United States v. Foley

• Decision Date: 01 April 2015
• Docket Number: 13–1118.,Nos. 13–1048,s. 13–1048
• Citation: 783 F.3d 7
• Parties: UNITED STATES of America, Appellee, v. Marc D. FOLEY, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

783 F.3d 7

UNITED STATES of America, Appellee

v.Marc D. FOLEY, Defendant, Appellant.

Nos. 13–1048

13–1118.

United States Court of Appeals, First Circuit.

April 1, 2015.

Rebecca A. Jacobstein, with whom Office of Appellate Advocacy was on brief, for appellant.

Ross B. Goldman, Criminal Division, Appellate Section, United States Department of Justice, with whom Carmen M. Ortiz, United States Attorney, Victor A. Wild and Veronica M. Lei, Assistant United States Attorneys, Mythili Raman, Acting Assistant Attorney General and Denis J. McInerney, Deputy Assistant Attorney General, were on brief, for appellee.

Before LYNCH, Chief Judge, TORRUELLA and HOWARD, Circuit Judges.

Opinion

HOWARD, Circuit Judge.

Marc Foley appeals his conviction and sentence for 33 counts of wire fraud and five counts of money laundering arising from his role in a mortgage fraud scheme. Foley challenges the sufficiency of the evidence as to 28 of the wire fraud counts and all of the money laundering counts, argues that the district court abused its discretion in three of its evidentiary rulings, and alleges that the prosecutor engaged in misconduct in his closing statement. Foley also disputes the procedural and substantive reasonableness of his 72–month sentence and the district court's methodology in ordering restitution of nearly $2.2 million. We find no error in Foley's conviction and sentence, except that we vacate in part the district court's restitution order.

I.

At the center of this case is a 24–unit apartment building at 135 Neponset Avenue in Dorchester, Massachusetts (the “Neponset Building”), purchased and converted into a condominium form of ownership by Elizabeth (Lisa) Reed in December 2006. Reed was the owner of Mass Lending, LLC, a mortgage brokerage firm, in which capacity she frequently worked with Foley, a real estate lawyer, on loan closings. Foley also prepared the condominium conversion documents for the Neponset Building.

Reed financed the purchase of the Neponset Building with a short-term “hard money” loan, pursuant to which she paid a private lender $100,000 in exchange for a ten-day loan of $2.6 million. Needing to recoup her investment at once to repay the loan, Reed took three steps to generate immediate sales of condominium units. First, she rewarded buyers with kickbacks for their purchases. Second, she directed her employees at Mass Lending to submit falsified mortgage loan applications on the buyers' behalf, misrepresenting the buyers' incomes, employment, and assets in order to obtain loans covering 90 to 95 percent of the purchase price. Third, she ensured that the buyers would not need to provide the remaining down payment at the loan closing. It was this last measure for which she once again obtained Foley's assistance.

Either Foley or his associate, Sean Robbins, served as the closing attorney and settlement agent at each of the loan closings, which took place from December 19, 2006 to January 12, 2007. In that role, Foley and Robbins were responsible for preparing HUD–1 settlement statements (“HUD–1s”)—documents certified by the buyer, seller, and settlement agent and indicating to the lender, inter alia, the amount of funds collected from the buyer at the closing.¹ Each of the 33 submitted HUD–1 forms at issue in this case—seven of which were not signed by the settlement agent—indicated that the buyer had made a down payment at the loan closing. In fact, however, no such payments were ever made.

Upon receipt of the HUD–1 forms, lenders would wire funds to Foley's Interest on Lawyers Trust Account (“IOLTA”). Foley would then disburse those funds to Reed, writing Reed a check for the amount denoted “Cash to Seller” on the HUD–1, less the amount of the buyer's supposed down payment (denoted “Cash from Borrower” on the HUD–1). To avoid potential liability to Reed over the remaining proceeds, Foley directed Reed to sign a “disbursement authorization” form for each of the loan closings, reducing Reed's sale proceeds by the amount of the purported down payment.² When a lender required additional proof of a buyer's down payment, Foley instructed Reed to prepare bogus checks indicating that the buyer had actually brought funds to the closing. Foley then directed his paralegal to draw a check from his IOLTA in the amount due from the borrower and to later redeposit that check as “cash from buyer,” creating the illusion that Foley had received money from the borrower.

