United States v. Appolon

• Citation: 715 F.3d 362
• Decision Date: 29 April 2013
• Docket Number: No. 11–1627.,11–1627.
• Parties: UNITED STATES of America, Appellee, v. Ralph APPOLON, Defendant, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

715 F.3d 362

UNITED STATES of America, Appellee,

v.Ralph APPOLON, Defendant, Appellant.

No. 11–1627.

United States Court of Appeals, First Circuit.

April 29, 2013.

Derege B. Demissie for defendant-appellant.

Ryan M. DiSantis, Assistant United States Attorney, with whom Carmen M. Ortiz, United States Attorney, was on brief, for appellee.

Before HOWARD, STAHL, and LIPEZ, Circuit Judges.

LIPEZ, Circuit Judge.

Appellant Ralph Appolon was charged with one count of conspiring to commit wire fraud in violation of 18 U.S.C. § 371 and four counts of committing wire fraud in violation of 18 U.S.C. § 1343. These charges arose out of his connection to a mortgage fraud scheme. After a lengthy jury trial, Ralph ¹ was found guilty of all charges against him, and was sentenced to a term of imprisonment followed by supervised release. He raises a number of challenges to the district court's evidentiary rulings, the sufficiency of the evidence against him, and the loss calculation used to establish his sentence. Upon careful consideration, we affirm his convictions and sentence.

I.

A. The Mortgage Fraud Scheme

The companion case to this appeal, United States v. Appolon, 695 F.3d 44, 51–53 (1st Cir.2012) [“Daniel Appolon ”], lays forth the basic facts of the mortgage fraud scheme at issue in great detail, and we assume the reader's familiarity with that opinion.² As we described, [t]he scheme itself was uncomplicated: appellants and their coconspirators arranged for straw buyers to purchase real property at the asking price, falsified mortgage loan applications for the straw buyers to obtain financing for an artificially-inflated purchase price, and pocketed the difference. The loans secured by each of the properties involved in appellants' scheme eventually went into default, and most of the properties were forced into foreclosure at huge losses for the lenders.

Id. at 51. Twenty-one properties were sold as part of this scheme. Id. at 53. The conspiracy involved a number of individuals, including: Eric Levine, a real estate lawyer who had been suspended from the practice of law; Daniel Lindley, another real estate attorney; Latoya Haltiwanger, a residential mortgage broker; and Ernst Appolon, a realtor. Id. at 52. Ernst Appolon's brothers, Daniel and Ralph, also participated in the scheme. Id.

The trial record discloses the following facts, described in the light most favorable to the jury's verdict. See United States v. Mubayyid, 658 F.3d 35, 41 (1st Cir.2011). Ralph was a loan originator with New England Merchants, a real estate company where he worked with Ernst and Daniel. His main responsibility was to recruit and cultivate straw buyers to participate in the fraudulent property deals. These buyers typically provided their names and credit histories for the purchase in exchange for various benefits, including having mortgage payments made on their behalf or receiving remuneration for their participation. Ralph also created and processed loan applications for the property deals, which contained various representations regarding the straw buyers who were purportedly applying for the loans.

Ralph's wire fraud charges arose from his involvement with transactions surrounding two properties located at 586 East Third Street, South Boston, MA (“the Third Street property”) and 3231 Washington Street, Jamaica Plain, MA (“the Washington Street property”).

B. The Third Street Property

The Third Street property's purchase took place in June 2005. Ralph's coconspirators recruited him to find a purchaser, telling him that he could write the mortgage documents and would obtain a commission on the loan. When Ralph was unable to secure a purchaser, Levine and the seller, Robert Odimegwu, asked Ralph to buy the property himself, on the conditions that Ralph would receive a portion of the realtor commission as well as a hefty referral fee, and that Levine and Odimegwu would pay the mortgage for a year.

Ralph assented, but put the property in the name of his mother-in-law, Violetha Clemendore. Clemendore agreed to assist Ralph and sign loan documents at his request, believing that her participation would help Ralph and her daughter with their real estate ventures. He prepared and submitted a mortgage loan application on Clemendore's behalf to Long Beach Mortgage. This application contained a number of false statements concerning, inter alia, the purchase price, Clemendore's intent to maintain her primary residence at the property, and her monthly income. Based on the application and related paperwork, Long Beach Mortgage approved 100 percent financing for the purchase and wired loan proceeds to Lindley's account. The proceeds were transferred to Levine's account after the closing, and Levine in turn paid Ralph $60,000, as well as a loan origination commission of almost $6,000.

