U.S. v. Trainor

• Decision Date: 16 February 2007
• Docket Number: No. 05-1553.,05-1553.
• Citation: 477 F.3d 24
• Parties: UNITED STATES, Appellee, v. William P. TRAINOR, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

477 F.3d 24

UNITED STATES, Appellee, v. William P. TRAINOR, Defendant, Appellant.

No. 05-1553.

United States Court of Appeals, First Circuit.

Heard October 6, 2006.

Decided February 16, 2007.

Robert D. Dimler, for appellant.

Jack B. Patrick, Senior Litigation Counsel, Fraud Section, Criminal Division, U.S. Department of Justice, with whom Thomas P. Colantuono, United States Attorney, was on brief, for appellee.

Before LIPEZ, Circuit Judge, STAHL, Senior Circuit Judge, and BARBADORO,^* District Judge.

LIPEZ, Circuit Judge.

The primary claim in this criminal appeal is the familiar one that a conspiracy conviction was flawed because the facts revealed multiple conspiracies rather than the single overarching scheme that was charged. The indictment against defendant-appellant William P. Trainor, charging both conspiracy to commit wire fraud and multiple episodes of the substantive crime, stemmed from his role in fraudulently securing mortgages on two adjacent properties owned by his family in Maine. Asserting that the conduct related to each property was separate, appellant argues that the conspiracy count — which treated the two ventures as a single scheme — should have been dismissed as duplicitous. He alternatively argues prejudicial variance, contending that the evidence presented at trial showed separate schemes and thus was insufficient to prove the single charged conspiracy. He also claims that spillover in evidence between the two schemes denied him a fair trial on the wire fraud charges, requiring that those convictions also be set aside.

We find no merit in these contentions or his related evidentiary claim. The jury was properly instructed to consider whether a single conspiracy had been proven, and the record amply supports its verdict. We therefore affirm appellant's conviction on all counts.

I.

A. Factual Background

Appellant Trainor and his family owned two lakeside properties — 12 Trainor Road and 16 Trainor Road — in Lebanon, Maine. Appellant allegedly orchestrated a complex series of financial transactions involving sham deposits, altered checks, forged signatures and myriad other false representations to fraudulently elicit mortgage funds from two different financial institutions. We present the facts as the jury could have found them, reserving additional detail for our discussion of defendant's claims of error. See United States v. Byrne, 435 F.3d 16, 18 (1st Cir.2006).

1. The Mortgage on 12 Trainor Road

In the summer of 2000, Trainor approached co-defendant John DesMarais, a family friend and carpenter who had done work for him,¹ about buying the house and land at 12 Trainor Road, which was held in the name of Trainor's wife. DesMarais earned only $40,000 a year and had filed for bankruptcy in 1995, but Trainor offered to help him secure financing. The original purchase and sale agreement showed a sale price of $550,000 and an initial deposit of $10,000. DesMarais had not, in fact, given such a deposit. He previously had purchased a boat from Trainor for $6,000, and Trainor told DesMarais he would credit the money from the boat purchase toward the property deal.²

In helping DesMarais obtain a $400,000 mortgage from Chase Manhattan Mortgage ("Chase"), appellant took various steps aimed at creating the false impression that DesMarais had the resources to buy the property. For example, at Trainor's suggestion, DesMarais borrowed $20,000 from an acquaintance, Don Walden, which DesMarais used in part to purchase stock in a company associated with Trainor.³ DesMarais understood that, like the boat purchase, the money for the stock would be considered a deposit on the property. Walden's money also was used to fund a $5,240 personal check written to Trainor's wife, Geraldine, as a deposit. DesMarais subsequently told a Chase loan officer, David Barney, that he planned to finance the property purchase by selling stock worth $157,500. DesMarais testified that the stock value was set by Trainor, and he admitted at trial that he did not own stock of that value. During the loan process, DesMarais did not disclose that he had borrowed money to finance the down-payment, a fact that would have disinclined the mortgage company to issue the loan because an outlay of cash is considered some security against default.

