United States v. Neil Fagan , 518 F. App'x 749 ( 2013 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
___________________
No. 11-16123
___________________
D.C. Docket No. 1:10-cr-20753-PAS-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
NEIL FAGAN,
VELDORA ARTHUR,
PAMELA JOHNSON,
Defendants-Appellants.
________________________
Appeals from the United States District Court
for the Southern District of Florida
________________________
(May 7, 2013)
Before MARCUS, BLACK, and SILER, * Circuit Judges.
SILER, Circuit Judge:
*
Honorable Eugene E. Siler, Jr., United States Circuit Judge for the Sixth Circuit, sitting by
designation.
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Defendants Neil Fagan, Veldora Arthur, and Pamela Johnson were convicted
of conspiracy to commit wire and mail fraud and several counts of mail fraud.
They appeal their convictions on multiple grounds including the denial of
severance and the sufficiency of the evidence. For the reasons that follow, we
AFFIRM.
I.
In 2005 and 2006, Fagan entered into several assignable real estate contracts
to purchase condominiums at the Hidden Bay complex in Aventura, Florida. He
ultimately assigned four contracts to three different buyers, including Arthur, for
considerably higher prices than he had negotiated with the sellers of each unit.
Johnson, through Service First Title, LLC, served as the settlement agent at each of
the four closings. Each transaction involved two different settlement statements
(HUD-1 form): one for the seller, listing the original contract price negotiated
between Fagan and the seller, and one for the lender, listing a much higher price.
The sellers were unaware that Fagan had assigned the contracts for a higher price.
In addition, each of the lender’s HUD-1s listed a non-existent, unrecorded second
mortgage held by either Regus Holdings, LLC or Land America Holdings and
Investment Group, LLC, both of which were owned and controlled by Fagan.
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The loan applications handled by Johnson, and submitted to the lenders,
contained false information, including income, assets, and liabilities, about each of
the assigned buyers. Johnson falsely represented to the lenders that the closing
costs and escrow payments had been made prior to or during closing even though
these payments were made subsequent to the loan disbursements. In each sale,
after paying the seller the original contract price, Johnson disbursed the remaining
loan proceeds to Fagan, or one of his two companies, as a payoff for the mortgage
listed on the lender’s HUD-1 form. Fagan then used a portion of the proceeds to
pay closing costs and make escrow deposits. Fagan also made payments to the
assigned buyers, including Arthur, who never invested any of their own money in
the purchases. Johnson made several payments from the loan proceeds to her
mother.
Fagan, Johnson, and Arthur were indicted and convicted for conspiracy to
commit wire and mail fraud and substantive offenses of mail fraud. Co-defendants
Patrick Brinson and Earl Silas, who were assigned buyers like Arthur, ultimately
pled guilty, while the others went to trial. Fagan was sentenced to 90 months’
imprisonment, and Johnson and Arthur were each sentenced to 57 months’
imprisonment.
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II.
All three defendants sought severance, or mistrial as a result of their joint
trial, either before or during trial, or both. The defendants argue on appeal that the
court erred by denying the motions. We review the district court’s decision for an
abuse of discretion. United States v. Lopez, 649 F.3d 1222, 1236 (11th Cir. 2011).
The general rule “that defendants indicted together should be tried together .
. . is particularly applicable to conspiracy cases.” United States v. Cassano, 132
F.3d 646, 651 (11th Cir. 1998). Trial courts are required to “balance the rights of
the defendants and the government to a trial that is free from the prejudice that may
result from joint trials against the public’s interest in efficient and economic
administration of justice.” United States v. Novaton, 271 F.3d 968, 989 (11th Cir.
2001) (internal quotation marks omitted). However, “potential for prejudice” is
not enough, and instead, the prejudice must be “compelling.” Lopez, 649 F.3d at
1234 (citing Zafiro v. United States, 506 U.S. 534, 538, 539-41 (1993)).
