United States v. O'Donnell ( 2016 )

United States Court of Appeals
For the First Circuit
No. 16-1008
UNITED STATES OF AMERICA,
Appellee,
v.
MICHAEL P. O'DONNELL,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Torruella and Barron, Circuit Judges,
and Lisi,* District Judge.
James L. Sultan, with whom Charles W. Rankin and Rankin &
Sultan were on brief, for appellant.
Mark J. Balthazard, Assistant United States Attorney, with
whom Carmen M. Ortiz, United States Attorney, was on brief, for
appellee.
October 19, 2016
* Of the District of Rhode Island, sitting by designation.
BARRON, Circuit Judge. Michael O'Donnell appeals from
his conviction on one count under 18 U.S.C. § 1344, the Bank Fraud
Act. We affirm.
I.
O'Donnell was indicted under the Bank Fraud Act (the
Act) on June 15, 2015. The Act provides:
Whoever knowingly executes, or attempts to
execute, a scheme or artifice--
(1) to defraud a financial institution;
or
(2) to obtain any of the moneys, funds,
credits, assets, securities, or other property
owned by, or under the custody or control of,
a financial institution, by means of false or
fraudulent pretenses, representations, or
promises;
shall be fined not more than $1,000,000 or
imprisoned not more than 30 years, or both.
18 U.S.C. § 1344.
The indictment alleged that O'Donnell violated
subsections (1) and (2) of the Act. Specifically, the indictment
alleged that he "knowingly executed and attempted to execute a
scheme and artifice to defraud Countrywide Bank, FSB, a federally-
insured financial institution, and to obtain money . . . and other
property owned by and under the custody and control of Countrywide
Bank, FSB, by means of false and fraudulent pretenses,
representations, and promises, concerning material facts and
matters in conjunction with a mortgage loan in the amount of
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$44,000 for property located at 40 Harbor Street, Salem,
Massachusetts."
Following indictment, O'Donnell waived his right to a
jury trial and opted for a bench trial. He also entered into a
stipulation. The stipulation set forth the following facts
concerning the scheme alleged in the indictment.
While serving as a self-employed loan originator
operating through his loan originator business, AMEX Home Mortgage
Corporation, O'Donnell completed loan applications and submitted
them to mortgage companies on behalf of individuals seeking to
purchase or refinance property. In 2007, O'Donnell sought to
defraud mortgage lenders in connection with the refinancing of the
property in Salem, Massachusetts referenced in the indictment.
The scheme began with O'Donnell's efforts to obtain a
mortgage loan on a different property, which was owned by a woman
named L.T. In connection with that transaction, O'Donnell
submitted a mortgage loan application containing false information
about L.T. to Homecomings Financial Network, Inc. O'Donnell also
paid, from a bank account controlled by AMEX, approximately $37,000
that L.T. was supposed to put down herself to secure the loan for
that property.
After O'Donnell was successful in securing the mortgage
loan in L.T.'s name, O'Donnell then sought to secure a second
mortgage loan in L.T.'s name, this time for the Salem,
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Massachusetts property named in the indictment. O'Donnell sought
this loan in order to obtain the $37,000 that he had put down to
secure the first loan in L.T.'s name.
O'Donnell submitted the application for this second loan
to a different entity from the one to which he had submitted the
application for the first loan. The stipulation referred to the
entity to which O'Donnell submitted the second loan application as
follows: "Countrywide, where Countrywide Home Loans employees
underwrote and processed the application."
This second loan application contained many of the same
false statements that were in O'Donnell's application for the first
loan in L.T.'s name. O'Donnell also provided fraudulent responses
to various follow-up inquiries in the course of seeking this second
loan. When this second loan closed, O'Donnell pocketed most of
the proceeds.
The key issue at trial concerned whether O'Donnell's
fraudulent scheme to secure the second loan targeted Countrywide
Bank, FSB, as the indictment alleged, or only Countrywide Home
Loans, as O'Donnell contended. The identification of the intended
target was crucial because O'Donnell stipulated that Countrywide
Bank, FSB was a "financial institution" within the meaning of the
Act, while the government did not dispute that Countrywide Home
Loans was not.
