Court of Appeals of Illinois, First District, First Division
[Copyrighted Material Omitted]
Appeal from the Circuit Court of Cook County. No.11 CR 2035-01. Honorable Stephen J. Connolly, Judge Presiding.
On appeal from defendant's convictions for organizing a continuing financial crimes enterprise and predicate convictions for theft by unauthorized control, theft by deception, and loan fraud, the appellate court held that defendant failed to establish that the " organizer of a continuing financial crimes enterprise" statute was unconstitutionally vague as applied to him, that the trial court properly admitted certain loan files as business records, and that defendant was guilty of two counts of being an organizer of a continuing financial crimes enterprise, but one count of being an organizer of a continuing financial crimes enterprise and three predicate convictions of theft by unauthorized control were vacated and the cause was remanded for resentencing.
Marc Martin, Ltd., Chicago, IL, (Marc W. Martin, of counsel), for APPELLANT.
The Law Offices of John J. Eannace, Palos Heights, IL, (John J. Eannace, of counsel), for APPELLANT.
Anita Alvarez, State's Attorney, County of Cook, Richard J. Daley Center, Chicago, IL, (Alan J. Spellberg, Michael Z. Zhu and Brian K. Hodes, of counsel), for APPELLEE.
JUSTICE HARRIS delivered the judgment of the court, with opinion. Justices Cunningham and Connors concurred in the judgment and opinion.
[¶1] The circuit court convicted defendant, Emad Zaibak, after a bench trial of three counts of organizing a continuing financial crimes enterprise. 720 ILCS 5/16H-55 (West 2006). Those three counts, in turn, were based on defendant being convicted of the following predicate convictions: three counts of theft by unauthorized control; three counts of theft by deception; and three counts of loan fraud. Defendant raises the following issues for our review: (1) whether the " organizer of a continuing financial crimes enterprise" statute (720 ILCS 5/16H-55 (West 2006)) is unconstitutionally vague; (2) whether the circuit court abused its discretion when it admitted the contents of loan files from two banks, Washington Mutual and Harris Bank, as business records; (3) whether the State provided sufficient evidence to convict him of loan fraud (720 ILCS 5/16H-30 (West 2006)); and (4) whether the State provided sufficient evidence to convict him of being an organizer of a continuing financial crimes enterprise (720 ILCS 5/16H-55 (West 2006)). Additionally, the parties agree that defendant's conviction for being an organizer of a continuing financial crimes enterprise based on the three predicate convictions of theft by unauthorized control should be vacated. The parties, however, disagree on whether the matter needs to be remanded for resentencing.
[¶2] We hold defendant has not satisfied his burden of proving that the " organizer of a continuing financial crimes enterprise" statute (720 ILCS 5/16H-55 (West 2006)) is unconstitutionally vague as applied to him. Further, the circuit court did not abuse its discretion when it admitted the contents of the respective loan files as business records, and the State presented sufficient evidence showing defendant committed loan fraud (720 ILCS 5/16H-30 (West 2006)) and two counts of being an organizer of a continuing financial crimes enterprise (720 ILCS 5/16H-55 (West 2006)). We agree with the parties that one of defendant's convictions for being an organizer of a continuing financial crimes enterprise, and the three predicate convictions of theft by unauthorized control that the conviction is based on, must be vacated. Therefore, we vacate those convictions and remand the matter to the circuit court solely for resentencing.
[¶4] The circuit court sentenced defendant on October 19, 2012. Defendant timely filed his notice of appeal on October 20, 2012. Accordingly, this court has jurisdiction pursuant to article VI, section 6, of the Illinois Constitution and Illinois Supreme Court Rules 603 and 606, governing appeals from a final judgment of conviction in a criminal case entered below. Ill. Const. 1970, art. VI, § 6; Ill. S.Ct. Rs. 603, 606 (eff. Feb. 6, 2013).
[¶6] A grand jury charged defendant and others with 33 fraud-related counts involving 10 real estate loans on 8 properties. Codefendants Ocie Johnson, John Bobak, and Omar Alzaibak entered guilty pleas and executed cooperation agreements. After defendant waived his right to a jury trial, the circuit court conducted a bench trial on 12 counts, based on three 2007 financial transactions involving two properties: a mortgage and a home equity line of credit for property located at 106 Forest Edge, in Palos Park, Illinois; and a mortgage for property located at 221 Sawgrass in Palos Heights, Illinois. Codefendants
Sam Elayyan and Nate Morgan were also tried with defendant, although Elayyan had a jury trial. Relevant here, counts IX, XI, and XIII of the indictment against defendant alleged theft by deception. Those counts served as the predicate to count II, which alleged defendant was an organizer of a continuing financial crimes enterprise. Counts XXVI through XXVIII alleged defendant committed loan fraud, and also served as the predicate for count III, which contained another allegation against defendant for being an organizer of a continuing financial crimes enterprise.
