Usa. v. Lo

• Decision Date: 01 November 2000
• Docket Number: No. 99-10303,99-10303
• Parties: (9th Cir. 2000) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. CHUNG LO, Defendant-Appellant
• Court: U.S. Court of Appeals — Ninth Circuit

Page 471

231 F.3d 471 (9th Cir. 2000)

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. CHUNG LO, Defendant-Appellant.

No. 99-10303

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted July 6, 2000

Filed November 1, 2000

[Copyrighted Material Omitted] Dennis P. Riordan, Dylan L. Schaffer and Donald M. Horgan, San Francisco, California, for defendant-appellant Chung Lo.

Robert S. Mueller, III, United States Attorney, Northern District of California, J. Douglas Wilson, Chief, Appellate Section, and Susan E. Badger and Laurie Kloster Gray, Assistant United States Attorneys, San Francisco, California, for appellee the United States of America.

Appeal from the United States District Court for the Northern District of California Maxine N. Chesney, District Judge, Presiding. D.C. No. CR 96-0174-01

Before: John T. Noonan, Sidney R. Thomas and Marsha S. Berzon, Circuit Judges.

BERZON, Circuit Judge:

Chung Lo, a San Francisco real estate broker, appeals her conviction for eight counts of mail fraud in violation of 18 U.S.C. S 1341 and for related offenses. Lo maintains, as to some of the mail fraud counts, that the government failed to present sufficient evidence to prove that a mailing occurred and, as to others, that the government failed to prove sufficiently that the mailings were in furtherance of the alleged fraudulent scheme. She also claims that the statute of limitations barred a superseding indictment filed by the government and that in any case, the two conspiracy charges were improperly pled. Finally, Lo contends that the district court's refusal to allow broader cross-examination of a government witness prejudiced her defense. While four of Lo's sufficiency-of-the evidence arguments have merit, the remainder of her claims do not. We therefore reverse Lo's conviction on four mail fraud counts and affirm as to the rest of the case.

I. Background

The charges against Lo all stem from a series of four real estate transactions she oversaw in the early 1990s, all of which were both byzantine and indubitably fraudulent. We begin here by providing a brief overview of the four transactions, leaving recitation of some of the factual details for later.

A.

The first transaction originated in the spring of 1990 when Aristela Wise and her husband Arthur came to Lo for assistance in buying a home. Although the Wises had little money for a down payment, Lo encouraged them to fill out a loan application and soon called them with information about a house for sale on Sarazen Avenue in Oakland, California ("Sarazen property"). Lo knew the seller of the house, Frank Rosario, having helped him buy and sell property in the past, and she set out to conclude a deal with the Wises. Although the high cost of the house concerned them, Lo assured the Wises that the seller was willing to make accommodations and that a deal could be reached.

The details of the transaction -like the details of all of these transactions -are complicated, but the essence is this: Lo told the Wises that they would not qualify for a loan on their own credit-worthiness alone, and suggested instead that they include an investor named "Wong K. Chow" -whose existence is dubious -as co-signer on their application. The proposed deal would obligate the Wises to pay Chow $3000 for his services while Chow would in turn quitclaim his interest in the home back to the Wises after the deeds were recorded and the sale finalized. The Wises agreed to the proposal, and Lo prepared a loan application which she submitted to Imperial Bank ("Imperial"). The application contained numerous false statements about the Wises' employment, earnings and assets and about Chow's intentions as a co borrower.

Imperial accepted the application, funded the loan for over $280,000, and paid Lo a broker's fee. The sale of the Sarazen property closed in July 1990, and the deeds were recorded and mailed thereafter. The Wises eventually defaulted on the loan.

B.

The next two transactions involved a pair of sham real estate sales Lo orchestrated in 1991. Her client, Jayson Bryant, owned two separate properties in Oakland, California, one at 9515 MacArthur Boulevard ("MacArthur property") and one at 2738 79th Avenue ("79th Avenue property"). Both properties were heavily leveraged. In order to avoid foreclosure, Bryant sought refinancing. Lo arranged a fraudulent refinancing scheme, whereby Bryant would "sell" the properties to his wife, Elma Bryant, using her maiden name, Aglibot, and a straw purchaser, Frank Bosnich.¹ Once again, Lo submitted loan applications containing assorted false information, this time to California Mortgage Services ("CMS") for the MacArthur property, and to Beverly Hills Security Company ("BHSC") for the 79th Avenue property. Both loan applications were approved. A third investor, Edward Brubaker, also loaned money against the MacArthur property.

