United States v. DeMarco, 14–1526.

• Citation: 784 F.3d 388
• Decision Date: 24 April 2015
• Docket Number: No. 14–1526.,14–1526.
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Michael DeMARCO, Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

784 F.3d 388

UNITED STATES of America, Plaintiff–Appellee

v.Michael DeMARCO, Defendant–Appellant.

No. 14–1526.

United States Court of Appeals, Seventh Circuit.

Argued Dec. 4, 2014.

Decided April 24, 2015.

Naana A.N. Frimpong, Attorney, Office of the United States Attorney, Chicago, IL, for Plaintiff–Appellee.

Claire Hollis Forster, Attorney, Chicago, IL, for Defendant–Appellant.

Before BAUER, RIPPLE, and SYKES, Circuit Judges.

Opinion

BAUER, Circuit Judge.

A jury convicted defendant-appellant, Michael DeMarco (“DeMarco”), of one count of wire fraud, see 18 U.S.C. § 1343, and the district court sentenced him to forty-eight months' imprisonment. DeMarco appeals his conviction, arguing the district court made two erroneous evidentiary rulings which substantially prejudiced his defense. He also contests his sentence, claiming that the district court erred by applying a two-level increase to his base offense level for both abuse of a position of trust, see U.S.S.G. § 3B1.3, and the use of sophisticated means, see U.S.S.G. § 2B1.1(b)(1). For the reasons set forth below, we affirm.

I. BACKGROUND ¹

In January 2007, Michael Suarez (“Suarez”), a seventy-five year old widower from Mexico, visited a JPMorgan Chase Bank located in Vernon Hills, Illinois, to open a checking account. Michael DeMarco, the bank branch manager and assistant vice president, approached Suarez and assisted him in opening the account. DeMarco and Suarez eventually became friends. They spoke with one another about personal matters every week or so when Suarez would go to the bank to withdraw cash. During one of these conversations, Suarez told DeMarco that he was trying to sell his three acre property in Lincolnshire, Illinois, then listed with Coldwell Banker for $1.8 million. DeMarco told Suarez that he was “in charge of a lot of very wealthy people's accounts” and that he could help Suarez sell the property.

DeMarco convinced Suarez to break his contract with Coldwell Banker, indicating that he had a buyer for the property. DeMarco told Suarez that he needed a home equity line of credit (“HELOC”) on the property in order to complete the sale. After unsuccessfully submitting HELOC applications with Chase Bank and Wells Fargo, DeMarco obtained a HELOC, under Suarez's name and secured by Suarez's property, from Bank of America, in the amount of $250,000.

On June 8, 2007, DeMarco joined Suarez at a Bank of America branch located in Buffalo Grove, Illinois, to close on the HELOC. DeMarco provided the Bank of America representative who handled the closing, Dhara Patel, with his account details and requested that the $250,000 in HELOC proceeds be deposited directly into his personal account at Chase Bank. DeMarco also had his work address (325 Milwaukee Avenue, Vernon Hills, Illinois) listed as the “home address” of the borrower, even though Suarez was listed as the “borrower” on the HELOC.

On June 21, 2007, the HELOC proceeds were transferred via wire into DeMarco's personal account at Chase Bank. However, because the account holder (DeMarco) did not match the name of the borrower on the HELOC (Suarez), the wire transfer was reversed the following day. DeMarco then caused Bank of America to transfer the HELOC proceeds into a joint checking account, which he opened in both his and Suarez's name and which listed DeMarco's home address as the address of record on the account. After the HELOC proceeds were transferred to the joint account on June 27, 2007, DeMarco withdrew $245,000 of the $250,000 from the joint account and deposited the funds into his personal account at Chase Bank. After Chase Bank terminated his employment on August 22, 2007, DeMarco transferred the funds into two accounts he opened at National City Bank.

DeMarco spent the vast majority of the HELOC proceeds to pay off his credit card debt, make a down-payment on his home and on a Lexus SUV, pay off his two cars (a Mazda and Mercedes), finish his basement, and go on vacations to Hawaii, Mexico, and the Wisconsin Dells. He used a small fraction of the money to pay off various debts that Suarez had incurred.

In late July or early August 2007, Suarez went to a Chase Bank branch located in Libertyville, Illinois, to review copies of his Chase checking account statement. Upon doing so, he identified various irregularities with respect to his statement for July 2007. He brought this to the attention of a Libertyville Chase banker and was informed that he may have been the victim of some sort of fraud. Suarez then contacted Federal Bureau of Investigation (“FBI”) Special Agent Daniel McCune to discuss his dealings with DeMarco. After speaking with Suarez, Agent McCune launched an investigation; as a result of this investigation, an indictment charging DeMarco with one count of wire fraud in violation of 18 U.S.C. § 1343 was returned in the Northern District of Illinois on May 23, 2012.

