U.S. v. Brandon, Nos. 92-1447 and 92-1465

CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)
Writing for the CourtBefore TORRUELLA, Circuit Judge, CAMPBELL, Senior Circuit Judge, and BOUDIN; TORRUELLA
Citation17 F.3d 409
PartiesUNITED STATES of America, Appellee, v. Peter BRANDON, Defendant, Appellant. UNITED STATES of America, Appellee, v. Charles D. GAUVIN, Defendant, Appellant. UNITED STATES of America, Appellee, v. Marvin GRANOFF, Defendant, Appellant. UNITED STATES of America, Appellee, v. Ronald R. HAGOPIAN, Defendant, Appellant. UNITED STATES of America, Appellee, v. Momi A. KUMALAE, Defendant, Appellant. UNITED STATES of America, Appellee, v. Owen B. LANDMAN, Defendant, Appellant. UNITED STATES of America, Appellee, v. Norman D. REISCH, Defendant, Appellant. UNITED STATES of America, Appellee, v. John WARD, Defendant, Appellant. to 92-1471. . Heard
Docket NumberNos. 92-1447 and 92-1465
Decision Date07 September 1993

Page 409

17 F.3d 409
UNITED STATES of America, Appellee,
v.
Peter BRANDON, Defendant, Appellant.
UNITED STATES of America, Appellee,
v.
Charles D. GAUVIN, Defendant, Appellant.
UNITED STATES of America, Appellee,
v.
Marvin GRANOFF, Defendant, Appellant.
UNITED STATES of America, Appellee,
v.
Ronald R. HAGOPIAN, Defendant, Appellant.
UNITED STATES of America, Appellee,
v.
Momi A. KUMALAE, Defendant, Appellant.
UNITED STATES of America, Appellee,
v.
Owen B. LANDMAN, Defendant, Appellant.
UNITED STATES of America, Appellee,
v.
Norman D. REISCH, Defendant, Appellant.
UNITED STATES of America, Appellee,
v.
John WARD, Defendant, Appellant.
Nos. 92-1447 and 92-1465 to 92-1471.
United States Court of Appeals,
First Circuit.
Heard Sept. 7, 1993.
Decided Jan. 31, 1994.

Page 417

Dana A. Curhan, by Appointment of the Court, for appellant Peter Brandon; John A. MacFadyen with whom Richard A. Gonnella, was on brief for appellant Charles D. Gauvin; Thomas J. May, with whom Carol A. Fitzsimmons and Johnson, Mee & May, were on brief for appellant Marvin Granoff; Barbara A.H. Smith for appellant Ronald R. Hagopian;

Page 418

William C. Dimitri, by Appointment of the Court, with whom Dimitri & Dimitri, was on brief for appellant Momi A. Kumalae; Donald P. Rothschild, by Appointment of the Court, with whom Tillinghast Collins & Graham, was on brief for appellant Owen B. Landman; Barbara A.H. Smith for appellant Norman D. Reisch; and Catherine C. Czar, by Appointment of the Court, for appellant John Ward.

Craig N. Moore, Assistant United States Attorney, with whom Edwin J. Gale, United States Attorney, and Margaret E. Curran, Assistant United States Attorney, were on brief for appellee.

Before TORRUELLA, Circuit Judge, CAMPBELL, Senior Circuit Judge, and BOUDIN, Circuit Judge.

TORRUELLA, Circuit Judge.

The eight defendants in this case were convicted of conspiracy to commit bank fraud under 18 U.S.C. Sec. 371 and of a varying number of bank fraud counts under 18 U.S.C. Sec. 1344 and Sec. 2 following a jury trial in the district court. They now challenge their convictions and sentences on a wide variety of grounds. For the reasons set forth below, we affirm all of the convictions except for the bank fraud convictions on Counts 24 and 25 against defendant John Ward and the bank fraud convictions on Counts 23 through 26 against defendant Owen Landman, which we reverse.

I. BACKGROUND

This case involves an alleged scheme to obtain loan financing from a federally insured bank by fraudulently representing the existence of down payments required by the bank from the investors on whose behalf the loans were made. According to the record in this case, viewed in the light most favorable to the government, United States v. Van Helden, 920 F.2d 99, 101 (1st Cir.1990), the facts of this scheme are as follows.

On January 1, 1985, defendant Peter Brandon and two others formed a partnership called Dean Street Development ("Dean Street") 1 for the purpose of buying, developing, and selling real estate. Specifically, Brandon planned to buy and renovate motels along the Rhode Island seashore, convert them into condominiums and then sell the individual rooms to investors as condominium units. As part of this plan, the condominium buyers would lease the units back to Dean Street and Dean Street would then manage the properties as motels. Under the "lease-back" agreement with the buyers, Dean Street would apply the income from the operation of the motels to cover the monthly mortgage, tax and insurance costs incurred by the unit buyers. Any shortfalls in operating costs would be made up by Dean Street, leaving the buyers with no monthly costs on their investment.