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In ruling from the bench at the close of evidence, the
District Court explained that it had determined that the record
showed that O'Donnell was "on notice" that Countrywide Bank, FSB
was "part of this transaction in some form" in the second loan
transaction. With that finding in place, the District Court then
found that O'Donnell was guilty of "attempt[ing]" to execute --
though not of actually executing -- a scheme or artifice described
in subsections (1) and (2) both because O'Donnell had intended to
defraud Countrywide Bank, FSB and because he had intended to obtain
money and property that was under Countrywide Bank, FSB's custody
and control. This appeal followed.
II.
"We review a bench trial conviction de novo, examining
the facts and inferences in the light most favorable to the
verdict." United States v. Ngige, 780 F.3d 497, 503 (1st Cir.
2015) (citing United States v. Tum, 707 F.3d 68, 69 (1st Cir.
2013)). The ultimate question is whether "any rational trier of
fact could have found the essential elements of the crime beyond
a reasonable doubt." United States v. Grace, 367 F.3d 29, 33 (1st
Cir. 2004) (quoting United States v. Casas, 356 F.3d 104, 126 (1st
Cir. 2004)). "[T]his court need not believe that no verdict other
than a guilty verdict could sensibly be reached, but must only
satisfy itself that the guilty verdict finds support in a plausible
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rendition of the record." United States v. Hatch, 434 F.3d 1, 4
(1st Cir. 2006).
We start with the Supreme Court's most recent case
construing the Act, Loughrin v. United States, 134 S. Ct. 2384
(2014). Loughrin makes clear that subsections (1) and (2) of the
Act set out two routes to proving criminal liability under the
statute. See id. at 2389-92. Loughrin also makes clear that proof
that the defendant violated either subsection is sufficient to
support a conviction under the Act. Id. Because we conclude that
the evidence in this case was sufficient to prove a violation under
subsection (1), we confine our analysis to what the evidence shows
regarding that portion of the Act.1 See United States v. Gaw, 817
F.3d 1, 4 (1st Cir. 2016) ("[W]e must affirm each count if the
evidence is sufficient for the jury to have convicted [the
defendant] under any one of the relevant theories of liability
presented to the jury as to that count.").
Under subsection (1), a defendant who "knowingly
executes or attempts to execute" a scheme or artifice to defraud
a "financial institution" violates the Act.2 O'Donnell contends
1 Our prior cases did not always distinguish between the two
subsections of the statute in the way that Loughrin now requires.
2 In contrast to subsection (1), under subsection (2),
Loughrin makes clear, the government must show that "the defendant
intend[ed] 'to obtain any of the moneys . . . or other property
owned by, or under the custody or control of, a financial
institution.'" Loughrin, 134 S. Ct. at 2389 (quoting 18 U.S.C.
§ 1344(2)). Thus, under subsection (2), a defendant may be
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that because the District Court found him guilty under subsection
(1) only of "attempt[ing]" to defraud a financial institution
(rather than of actually "knowingly execut[ing]" such a scheme),
the government was required to show that O'Donnell specifically
intended to defraud Countrywide Bank, FSB and that he took a
substantial step towards doing so. The government does not appear
to disagree. The government instead simply contends that the
evidence sufficed to show that O'Donnell did specifically intend
just that.
O'Donnell's contrary argument proceeds in the following
steps. He first argues that, under the "attempt" prong of
subsection (1), the government had to prove that he specifically
intended to defraud a "financial institution." He thus contends
that the government had to prove that he specifically intended to
defraud Countrywide Bank, FSB, and not simply Countrywide Home
Loans. After all, the parties agree that only Countrywide Bank,
FSB is a "financial institution" under the Act. For that reason,
convicted for violating the Act if he used fraudulent means to
attempt to obtain money or property that he knew was "owned by, or
under the custody or control of, a financial institution."
Loughrin, 134 S. Ct. at 2388 (citing 18 U.S.C. § 1344(2)). And,
a conviction on that basis is proper even if the defendant made no
"false or fraudulent pretenses, representations, or promises"
directly to the financial institution. Id. Still, under that
subsection, the government must show that the "moneys . . . or
other property" sought by the defendant were "owned by, or under
the custody or control of, a financial institution," which, in
this case, would be Countrywide Bank, FSB and not Countrywide Home
Loans. Id.
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an attempt to defraud Countrywide Home Loans would not be an
attempt to defraud a "financial institution" and thus would not be
a crime under subsection (1).
