People v. Bickhaus
| Decision Date | 12 May 2014 |
| Docket Number | No. 1-13-1200,1-13-1200 |
| Citation | 2014 IL App (1st) 131200 |
| Parties | PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee, v. BRENT BICKHAUS, Defendant-Appellant. |
| Court | United States Appellate Court of Illinois |
NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).
Appeal from the Circuit Court
of Cook County.
¶ 1 Held: The charge of financial institution fraud, though based upon a statute that was subsequently repealed, was kept alive throughout the defendant's case under the general savings clause of the Statute on Statutes (5 ILCS 70/4 (West 2010)); the defendant's contentions under the "honest services" doctrine were not addressed, where the finding of guilt was premised upon his participation in a scheme to defraud a financial institution under the first clause of the statute; the defendant failed to provide a sufficient record to support his claim that he was not proven guilty of defrauding a financial institution; the indictment for money laundering sufficiently apprised him of the charge against him; and he was proven guilty of money laundering beyond a reasonable doubt.
¶ 2 The defendant, Brent Bickhaus, was charged by indictment with financial crimes conspiracy and financial institution fraud under the Illinois Financial Crime Law (IFCL) (720 ILCS 5/16H-1, 720 ILCS 5/16H-45 (West 2010)), and money laundering (720 ILCS 5/29B-1(a)(1.5)(B) (West 2010)). Following a bench trial, he was acquitted on the conspiracy charge, but convicted of financial institution fraud and money laundering, and sentenced to concurrent respective terms of four years' imprisonment.* He now appeals, contending (1) his conviction for financial institution fraud must be reversed because the IFCL was repealed after his indictment; (2) alternatively, he was not shown to be a fiduciary engaging in a transaction involving bribery or a kickback, as required to establish the offense of deprivation of "honest services" under the case of Shilling v. United States, 561 U.S. 358, 130 S. Ct. 2896, 2931, 177 L. Ed. 2d 619 (2010); (3) the alleged fraud victim, Gateway Funding Diversified Mortgage Services, LP (Gateway), was not a financial institution under section 16H-25; (4) his indictment for money laundering was fatally deficient; and (5) he was not proven guilty of money laundering beyond a reasonable doubt. For the reasons that follow, we affirm.
¶ 3 As a preliminary matter, we point out that the record is devoid of any of the trial exhibits entered in evidence in this case. These documents included the title files for the alleged fraudulent sales, which evidenced the transactions and communications between the parties that were central to the trial court's determination of the defendant's guilt. It was the defendant's burden as appellant to provide this court with a sufficient record to permit a meaningful reviewof his assignments of error. Foutch v. O'Bryant, 99 Ill. 2d 389, 459 N.E.2d 958 (1984). Illinois Supreme Court Rule 321 (eff. Feb. 1, 1994) states that the record on appeal must contain the entire common-law record, including "documentary exhibits offered and filed by any party." In the absence of a complete record, a reviewing court will resolve all insufficiencies against the appellant and will presume that the trial court's ruling had a sufficient legal and factual basis. Foutch, 99 Ill. 2d at 391-92. Accordingly, in reviewing this case, we accept at face value all assertions and inferences regarding these exhibits which are consistent with the trial court's factual findings.
¶ 4 On May 23, 2011, the defendant and six co-defendants, Gayle Tracy, Catherine Denwood, Frances McCormick, Richard Simmons, Lorenzo Crooks, and Mark Schwarzbach, were charged with financial crimes conspiracy, financial institution fraud, and money laundering for their participation in an elaborate scheme to procure fraudulent mortgage loans, engage in staged purchases of real estate, and then profit from the loan proceeds. The scheme involved three properties, all of which were held in residential land trusts by Tracy, and one of which was co-owned in a trust by the defendant. All three properties were "sold" over a period of less than six months. Denwood and McCormick posed as straw buyers, purchasing the property in name only based upon fraudulent loan applications which vastly overstated their assets. Crooks was a loan originator at Gateway, the mortgage company for each of the three sales. Simmons, though not a licensed realtor, served as intermediary between the buyers, sellers, and Crooks. Each of the closings were conducted by Great Lakes Title Company, owned by Schwarzbach. This appeal involves the sale of one of the properties, co-owned by the defendant and Tracy, which was located at 5601 S. May Street (May St. property). The evidence demonstrated that the defendant and Tracy received large payouts on the sale of the May St. property from theproceeds of a loan obtained by Denwood from Gateway, and then provided kickbacks to Schwarzbach and Crooks for their assistance in facilitating the transactions.
