2/27/17: Amended mortgage fraud opinion

In June 2016, the 9th Circuit released its opinion in United States v. Lindsey, --- F.3d --- (9th Cir.).  My prior summary is at the bottom of this post.  

Today, the Court released an amended version of the opinion (here).  

Although the new version does not help the defendant, it has better language for future cases.  Here is the relevant part:

We hold that a victim’s intentional disregard of relevant information is not a defense to wire fraud and thus evidence of such disregard is not admissible as a defense to mortgage fraud. To the extent that Lindsey tried to introduce evidence of lenders’ intentional disregard and the district court prevented him, the district court did not err. 

Our holdings do not leave defendants powerless to challenge the materiality of false statements made in connection with securing mortgages. Among other things, defendants can disprove materiality through evidence of the lending standards generally applied in the mortgage industry. For example, defendants can offer testimony about the types of information, such as household income or assets, that lenders typically consider, as well as evidence of how much weight the industry generally gives to statements about such information. As long as defendants do not stray into evidence of the behavior of individual lenders—for instance, evidence of specific prior bad loans or particular mistakes by underwriters—defendants may attack materiality though industry practice. 

To illustrate, suppose a defendant is charged with wire fraud for falsely stating on a loan application that he was married. In such a case, it would be admissible for a defense expert to testify that, while mortgage applications usually ask about marital status, the general practice in the industry is to ignore marital status when making lending decisions. The defendant could then argue in closing that his false statement about marriage was immaterial, and so the elements of wire fraud have not been proven. By contrast, a district court could properly exclude evidence that (a) the particular lender to whom the defendant lied did not generally give weight to marital status when deciding whether to lend, or (b) there were prior instances in which that lender did not consider marital status in making loans.

In short: (1) negligence is not a defense to wire fraud, and evidence of lender negligence is not admissible as a defense to mortgage fraud; (2) intentional disregard of relevant information is not a defense to wire fraud, and evidence of intentional disregard by lenders is not admissible as a defense to mortgage fraud; (3) evidence of individual lender behavior is not admissible to disprove materiality, but evidence of general lending standards in the mortgage industry is admissible to disprove materiality; 

_______

In United States v. Lindsey, --- F.3d ---, Case No. 14-10004 (9th Cir. 2016), the Court held, "lender negligence in verifying loan application information, or even intentional disregard of the information, is not a defense to fraud, and so evidence of such negligence or intentional disregard is inadmissible as a defense against charges of mortgage fraud."

It further held that, "when a lender requests specific information in its loan applications, that information is objectively material as a matter of law, regardless of the lenders’ policies or practices with respect to use of that information." 

Based on these holdings, the Court affirmed the defendant's wire fraud convictions, over his claim that the district court denied him the constitutional right to present a defense by excluding evidence of lender negligence.  

2/22/17: "Some toxins can be deadly in small doses"

The Supreme Court's decision in Buck v. Davis, --- U.S. ---, Case No. 15-8049 (2017), is definitely worth a read. 

This is was capital habeas out of Texas.  During the penalty phase, the defendant's attorney introduced expert testimony that the defendant's race made him statistically more likely to pose a danger in the future.  The jury sentenced him death. 

As the Supreme Court explained, the "case then entered a labyrinth of state and federal collateral review, where it has wandered for the better part of two decades."  The district court and Ffith Circuit denied the habeas claim on essentially a hybrid of procedural and merits-based grounds.  The Supreme Court took the case and, in an opinion by Chief Judge Roberts, reversed.  

The Court found that Mr. Buck satisfied both prongs of the Strickland ineffective assistance of counsel test.  It also ruled on some procedural issues, with good language on when to grant a COA.  

I won't go into too much detail, but there is a great passage worth sharing (thanks to Chuck Sevilla for first reading it to me): 

[W]hen a jury hears expert testimony that expressly makes a defendant’s race directly pertinent on the question of life or death, the impact of that evidence cannot be measured simply by how much air time it received at trial or how many pages it occupies in the record. Some toxins can be deadly in small doses. 

2/7/17: Two decisions - neither good for defendants

Two tough decisions today. 

First, in United States v. Peralta-Sanchez, --- F.3d ---, Case No. 14-50393 (9th Cir. 2017), the majority held that aliens subject expedited removal proceedings under 8 U.S.C. § 1225 have no Fifth Amendment due process right to hire counsel.  This is true, even if the person is not caught at the border, but inside the country where due process protections are greater.  The Court also held there is no statutory right to counsel in such proceedings.  

Thus, as the dissent noted, "[t]he expedited removal process begins and ends with a Customs and Border Protection (CBP) officer."

Based on this holding, the majority rejected the defendant's 1326(d) claim that his removal was fundamentally unfair because he was denied the right to hire counsel.  It also rejected his claim based on the failure to advise him of the right to seek withdrawal of his application for admission, because he could not show prejudice.  

Finally, I think it is worth sharing the dissent's final paragraph: 

The expedited removal system is flawed; it does not account for the realities of immigration and the strong ties to this country held by many noncitizens. The system is also cruel; it gambles with the lives of hundreds of thousands of people per year by offering few procedural safeguards. We can, and should, do better. I would hold that there is a due process right to counsel in expedited removal proceedings.

Second, in United States v. Loucious, --- F.3d ---, Case No. 16-10121 (9th Cir. 2017), the Court reversed the district court's grant of the defendant's suppression motion.  It held: "The Miranda warnings given to [the defendant] adequately conveyed that he had the right to consult with an attorney before questioning even though they did not explicitly inform him of that right. This right was reasonably to be inferred."

As to the facts, before the start of a custodial interrogation, the defendant received warnings informing him he had the right to remain silent; he had the right to the presence of an attorney during questioning; and that if he could not afford an attorney, an attorney would be appointed before questioning.  The defendant successfully moved to suppress the statements he made during the custodial interrogation, arguing that the Miranda warnings he received were constitutionally deficient because they did not tell him of his right to consult with an attorney before questioning.

As noted, the Ninth Circuit reversed because "Miranda warnings need not follow a precise formulation, and here the warnings reasonably conveyed that [the defendant] had the right to consult an attorney before questioning."