United States v. Santos
| Decision Date | 22 March 2022 |
| Docket Number | CRIMINAL ACTION 18-585 (MAS) |
| Parties | UNITED STATES OF AMERICA v. VICTOR SANTOS et al. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
This matter comes before the Court on several motions from the parties. Most are sets of separate motions in limine filed by Defendant Victor Santos (“Santos”) (ECF No. 201), Defendant Fausto Simoes (“Simoes”) (ECF No. 202), and the United States of America (the “Government”) (ECF No. 203). Santos and Simoes separately opposed the Government's motions in limine (ECF Nos. 207, 210), and the Government replied (ECF No. 218). The Government opposed Santos's and Simoes's motions in limine (ECF No. 209), and Santos and Simoes separately replied (ECF Nos. 216, 219). Also before the Court is Simoes's Motion to Dismiss (ECF No. 208), to which the Government opposed (ECF No. 213), and Simoes replied (ECF No. 215). Finally, before the Court is Simoes's Motion to Release Brady Materials (ECF No. 212), to which the Government opposed (ECF No. 217), and Simoes replied (ECF No. 220). The Court has carefully considered the parties' submissions and decides the matter without oral argument under Local Civil Rule 78.1 which is applicable to criminal cases under Local Criminal Rule 1.1.
This case arises out of an alleged scheme hatched by Defendants Victor Santos, Arsenio Santos, and Fausto Simoes (collectively, “Defendants”) during the financial crisis of 2007-2008. As alleged in the Indictment, the trio conspired to use straw buyers to purchase properties throughout New Jersey to fraudulently obtain mortgage loans from Wells Fargo. The scheme worked like this: First, Defendants recruited straw buyers to purchase residential properties. Second, Defendants agreed to pay the straw buyers' down payments. Third, the straw buyers obtained mortgage loans from Wells Fargo by filling out fraudulent mortgage loan documents, indicating that they would use the purchased properties as primary residences. Fourth, once Wells Fargo approved the mortgage loan, the straw buyers diverted the loan proceeds to Defendants. Fifth, Defendants paid the first few months' mortgage payments on the purchased properties. Sixth, Defendants eventually stopped paying, and the straw buyers defaulted. (Indictment 4-5, ECF No. 64.) Defendants carried out this scheme at least nine times with properties in Newark, New Jersey. (Id. at 13.)[1] As a result, the Indictment charges Defendants with one count of conspiracy to commit bank fraud in violation of 18 U.S.C. § 1349, nine counts of bank fraud in violation of 18 U.S.C. § 1344(2), and nine counts of false statements in violation of 18 U.S.C. § 1014(2). (Id. at 1, 12, 14.)
Now before the Court are several motions. Up first are three sets of motions in limine, which seek various preliminary rulings on the admissibility of evidence, including evidence of Wells Fargo's alleged misconduct in reviewing loan applications, certain business and public records, summary charts, and lay opinion testimony. Next is a Motion to Dismiss filed by Simoes, where he argues that the Government distorted the factfinding purpose of trial by refusing to indict another coconspirator, Raquel Casalinho. Similarly, Simoes also moves the Court for an order mandating that the Government turnover any Brady material relevant to the Government's decisions not to charge Wells Fargo employees.
“Although the Federal Rules of Evidence do not explicitly authorize in limine rulings, the practice has developed pursuant to the district court's inherent authority to manage the course of trials.” Luce v. United States, 469 U.S. 38, 41 n.4 (1984). Federal trial courts often find it appropriate to rule on pre-trial in limine motions to exclude or admit certain evidence so that “the court can shield the jury from unfairly prejudicial or irrelevant evidence.” Ebenhoech v. Koppers Indus., Inc., 239 F.Supp.2d 455, 461 (D.N.J. 2002) (citing United States v. Romano, 849 F.2d 812, 815 (3d Cir. 1988)). “The in limine motion then fosters efficiency for the court and for counsel by preventing needless argument at trial.” Id. “Because a ruling on a motion in limine is ‘subject to change as the case unfolds,' this ruling constitutes a preliminary determination in preparation fortrial.” United States v. Perez, No. 09-1153, 2011 WL 1431985, at *1 (S.D.N.Y. Apr. 12, 2011) (quoting Palmieri v. Defaria, 88 F.3d 136, 139 (2d Cir. 1996)).