O'Donnell then contends that the evidence shows that, at
most, Countrywide Bank, FSB "may have been involved in some way in
the transaction." As a result, O'Donnell contends, he cannot have
been found guilty under subsection (1), because the evidence in
the record that supports a finding that O'Donnell knew that
Countrywide Bank, FSB was involved "in some way" is insufficient
to show that he specifically intended to defraud Countrywide Bank,
FSB.3
To support this argument about the insufficiency of the
evidence, O'Donnell contends that the record reveals what he
characterizes as only a "perfunctory reference" to Countrywide
3
We note that the government expressly argued to the District
Court that a showing that there was a "risk of loss" to the
financial institution was required under subsection (1), and it
appears that the District Court made its finding of guilt under
subsection (1) on the understanding that a "risk of loss" showing
was required. O'Donnell does not challenge on appeal, however,
the "risk of loss" finding that the District Court made. We thus
treat as waived any argument by O'Donnell regarding the "risk of
loss" issue. The first time he directly addresses the risk of
loss issue is in his reply brief, where he merely notes that the
Supreme Court may "illuminate the scienter requirement" for
subsection (1) in Shaw v. United States, 781 F.3d 1130 (9th Cir.
2015), cert. granted, 136 S. Ct. 1711 (2016). In Shaw, the Ninth
Circuit, post-Loughrin, held that a conviction under subsection
(1) does not require the government to prove a risk of loss to the
financial institution. Id. at 1136. Other circuits however, pre-
Loughrin, have reached the opposite conclusion. See, e.g., United
States v. Staples, 435 F.3d 860, 866 (8th Cir. 2006).
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Bank, FSB in the papers that he received in connection with his
application for, and the approval of, the second loan transaction.
He also notes that most of the loan documents that he saw
referenced Countrywide Home Loans and not Countrywide Bank, FSB.
Further, he points out that the documents that he did see and that
referred to Countrywide Bank, FSB, also contained references to
Countrywide Home Loans. Thus, he contends that, although the
evidence shows that he may have specifically intended to defraud
Countrywide Home Loans, the evidence that he knew of Countrywide
Bank, FSB's involvement in the transaction is simply too slight to
show that he specifically intended to defraud Countrywide Bank,
FSB.
The first of the documents that O'Donnell received that
referred to Countrywide Bank, FSB, however, was not just any
document. It was the loan conditions sheet, which contained the
loan's terms and the conditions for its approval. And that
document did not just contain any reference to Countrywide Bank,
FSB. It made the following statement: "Thank you for submitting
your loan to Countrywide Bank, FSB.! We sincerely appreciate your
business." (emphasis added).
O'Donnell does not deny receiving this document. In
fact, the record shows that he responded to the document by
supplying the specific and detailed information (fabricated though
it was) that the conditions sheet sought.
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In addition, O'Donnell received another document that
referenced Countrywide Bank, FSB. This second document was the
final loan approval document. This document informed O'Donnell
that, by submitting the information requested by the conditions
sheet, he had met the requirements that it had set forth. And
this second document made the same statement that the conditions
sheet had made: "Thank you for submitting your loan to Countrywide
Bank, FSB.! We sincerely appreciate your business." Moreover, the
record shows that, after receiving this second document, O'Donnell
received a check made out to his business in consequence of the
loan application's approval.
Given the documents that O'Donnell concededly saw in
carrying out his fraudulent scheme, the nature of their references
to Countrywide Bank, FSB, and what the record shows about what
happened after he received each document, the record clearly
supports a finding that O'Donnell was aware that Countrywide Bank,
FSB -- and not just Countrywide Home Loans -- was involved in
approving the loan that O'Donnell was seeking to obtain through
fraudulent means.
Moreover, O'Donnell received these documents referencing
Countrywide Bank, FSB while he was concededly engaged in a
fraudulent scheme to secure a loan via false statements. And he
was, by his own account, a sophisticated actor in the loan
origination business. He thus fairly could have been understood
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to have been aware, as we observed more than two decades ago, that
"financial transactions are becoming increasingly integrated and
complex" and that "the effects of fraudulent actions against one
institution are increasingly likely to spill over and
detrimentally affect others." Brandon, 17 F.3d at 427. As a
result, the documents at issue sufficiently support the reasonable
inference that, because O'Donnell was "on notice" of Countrywide
Bank, FSB's involvement in the loan's approval, O'Donnell
specifically intended to defraud Countrywide Bank, FSB and not
simply Countrywide Home Loans. See United States v. Munyenyezi,
781 F.3d 532, 536 (1st Cir. 2015) (explaining that on sufficiency
review we must "tak[e] the evidence and reasonable inferences in
the light most helpful to the prosecution"); United States v.
