United States v. Graham, 20-832
| Docket Number | 20-832,August Term 2021 |
| Decision Date | 14 October 2022 |
| Citation | 51 F.4th 67 |
| Parties | UNITED STATES of America, Appellee, v. Jacqueline GRAHAM, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Second Circuit |
Harry Sandick (Christopher Wilds, Andrew Haddad, on the brief), Patterson Belknap Webb & Tyler LLP, New York, NY, for Defendant-Appellant.
David R. Felton, Assistant United States Attorney (Michael D. Maimin, Karl Metzner, on the brief), for Audrey Strauss, United States Attorney for the Southern District of New York, New York, NY, for Appellee.
Before: Walker, Park, and Pérez, Circuit Judges.
Judge Pérez concurs in a separate opinion.
Defendant-Appellant Jacqueline Graham was convicted after a jury trial of conspiracy to commit mail, wire, and bank fraud, in violation of 18 U.S.C. § 1349. On appeal, Graham argues that her pretrial counsel was constitutionally ineffective for failing to transmit a plea offer from the government to Graham before it expired, thereby depriving her of the chance to plead guilty under the terms of the offer. See Missouri v. Frye , 566 U.S. 134, 132 S.Ct. 1399, 182 L.Ed.2d 379 (2012). We conclude that Graham has waived any claim that the alleged error violated her Sixth Amendment rights. Unlike the defendant in Frye , Graham learned of her expired plea offer and received new court-appointed counsel two months before trial. She nonetheless chose to go to trial rather than to plead guilty or to petition the court for reinstatement of the offer. This knowing and voluntary choice was inconsistent with seeking the benefit of the expired plea offer and thus constitutes waiver.
We also reject Graham's remaining arguments on appeal. The district court did not abuse its discretion by admitting evidence of Graham's other fraudulent activity that was similar and/or related to the charged conduct; the court did not err by allowing the government to introduce certain "red flag" emails from an outside attorney for the limited purpose of proving her knowledge; and the court's decision to instruct the jury on conscious avoidance was proper. We thus affirm.
Jacqueline Graham approached struggling homeowners with an offer that was too good to be true: In exchange for a fee, her partnership (the "Terra Foundation" or "Terra") could purportedly eliminate a customer's mortgage debts in full. Styling herself as a "sovereign citizen[ ]," Graham pledged that she would help these homeowners fight against the prevailing "[Uniform Commercial Code (UCC)] system" by marshaling obscure parts of the "common law." Joint App'x at A-676, A-1110, A-1113. In reality, however, Graham's tactics were far more mundane. She and her coconspirators would pretend to be employees of mortgagee banks, send county title offices fake notices of discharge, and convince them to erase any record of the banks’ interests in the subject properties. Once Graham's scheme was uncovered, the banks reinstated their interests, but Terra's "clients" could not recover the fees they had paid. In all, the scheme temporarily erased nearly $40 million of debt in connection with over 60 mortgage loans.
To execute the fraud, Terra used a "three-step procedure": "(1) an audit, (2) a ‘Qualified Written Request’ [QWR] to the client's mortgage lender, and (3) the filing of a discharge of mortgage in the local clerk's office." Id. at A-54. Each QWR contained a series of pseudo-legal questions, purportedly based on one of Terra's "audits," demanding detailed narrative responses and documentary submissions. If Terra received no response from the lender or considered a response insufficient, it would claim that the lending bank had ceded authority over the mortgage to Terra. One of Graham's coconspirators would then claim to be an agent of the lending bank, prepare a notice of discharge, and file it with the relevant county clerk.
