People v. Valverde, H034263
| Decision Date | 25 July 2012 |
| Docket Number | H034263 |
| Parties | THE PEOPLE, Plaintiff and Respondent, v. ESPERANZA ISABEL VALVERDE et al., Defendants and Appellants. |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Santa Clara County
Defendants Esperanza Isabel Valverde and Herman Michael Covarrubias were convicted by jury trial of numerous counts. Valverde was convicted of 24 counts of grand theft (Pen. Code, §§ 484, 487, subd. (a)) [counts 1, 2, 3, 5, 6, 7, 12, 15, 19, 21, 23, 24, 26, 28, 29, 31, 33, 36, 37, 38, 41, 43, 44, and 46], nine counts of committing a fraudulent notarial act on a deed of trust (Gov. Code, former § 8214.2) [counts 8, 11, 13, 16, 22, 25, 30, 45, and 47], and seven counts of forgery (Pen. Code, § 470, former subd. (d)) [counts 14, 17, 18, 34, 35, 39, and 40]. Covarrubias was convicted of 19 counts of grand theft [counts 5, 12, 15, 19, 21, 23, 24, 26, 28, 29, 31, 33, 36, 37, 38, 41, 43, 44, and 46] and three counts of forgery [counts 20, 39 and 40]. The jury found trueexcessive taking allegations under Penal Code section1 12022.6 and section 186.11 as to both defendants.
On appeal, defendants jointly contend that (1) the trial court erred in denying their request for discovery, and in excluding evidence, of mortgage industry practices, (2) the section 12022.6 and section 186.11 enhancement findings are not supported by substantial evidence, (3) the trial court prejudicially erred in failing to instruct on the technical meaning of the word "loss" in connection with the section 12022.6 enhancement allegations, (4) count 5 is not supported by substantial evidence, (5) the sentences imposed by the trial court were abuses of discretion, and (6) they are entitled to have their conduct credit calculated under the revised version of section 4019 that took effect while their appeal was pending. Valverde additionally asserts that (1) counts 7 and 47 are not supported by substantial evidence, (2) the trial court prejudicially erred in failing to instruct on one of the elements of the fraudulent notarial act offenses, and (3) the trial court erred in imposing restitution on a count on which she was acquitted. We affirm the trial court's original judgment.2
Valverde and her husband Covarrubias were mortgage brokers. A prospective borrower engages the services of a mortgage broker to work with wholesale lenders on the borrower's behalf. The wholesale lender's loan representative works directly with the broker, not the borrower. The broker submits a loan application and other documentation on behalf of the borrower to the wholesale lender's loan representative. Thisdocumentation is then forwarded to the wholesale lender's loan underwriter, who makes the decision whether to fund the loan. The purpose of the underwriting process is to ensure that the borrower will be able to repay the loan.
This case involved five wholesale lenders: Argent Mortgage Corporation (Argent), BNC Mortgage (BNC), Downey Savings and Loan (Downey), WMC Mortgage (WMC), and World Savings (World). These lenders relied on the information on the loan applications and documentation submitted by brokers to determine whether the borrowers would be able to repay the loans. Where the application was for a "stated income" loan, the lender relied on the broker to ensure that the borrower's stated income was accurate.3 Typically, the underwriter would issue a conditional loan approval that required further documentation. The loan would not actually be funded until the conditions were met.
Because the broker's fees are funded from the total loan amount, the borrower ends up paying those fees. Typically the broker's fee is 1 percent of the loan amount, but it may legally be as high as 5 percent. The wholesale lender may require a longer prepayment penalty period if the broker's fee is high in order to ensure that the lender profits from the loan. The borrower on a refinancing transaction had the legal right to cancel the transaction within three days after signing the documents.
Defendants acted as brokers on numerous transactions with these five wholesale lenders. These were subprime loans. Subprime loans include stated income loans, loans to borrowers with poor credit scores, and loans with high loan-to-value ratios. Many of the borrowers represented by defendants did not speak or read English, could not read the documents (which were always in English), and did not understand the details of the transactions. Defendants lied to these borrowers about the amounts of their fees and misrepresented the terms of the loans. Valverde notarized backdated deeds of trust inorder to prevent the borrowers from exercising their rights to cancel refinancing transactions. Defendants prepared and submitted loan applications that misrepresented the borrowers' income and assets, and forged documents to support those applications.
