United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
VIRGINIA M. KENDALL, District Judge.
On February 21, 2013, a grand jury returned a two-count Indictment against Defendant James M. Vani charging him with wire fraud in violation of 18 U.S.C. § 1343 for his participation in in a mortgage fraud scheme. (Dkt. No. 1). Specifically, the Indictment alleged that Vani, as a mortgage loan officer, knowingly submitted mortgage loan applications containing materially false statements concerning the nominee buyer's employment, income, assets, liabilities, and intention to occupy the residence being purchased to mortgage lenders. ( Id. ). After a four-day trial, a jury convicted Vani of both counts. (Dkt. No. 119). Vani now moves for judgment of acquittal under Fed. R. Crim. P. 29, arguing that there was insufficient evidence demonstrating his actual knowledge of the falsity of any material statements found in the mortgage loan applications. Alternatively, Vani seeks a new trial under Fed. R. Crim. P. 33, alleging that the Court erred by: (1) barring the expert testimony of Neill Fendly; (2) admitting Vani's statements to an FBI agent in the Government's case in chief; (3) limiting the testimony of Vani's character witnesses; and (4) refusing to give a proposed jury instruction defining material statements. Because there was more than sufficient evidence to support the jury's verdict and the law and facts support the Court's trial rulings, Vani's motions are denied.
I. The Record Contained Ample Evidence to Support the Jury's Verdict
A motion for judgment of acquittal challenges the sufficiency of the evidence against a defendant. Fed. R. Crim. P. 29. Vani faces "a nearly insurmountable hurdle" in claiming that the jury had insufficient evidence to conclude that he had actual knowledge of the falsity of the statements contained in the mortgage loan applications that he submitted. See United States v. Domnenko, 763 F.3d 768, 772 (7th Cir. 2014) (citing United States v. Torres-Chavez, 744 F.3d 988, 993 (7th Cir. 2014)). The Court now reviews the evidence in the light most favorable to the Government and makes all reasonable inferences in the Government's favor. United States v. Cejas, 761 F.3d 717, 726 (7th Cir. 2014); United States v. Hassebrock, 663 F.3d 906, 918 (7th Cir. 2011). The Court may overturn the jury's guilty verdict "only if the record is devoid of evidence from which a reasonable jury could find guilt beyond a reasonable doubt." United States v. Jones, 713 F.3d 336, 340 (7th Cir. 2013) (quoting United States v. Stevenson, 680 F.3d 854, 855-56 (7th Cir. 2012)).
To prove Vani guilty of wire fraud, the Government had to prove (1) Vani's participation in a scheme to defraud, (2) his intent to defraud, and (3) his use of interstate wires in furtherance of the fraud. See United States v. Durham, 766 F.3d 672, 678 (7th Cir. 2014). "A scheme to defraud requires the making of a false statement or material misrepresentation, or the concealment of material fact.'" United States v. Sloan, 492 F.3d 884, 890 (7th Cir. 2007) (internal citation omitted). Vani contends that the Government failed to prove his intent to defraud because the evidence did not establish he knew that any of the statements within the mortgage loan applications were false. Vani's position at trial and in his motion for acquittal is that he merely relied on the information provided to him by co-conspirator Olanrewaju Okulaja, another licensed loan officer. After listening to all of the evidence and judging the credibility of the witnesses, the jury found otherwise.
Despite Vani's cries of ignorance, the jury had plenty of reasons to believe that he was fully aware of the fraudulent mortgage scheme and willingly participated in it. "[I]ntent to defraud requires a willful act by the defendant with the specific intent to deceive or cheat, usually for the purpose of getting financial gain for one's self or causing financial loss to another." United States v. Daniel, 749 F.3d 608, 614 (7th Cir. 2014) (quoting United States v. Sheneman, 682 F.3d 623, 629 (7th Cir. 2012)). Here, it was entirely reasonable for the jury to conclude that Vani knew that the loan applications he submitted included false representations and statements regarding the alleged buyers.
