United States v. Sheneman

• Decision Date: 12 May 2015
• Docket Number: Case No. 3:10-CR-126(2) JD,Case No. 3:14-CV-1733 JD,Case No. 3:10-CR-120 JD
• Parties: UNITED STATES OF AMERICA v. JEREMIE SHENEMAN
• Court: U.S. District Court — Northern District of Indiana

UNITED STATES OF AMERICA v. JEREMIE SHENEMAN

Case No. 3:10-CR-120 JD

Case No. 3:10-CR-126(2) JD

Case No. 3:14-CV-1733 JD

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA SOUTH BEND DIVISION

May 12, 2015

OPINION AND ORDER

Now before the Court is the Defendant Jeremie Sheneman's motion under 28 U.S.C. § 2255 to vacate his convictions for wire fraud. Mr. Sheneman was charged under two indictments with a total of seven counts of wire fraud relating to two separate fraudulent schemes in the mortgage industry. He was convicted on all counts in two jury trials, and was sentenced to concurrent terms of 120 months' imprisonment on each count. The Seventh Circuit affirmed Mr. Sheneman's convictions on appeal, and the Supreme Court denied Mr. Sheneman's petition for a writ of certiorari. Having received no relief on direct appeal, Mr. Sheneman now seeks collateral relief through this § 2255 proceeding. For the reasons that follow, the Court finds that Mr. Sheneman is not entitled to any relief under § 2255, and denies Mr. Sheneman's motion.

I. FACTUAL BACKGROUND

Mr. Sheneman was charged under two indictments for his participation in two separate wire fraud schemes. These cases were tried in separate jury trials and resulted in Mr. Sheneman's conviction on all seven counts. The Court briefly summarizes the facts of the respective cases.

A. Case 3:10-CR-120

In the -120 case, Mr. Sheneman was the sole defendant, and was charged with three counts of wire fraud in connection with his role in acquiring eight properties on behalf of hisgrandmother, Phyllis Sheneman,¹ in violation of 18 U.S.C. § 1343 and § 2. Mr. Sheneman had worked for several years as a mortgage broker, so in 2005, when Phyllis decided she wanted to purchase rental properties as a means of investing, she turned to Mr. Sheneman for help. With the assistance of real estate agents whom Mr. Sheneman retained, Mr. Sheneman identified eight properties for Phyllis to purchase—three in Chicago, one in California, and four in New York. Phyllis did not take part in that process. Once the properties were under contract, Mr. Sheneman located mortgage brokers to secure mortgages on all the properties, all of which would be in Phyllis' name only. Two of those brokers testified at trial: Alex Veksler, who was a loan officer in New York at the time, and Andrew Weiske, who was a loan originator in California.

Mr. Veksler and Mr. Weiske both testified that Mr. Sheneman was their primary contact relative to these properties, and that they had few if any contacts with Phyllis. Phyllis may have provided her biographical information for the loan applications, but they testified that Mr. Sheneman provided the rest of the information, including Phyllis' financial information. However, the government asserted that much of the information provided by Mr. Sheneman was fraudulent. For example, while Phyllis' tax return showed that she made about $15,000 the previous year, and a loan application she had completed personally listed her monthly income as $2,500, the applications for the properties with which Mr. Sheneman was involved listed her monthly income as from $10,000 to over $16,000. Several of the applications also stated that the property was intended as a primary or secondary residence, even though Phyllis actually intended to buy them as investment properties. Further, the eight properties closed over a period of almost three months, but as the properties closed, they were not disclosed in subsequentapplications. The only exception was that one of the last properties to close listed two, but not all, of the other properties Phyllis had already purchased.

In addition, throughout the application process, the lenders requested various letters of explanation as conditions to approving the loan. Many of these related to Phyllis' employment, as she had been self-employed as a part owner of a consignment shop, which in truth generated quite little income. However, the letters submitted to the lenders in response to these requests contained complete falsehoods. One such letter, purporting to be signed by Phyllis' accountant, states that "Phyllis has demonstrated herself as a top clothing designer and entrepreneur," (Exhibit 10C), while another, which purports to be signed by Phyllis, states that the "reason for the move to New York is to expand the clothes business and to create a center main office," which would "bring in more profit and clothes [and] also serve to expand [her] business goals." (Exhibit 10E). Another letter purporting to be signed by Phyllis states, "I Phyllis Sheneman will be going back and forth from Indiana to California and I have a Manager in place at my store to continue to run the business." (Exhibit 4E). Yet another letter bearing Phyllis' signature described her "employment [in] the fast paced ever-changing business of clothing manufacturing & design." (Exhibit 7E). The undisputed evidence showed that each of these statements was patently false—not only had Phyllis never been in the clothing design business, but she no longer owned or earned income from the consignment shop at the time of the applications. Phyllis denied having written these letters, and Mr. Veksler and Mr. Weiske testified that all such letters were sent to them by Mr. Sheneman.

