by David Cosgrove
Earlier this month, the U.S. Court of Appeals for the Eighth Circuit rejected the appeals of two former Los Angeles County Sheriff’s deputies. Both men were convicted and sentenced to 42 months in prison in the U.S. District Court, Western District of Missouri.
The two men were convicted of wire fraud in connection with a California-Kansas City mortgage fraud scheme. The fraudulent real estate scheme was orchestrated by a Kansas City, Missouri real estate agent and a California businessman. The real estate agent and “straw buyers” would purchase homes in the Kansas City area for $100,000 or more over the asking price. At the closing, the straw buyer would walk away with the excess loan proceeds. The deputies were two of several straw buyers. But they tried to convince the KC jury that they were innocent good faith buyers of KC real estate that received a bunch of cash to split with their real estate agent. They must have received a really bad plea offer.
On appeal, the two former deputies argued that there was insufficient evidence of their guilt. The Court of Appeals dismissed this argument in two paragraphs:
We conclude that there was sufficient evidence to support the jury’s verdict. Nshanian argues that he was unaware of the fraud orchestrated by others, and that he acted in good faith without the requisite mental states necessary to support his convictions. The jury reasonably could infer, however, that Nshanian knew of the conspiracy and scheme to defraud, and that he intended to defraud lenders. Howard testified that he discussed the requirements necessary to purchase a property with Nshanian and his wife and told them that they could earn $100,000 for every property they purchased. His testimony, if believed, established that Nshanian and his wife created a fictitious management company and a bank account to receive their portion of the loan proceeds. The testimony, if credited, also showed that Howard informed Nshanian that he would not qualify on his own for the financing necessary to purchase the properties, and that Howard and Turner would modify the documents so that Nshanian would qualify. Nshanian’s admissions to Special Agent Stacy Banks of the FBI corroborated Howard’s account, and credibility determinations about Howard’s testimony are within the province of the jury.
The loan application and closing documents that Nshanian signed and initialed to complete the purchase contained several misrepresentations that were necessary to obtain financing and finalize the deals. Nshanian’s documents stated that he was single although he was married; that he had worked for Infinite Link as the company’s Vice President of Operations for four years when he did not hold that position; that his monthly income was $19,295 per month when it was actually $6500 per month; and that he intended to use the purchased property as his primary residence when he had no such intention. The documents also warned signatories that they could be punished criminally for knowingly misrepresenting facts in the documents.
U.S. v. Nshanian, 2016 WL 2342909 (May 4, 2016, U.S. App., 8th Cir.)
Sufficient evidence indeed.
The attorneys at Cosgrove Law Group, LLC have previously handled mortgage related investment fraud matters from both the plaintiff-civil and criminal defense side of the aisle. Each case is intensely fact specific. The typical scheme includes a multitude of players and roles with varying degrees of culpability, including but not limited to, the innocent pawn or investor. But the most important take away from the Nshanian case is this: easy cash will get you in big trouble. Food for thought.