The jury heard testimony that Vani served as the loan officer for buyers seeking mortgage loans for the purchase of condominium units at 1351 North Ashland Avenue in Chicago, Illinois. Specifically, FBI Special Agent Deborah Jones-Buggs testified that there were nine units in the 1351 Ashland building, seven of which were sold. Jones-Buggs further testified that Vani was the loan officer on a number of the sold units. Vani was the loan officer for three units in the building purchased by Mr. Semanyuk and two other units in the building purchased by Jose Galindo. Semanyuk purchased his three units utilizing three different mortgage-lending institutions while Galindo received loans from two lenders for his two units.
Judy Taylor, a representative from CitiMortgage, testified that CitiMortgage funded a loan to Semanyuk on January 31, 2008 to purchase Unit 1C of the 1351 Ashland building. Semanyuk indicated on his application that Unit 1C would be his primary residence, information that Taylor testified was important to CitiMortgage because a loan for a primary residence is considered lower risk compared to second home and investment properties. Taylor further stated that the application provided to CitiMortgage showed that Semanyuk had over $94, 000 in a bank account and over $49, 000 in a checking account. In truth, an MB Financial Bank statement for Semanyuk from January 6, 2008 showed a balance of only $22.22. Vani submitted the application on behalf of Semanyuk and provided the information to CitiMortgage. Taylor told the jury that CitiMortgage was not allowed to call Semanyuk to verify his information and therefore took the application at face value and relied upon it in determining whether to give Semanyuk a mortgage.
Similarly, Brett Hellstrom testified that Washington Mutual provided a loan to Semanyuk on February 7, 2008 for Unit 3C of the 1351 Ashland building. Vani also prepared this loan application for another unit within the same building just one month later. Having already told CitiMortgage that Unit 1C was his primary residence for Semanyuk, Vani told this second bank that Unit 3C would be Semanyuk's primary residence. Hellstrom testified similarly that Washington Mutual based its decision to loan money on whether a borrower would occupy the property because the risk to the bank is greater for second home and investment properties. In spite of Vani's role in aiding Semanyuk to obtain the CitiMortgage for Unit 1C, Vani submitted an application showing that Semanyuk had no existing mortgages and did not own any other units in the building. Vani's role in submitting this application occurred just three weeks after his role in aiding Semanyuk's purchase of Unit 1C with funding from CitiMortgage on January 31, 2008. Hellstrom testified that as a lender, Washington Mutual is uncomfortable with large concentrations of single investors because they cannot live in all the properties, thereby raising the risk of default. Washington Mutual issued an additional loan for Unit 3B in the 1351 Ashland building to Jose Galindo for a closing on February 26, 2008. Vani was once again the loan officer and prepared the application just three weeks after the second loan that he helped obtain for Semanyuk. Galindo's application for Unit 3B stated that it would be his primary residence. Hellstrom said that the application showed Galindo's phone number to be XXX-XXX-XXXX, a number that was actually associated with Okulaja's cellular phone. The application also claimed that Galindo was employed as a mechanical engineer, made $11, 359.39 per month, and had over $142, 000 in a Chase bank account. The loan application neglected to mention any other units owned by Galindo.
To further demonstrate the falsity of the information found on the loan applications submitted by Vani, the Government called Galindo as a witness. Galindo testified that his involvement with the 1351 Ashland building stemmed from a request from a friend of his to cosign a unit for the friend's father. Galindo agreed to help and gave the friend a copy of his driver's license. Galindo testified that he had no idea that, in actuality, he was purchasing Units 2B and 3B in the 1351 Ashland building. He said the phone number found on the loan applications filed under his name was not his number. He stated that he did not author the two letters submitted to the two different lenders with the applications submitted by Vani. Galindo testified that although his loan application stated he was unmarried at the time of the loan, he had actually been married since 1987. Galindo further testified that he never had any intention to live in either of the units as a "primary residence, " despite both applications claiming he did. He also affirmed that he was not a mechanical engineer, made significantly less than the amount claimed on the applications, and never had over $100, 000 in a Chase bank account.