Mr. Sheneman testified in his own defense, and generally denied having been responsible for or even aware of any of these misrepresentations. He testified that his only role in the loan application process was to forward the brokers Phyllis' bank statements, and that the lenders thencalculated her income based on the statements and inserted those calculations into the loan applications. Any falsehoods must have come from the brokers or the lenders themselves, according to Jeremie. However, Mr. Sheneman admitted to having falsified a lease agreement that falsely showed that Phyllis was receiving rental income from her primary residence, which she was not actually renting to anyone. Mr. Sheneman testified that Mr. Weiske had only requested that documentation after the property had closed, so it could not have been material to the lender's approval of the loan. Yet, he was unable to account for why several of the loan applications stated that Phyllis' home was generating that same rental income. (Exhibits 7B, 8B, 10B).

The three counts of the indictment were each predicated on a separate wire transmission relating to the last two properties to close, including two interstate faxes sent prior to the closings and the interstate wiring of money from the lender to the closing agent. Ultimately, the jury returned a verdict of guilty on all three counts.

B. Case 3:10-CR-126

In the -126 case, Mr. Sheneman was charged and tried along with his father in connection with a separate scheme to defraud that took place around the same time. The facts of the -126 case, as set forth by the court of appeals on Michael's direct appeal, are as follows:

From 2003 to 2005, [Michael] Sheneman and Jeremie worked in tandem to defraud both real estate buyers and mortgage lenders through a series of calculated misrepresentations. Generally speaking, their plan involved acquiring control over a large number of rental properties, inducing buyers to purchase the properties through a host of false promises, and ensuring that lenders would finance the purchases by falsifying loan documents and misrepresenting the buyers' financial standing.

Sheneman and Jeremie began by acquiring control over a large number of rental properties being sold by landlords in the South Bend and Mishawaka areas of Indiana. Many of these sellers had difficulty renting out their properties—some were in very poor condition—and were, by and large, simply looking to cut their losses and walk away from the homes with their mortgages and taxes paid. Theyagreed to sell their properties to either Sheneman or Jeremie, both of whom had a reputation for "flipping" homes and selling them at a profit. Although most sellers believed they had sold their properties directly to either Sheneman or Jeremie, the sellers had in fact merely granted one of the two power of attorney over their properties.² By exercising powers of attorney, Sheneman and Jeremie took control over the properties without ever appearing on any chain of title. The sellers, for their part, did not notice much of a practical difference. Each seller received the amount of money agreed upon as the selling price—albeit not from a title company, as would normally be the case, but directly from either Sheneman or Jeremie. After they "flipped" the houses and sold them to new buyers for more than the seller's asking price, Sheneman and Jeremie then endorsed and deposited the checks issued by the title company directly into their own accounts, yielding them hefty profits.

Once granted control, Sheneman and Jeremie then set about searching for buyers to purchase the dilapidated properties. Eventually, they found their marks, selling sixty properties to four buyers with no relevant real estate experience: Gladys Zoleko, a Cameroonian citizen in the United States on a student visa, bought fifteen homes; Paul Davies, a Liberian citizen also on a student visa, bought fourteen homes; David Doo[]little, an electrician, bought twenty-one homes; and Gary Denaway, a maintenance worker, bought ten homes. For each buyer, a very similar pattern of conduct transpired.

Sheneman and Jeremie made a wide range of promises to the buyers—false promises, as it turns out—in order to induce the sales. The buyers were all looking for an additional source of income, and Sheneman promised them just that. Significant profits could be made by purchasing homes and then renting them out—the more homes purchased, the bigger the profit. The homes were all in excellent condition, buyers were assured, and either Sheneman or Jeremie would make any necessary repairs. There was also little risk because most of the homes already had paying tenants living in them,

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