¶ 5 Count IX of the indictment was directed against the defendant and five of the co-defendants under section 16H-25(1) of the IFCL. 720 ILCS 5/16H-25(1) (West 2010). It alleged that in April 2010, they committed the offense of financial institution fraud as follows:
"as part of a single intention and design, they knowingly executed or attempted to execute a scheme or artifice to defraud a financial institution, to wit: they attempted to or knowingly submitted false or misleading statements to the lender, Gateway Funding Diversified, LP, designed to induce the lender to fund the real estate closing by means of bank wire transfer."
¶ 6 The indictment further provided "that a scheme or artifice to defraud also includes a scheme or artifice to deprive a financial institution of the intangible right to honest services." (Emphasis added.) See 720 ILCS 5/16H-25 (West 2010).
¶ 7 The defendant moved for a bill of particulars with regard to multiple counts of the indictment, including Count IX. The State responded, in relevant part, that Wells Fargo bank "was deprived of the opportunity to service a loan that was obtained lawfully and honestly, free from any fraud or false representations," while Chase Bank, Bank of America, Wells Fargo, and TCF Bank were "deprived of honest services," because they were deprived of the opportunity to conduct financial transactions free from fraud.
¶ 8 In its motion to dismiss, the defendant contended that, (1), with regard to the alleged deprivation of the right to honest services, the State failed to allege the existence of a fiduciary relationship between the defendant and the financial institutions; (2), section 16H-25 was unconstitutional in light of the Supreme Court's holding in Shilling v. U.S., 561 U.S. 40 (2010);and (3), section 16H-25 had been repealed effective July 1, 2011. The trial court denied the motion, and the defendant proceeded to a joint bench trial along with co-defendant Tracy.
¶ 9 Apart from the documents evidencing the communications and transactions between the parties, the case against the defendant consisted primarily of the testimony of Schwarzbach, who testified pursuant to a plea arrangement, and Crooks.
¶ 10 Schwarzbach testified that, at the time of the alleged offenses, he was the owner of Great Lakes Title and had one employee, Sonia Alvarez. Schwarzbach already knew the defendant and Tracy because he had worked with them at another title company 10 or 12 years prior to the offenses, and also because the defendant currently had an office in the same building as Great Lakes. Schwarzbach testified that the defendant had worked as a loan officer. The State introduced the loan application for the May St. property, which, according to Schwarzbach, identified Crooks as the loan originator who conducted a face-to-face interview with Denwood, the prospective borrower. The application stated that Denwood possessed assets in the amount of $202,843 which were held at TCF Bank under "account number 9055."
¶ 11 On April 30, 2010, the closing for the May St. property was held at Great Lakes. Schwarzbach testified that it was Great Lakes' responsibility to send the closing documents to the lender, including the HUD-1 settlement statement, so that the lender could then provide the loan funds. Schwarzbach described the HUD-1 as a summary of all funds to be received and disbursements to be made as part of the closing. According to Schwarzbach, the HUD-1 statement was notarized and executed by Denwood as the buyer, Gateway as the lender, and the "5601 S. May Street Trust" (May trust) as a seller. The defendant was shown to be the trustee of the May trust. The HUD-1 statement listed the sales price for the property as $340,000, of which Denwood was required to tender $78,091 at the closing, and the loan amount as $272,000.
Schwarzbach testified that upon receiving the funds from a buyer, Great Lakes would normally deposit them into the bank.
¶ 12 Schwarzbach next identified disbursement checks which the sellers had directed to be issued from the sale's proceeds at the time of the closing. The disbursements included a check payable to Simmons, and a second check payable to "Werks of Chicago," apparently owned by one of the co-defendants, in the amount of $58,493. These checks were listed on Great Lakes' own disbursement summary, although they had not been reflected on the HUD-1 statement. On May 3, 2010, a cashier's check in the amount of $78,091 was deposited by Great Lakes into its account at Harris Bank. This amount, which the HUD-1 statement showed as the amount due from the buyer at closing, was withdrawn from an...
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