Defendants may bring motions to dismiss criminal pleadings under Federal Rule of Criminal Procedure 12. “In considering a defense motion to dismiss an indictment, the district court accepts as true the factual allegations set forth in the indictment.” United States v. Besmajian, 910 F.2d 1153, 1154 (3d Cir. 1990).
Here, Simoes bases his Motion to Dismiss on prosecutorial misconduct. “Improper prosecutorial conduct rises to the level of constitutional error ‘when the impact of the misconduct is to distract the trier of fact and thus raise doubts as to the fairness of the trial.'” United States v. Morena, 547 F.3d 191, 194-95 (3d Cir. 2008) (quoting Marshall v. Hendricks, 307 F.3d 36, 67 (3d Cir. 2002)). Courts assess prosecutorial-misconduct claims by whether the asserted misconduct “so infected the trial with unfairness as to make the resulting conviction a denial of due process.” Marshall, 307 F.3d at 64 (quoting Donnelly v. DeChristoforo, 416 U.S. 637, 643 (1974)). In addition, misconduct does not result in an unfair trial where “the evidence [against the defendant] is strong” and “the curative instructions [are] adequate.” Morena, 547 F.3d at 196 (citing Moore v. Morton, 255 F.3d 95, 113 (3d Cir. 2001)).
Under Brady v. Maryland, prosecutors must “disclose material exculpatory evidence to the defense.” Marshall, 307 F.3d at 52 (citing 373 U.S. 83 (1963)). To that end, prosecutors must “learn of any favorable evidence known to the others acting on the government's behalf.” Dennis v. Sec'y, Pa. Dep't of Corr., 834 F.3d 263, 284 (3d Cir. 2016) (quoting Strickler v. Greene, 527 U.S. 263, 281 (1999)). In addition, the prosecutor's duty is “absolute” and does not “depend on defense counsel's actions.” Id. at 290 (citing United States v. Agurs, 427 U.S. 97, 107 (1976)).
The Court considers the Government's motions in limine first, as these motions dispose of issues raised in Santos's and Simoes's motions. The Government moves for eight preliminary rulings: (1) to preclude evidence of Wells Fargo's alleged misconduct in their lending practices; (2) to preclude evidence of Santos's and Simoes's potential punishment; (3) to admit certain documents as authenticated business records; (4) to admit certain exhibits as authenticated public records; (5) to admit summary charts; (6) to rule that testimony by former and current Wells Fargo employees on Wells Fargo's lending practices is permissible fact and lay opinion testimony; (7) to rule that testimony by witnesses familiar with Santos's and Simoes's signatures on those signatures' authenticity is permissible lay opinion testimony; and (8) to reserve additional motions. (See generally Gov't's Mot. in Limine Br., ECF No. 203.) The Court addresses each in turn.[2] Motion in Limine #1 (Evidence of Wells Fargo Misconduct): The Government first moves to exclude evidence pertaining to Wells Fargo's purported misconduct in approving mortgage loan applications. (Id. at 5.) Specifically, the Government seeks to exclude two categories of evidence: (1) various settlement agreements and a class action complaint between Wells Fargo and several government entities and (2) testimonial evidence and argument that Wells Fargo was negligent in its lending practices. (Id. at 6-7.) In support, the Government argues that the evidence is both irrelevant and prejudicial because victim negligence is neither a defense to bank fraud nor material to the falsity of Santos and Simoes's statements. (See id. at 6-12.) Santos counters that Wells Fargo's misconduct is relevant because it shows that Wells Fargo was not verifying information in mortgage loan applications and because it shows that Wells Fargo itself did not view the allegedly fraudulent statements as material. (Santos's Opp'n Br. to Gov't's Mot. in Limine 3-12, ECF No. 210.) Simoes adds that the evidence shows that Wells Fargo is not simply a negligent victim (but rather an active participant in the fraud) and that the evidence is necessary to effectively cross-examine the Government's witnesses, including current Wells Fargo employees. (Simoes's Opp'n Br. to Gov't's Mot. in Limine 5-9, ECF No. 207.)
The core of the dispute focuses on the materiality prong of the bank-fraud statutes. As relevant here, that statute prohibits defrauding banks “by means of material false or fraudulent pretenses, representations or promises.” Mod. Crim. Jury Instr. 3d Cir. § 6.18.1344 (2021) (emphasis added); see also Neder v. United States, 527 U.S. 1, 25 (1999) (). A materially false 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 (alteration in original) (quoting United States v Gaudin, 515 U.S. 506, 509 (1995)). By all counts, courts assess materiality through an objective lens. E.g, id. at 22 n.5 (...
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