United States v. Betts-Gaston
| Decision Date | 06 November 2015 |
| Docket Number | Case No. 11 CR 502–1 |
| Citation | 142 F.Supp.3d 716 |
| Parties | United States of America, v. Avalon Betts–Gaston, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Stephen Chahn Lee, United States Attorney's Office, Chicago, IL, for United States of America.
CHARLES RONALD NORGLE
In 2011, Defendant Avalon Betts–Gaston ("Betts–Gaston") and her codefendant, Dimona Ross ("Ross"), were indicted for two counts of wire fraud, arising out of a foreclosure relief scheme that began around March 2006 and continued until about October 2007. During the time of the scheme, Betts–Gaston was a self-employed licensed attorney and Ross was a licensed real estate loan officer working at First Choice Funding. In addition to their licensed professions, the two women founded IJCN Investments, LLC ("IJCN"). Betts–Gaston was a managing member and the registered agent for IJCN, which functioned as the major vehicle for their fraud.
Ross ultimately pled guilty to one count of wire fraud. On the other hand, Betts–Gaston went to trial on the charges. After a six-day trial, the jury found Betts–Gaston guilty beyond a reasonable doubt on all charges. Before the Court is Betts–Gaston's post-trial motion arguing that Federal Rule of Criminal Procedure 29
warrants a judgment of acquittal to be entered; or in the alterative, Betts–Gaston requests a new trial pursuant to Federal Rule of Criminal Procedure 33. For the following reasons, the motion is denied.
After graduating from law school in 2000, Avalon Betts–Gaston worked for a medium-sized law firm specializing in employment insurance litigation. But in the early 2000s, Betts–Gaston saw opportunity in the burgeoning real estate market. After two years with the medium-sized firm, she opened her own law firm and started doing real estate transactions. For several years she performed the role of the attorney at real estate closings. She became acquainted with Ross during the course of those real estate transactions and the two chose to become business partners, founding IJCN in 2006. What might have started as a well-intentioned business plan to help people struggling to meet the mortgage payment obligations on their homes became a criminal enterprise in which Betts–Gaston and Ross contrived fraudulent real estate transactions to defraud the homeowners selling their homes and the financial institutions funding the loans.
Ross reached a plea agreement with the government in which she accepted responsibility and pled guilty to one count of wire fraud; Betts–Gaston, however, maintained her not guilty plea and chose to defend the charges at trial. Before trial, the Court entered several evidentiary rulings. One of which was the March 12, 2015 Order granting the government's Santiago
Proffer pursuant to Federal Rule of Evidence 801(d)(2)(E). The Order allowed the government to admit: (1) statements made by an employee of IJCN, and (2) statements made by the straw buyers used in the mortgage fraud scheme. In a written order on April 27, 2015, the Court found that the proposed testimony from Betts–Gaston's putative expert was irrelevant to the elements of wire fraud and had little probative value; thus the Court barred the expert from testifying under Federal Rules of Evidence 401 and 403, respectively, Betts–Gaston filed a motion asking the Court to reconsider its April 27th Order and the Court heard oral arguments on the day of trial, June 23rd, before jury selection. The Court denied the motion because the written summary of the expert's proposed testimony did not comply with Rule 16 of the Federal Rules of Criminal Procedure and Betts–Gaston's renewed arguments were unpersuasive. The Court then ruled on the outstanding motions in limine before a jury venire was selected.