C. The Washington Street Property

Ralph also participated in the September 2005 sale of the Washington Street property. A man named Peter Robinson served as the straw buyer for this purchase. Robinson testified that he spoke with Ralph at least once during the purchasing process, and on one occasion another conspirator witnessed Robinson, Ernst, and Ralph meet together at the New England Mortgage office. Robinson's loan application listed Ralph as the loan interviewer, and Ralph also acted as the broker representative for the purchase.

Robinson's purported loan application was submitted to a company called WMC Mortgage Corporation (“WMC Mortgage”). The application contained various false statements, including information about his employment at a second job, misrepresentations regarding his monthly income, and a $29,000 bank account balance he did not actually have. The closing for the Washington Street property took place in September 2005, with Robinson, Ernst, and an attorney present. Ralph was at the closing for a short period of time. After the closing, Ralph received $8,320 in excess funds from one of Levine's accounts, as well as a broker fee in a similar amount.

After a nine-day trial, the jury returned guilty verdicts on the conspiracy count as well as all four wire fraud counts. The district court sentenced Ralph to 60 months' imprisonment on the conspiracy count and 70 months' imprisonment on each wire fraud count, all to run concurrently. Ralph was also sentenced to two years of supervised release, and ordered to forfeit approximately $1.9 million that he had gained from his participation in the conspiracy. This timely appeal followed.

II.

Ralph raises various challenges to his conviction and sentence, some of which coincide with arguments raised by his coconspirators in Daniel Appolon. We begin by addressing the arguments unique to Ralph's appeal.

A. Sufficiency of the Evidence

Ralph moved for a judgment of acquittal on all of the charges against him under Federal Rule of Criminal Procedure 29. The district court denied Ralph's motion, and he appeals from that ruling. We review a challenge based on insufficiency of the evidence de novo, viewing the evidence in the light most favorable to the jury's verdict. United States v. Rodríguez–Vélez, 597 F.3d 32, 38 (1st Cir.2010). We give equal weight to direct and circumstantial evidence. See United States v. Ortiz, 447 F.3d 28, 32 (1st Cir.2006). The inquiry focuses on whether “ ‘a rational jury could have found that the government proved each element of the crime beyond a reasonable doubt.’ ” United States v. Mardirosian, 602 F.3d 1, 7 (1st Cir.2010) (quoting United States v. Sepulveda, 15 F.3d 1161, 1173 (1st Cir.1993)). We begin with Ralph's arguments as to the substantive wire fraud counts before turning to his conviction on the conspiracy count.

1. The Wire Fraud Counts

The elements of a wire fraud conviction under 18 U.S.C. § 1343 are: (1) a scheme or artifice to defraud using false or fraudulent pretenses; (2) the defendant's knowing and 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. See United States v. Sawyer, 85 F.3d 713, 723 (1st Cir.1996); United States v. Cassiere, 4 F.3d 1006, 1011 (1st Cir.1993). The false or fraudulent representation must be material.Neder v. United States, 527 U.S. 1, 25, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999); United States v. Blastos, 258 F.3d 25, 27 (1st Cir.2001).

a. Counts Two and Three (Third Street Transaction)

Counts Two and Three arose from Ralph's participation in the sale of the East Third Street property to Ralph's mother-in-law, Clemendore. Appellant's challenge to these counts concerns the materiality of his misrepresentations. A material statement “has a natural tendency to influence, or [is] capable of influencing, the decision of the decisionmaking body to which it was addressed.” Neder, 527 U.S. at 16, 119 S.Ct. 1827 (quoting United States v. Gaudin, 515 U.S. 506, 509, 115 S.Ct. 2310, 132 L.Ed.2d 444 (1995)) (internal quotation marks omitted) (alteration in original). The government need not prove that the decisionmaker actually relied on the falsehood or that the falsehood led to actual damages. See id. at 24–25, 119 S.Ct. 1827 (“The common-law requirements of justifiable reliance and damages ... plainly have no place in the federal fraud statutes.” (internal quotation marks omitted)).

Here, the misrepresentations at issue were contained in the mortgage application Ralph prepared and submitted to Long Beach Mortgage. Ralph observes that the government presented no evidence regarding Long Beach Mortgage's loan evaluation process, in contrast to the Washington Street transaction, where the government presented witness testimony from a WMC Mortgage representative who spoke about the types of factors that company used when evaluating an application. Without any information regarding the types of information that Long Beach found relevant in deciding whether to approve a loan, Ralph argues, the government could not establish that any of the misrepresentations...