DeMarco proceeded to trial on the charge. At trial, the government presented the testimony of Suarez, Agent McCune, and Dhara Patel. Suarez testified that DeMarco told him that Chase Bank would purchase his property for $2.6 million. He testified that, at DeMarco's direction, he went to a Bank of America branch located in Buffalo Grove, Illinois, to attend what he thought was a closing on the sale of his property. Eventually, Suarez realized that the meeting did not relate to the sale of his property, but rather to open a line of credit for $250,000. DeMarco told him that the HELOC was necessary to consummate the sale of his property.

Suarez testified that DeMarco rushed him through the HELOC closing and told him to sign numerous documents before he had a chance to read them. He testified that he and DeMarco never discussed where the HELOC proceeds would be deposited nor did he ever know that DeMarco arranged to have the proceeds transferred to his (DeMarco's) personal account at Chase Bank. Suarez said that he never questioned DeMarco because he “had confidence in him” and thought that DeMarco, as a bank branch manager and assistant vice president, knew what he was doing.

After the HELOC closing, Suarez never spoke to or saw DeMarco again. Every time Suarez tried to contact DeMarco, he was met with an excuse—for example, he was told DeMarco was “downtown at a meeting,” “with a client,” or “out to lunch.” Suarez also testified that he never agreed to pay DeMarco a commission for selling his property; he never agreed to open a joint checking account with DeMarco; he never agreed to give DeMarco any portion of the $250,000 in HELOC proceeds; and he never asked DeMarco to pay off any of his debts.

Agent McCune testified that, as part of his investigation, he went to DeMarco's home to interview him. During the interview, DeMarco initially told him that Suarez had given him the HELOC proceeds as a gift but subsequently admitted this was not true, instead saying that Suarez had taken him on as a sales agent for the sale of his property. Agent McCune testified that DeMarco said he located a developer, through a bank client, to purchase the property but could recall neither the name of the customer nor the buyer. Agent McCune testified that DeMarco ultimately admitted that he lied to Suarez when he told him that he found a developer who agreed to purchase the property for $2.6 million. Finally, Agent McCune testified that DeMarco admitted that Suarez trusted him and that he abused that trust.

Dhara Patel, the Bank of America representative who handled the HELOC closing, testified that DeMarco rushed her through the closing in order to keep her from fully explaining the HELOC documents to Suarez. She also corroborated Suarez's testimony that DeMarco pushed him to sign documents before he had a chance to review them. She testified that DeMarco did not attempt to explain the documents to Suarez and that Suarez did not appear to fully understand what was going on during the closing.

DeMarco was the only defense witness. He testified that he had not intended to defraud Suarez; that the two had entered into a legitimate oral agreement for him to sell Suarez's property. According to DeMarco, Suarez agreed to pay him a commission of ten to twelve percent of the sale price, in the event that he was able to sell the property. DeMarco testified that he found a developer to purchase the property, however, because the developer needed a couple of months before he could complete the sale, DeMarco convinced Suarez to take out a HELOC so that he could immediately receive his commission and Suarez could begin paying off various debts.

DeMarco testified that Suarez participated in every step of the HELOC process. He testified that Suarez agreed to having the HELOC proceeds deposited in his (DeMarco's) personal account at Chase Bank; that Suarez authorized him to open a joint checking account in his and Suarez's name; and that Suarez agreed to having the HELOC funds transferred from the joint checking account to his (DeMarco's) personal account. DeMarco testified that on August 23, 2007, the unidentified developer he found to purchase the property informed him that the deal was off. According to DeMarco, he tried to contact Suarez to tell him that the deal had fallen through, but despite his efforts, which he admitted were rather minimal, he could not get in touch with Suarez. DeMarco then spent the remaining $114,000 in HELOC proceeds on himself and his family. DeMarco admitted that Suarez trusted him to “do the right thing” and that he “obviously did him [Suarez] wrong.”

The jury found DeMarco guilty of one count of wire fraud in violation of 18 U.S.C. § 1343. In anticipation of sentencing, the United States Probation Office prepared a presentence report (“PSR”). The PSR recommended a two-level enhancement pursuant to the United States Sentencing Guidelines § 2B1.1(b)(10)(C) because DeMarco's fraud involved the use of sophisticated means, but rejected a two-level enhancement for abuse of a position of trust.

DeMarco filed an objection to the PSR's...