504 F.3d 672 (7th Cir. 2007), 06-1613, United States v. Serfling
|Citation:||504 F.3d 672|
|Party Name:||United States v. Serfling|
|Case Date:||October 05, 2007|
|Court:||United States Courts of Appeals, Court of Appeals for the Seventh Circuit|
Argued June 7, 2007.
Rehearing En Banc Denied Nov. 5, 2007.
Appeal from the United States District Court for the Northern District of Illinois, Matthew F. Kennelly, J., of mail fraud and wire fraud, and he appealed.
[Copyrighted Material Omitted]
Lindsay Jenkins (argued), Office of the United States Attorney, Chicago, IL, for Plaintiff-Appellee.
William J. Harte (argued), Harte & Associates, Chicago, IL, for Defendant-Appellant.
Before BAUER, ROVNER, and SYKES, Circuit Judges.
ROVNER, Circuit Judge.
Scott Serfling and codefendant Mary Capri engaged in a scheme to defraud Western United Life Assurance Company ("WULA") of nearly $12 million by procuring a loan through repeated false representations. Capri pleaded guilty, and a jury found Serfling guilty of two counts of wire fraud, 18 U.S.C. § 1343, and one count of mail fraud, id. § 1341. The district court entered judgment against Serfling and sentenced him to 78 months' imprisonment, three years' supervised release, and restitution in the amount of $6.75 million. On appeal, Serfling argues that his convictions must be vacated because the government withheld exculpatory evidence and engaged in prejudicial misconduct by making improper remarks during the trial. He contends as well that the district court erroneously excluded relevant testimony by a banking expert. Serfling also challenges his sentence, from the calculation of the guidelines range to the length of his prison term as compared to Capri's. For the reasons set forth in the following opinion, we affirm the judgment of the district court.
Serfling worked as a car salesman at Celozzi Ford Dealership in Waukegan, Illinois. In 2000, the dealership's owner, Nicholas Celozzi, and Ford agreed to expand the operation and open a second dealership in Gurnee. Under the terms of their agreement, Ford would sublease the property from Celozzi for 25 years for $76,600 per month. The sublease agreement was to go into effect after construction of the dealership was complete and Celozzi obtained a certificate of occupancy from the county. Celozzi selected Serfling as a partner and financial advisor for the new project.
Construction of the new dealership commenced but stalled in early 2001 when various contractors and subcontractors stopped work because they had not been paid on schedule. In light of cost overruns, Serfling renegotiated the sublease agreement with Ford, which agreed to a rent increase. Months later, Serfling procured another rent increase, so that Ford would pay $99,800 per month to sublet the property upon completion of construction and the issuance of a certificate of occupancy. In November 2001, however, Ford reconsidered, and it terminated the lease agreement entirely.
Shortly after Ford canceled the contract, Serfling and Capri embarked on a plan to purchase the Gurnee property themselves. At that time the property was controlled by Fifth Third Bank, which had supplied a construction loan. First, Serfling and Capri had the property appraised by Robert Schmidt. Serfling told Schmidt that the property would be subject to a dealership lease, and in support of this representation he faxed Schmidt a "proposed" lease agreement between Ford
Leasing Development Company and Celozzi/Serfling Ford, Inc., whereby Ford would lease the Gurnee property for $125,000 per month. In actuality no such agreement existed, but based on Serfling's representation, Schmidt valued the property at $15.7 million.
Serfling and Capri next shopped for a lender to finance their purchase of the Gurnee property. Acting as a broker, Capri enlisted a commercial loan broker, Francisco Gonzalez, to find a lender for a borrower she identified as Scott Serfling and his company, Serfin Trust LLC. In response to Gonzalez's request for documentation, Capri sent a package containing 1999 and 2000 tax returns for Serfling and Serfin Trust, signed by Serfling. In fact, Serfling had not filed tax returns as an individual or on behalf of Serfin Trust in 1999 or 2000. The package also included the "proposed" Ford lease agreement. That document was signed by Serfling and a "Susan Morgan" on behalf of Ford. Trial testimony revealed that no "Susan Morgan" worked for Ford.
Armed with the documentation he received from Capri, Gonzalez began shopping for a loan for Serfling. He found one at Old Standard Life Insurance, an affiliate of WULA. Loan officer John Byers testified that he believed that the loan would be a sound investment based on the financial strength of Serfling (evinced by his tax returns, and, later, bank statements) and the long-term lease with Ford. Eventually Byers, on behalf of Old Standard and WULA, agreed to loan Serfling and Serfin Trust $11,750,000.
As a condition of closing on the loan, WULA requested bank statements from Serfling, who resisted this request in a telephone conversation with a WULA representative. Ultimately, however, Serfling relented, and Capri faxed statements from Firstar Bank to Gonzalez, who relayed them to WULA employee Shelli Findley. According to the statements, Serfling had more than $10,000,000 in a personal account, and Serfin Trust had a balance of nearly $1,000,000. Trial testimony later revealed that neither Serfling or his company ever held accounts at Firstar Bank.
As WULA continued to investigate the potential borrowers, it attempted to contact "Susan Morgan" to verify the terms of the Ford lease. An underwriter for WULA spoke on the telephone with a woman identifying herself as Susan Morgan. At trial, Serfling stipulated that the telephone number provided on the phony lease agreement for "Susan Morgan" was registered to Capri. WULA also continued to request, as a condition of closing the loan, a copy of a certificate of occupancy for the Gurnee property. WULA insisted that $100,000--a sum more than adequate to cover remaining construction costs--be placed in escrow for release after the certificate was issued. For his part, Serfling demanded that $200,000 of the loan proceeds be dispersed to him directly in order to pay other expenses relating to the property.
Serfling also provided WULA with the name of a construction company, which, he said, would finish building the dealership. WULA attempted to contact the company numerous times but could not reach anyone at the phone number Serfling supplied. Unsurprisingly, Serfling stipulated at trial that the company did not exist. Capri and Serfling also fabricated an insurance company to satisfy WULA that the Gurnee property was appropriately covered.
In March 2002, WULA was prepared to close on the...
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