In addition, buyers would be allowed to use their units for two weeks out of the year. Dean Street would also guaranty them a certain level of profit at sale. Some buyers would receive rebates for each unit they purchased. In short, the buyers would be offered a sweet deal.

To make the deal even sweeter, Brandon planned to arrange all the financing for the buyers. He hoped to obtain 100% financing, that is, loans for the complete purchase price of each unit. With such financing, buyers could invest in the project without putting any money down and consequently obtain that elusive--yet apparently not uncommon for the fast-paced world of 1980s real estate--deal of "something for nothing."

In early 1987, Brandon approached Homeowner's Funding Corporation ("Homeowners"), a mortgage broker that acts as an intermediary between banks and borrowers, to obtain these "end loans" for the buyers. Homeowners' President told Brandon that 100% financing was unavailable for the project. Rather, the best Brandon could hope to find was 80% financing with a 20% down payment required from the buyers. Homeowners subsequently searched for a lender and, after approaching several banks, located

Page 419

Bay Loan and Investment Bank ("Bay Loan"), a financial institution insured by the Federal Deposit Insurance Corporation. Bay Loan agreed to lend buyers of Dean Street's condominium units up to 80% of the required purchase price.

Homeowners, as well as East-West Financial Corporation ("East West"), the other mortgage broker involved in this case, 2 acted as brokers and servicing agents for Bay Loan. Bay Loan was the actual lender for the Dean Street project and it financed every condominium sale involved in the scheme. By prior agreement, Homeowners and East West provided the original mortgages for the buyers and then sold them to Bay Loan. Homeowners and East West would forward all the loan applications to Bay Loan for approval prior to providing the mortgages for the condominium units. 3 The decision of whether to fund a particular mortgage rested entirely with Bay Loan and Bay Loan set the terms and conditions of each mortgage.

As Bay Loan Vice President of consumer lending, Joseph Gormley, explained to Brandon, the bank required each buyer of a condominium unit to make at least a 20% down payment to the seller, Dean Street, before Bay Loan could fund the loans. Instead of instructing buyers to provide the required down payments, however, Brandon concocted a scheme that permitted buyers to avoid the down payments altogether. As a result, he was able to pursue his original goal of obtaining 100% financing for the condominium project. The scheme was formulated during the spring and summer of 1987 when Brandon had several discussions with, among other people, his attorney, George Marderosian, and co-defendant Norman Reisch, another of Marderosian's clients, concerning ways that the 20% down payment requirement "might be satisfied by alternative methods or might be avoided." During that period, Brandon also told another person involved in the conspiracy, Claude Limoges, that the down payments would be falsified.

Brandon planned and employed three basic methods of falsifying the down payments. The first method was simply providing money to the various buyers which the buyers would then use to make the down payments to Dean Street. Usually the money came from third-party investors to whom Brandon promised a commission for each down payment they funded. Once the buyer made the down payment to Dean Street, Dean Street would return the money to the investor leaving a paper trail for a down payment that was never actually made. The second method involved obtaining down payment checks from the buyers and promising not to cash them. Copies of these nonnegotiated checks would remain in the loan file to give the appearance that real funds had actually been transferred. The third method was to provide second mortgages to the buyers to fund their down payments and then to discharge those mortgages after the closings. 4

The first method of avoiding down payments was employed from the outset of the scheme. Co-defendants Charles Gauvin and Marvin Granoff, two clients of Marderosian, agreed with Brandon to purchase some units at the Charlestown Motor Inn. Gauvin and Granoff also agreed to provide down payment funds to other buyers for subsequent unit sales. Brandon promised them $1000 for each unit sold with their down payment funds. In August of 1987, Gauvin, Granoff and a third person each purchased four units. Marderosian conducted the closing and co-defendant Owen Landman, an attorney who shared office space with Marderosian, acted as escrow agent. During the closing, Marderosian recorded the amount of each down

Page 420

payment ($20,500) on the closing statements--also called the HUD settlement sheets--as "amounts paid by or in behalf of borrower." 5

Gauvin provided the down payment funds for these twelve purchases but no actual payment was ever made; instead, the funds were passed through Dean Street and returned to Gauvin. At the closing, Gauvin delivered twelve separate checks for $20,500 each to Marderosian, drawn on an account that only had a $6000 balance at the time, and Landman deposited the checks in his escrow account. Landman then wrote twelve corresponding checks to Marderosian who in turn wrote checks to Dean Street for identical amounts of $20,500 each. Two days later, Dean Street wrote twelve checks back to Gauvin for the same amounts of $20,500 each and Gauvin deposited the money in the original checking account to cover his initial twelve checks written as down payments to the seller.

