the government's evidence (in terms of the time consumed to present it) concerned the 1998 and 2002 transactions in which Mr. Sturdivant was the sole borrower. Among other things, the government offered voluminous evidence that Mr. Sturdivant's 1998 and 2002 loan applications--which, again, he made exclusively in his own name--included a myriad of false representations regarding his income, employment, and various other matters. The government offered no evidence that Ms. Sturdivant completed or assisted in completing those loan applications. (It did offer some evidence concerning her involvement in two closings and one purchase negotiation, a topic to which the Court will return shortly.)
The government also offered evidence that Mr. Sturdivant filed six bankruptcy petitions: one in 1999, two in 2000, one in 2003, one in 2004, and one in 2005. As noted earlier, the government contended that the petitions were part of an effort to stave off lenders' efforts to collect mortgage loans that Mr. Sturdivant had earlier obtained. Mr. Sturdivant--the sole obligor on those mortgage loans--filed the bankruptcy petitions exclusively on his own behalf. The government offered no evidence that Ms. Sturdivant was involved in the preparation or filing of any of the petitions. The bankruptcy evidence was part of what the Court excluded in its oral ruling.
In addition, the government offered evidence that starting in 2003, Mr. Sturdivant, at the time the sole owner of the three properties then at issue, quitclaimed his interests in the properties to Ms. ...