United States v. Benchick, 021518 FED6, 16-2471

Docket Nº:16-2471
Opinion Judge:COOK, Circuit Judge.
Party Name:UNITED STATES OF AMERICA, Plaintiff-Appellee, v. JOHN S. BENCHICK, Defendant-Appellant.
Judge Panel:BEFORE: CLAY, GIBBONS, and COOK, Circuit Judges.
Case Date:February 15, 2018
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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UNITED STATES OF AMERICA, Plaintiff-Appellee,

v.

JOHN S. BENCHICK, Defendant-Appellant.

No. 16-2471

United States Court of Appeals, Sixth Circuit

February 15, 2018

         NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

         ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

          BEFORE: CLAY, GIBBONS, and COOK, Circuit Judges.

          COOK, Circuit Judge.

         The government alleges John S. Benchick managed to convince two banks to issue five mortgages totaling approximately $7.7 million despite having no appreciable income or assets. Separately, the government claims he persuaded an individual investor to send him some $300, 000, which Benchick largely committed to his personal use. After a jury found him guilty of four counts of bank fraud and one count of wire fraud, the district court sentenced him to 110 months' imprisonment and ordered him to pay over $4.8 million in restitution. Benchick appeals, pressing various arguments. We reject them and AFFIRM.

         I. BACKGROUND

         A. Bank Fraud Charges

         Benchick submitted one mortgage application in his own name, but, according to the government, he listed the stated borrower on the others as either his father, John I. Benchick, or his mother, Helen Benchick. The government presented evidence that Benchick's parents had little to do with any of these transactions. Witnesses testified that Benchick alone found the properties, communicated with loan officers, and negotiated the purchases. Additionally, phone numbers on the applications made under his father's name were actually associated with Benchick. Moreover, excess cash from the mortgages found its way into bank accounts Benchick owned or controlled. The government also argued via a physician's affidavit and testimony that Benchick's father had developed severe senile dementia rendering him incapable of comprehending mortgage transactions.

         The jury likewise heard evidence of significant discrepancies in the employment status and income figures Benchick reported on the applications. One application listed the senior Benchick as the self-employed owner of a company called "Cobe & Associates, LLC" earning $99, 999 per month (or nearly $1.2 million per year). Another lists his monthly income as $95, 000. An application the government claimed Benchick submitted in his mother's name notes her income of $45, 000 per month, also with Cobe & Associates. On the application he submitted under his own name, Benchick declared monthly income of $60, 000.

         At trial, the government presented actual tax returns for the Benchicks, revealing that all three made far less than claimed. According to these documents, John I. and Helen Benchick together made approximately $243, 000 in 2005 and $359, 000 in 2006 (all from passive sources, such as investments and Social Security). Benchick's own tax returns for this period each show negative incomes. Moreover, the government provided evidence-including testimony from Helen Benchick-that both parents had been retired for many years.

         Each of John I. and Helen Benchick's "applications" also declares that the mortgaged property would serve as their primary residence. But Helen Benchick herself testified that neither she nor her husband ever moved to any of the purchased properties.

         Bank representatives testified to the importance of providing truthful information on loan applications. For example, they told the jury that accurate income reporting is essential for the bank to judge whether a borrower will be able to make his monthly payments. They also testified to the importance of accurate employment history, its relevance to job stability and correlation to a lower risk of default, and the lenders' more favorable view toward primary-residence loans.

         The jury ultimately found Benchick guilty of fraudulently inducing two banks to issue five mortgages on three houses (two in Michigan, one in Florida) between 2006 and 2007, totaling more than $7.7 million, including over $1.5 million in cash disbursements.

         B. Wire Fraud Charge

         While living in Florida, Benchick met Doug Knoerr, a Michigan farmer, when Knoerr was vacationing in the area and looking to invest in distressed real estate. Knoerr testified that he knocked on Benchick's front door and started talking with Benchick about buying his house. Eventually, Knoerr bought the property with the understanding that Benchick would remain in the home overseeing repairs (using funds Knoerr provided) and preparing to flip it for a profit. Knoerr purchased the house for approximately $950, 000. According to the government, he went on to send Benchick over $300, 000 more for supposed repair work and as an investment in an illusory electric car project.

         Knoerr returned to Michigan, staying in touch with Benchick via phone calls and text messages. Knoerr testified that he occasionally sent Benchick money meant for repairs-$10, 000 for a boat lift, $15, 000 for the roof, $25, 000 for tile and flooring, among other expenses. He eventually became suspicious that Benchick was overcharging him because Benchick refused to provide receipts or bank records documenting completed repairs. Knoerr flew to Florida to take charge of the situation and tried to recoup some of his money from Benchick. Benchick refused, claiming that he had already spent all of Knoerr's money.

         The government presented evidence to show that Knoerr's concerns were well-founded. The FBI special agent who investigated the case, Claudia Link, testified about Benchick's cash flow patterns. While he appeared to make some repairs, such payments did not account for all of Knoerr's money. For example, at one point Knoerr sent Benchick $50, 000. A few days later, Benchick transferred $50, 000 from the same account to pay his criminal defense attorney.1Additionally, Benchick's ex-girlfriend, who lived with him in the Florida house during part of the relevant period, testified that Benchick used Knoerr's money to pay his living expenses. She said that she never saw him pay for any house repairs or work on it himself; furthermore, she testified that he told her he only intended to pay Knoerr back if he did "what he wanted him to do."

         The government also claimed Benchick cajoled Knoerr into supporting a non-existent electric car battery invention (the "BEV" project). Although Benchick refused to share background information on his invention and did not show Knoerr any blueprints, plans, or a workshop, Knoerr testified that he loaned Benchick $100, 000 to "get started" ...

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