After showing the jury that the information contained within the loan applications was materially false, the Government presented evidence linking Vani to the applications. Specifically, the Government presented evidence that Vani was paid substantial sums of money for his efforts in getting the loan applications approved. Co-defendant, Olabode Rotibi, who pled guilty to being involved in the scheme and agreed to testify on behalf of the Government, testified about Vani's role, bolstering the jury's reasonable conclusion that Vani knowingly participated in the mortgage fraud scheme for personal financial gain. See United States v. White, 737 F.3d 1121, 1130 (7th Cir. 2013) ("Intent to defraud requires a willful act by the defendant with the specific intent to deceive or cheat, usually for the purpose of getting financial gain for one's self..."). Rotibi testified that the transactions surrounding the 1351 Ashland building were carried out by Okulaja, Vani, and himself. Vani operated as the loan officer and Rotibi performed the appraisals for the units. Rotibi told the jury that he and Okulaja visited Vani at his home three times during the existence of the mortgage fraud scheme. Rotibi further testified that conversations between Vani and Okulaja demonstrated a disagreement between the two regarding Okulaja's payments to Vani for his involvement in the scheme. Vani thought he would receive $10, 000 for his role. After the first closing on one of the 1351 Ashland units, Okulaja gave Rotibi an envelope of money to give to Vani. Rotibi testified that he delivered the envelope of cash to Vani.
Particularly damaging to Vani's argument that the Government presented insufficient evidence to demonstrate that Vani had actual knowledge of the falsity of the information he submitted on the loan applications is his statement to Special Agent Alexander McDonald. McDonald testified that in 2007 and 2008, he investigated Vani's involvement in the sales of the 1351 Ashland units. On October 7, 2008, McDonald interviewed Vani at his home. McDonald testified that Vani told him he wanted to help and get everything out in the open. Specifically regarding the Galindo units, McDonald told the jury that Vani told him that he knew the cell phone number listed as Galindo's was actually Okulaja's. Vani also recognized that both Galindo loan applications were submitted as primary residence loans and told McDonald that he knew there was no legitimate way to submit two primary residence mortgage applications for the same buyer. Vani told McDonald that he submitted the applications to different lenders anyway because he was making a lot of money. As the two were talking, McDonald prepared a written statement. McDonald testified that he told Vani that he wanted Vani to review the statement and that he was under no obligation to sign it, but if he did, he would be adopting the statement as his own. Vani proceeded to read, review, edit, and ultimately sign the statement. The Court admitted the statement into evidence, at which point McDonald read from it. In his statement, Vani admitted that he "realized at some point that the information on the loan applications was false" but "thought that because [he] didn't get in any trouble after [a bank cut him off from doing loans with them], it might not be so bad." Vani further admitted in the statement that he "was making a lot of money, so [he] kept doing business with [Okulaja and Rotibi]." Regarding the Galindo applications specifically, Vani's statement read that he "knew that some of the information was false, but [he] really just didn't want to know the truth." Vani submitted the Galindo applications because he "knew [he] would make a lot of money and that was very hard to resist."
The Government's theory at trial was that Vani misrepresented the nominee borrowers' assets, liabilities, and intentions to occupy the charged units in order to receive the mortgage loan proceeds. Taking into consideration Vani's experience in the mortgage industry,  his indications on the various loan applications that each unit would be the borrower's "primary residence" despite the same borrower being listed for multiple units, his sending of the applications to different lenders in order to conceal the wrongdoing, his $10, 000 payment from Okulaja, and his statement to Agent McDonald, there was ample evidence for the jury to conclude beyond a reasonable doubt that Vani knowingly submitted false information on the loan applications in order to secure the loans. See Daniel, 749 F.3d at 614 ("intent to defraud requires a willful act by the defendant with the specific intent to deceive or cheat, usually for the purpose of getting financial gain for one's self"); Sheneman, 682 F.3d at 630 (jury is well within reason to consider a defendant's involvement and experience in the real estate market when determining what the defendant could reasonably foresee being the consequences of his actions); United States v. Howard, 619 F.3d 723, 727 (7th Cir. 2010) ("[S]pecific intent to defraud may be established by circumstantial evidence and by inferences drawn from examining the scheme itself."). Based on the record, a reasonable jury could conclude that Vani knew that an individual could not have ...