As part of the loan application process, Trainor submitted appraisals for the property that the jury could have found were inflated. See infra note 18. Also among the documents provided to Chase was a memo stating that DesMarais had exchanged his original stock for shares of another company, and that he had a buyer ready to purchase that stock for $106,250. The memo bore the heading "From the Office of John Desmarais" and was signed with the initials "J.D." DesMarais testified, however, that he had not created the document, that it was not his handwriting on it, and that he never spelled his last name with a lower-case "m." Barney also was sent a revised purchase and sale agreement, which showed a new sale price of $500,000 and referenced $22,500 in deposits that DesMarais was to have paid by September 30, 2000. DesMarais testified that he did not see the revised purchase and sale agreement until after his arrest, and also stated that the signature that appears on it — his name — was not written by him.

On December 11, 2000, the mortgage company received another memo purportedly from DesMarais, along with photocopies of cancelled checks that were meant to be evidence of his down-payments on the property. The evidence showed, however, that some of the photocopied checks had been altered.⁴ On December 21, the company received a faxed copy of DesMarais's bank statement showing deposits of $18,000 and $87,500 and an account balance of $106,690.83 — "proof" that DesMarais had sufficient funds of his own for the loan to close. The two deposited checks had been written by Trainor, however, on an account of "Fradco Holdings, Inc." that at the time contained only $7.65. At the closing on December 22, Trainor provided the $91,855.69 that was due from the borrower by using another Fradco Holdings check, this time for $75,000, and a cashier's check for $16,855.69. Trainor had purchased the cashier's check with money he obtained from Walden; he gave Walden in return a $17,000 Fradco Holdings check that Walden was told he should hold off on cashing until he heard back from Trainor.

Chase provided $390,083.90 for the closing, and that money was disbursed based on directions from Trainor, who stated in his letter to the mortgage company that he and his wife were donating most of the sale proceeds. The specified disbursements included a $120,000 payment wired to the Fradco Holdings account, which covered the checks that Trainor recently had written on that account: the $17,000 to Walden for the cashier's check, the $75,000 paid at closing, and the $18,000 check deposited into DesMarais's account.⁵ Trainor put a stop payment order on the $87,500 Fradco Holdings check that also had been deposited into DesMarais's account. Another $20,000 was used to repay Walden for his original loan to DesMarais.

DesMarais moved into the house at 12 Trainor Road and managed to make the loan payments for eighteen months before the bank foreclosed on the property.

2. The Mortgage on 16 Trainor Road

Within weeks after the closing on 12 Trainor Road, Trainor approached DesMarais with a new proposal. He suggested that DesMarais become involved in a plan to purchase the adjoining four-acre plot at 16 Trainor Road, which was held in the name of Trainor's son, and to build a custom home on the property; the sale of the house would generate funds to help DesMarais afford his loan payments on 12 Trainor Road. DesMarais introduced Trainor to his friend, builder Donald Smith — the third co-conspirator in this case — and the discussions eventually led to DesMarais bowing out of the financing for 16 Trainor Road because of his inability to borrow any more money. Trainor and Smith agreed that Smith would serve as the buyer, and DesMarais would receive a $10,000 finder's fee from the loan proceeds.

Trainor again provided a purchase and sale agreement, which listed the sale price as $250,000 and stated that the purchase would be accomplished with a $50,000 deposit and a $200,000 mortgage. Smith and Trainor had agreed, however, that the "real" sale price for the land was $130,000 and that Smith did not have to make the $50,000 deposit. Smith gave Trainor $20,000, but understood that he would be reimbursed when the loan closed. On April 20, 2001, a deed was executed showing transfer of the property to Smith.

Meanwhile, Trainor had interested Walden — the individual who had lent money to DesMarais for the earlier purchase — in investing in Trainor's businesses. When Walden became nervous about his investments, Trainor offered him a security interest in the 16 Trainor Road property as a "line of credit" up to a $200,000 investment. In essence, this arrangement meant that Walden would become the mortgage-holder on 16 Trainor Road, with the security interest in the land protecting him in case his investments with Trainor turned out badly. The deal allowed Trainor to create the impression that Smith had purchased the property with a temporary mortgage funded by Walden; Trainor prepared a mortgage and promissory note in which Smith agreed to pay Walden $200,000.

Using the Walden "mortgage" as evidence that $200,000 had changed hands in his purchase of the property, Smith submitted an application to Citizens Mortgage Corporation ("Citizens") for a $419,000 construction loan — $200,000 intended to repay the original mortgage and the remainder to finance construction of the house. Smith told the loan officer that the house would be a vacation home rather than a custom investment house — a deception necessary to gain approval for the loan. The mortgage company also was deceived about the $50,000 down payment, another prerequisite to...