Tuesday, November 28, 2017

Fraudulent mortgage lending conspiracy convictions affirmed

US v. Raza, et al.:  Four former employees of SunTrust Mortgage in Annadale, Virginia, appealed their wire fraud and conspiracy to commit wire fraud convictions, specifically, the jury instructions on materiality and intent to defraud instructions.  Additionally, the defendants argued that the district court failed to instruct the jury that it had to individually assess the guilt of each of the defendants as to each count.  The Fourth Circuit, finding no errors, affirmed the convictions.

In its reasoning, the Fourth Circuit noted that the defendants’ proposed instruction for the wire fraud offense required proof of five elements that the court tracked in its charge to the jury.  The Fourth Circuit found several similarities between this case and one from the 9th Circuit, wherein it concluded that adopting a subjective test of materiality, as defendants urged here, would “essentially grant blanket absolution to low-level fraudsters because of the widespread sins of the mortgage industry.”  Further, the Fourth Circuit discussed the controlling import of its earlier cases, finding that the correct test for materiality is an objective one, “which measures a misrepresentation’s capacity to influence an objective ‘reasonable lender,’ not a renegade lender with a demonstrated habit of disregarding materially false information.”

As to the intent instruction, the Fourth Circuit found that its earlier decision in Wynn explained how the district court’s instruction in this case was correct, that is, the government had to prove more than an intent to deceive; it also had to prove an intent to harm “in some sense.”

With the last challenge, the defendants claimed that the district court’s instructions allowed the jury to find guilty by association.  During the jury’s three days of deliberations, the jury sent a question to the court to clarify if they found the defendants guilty of the conspiracy, was guilt to be assumed, then, for all other counts, and the district court advised them that no, the jury had to look at each count facing each defendant.  The Fourth Circuit found the instructions and the supplement, as well as the separate verdict forms for each defendant, with the counts listed separately, appropriately gave individual consideration to each count alleged. 

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