In late August and September of 1987, Gauvin provided down payments for the purchase of units at the Charlestown Motor Inn and at the Bayside Motel by Reisch and others. As with the first purchases, Dean Street returned the down payment money within a matter of days and also paid Gauvin an additional $1000 per unit.

In the beginning of 1988, Bay Loan began requiring that down payments be made with certified funds. Gauvin and Granoff agreed to provide buyers with funds so that they could obtain certified checks before the closings. In January and February of 1988, Granoff supplied $470,000 to...

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259 practice notes
  • U.S. v. De La Mata, Nos. 00-10201
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • September 27, 2001
    ...(3) that the defendant acted knowingly. United States v. Goldsmith, 109 F.3d 714, 715 (11th Cir. 1997); see also United States v. Brandon, 17 F.3d 409, 424 (1st Cir. 1994). The question here is whether the government must also prove that appellants exposed the Bank to a risk of loss as part......
  • U.S. v. Rigas, No. 08-3218.
    • United States
    • U.S. Court of Appeals — Third Circuit
    • October 21, 2009
    ...On the one hand, the "defraud" clause focuses narrowly on conspiracies targeting the federal government. See United States v. Brandon, 17 F.3d 409, 422 (1st Cir.1994); United States v. Falcone, 960 F.2d 988, 990 (11th Cir.1992) (en banc); United States v. Thompson, 814 F.2d 1472, 1476-77 (1......
  • U.S. v. Reitmeyer, No. 02-5151.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • February 4, 2004
    ...whether an indictment is multiplicious, see United States v. Mancuso, 42 F.3d 836, 847-48 (4th Cir.1994); United States v. Brandon, 17 F.3d 409, 422 (1st Cir.1994); Lilly, 983 F.2d at 305; United States v. Saks, 964 F.2d 1514, 1519, 1526 (5th Cir. 1992), and may be evidence indicating an "e......
  • United States v. Simon, 20-1368
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • August 25, 2021
    ...or arguments to indicate this was, in fact, the case," is inadequate to ground a claimed Brady violation. United States v. Brandon, 17 F.3d 409, 456 (1st Cir. 1994); see Flete-Garcia, 925 F.3d at 34 (concluding that "district court's refusal to compel production of requested information is ......
  • Request a trial to view additional results
259 cases
  • U.S. v. De La Mata, Nos. 00-10201
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • September 27, 2001
    ...(3) that the defendant acted knowingly. United States v. Goldsmith, 109 F.3d 714, 715 (11th Cir. 1997); see also United States v. Brandon, 17 F.3d 409, 424 (1st Cir. 1994). The question here is whether the government must also prove that appellants exposed the Bank to a risk of loss as part......
  • U.S. v. Rigas, No. 08-3218.
    • United States
    • U.S. Court of Appeals — Third Circuit
    • October 21, 2009
    ...On the one hand, the "defraud" clause focuses narrowly on conspiracies targeting the federal government. See United States v. Brandon, 17 F.3d 409, 422 (1st Cir.1994); United States v. Falcone, 960 F.2d 988, 990 (11th Cir.1992) (en banc); United States v. Thompson, 814 F.2d 1472, 1476-77 (1......
  • U.S. v. Reitmeyer, No. 02-5151.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • February 4, 2004
    ...whether an indictment is multiplicious, see United States v. Mancuso, 42 F.3d 836, 847-48 (4th Cir.1994); United States v. Brandon, 17 F.3d 409, 422 (1st Cir.1994); Lilly, 983 F.2d at 305; United States v. Saks, 964 F.2d 1514, 1519, 1526 (5th Cir. 1992), and may be evidence indicating an "e......
  • United States v. Simon, 20-1368
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • August 25, 2021
    ...or arguments to indicate this was, in fact, the case," is inadequate to ground a claimed Brady violation. United States v. Brandon, 17 F.3d 409, 456 (1st Cir. 1994); see Flete-Garcia, 925 F.3d at 34 (concluding that "district court's refusal to compel production of requested information is ......
  • Request a trial to view additional results
1 books & journal articles
  • FINANCIAL INSTITUTIONS FRAUD
    • United States
    • American Criminal Law Review Nbr. 58-3, July 2021
    • July 1, 2021
    ...made false statements on a loan application need not know whether the victimized bank was federally insured); United States v. Brandon, 17 F.3d 409, 425 (1st Cir. 1994) (f‌inding that the status of a banking institution is an objective fact, and not part of the “knowledge” element under § 1......

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