[¶7] The Lending Center and Silver Key Lending and Investment Group
[¶8] Around 2004, defendant and his colleague John Kocher opened a mortgage brokerage, The Lending Center, as equal partners. Defendant became the president of the organization. The Lending Center served as a loan originator, but did not underwrite loans. Eventually, Kocher and defendant's relationship deteriorated, and Kocher dissociated himself from The Lending Center in the spring of 2007. Kocher maintained a formal interest in the company until May 8, 2009.
[¶9] After defendant and Kocher's relationship ended, defendant opened up Silver Key Lending and Investment Group (Silver Key) with his childhood friend Youssef Allen. Defendant and Allen set up Silver Key's office at 744 North Wells Street, in Chicago, Illinois. At first, Silver Key had four employees: defendant, Allen, Stella Brown, and defendant's uncle Aimen Rafati. Stella Brown had worked as a loan processor for The Lending Center. Defendant later " started filling the office with people," including Nate Morgan. Brown did not remember what Morgan did, but recalls Rafati referred to Morgan as one of defendant's " boys."
[¶10] 106 Forest Edge Property
[¶11] John Bobak, a builder doing business as J.B. Builders, purchased a lot at 106 Forest Edge in Palos Park, Illinois, and built a home on it. He hired Laura Burns, a real estate agent, to sell the home. Defendant told Burns that he was interested in the house for his parents. Bobak showed defendant the house, which defendant liked. On May 5, 2007, defendant and Bobak met at Burns' office and negotiated a contract for the purchase of the property for $2.2 million, which included extras and improvements. Burns drafted the contract as a ministerial agent for both parties. The contract lists Bobak as the seller and defendant's father and codefendant, Omar Alzaibak as the buyer. The defendant is not a buyer in the contract. Bobak signed the contract and defendant, using his father's initials, initialized each page of the contract. At that time, Burns and Bobak had not met Alzaibak, and Alzaibak did not attend the meeting or provide any input to Burns about what should go into the contract.
[¶12] The contract designated The Lending Center as the mortgage company. Defendant arranged for Washington Mutual to provide $1.7 million in mortgage financing for Alzaibak. Defendant had Alzaibak sign the mortgage application, which Alzaibak did not read or understand. The application falsely stated that Alzaibak made $38,000 a month as the chairman of the board of Zaibak Center for Dentistry. Defendant's brother, Zyad Zaibak, operated a dental practice named Zaibak Center
for Advanced Dentistry, but he did not employ or pay Alzaibak. The application also falsely stated that Alzaibak made $30,000 a month as the chairman of Lina Enterprises. Alzaibak did own a grocery store in 2005 named Lina Enterprises, but he did not make $30,000 a month from operating it. The application also falsely stated Alzaibak shared a Harris Bank account with his ex-wife that had a balance of $855,322.81 on April 9, 2007, and $446,110.81 on May 9, 2007. Alzaibak admitted that the information on the loan application was not true. According to the application, Alzaibak also owned property at 14007 South 84th Street in Orland Park, Illinois, without encumbrance, which was untrue as he relinquished his interest in the property in 2002 by conveying it in a quitclaim deed to his ex-wife and defendant. Defendant falsely documented Alzaibak's financial condition with fabricated Harris Bank records showing the purchases of a $450,000 cashier's check; a remaining balance of $446,110, a false earnest money cashier's check, and a letter from Alzaibak's former accountant, Adnan Elhaj, of HAJ Financial, Inc., falsely attesting to Alzaibak's employment. Elhaj testified that the documents submitted using HAJ Financial's letterhead regarding Alzaibak's financial situation were false. He was never asked to prepare any letters regarding Alzaibak's finances to Washington Mutual or Harris Bank.
[¶13] On June 4, 2007, the closing occurred for the sale of the 106 Forest Edge property. The closing was a " dry closing" in that legal documents were signed but no money changed hands. Defendant, his parents, Rafati, Bobak, and Bobak's attorney were in attendance. Defendant directed Alzaibak what to sign and initial. Washington Mutual disbursed $1,767,853 to various parties, including: $1,063,324 to Archer Bank to pay Bobak's first mortgage; $611,598 to Bobak as seller's proceeds; $61,250 to Bobak's agent, Century 21; and $15,804 to The Lending Center. The proceeds that went to The Lending Center were deposited into defendant's personal account.