The Supreme Court has indicated that joined defendants are only entitled to
severance in two situations: where there is a serious risk that a joint trial would
either (1) compromise a specific trial right of one of the defendants or (2) prevent
the jury from making a reliable judgment about guilt or innocence despite a
limiting instruction. Zafiro, 506 U.S. at 539; Lopez, 649 F.3d at 1234-35. Because
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the defendants have not alleged the denial of a specific trial right, they are limited
to showing that the jury was prevented from making a reliable judgment about
their guilt or innocence despite the limiting instructions that were given. Lopez,
649 F.3d at 1235.
Each defendant argues that the court should have severed their trials because
of their mutually antagonistic defenses. Fagan’s defense was that his contract
assignments were negotiated at arms’ length, that he was not involved with the
lenders, and that his co-defendants fraudulently completed their loan applications
without his knowledge. Johnson’s defense was that she was an unknowing conduit
for the fraud of her co-defendants and at worst, she conducted her duties
negligently. Arthur’s defense was that she was given closing documents by Fagan,
that she signed them without reading them, and that she relied on Johnson to
properly conduct the closings. She argued that she was just trying to make an
investment and that Fagan was the sole mastermind behind the fraud.
Even so, “[m]utually antagonistic defenses are not prejudicial per se,”
Zafiro, 506 U.S. at 538, because “co-defendants do not suffer prejudice simply
because one co-defendant’s defense directly inculpates another, or it is logically
impossible for a jury to believe both co-defendants’ defenses.” United States v.
Blankenship, 382 F.3d 1110, 1125 (11th Cir. 2004). Instead, “a defendant must
show that the joint trial caused him such compelling prejudice that he was deprived
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of a fair trial.” United States v. Hill, 643 F.3d 807, 834 (11th Cir. 2011) (citing
Zafiro, 506 U.S. at 537-41).
The defendants have failed to make this showing. Johnson simply asserts
that their defenses were mutually antagonistic and therefore they suffered the
requisite prejudice. This falls far short of showing “compelling prejudice.”
Fagan’s argument relies exclusively on pre-Zafiro cases and fails to recognize the
standard pronounced in Zafiro. Fagan has failed to give any specific examples of
how he or the other defendants suffered compelling prejudice as a result of the
joint trial.
Arthur argues that she suffered specific prejudice because Fagan’s counsel
acted as a second prosecutor and pursued a closing argument against her that the
government chose to forgo or could not make in good faith. In order to grant a
new trial based on a co-defendant’s closing argument, we must find the argument
“both improper and prejudicial to a substantial right of the defendant.” United
States v. Garcia, 405 F.3d 1260, 1272 (11th Cir. 2005) (internal quotation marks
omitted). When a curative instruction is given, we will reverse “only if the
evidence is so highly prejudicial as to be incurable by the trial court’s admonition.”
Id. (internal quotation marks omitted). Here, the court indeed instructed the jury
that opening and closing arguments by the lawyers were not evidence.
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The comments Arthur complains of do not rise to the necessary level, as
indicated by the fact that Arthur’s counsel failed to object during Fagan’s closing
argument. Additionally, the district court gave the precise limiting instructions
suggested by the Supreme Court for use in a joint trial. See Zafiro, 506 U.S. at
540-41. This cured any potential prejudice because “juries are presumed to follow
their instructions.” Richardson v. Marsh, 481 U.S. 200, 211 (1987). Thus, the
district court did not abuse its discretion in denying the defendants’ requests for
severance and mistrial.
III.
We review the sufficiency of the evidence de novo, viewing the evidence in
the light most favorable to the verdict and making all inferences and credibility
determinations in favor of the verdict. United States v. Chirino-Alvarez, 615 F.3d
1344, 1346 (11th Cir. 2010).
A. Count One: Conspiracy
Fagan and Johnson argue that the government failed to present sufficient
evidence to support their convictions for conspiracy in count one of the indictment.
The elements of conspiracy to commit mail or wire fraud include: “(1) agreement
between two or more persons to achieve an unlawful objective; (2) knowing and
voluntary participation in that agreement by the defendant; and (3) an overt act in
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furtherance of the agreement.” United States v. Broughton, 689 F.3d 1260, 1277
(11th Cir. 2012). “A defendant’s knowing participation in a conspiracy may be
established through proof of surrounding circumstances such as acts committed by
the defendant which furthered the purpose of the conspiracy.” United States v.