After the "sales" closed, the Alameda County Recorder's office mailed the original grant deeds to Aglibot and Bosnich, the original deeds of trust to CMS and BHSC, and, some time later, a grant deed from Elma Aglibot to Jayson Bryant. Eighteen months afer the sale, Bosnich assigned his interest in the properties to Aglibot, and the County Recorder's office sent the corresponding deed to her. The Bryants eventually defaulted on both loans.

C.

The fourth transaction involved the attempted sale of a property on Hugo Street in San Francisco ("Hugo property")in 1991. Rosalina Bautista approached Lo, seeking assistance in buying a home. Although she did not believe she had enough money to buy a house alone, she indicated that her brother, Roland Bautista, and sister, Jocelyn Bautista Panaligan, would be able to help. Lo asked all three to complete loan application forms. Based on the information provided, Lo advised Rosalina that neither Roland nor Jocelyn's income was sufficient to qualify for financing but assured her that she would make other arrangements to secure a loan. Lo then prepared new loan applications which she submitted to Greater Suburban Mortgage ("GSM") for the purchase of the Hugo property. The new applications contained numerous false statements about the Bautistas' financial circumstances. This time, the lending institution discovered the fraud in its review of the application and notified Lo that it would not grant the loan.

D.

In June 1996, the government filed an initial fourteen count indictment charging Lo, inter alia, with mail fraud and conspiracy to commit mail fraud. It filed a superseding thirteen count indictment in July 1998. After the government dropped one of the charges, a jury convicted Lo of the remaining twelve counts and this appeal followed.

II. Discussion

A. The Hugo Property Mail Fraud

We begin our analysis with Count Thirteen of the superseding indictment, charging Lo with mail fraud in connection with the Hugo property purchase.

Mail fraud includes two general elements: first, the government must prove that a defendant devised or intended to devise a scheme to defraud a victim of his money or property; second, it must prove that in executing the scheme, the defendant made use of or caused the use of the mails. See United States v. Sayakhom, 186 F.3d 928, 941 (9th Cir. 1999). There was more than sufficient evidence to prove that the scheme was fraudulent, and Lo does not contend otherwise. Instead, she asserts that there was insufficient evidence to make out the second element, maintaining that the government's evidence was not adequate to prove she used the mail to carry out the alleged fraudulent scheme. This sufficiency-of-the evidence challenge can succeed only if, viewing the evidence in the light most favorable to the prosecution, no rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. See Jackson v. Virginia, 443 U.S. 307, 319 (1979); United States v. Deeb, 175 F.3d 1163, 1168 (9th Cir. 1999). Applying this standard, we conclude that the government's evidence on the Hugo property mail fraud is so scant as to be insufficient to support the conviction.

The only mailing allegation in Count Thirteen of the indictment is that Lo knowingly caused the mailing of a "Truth in Lending Disclosure/Good Faith Estimate" document (the "Truth in Lending" document) as part of the scheme to secure a fraudulent loan.² A Truth in Lending document lists all fees a borrower will incur when obtaining a loan. The law requires loaning institutions to provide the document to borrowers.

To establish the mailing element, the government offered testimony by a loan processor and an operations manager at GSM about the bank's procedures for generating a Truth in Lending document in the course of a normal loan application. The GSM witnesses explained that when the mortgage company receives an application, it generates the document and, within three days from receipt of the application, sends it to the borrower. The GSM witnesses also testified that because the law requires this document, GSM has a series of provisions in place to insure that it is mailed, including cross checks by other loan departments.

The foregoing is the sum total of the mailing testimony produced on the Hugo property count. No copy of the Truth in Lending notice in question was introduced at trial. No GSM witness testified that he or anyone else at the company had ever seen the specific, critical document, that there was any record that it had ever existed, that it was ever in GSM's loan files (whether at the time of trial or earlier) or that the loan file was ever complete. Moreover, although the Bautistas, the putative borrowers, also testified at trial, they did not state that they had ever received the document, and they, also, did not produce a copy of it.

The government contends that the custom and practice evidence alone was enough to prove the mailing beyond a reasonable doubt, maintaining that the jury could have inferred that since GSM...