[¶14] Bobak, as reflected in the contract and the settlement sheet at closing, was to receive $450,000 in earnest money from Alzaibak. Defendant and Bobak agreed in advance that the contract would falsely state that Alzaibak tendered the $450,000 in earnest money in order to induce Washington Mutual into providing more funding than it typically would have done. The Washington Mutual loan file included a Harris Bank cashier's check that paid Bobak $450,000 earnest money that was used to apply for the mortgage at 106 Forest Edge. Bobak testified he had never seen the check before. Defendant and Bobak had a side agreement whereby Bobak would complete various improvements on the house for $100,000. Washington Mutual would have denied financing had this been part of the sale agreement. Bobak subsequently tried to collect from defendant and Alzaibak. He eventually placed an $80,000 lien on the house.
[¶15] Home Equity Line of Credit
[¶16] After the closing of 106 Forest Edge, defendant contacted Harris Bank manager Rami Haleem to obtain a home equity line of credit on the property. Defendant told Haleem the property was worth $2.65 million. Defendant explained in a June 7, 2007, email to Angel Ulan, a banker managed by Haleem, that he needed the home equity line of credit to be obtained quickly, stating: " My dad owns this house free and clear. However, we need [a home equity line of credit] as soon as possible. I have an investment coming up on the 15th of June that I will need close to million dollars for. Please help me in expediting this." Defendant sent
Ulan a uniform residential loan application and other documents for the home equity line of credit.
[¶17] The home equity line of credit loan application was submitted under a program that extended credit based on credit history as opposed to documentation. The application falsely identified Alzaibak as the senior vice president of The Lending Center for the previous 4 1/2 years. It also indicated that he earned $66,000 a month and had $700,000 in liquid assets. Defendant also sent Ulan a false settlement statement indicating that Alzaibak paid $1.75 million in cash and $450,000 in earnest money at closing. When Harris Bank ran Alzaibak's credit report on June 7, 2007, it had not yet reflected the $1.75 million mortgage to Washington Mutual because it usually takes about 30 days for a loan to appear on a credit report.
[¶18] Harris Bank approved a $1.4 million home equity line of credit to Alzaibak on June 15, 2007. On June 29, 2007, defendant directed Alzaibak to complete paperwork at an Orland Park, Illinois, branch of Harris Bank. Alzaibak, after completing the paperwork, authorized a request from defendant to have the entire home equity line of credit placed in defendant's Harris Bank account. On July 7, 2007, Harris Bank disbursed $1.4 million directly into defendant's checking account.
[¶19] Defendant, Alzaibak, and other family members moved into the home at 106 Forest Edge. Alzaibak was under the impression that defendant was making the mortgage payments. The mortgage went into default in less than a year.
[¶20] 221 Sawgrass Property
[¶21] Ocie Johnson earned $8 an hour in early 2007 and lived at his mother's house in Dolton, Illinois. Johnson boasted to Eric Peoples, an auto shop owner, that he had a good credit score. Peoples introduced Johnson to Nate Morgan later that week. Morgan, Johnson, and Peoples discussed his credit score and employment situation. Morgan told Johnson that they " could do business" due to his good credit score. Morgan asked Johnson to send him a copy of his driver's license and social security information, which Johnson did. Several weeks later, Morgan had Johnson open a credit card account at Home Depot. Morgan also had Johnson open an account up at J.P. Morgan Chase. When Johnson received his credit card in the mail, he gave it to Morgan.
[¶22] Several weeks later, Morgan drove Johnson to Silver Key's office at 744 North Wells Street in Chicago and met defendant. Defendant told Johnson that he helped people, including professional athletes, purchase houses. He gave Johnson his Silver Key business card. After Morgan and defendant talked with one another, defendant told Johnson that he had some papers for him to sign and initial. Upon Johnson's signing of the documents, Morgan turned them face side down. Morgan handed all of the documents to defendant. Johnson did not read or understand the documents he signed, but he was told by Morgan that the documents were for the house they were " getting." About a week later, Morgan called Johnson and informed him that a driver would pick him up. The driver drove Johnson to defendant's office, where Johnson met defendant and Morgan. Johnson signed more documents given to him by defendant. Morgan again collected the documents in the same manner as before and handed them to defendant.
[¶23] On September 7, 2007, Morgan drove Johnson to defendant's office. While driving, Morgan told Johnson that they were " about to get the house." After going to defendant's office, defendant, Johnson, Morgan, and one other person ...