Defendants were jointly charged by indictment with 19 counts of grand theft [counts 5, 12, 15, 19, 21, 23, 24, 26, 28, 29, 31, 33, 36, 37, 38, 41, 43, 44, and 46] and two counts of forgery [counts 39 and 40]. Valverde alone was charged with an additional seven counts of grand theft [counts 1, 2, 3, 6, 7, 9, and 10], 12 counts of committing a fraudulent notarial act on a deed [counts 8, 11, 13, 16, 22, 25, 27, 30, 32, 42, 45, and 47], and five counts of forgery [counts 14, 17, 18, 34, and 35].4 Covarrubias alone was charged with one count of forgery [count 20]. The indictment also alleged excessive taking allegations under sections 186.11 and 12022.6 against both defendants.
After lengthy deliberations, the jury returned verdicts finding defendants guilty of nearly all of the counts. On count 3, Valverde was found guilty as to only the lender but not the borrowers. She was also acquitted of counts 9 and 10, which were grand theft counts, and counts 27, 32, and 42, which were fraudulent notarial act counts. Valverde was convicted of the remaining counts. Covarrubias was convicted of all of the charged counts. The enhancement allegations were found true as to both defendants, as was a probation-related excessive taking allegation.
In May 2009, Valverde was sentenced to 23 years and eight months in state prison. She was awarded 67 days of actual custody credit and 32 days of conduct credit. Covarrubias was sentenced at the same time to 19 years and eight months in state prison.He was awarded 61 days of actual custody credit and 30 days of conduct credit. Both of them timely filed notices of appeal.
In February 2010, defendants filed motions seeking additional conduct credit under the newly revised version of section 4019 that had taken effect in January 2010. The prosecution conceded that defendants were entitled to the additional credit they sought. In April 2010, the trial court granted defendants' motions and awarded Valverde an additional 34 days of conduct credit and Covarrubias an additional 30 days of conduct credit.
In June 2008, prior to trial, Valverde filed a motion to compel discovery. She sought to compel the prosecution to "disclose evidence obtained during the investigation of ACC Capital Holdings Corporation ('ACCCH') and its subsidiaries . . . ." Her motion asserted that Argent, which was one of the lender victims of some of the grand theft counts, was a "subsidiary" of ACC Capital Holdings Corporation (ACCCH). Valverde contended that "evidence obtained during [an] investigation of ACCCH" was "materially favorable to her defense" because it would refute "the contention that Argent is a victim" of Valverde's conduct.
Her motion was based on the fact that the State of California and various district attorneys, not including the Santa Clara County District Attorney, had brought a civil action in 2006 against ACCCH and various other entities, not including Argent, alleging that they had made misrepresentations to consumers, obtained inflated appraisals, and fabricated information on loan applications. A multi-state settlement was reached without ACCCH or the other entities admitting any fault. ACCCH and the other entitiesagreed to pay restitution of $295 million to consumers who had obtained loans from them between 1999 and 2005 and $30 million to the states. They also agreed to not make misrepresentations in the future, to change their appraisal practices, and to not make misrepresentations on loan applications.
The prosecution opposed Valverde's motion on the grounds that (1) the information sought was "not material and has no bearing on" Argent's conduct, and (2) the information was not in the prosecution's possession because the civil action had not been brought by anyone on the "prosecution team," as it had been brought by states and the district attorneys of other counties. The court denied the motion without explanation.
After trial commenced, the prosecution filed a motion in limine seeking exclusion of evidence of "fraudulent conduct by Ameriquest Mortgage Company," an ACCCH subsidiary that was not involved in any of the charged offenses. This motion was prompted by the defense's mention of "Ameriquest" in their opening statements. The prosecution had objected during the opening statements, but its objection had been overruled. The prosecution argued that such evidence would be irrelevant and should be excluded under Evidence Code section 352 because it would confuse the jury. Defendants opposed the motion on the ground that the evidence in question would be relevant to the credibility of the prosecution's witnesses and to "the issue of lenders' reliance on loan...
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