Vera, 701 F.2d 1349, 1357 (11th Cir. 1983). Thus, agreement and participation do
not have to be explicit, but may be “inferred from circumstantial evidence.”
United States v. Prince, 883 F.2d 953, 957 (11th Cir. 1989).
The evidence presented at trial overwhelmingly supported the defendants’
convictions. There were wire transfers, faxes, and mailings connected to the fraud
in which both Fagan and Johnson knowingly participated. Additionally, both
Fagan and Johnson financially profited from the conspiracy. The circumstantial
evidence of Fagan’s otherwise unexplained payments to Brinson, $105,000, and
Arthur, $316,000, were enough to show that there was an agreement and that
Fagan participated in the scheme. Johnson’s three checks to her mother from the
loan proceeds of units 3615 and 3711, totaling approximately $22,000, necessarily
inculpated her in the scheme as well.
B. Counts Two through Five: Mail Fraud
Mail fraud consists of “(1) an intentional participation in a scheme to
defraud a person of money or property, and (2) the use of the mails in furtherance
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of the scheme.” United States v. Downs, 870 F.2d 613, 615 (11th Cir. 1989).
Fagan and Arthur first argue that the government failed to present evidence that
there was an interstate carrier involved and that even if there was, the government
failed to prove what was sent and why. This argument is meritless. The
government submitted evidence demonstrating that essential documents were
either sent via facsimile or mailed through an interstate carrier. Specifically, the
evidence at trial showed that documents necessary to the closings were sent via
Federal Express and DHL from Johnson to each of the lenders. The receipt of
these documents was verified by evidence showing that the lenders’ files included
the executed closing records.
Second, Fagan and Johnson 1 argue that the evidence against them in counts
two through five was insufficient because they did not provide, or even know
about, the false information on the loan applications. They contend that they were
not involved in any agreement to defraud and that they were unaware of the other
co-defendants’ acts and intentions. These arguments are also meritless. The
evidence at trial overwhelmingly indicated that both Fagan and Johnson
intentionally participated in the scheme to defraud. For each sale, Johnson falsely
1
Arthur has attempted to adopt the sufficiency arguments raised by her co-defendants.
However, “the fact-specific nature of an insufficiency claim requires independent briefing” to
reach the merits where the defendants performed different roles and the evidence against each
differs. United States v. Khoury, 901 F.2d 948, 963 n.13 (11th Cir. 1990). Accordingly,
Arthur’s attempt to adopt Fagan’s and Johnson’s sufficiency arguments is not allowed.
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represented to the lenders that closing costs and escrow payments were made
before or during closing. Additionally, Johnson included Fagan’s non-existent and
unrecorded mortgages on the lender’s HUD-1s for each sale. Johnson also
submitted two different HUD-1s for each sale, indicating vastly different prices
and non-matching mortgages. Most importantly, Johnson received approximately
$22,000 from Fagan for her participation in the scheme.
For his part, Fagan accepted substantial loan disbursements for non-existent
mortgages and then used that money to pay the closing costs and escrow deposits
for properties in which he was not the purchaser. Additionally, Fagan allowed
Johnson to take approximately $22,000 of the loan proceeds for her part in the
scheme. Thus, the direct and circumstantial evidence presented against Fagan and
Johnson substantially supports their convictions for counts two through five.
IV.
The defendants have raised a litany of additional trial errors, some that were
objected to at trial, and some that were not. First, Fagan and Arthur contend that
the district court erred by limiting their presentation of evidence at trial, including
the court’s exclusion of testimony and Arthur’s polygraph evidence. We have
carefully reviewed the record and find this contention to be without merit. The
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court acted within its sound discretion when it excluded this evidence at trial.
United States v. Tobin, 676 F.3d 1264, 1272 (11th Cir. 2012).
Next, Arthur argues that the government’s expert witness, Reuben
Schneider, made a comment on cross-examination that required a mistrial.