A fourteen person jury was then selected, twelve members with two alternates, and the trial began. Over the course of the trial, the government presented testimony from: 1) Ross, the codefendant; 2) Sandra Spikes–Davis ("Spikes–Davis"), the former homeowner of the Trumbull property; 3) Mitchelle Kmiec ("Ms.Kmiec"), the sister of the former homeowner of the Howard Property, Charles Kmiec ("Mr.Kmiec"), because Mr. Kmiec died after participating in Betts–Gaston's foreclosure relief scheme; 4) Tracy Lee Kepler ("Kepler"), the investigator from the Illinois Attorney Registration and Disciplinary Commission ("ARDC") who investigated Betts–Gaston's disciplinary case; 5) Robert Brennan ("Brennan"), the former homeowner of the third property referenced, but not expressly named, in the indictment; 6) Surrina Hamb ("Hamb") and Tanisha Blanchard, two former employees of IJCN; 7) Armando Arevalo ("Arevalo") and Norman Ikonen ("Ikonen"), two representatives from the mortgage lending institutions that provided the loans on the Trumbull and Howard properties; 9) Mark Gold ("Gold"), an investigator for the Federal Reserve Bank of New York; 10) one of the Federal Bureau of Investigation ("FBI") agents who investigated Betts–Gaston's criminal case; and 11) multiple records custodians. In conjunction with the testimony, the government presented documentary evidence of the real estate transactions in which Betts–Gaston participated. In her defense, Betts–Gaston called to the stand a FBI agent that investigated her criminal case and she testified herself.
The government produced evidence showing that IJCN advertised a program to help homeowners who were at risk of losing their homes to foreclosure. The evidence showed that after forming IJCN, Betts–Gaston and Ross facilitated four real estate transactions through the use of their company. Ross handled obtaining the mortgages on the transactions, Betts–Gaston managed the legal aspects of the transactions, and they both interacted with the victim-homeowners and the IJCN business bank account. Betts–Gaston was at the center of each of these transactions; she was the attorney representing the homeowners selling their homes; she was the attorney acting on behalf of the title insurance company; she was the owner of IJCN, which ultimately obtained control of the homes; and in the Trumball Property transaction, she was the daughter of the buyer.
The evidence showed that Sandra Spikes–Davis purchased the Trumbull Property as her personal residence in 1994. As of 2006, she owed about $168,000 on the mortgage and made monthly payments of $921. But after losing her job at the Chicago Tribune, she began to fall behind on the mortgage payments. Spikes–Davis spoke with her friend Sylvia Hamb, who told her to contact her niece Surrina Hamb, who worked for a real estate company—IJCN—that helped distressed homeowners refinance their homes instead of face foreclosure. Spikes–Davis contacted Hamb, was told that she could delay her mortgage payments for six to eighteen months, and began to work with Hamb, Ross, and Betts–Gaston at IJCN. She was never under the impression that she was selling her home.
Spikes–Davis met in person with Betts–Gaston one time in June of 2006 for about an hour. Betts–Gaston had her sign documents, but never explained anything about the IJCN program. Betts–Gaston collected Spikes–Davis's signature on the documents, however, much of the other information on the documents was left blank. Spikes Davis was told that the blanks would be filled out at closing. Spikes–Davis signed an attorney representation document stating that Betts–Gaston would be her attorney and left the meeting with the understanding that Betts–Gaston would represent her on some sort of home refinance transaction. Spikes–Davis was told that her house would be going into a trust, but that the trust would be in her name. She was not told that she was giving up any interest or ownership in her home. Then, Spikes–Davis was not contacted by Ross, Betts–Gaston, or any other IJCN employee until after the closing on the Trumbull Property occurred.
What actually occurred at the formal closing on July 28, 2006, was much different than what Spikes–Davis was told and expected. Using the documents Spikes–Davis signed earlier but did not complete, all of Spikes–Davis's interests in the Trumbull Property were quitclaimed to a trust at Chicago Title Land Trust (the "IJCN trust") in June of 2006 for ten dollars. Also prior to the closing, Betts–Gaston recruited her father, James Betts ("Betts"), to serve as the straw buyer on the transaction. Ross and Betts–Gaston then worked together to submit a loan application, with Betts named as the debtor, to Fremont Investment and Loan. Betts's income amount stated on the loan application and his purpose for buying the Trumbull Property as a second home were false. On July 28, 2006, the IJCN trust sold the Trumbull Property to Betts. Spikes–Davis was not notified, and thus, was not present at the closing. From closing the transaction, a check for $31,553.48, essentially the equity from Spikes–Davis's home, was issued to IJCN. That equity was commingled with IJCN's business account. There was no escrow account. No money was set aside in a separate account for Spikes–Davis's...
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