Foley was charged with 33 counts of wire fraud, 18 U.S.C. § 1343, and five counts of money laundering, id. § 1957, for his role in these transactions. At trial, Foley mounted a defense of “good faith” in the face of damning testimony from Robbins and Reed, both of whom testified against him pursuant to plea agreements.³ The crux of Foley's defense was that he honestly believed that the money would be forthcoming from the buyers and that Robbins and Reed lacked credibility. The jury, however, saw the evidence differently and found Foley guilty on all counts. The case then proceeded to sentencing, where the district court imposed a below-Guidelines sentence of 72 months' incarceration and also ordered restitution in the amount of $2,198,204. This appeal followed.

II.

A. Sufficiency of the Evidence

1. Wire Fraud

Foley first contends that the evidence was insufficient as to all but five of the 33 wire fraud counts. With respect to the seven counts arising from unsigned HUD–1 forms, Foley contends that without a signature there was no misrepresentation and thus no wire fraud. Because two lending companies, Taylor, Bean & Whitaker and Fremont, nevertheless extended loans based on these unsigned HUD–1 forms, Foley further argues that there was also insufficient evidence as to the 21 counts involving signed HUD–1s sent to these companies, reasoning that the presence or absence of a signature was not material to the lenders' decisionmaking.

Although the parties do not dispute that Foley moved for acquittal on the wire fraud counts under Fed.R.Crim.P. 29 both at the close of the government's case and after the trial, they nevertheless disagree as to the proper standard of review for this claim. Under our precedent, although a general sufficiency-of-the-evidence objection preserves all possible sufficiency arguments, a motion raising only specific sufficiency arguments waives unenumerated arguments. United States v. Lyons, 740 F.3d 702, 716 (1st Cir.2014) ; United States v. Marston, 694 F.3d 131, 134 (1st Cir.2012). We have suggested that a general sufficiency objection accompanied by specific objections preserves all possible sufficiency objections. See Marston, 694 F.3d at 135 (finding “good reason in case of doubt” to treat such motions as general, because “[i]t is helpful to the trial judge to have specific concerns explained even where a general motion is made; and to penalize the giving of examples, which might be understood as abandoning all other grounds, discourages defense counsel from doing so and also creates a trap for the unwary defense lawyer”).

At the close of the government's case, Foley's counsel moved for judgment of acquittal on all counts. Defense counsel then proceeded to state: “But in reality, Judge, there is one very serious issue. And that is the government has failed to establish that the District of Massachusetts is the proper venue for this prosecution.” Foley's post-trial motion for acquittal in turn stated that “[a] judgment of acquittal should be granted on Counts 1–33 [i.e., the wire fraud counts] as the government failed to prove proper venue in the District of Massachusetts.” Neither of these motions are the type of “general motion accompanied by examples” contemplated in Marston. Neither motion raised any issue other than venue, and although the oral motion at the close of evidence might with some imagination be interpreted as treating venue as merely “one very serious issue” of many, the post-trial motion is not susceptible even to such liberal reading. We therefore treat Foley's signature-based sufficiency challenge as unpreserved, and review for clear and gross injustice only. Id. at 134 ; see also United States v. Upham, 168 F.3d 532, 537 (1st Cir.1999), cert. denied, 527 U.S. 1011, 119 S.Ct. 2353, 144 L.Ed.2d 249 (1999). We conclude that Foley's claim fails to meet that stringent standard, which we have described as a particularly exacting variant of plain error review,⁴ although our conclusion would be the same even under traditional plain error. See United States v. Jones, 748 F.3d 64, 73 (1st Cir.2014).

The elements of wire fraud under 18 U.S.C. § 1343 are “(1) a scheme or artifice to defraud using false or fraudulent premises; (2) the defendant's knowing or willing participation in the scheme or artifice with the intent to defraud; and (3) the use of the interstate wires in furtherance of the scheme.” United States v. Appolon, 715 F.3d 362, 367 (1st Cir.2013). The false or fraudulent representation must also be material. Id.

HUD–1 forms contain a signature block beneath the following certification by the settlement agent: “The HUD–1 Settlement Statement which I have prepared is a true and accurate account of this transaction. I have caused or will cause the funds to be disbursed in accordance with the statement.” By Foley's account, “the government's case was that Mr. Foley's signature was the fraud,” such that the only relevant statement was “the certification on the HUD–1 that Mr. Foley had collected cash from the buyer at the closing.”⁵

The prosecution did indeed allude in both its opening and closing arguments to the significance of the settlement agent's signature, stating, e.g., that “by signing the HUD–1s for these loans, the defendant certified to the mortgage company that he did collect the funds” and that the “HUD–1 when it said I have or will disburse in accordance with this HUD–1 is patently false.” Nevertheless, the government advanced a broader theory than Foley suggests. Signed or unsigned, each of the HUD–1s...