Schneider testified that he thought that the defense should have to prove that the
signatures purporting to be that of Arthur’s were in fact not hers. The court
admonished Schneider and gave the jury a curative instruction. Any error here was
cured by the court’s instruction. See Richardson, 481 U.S. at 211 (juries are
presumed to follow their instructions).
Third, Arthur argues that the court committed reversible error when it failed
to timely give a curative instruction for the improper questioning of her character
witness, Kamal Rashad. Although the court did not immediately give a curative
instruction, Rashad’s refusal to accept the premise of the guilt-assuming
hypothetical question and the court’s curative instruction, given at the next day of
trial, rendered any error here harmless. See United States v. Guzman, 167 F.3d
1350, 1353-54 (11th Cir. 1999) (holding the government’s use of guilt-assuming
questions to a character witness on cross-examination to be a harmless error
because of the witness’s defusing response and the strong evidence against the
defendant).
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Fourth, Arthur argues that the government made several improper comments
in its rebuttal during closing arguments. Some of the comments raised on appeal
were objected to at trial, while some were not. Claims of prosecutorial misconduct
ordinarily are reviewed de novo; however, if not raised below, review is limited to
plain error review. United States v. Merrill, 513 F.3d 1293, 1306-07 (11th Cir.
2008). For comments by the prosecutor during closing arguments to constitute
reversible prosecutor misconduct, the comments must have been improper and
there must be a reasonable probability that, but for the remarks, the outcome of the
trial would have been different. United States v. Eckhardt, 466 F.3d 938, 947
(11th Cir. 2006). We have carefully reviewed the record and find that any error
here was harmless and cured by the court’s curative instruction. Moreover, the
evidence against Arthur was overwhelming and thus reversal would be
inappropriate. See id.Fifth, Arthur argues that the district court’s rulings and comments
demonstrated an appearance of partiality and bias against her. To determine if a
judge gave the appearance of partiality or bias at trial we ordinarily review the
conduct for an abuse of discretion. United States v. Verbitskaya, 406 F.3d 1324,
1337 (11th Cir. 2005). However, because the objection was not raised below, the
claim is reviewed only for plain error. United States v. Rodriguez, 627 F.3d 1372,
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1379-80 (11th Cir. 2010). We have carefully reviewed the record and find
Arthur’s contention to be without merit.
Sixth, Arthur argues that the court should have given her proposed theory-
of-defense instruction. We review rulings on proposed jury instructions for an
abuse of discretion. Tobin, 676 F.3d at 1272. Arthur’s argument here is meritless.
“District courts have broad discretion in formulating jury instructions,” United
States v. Mintmire, 507 F.3d 1273, 1293 (11th Cir. 2007), and are “not bound to
use the exact words and phrasing requested by defense counsel,” United States v.
Gonzalez, 975 F.2d 1514, 1517 (11th Cir. 1992). Upon review, we “need only
ascertain whether the charge, when viewed as a whole, fairly and correctly states
the issues and the law.” Id. Here, the good faith instruction given by the court
sufficiently addressed Arthur’s defense according to the evidence that was
presented and the available defenses under the law.
Seventh, Arthur asserts that the district court improperly commented about
making a record for appeal. Any error here was cured when the court clarified to
the jury that a clear record would need to be made for review, no matter the
outcome of the case.
Eighth, Arthur contends that the government violated Rule 16 of the Federal
Rules of Criminal Procedure by failing to give her notice of its intent to introduce
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her 2006 federal tax return into evidence. Arthur has failed to show any prejudice
here. Although she claimed that she filed an amended return that would have
countered the government’s purpose for admitting the return—to show she was
hiding the $316,000 payment she received from Fagan—she failed to produce any
documentary evidence of an amended return or request further time to counter the
government’s evidence.
Lastly, all three defendants argue that the accumulation of errors committed
at trial entitle them to a reversal of their convictions and a new trial. In light of the
small number of errors committed at trial, the curative and limiting instructions
given by the court, and the weight of the evidence against the defendants, we reject
this argument.
AFFIRMED.
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