Terra collected substantial fees from these homeowners in consideration for the promise of debt relief. For example, Augustine Alvarez testified that in 2011, Terra employees told him that they could render his mortgage debt "reduced or eliminated." Id. at A-376. After paying $1100 upfront and completing a so-called "UCC Financing Statement" form, Alvarez waited for nearly a year until Terra provided him with an authentic title search showing that his mortgage had been removed from county records. Id. at A-377. In exchange, Alvarez—who had been, prior to Terra's involvement, barely able to satisfy his mortgage payments—wrote Terra two checks for $250,000 each. Soon thereafter, Alvarez's bank notified him that the mortgage had been removed pursuant to a "fraudulent transaction" and had thus been reinstated. Id. at A-388. Alvarez tried repeatedly to contact Terra affiliates, who dodged his calls and ultimately refused to return his money.
The government introduced evidence that Graham had directed the fraudulent scheme as the head partner of Terra. Witness testimony suggested that she personally helped prepare the QWRs and other documents. And documentary evidence showed her control of Terra's finances, including its bank accounts.
The defense principally argued that Graham lacked the requisite knowledge of the fraudulent means of the scheme. In particular, defense counsel argued that Graham "believed in good faith that the unorthodox methods and unconventional programs that she promoted ... would help homeowners stay in their homes." Id. at A-1007. To rebut this argument, the government introduced, among other evidence: (1) Graham's communications with coconspirators scolding them for sending multiple QWRs "to the same lender for the same client" because the QWRs would soon "look like some bull****," Supp. App'x at SA-90; (2) Graham's handwritten confession admitting her participation in the creation and distribution of "fraudulent mortgage discharges" and her "aware[ness] [that her] partners were committing fraudulent acts," id. at SA-71; (3) Graham's insistence that customers pay upfront; (4) Graham's attempts to move Terra's proceeds offshore; and (5) Graham's efforts to remove her name from many of Terra's documents and bank accounts.
In November 2016, a grand jury returned an indictment charging Graham and four coconspirators with a single count of conspiracy to commit mail, wire, and bank fraud, in violation of 18 U.S.C. § 1349. On April 2, 2019, just over one month before the scheduled trial date, the government sent a letter to the district court requesting a conference with Graham and her counsel. The government represented that it had transmitted a plea offer to Graham's counsel on February 22, 2019 and that the offer had expired nearly one month prior to the April 2 letter. The government had not received a response and was thus concerned that Graham may not have "received, understood, discussed with her counsel, and rejected" the offer. Joint App'x at A-82. The government noted that all parties still had to "invest significant time and effort into preparing for trial," so it would be advisable to act "at the Court's earliest convenience in order to ensure that Graham fully understood the plea offer and, if she intended to reject it, did so with a full understanding of the consequences of such a rejection." Id.1
The district court held a conference on April 10, 2019. Graham's counsel told the court that he had shared the "substance" of the plea agreement with Graham—he was not sure when—but he had not transmitted the agreement itself. Id. at A-90. Counsel explained that the reason for this was that he "knew that this plea offer would not be received well on [Graham's] part." Id. at A-100. Graham stated that she had not heard anything about the plea agreement until the "end of March via email." Id. at A-99. The court then instructed the government to provide a copy of the agreement—on the record—directly to Graham, remarking:
Id. at A-90 to -92. Graham reviewed the offer with trial counsel and, through counsel, indicated on the record that she wanted more time to consider it. The government explained that the offer had already expired but stated that it "would probably be able to get it reauthorized" if Graham so requested and that the government was also open to "alternative ways of structuring" a deal if Graham returned to negotiations "sooner rather than later." Id. at A-96. The court then reiterated that it "want[ed] the record to be clear, that [Graham had] been given an opportunity to review the plea offer that was conveyed." Id. at A-97.
At the same conference and immediately after this exchange, the district court dismissed Graham's attorney due to a "breakdown of communication"—which the court partly attributed to Graham's decision to remain in California prior to trial—and appointed Graham new trial counsel. Id. at A-101. The court then stated that new counsel would "probably want an opportunity to review the plea offer as well and discuss it with" Graham, id. at A-105, and the court told Graham directly that if she wanted to explore further plea...
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