A New Scheme to Defraud Homeowners: 7th Circuit follows 9th in Holding No Specific Unanimity as to the Means

confirmUnited States v. Daniel, No. 13-2399, (7th Cir. Apr. 15, 2014)

When unsuspecting homeowners were told they could place their titles in trust and regain full title free and clear of any mortgage after five years, they were eager to join Rym Tehnology Holdings, LLC’s (Rymtech’s) program. As part of the program, they signed over the title of their property to straw purchasers called “A buyers” who were supposed to obtain financing from mortgage lenders to pay off the mortgage. Instead, Daniel, Rymtech’s vice president, instructed his loan officers to prepare fraudulent loan applications on behalf of A buyers to acquire financing and he used the homeowners’ equity checks to operate the company itself.

When some homeowners discovered their homes were being foreclosed or that their property taxes had not been paid, Daniel assured them their homes were safe and that the money was coming.

Daniel was found guilty of one count of wire fraud under 18 U.S.C. §1343 and 3 counts of mail fraud under 18 U.S.C. §1341.

The jury was given the Pattern Criminal Jury Instruction for 18 U.S.C. §1341 and §1342 which provided that the government must prove a scheme to defraud, but not all the means of committing such a scheme. It need only prove one mean.

Daniel requested Pattern Criminal Jury Instruction 4.04, requiring the jury to agree unanimously on a specific fraudulent representation, pretense, promise or act. On appeal Daniel argued there must be specific unanimity on at least one false representation.

The Seventh Circuit disagreed and joined the first, eighth and ninth circuits, holding that a single false representation or omission used to execute a fraudulent scheme is properly characterized as a means to executing the scheme, rather than one of the necessary elements of the mail or wire offense that do require unanimity.

Here the elements were met: (1) an intent to defraud, (2) participation in a scheme to defraud, and (3) the use of interstate wires in furtherance of the scheme to defraud.

The specific fraudulent representations or omissions committed by Daniel were the means he used to commit an element of the crime.

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