Ortiz, 966 F.2d 707, 712 (1st Cir. 1992) (explaining that
"factfinders may draw reasonable inferences from the evidence
based on shared perceptions and understandings of the habits,
practices, and inclinations of human beings").4
To be sure, there is no evidence that O'Donnell was aware
that Countrywide Bank, FSB was a "financial institution." But,
4 O'Donnell's contention that the loan at issue in this case
was not an "integrated transaction," as was true of the loan
involved in United States v. Edelkind, 467 F.3d 791, 798 (1st Cir.
2006), is beside the point. Here, the evidence was sufficient to
support a finding that O'Donnell had the specific intent to defraud
Countrywide Bank, FSB even if the transaction was not of that
"integrated" type, and nothing in Edelkind precludes such an
assessment of this record.
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there is no dispute that it is. And we have long held that the
defendant need not have scienter of that necessary fact in order
to be found guilty under the Act. See United States v. Brandon,
17 F.3d 409, 425 (1st Cir. 1994) ("The fact that it should turn
out that the financial institution actually defrauded was
federally insured is a fortuitous stroke of bad luck for the
defendants but does not make it any less of a federal crime.").
Nor does anything in Loughrin hold otherwise, as the Court had no
occasion to address that question. Thus, to the extent that
O'Donnell means to contend that Loughrin requires us to depart
from our precedent on this point, we see no basis for reaching
such a conclusion.
O'Donnell next contends that, even if the record
supports the inference that he specifically intended to defraud
Countrywide Bank, FSB, the government still had to show that he
took a "substantial step" towards executing that fraudulent scheme
in order for him to be convicted of "attempt[ing]" to execute such
a scheme. But, as we have already pointed out, the record reveals
that O'Donnell responded to the conditions sheet in which
Countrywide Bank, FSB thanked him for submitting his loan by
sending fraudulent information in order to secure the loan. The
sending of such information in response to that request qualifies
as a "substantial step" because it is an act "of such a nature
that a reasonable observer, viewing it in context, could conclude
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beyond a reasonable doubt that it was undertaken with a design to
violate the statute." See United States v. Dworken, 855 F.2d 12,
19-20 (1st Cir. 1988).
In so concluding, we recognize that the record shows
that O'Donnell sent his response containing the fabricated
information to Countrywide Home Loans -- rather than to Countrywide
Bank, FSB. And we recognize, too, that the papers that O'Donnell
received in connection with the loan transaction referred to both
Countrywide Home Loans and to Countrywide Bank, FSB. But, as we
have explained, the nature of the references in those documents to
Countrywide Bank, FSB are such that the record adequately supports
the inference that O'Donnell specifically intended to defraud that
latter entity and not simply the former one. Thus, the record
sufficiently supports the finding that, by submitting fraudulent
information to secure the loan in response to the conditions sheet
that thanked O'Donnell for submitting his loan to Countrywide Bank,
FSB, O'Donnell was taking a substantial step in his attempt to
execute a fraudulent scheme directed at that same entity, even
though he sent the response itself to Countrywide Home Loans.
Finally, O'Donnell argues that it was legally impossible
for him to commit attempted bank fraud if he did not commit the
completed crime, given that he specifically intended to defraud
only Countrywide Home Loans and that he was not found guilty of
doing anything more than attempting to defraud Countrywide Bank,
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FSB. This contention necessarily rests, however, on the premise
that the evidence showing O'Donnell's awareness of Countrywide
Bank, FSB's involvement in the loan transaction is insufficient to
support the finding that O'Donnell specifically intended to
defraud Countrywide Bank, FSB. But, as we have explained, that
premise is mistaken, given the documents thanking O'Donnell for
submitting his loan to Countrywide Bank, FSB and O'Donnell's
admitted sophistication in the loan origination business. Thus,
O'Donnell's legal impossibility argument is without substance.
III.
For the foregoing reasons, the conviction is affirmed.
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