United States v. Phillip Rucker ( 2013 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 13-1297
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
PHILLIP RUCKER,
Defendant-Appellant.
Appeal from the United States District Court for the
Northern District of Indiana, Hammond Division.
No. 10 CR 182 — Rudy Lozano, Judge.
ARGUED NOVEMBER 15, 2013 — DECIDED DECEMBER 31, 2013
Before FLAUM and HAMILTON, Circuit Judges, and KAPALA,
District Judge.*
KAPALA, District Judge. After a jury found defendant, Phillip
Rucker, guilty of one count of wire fraud in violation of 18
U.S.C. § 1343, the district court sentenced him to 30 months’
*
The Honorable Frederick J. Kapala of the United States District Court for
the Northern District of Illinois, sitting by designation.
2 No. 13-1297
imprisonment, one year of supervised release, and ordered
him to pay $73,488.95 in restitution. In this direct criminal
appeal, Rucker contends that the district court erred in refusing
to allow him to use a prior conviction to impeach a testifying
co-defendant. We affirm.
I. Background
The grand jury charged Rucker, Jerry Haymon, and Sheila
Chandler, with engaging in a mortgage fraud scheme. Count
III of the indictment, the only count in which Rucker was
named, alleged the following. With the promise of a $10,000
payment, Rucker recruited Leequiter Smith to purchase
residential property at 3758 Buchanan Street in Gary, Indiana
for $85,000. Haymon led the owner, Margaret Peterson, to
believe that he would sell the property for approximately
$35,000. Rucker had Smith sign numerous false documents to
support her loan application. Chandler completed a mortgage
application for Smith knowing it contained false information.
Haymon filed a fake mechanics lien claiming that his business,
Priced Right Construction and Management, LLC (“Priced
Right”), was owed $44,000 for work performed on 3758
Buchanan. In fact, Priced Right performed no work at the
property. The transaction closed on July 14, 2008, and on that
date Rucker, Haymon, and Chandler caused $84,118.48 to be
transmitted by means of wire transmission in interstate
commerce from a lender in Florida to a title company in the
Northern District of Indiana. After the closing, Haymon cashed
a $44,000 check issued to Priced Right and paid kickbacks to
Rucker, Smith, and Chandler for their roles in the scheme.
No. 13-1297 3
Prior to trial, the government moved in limine to exclude
evidence of Chandler’s November 14, 2000 conviction for a
theft concerning a program receiving federal funds, in viola-
tion of 18 U.S.C. § 666(a)(1)(A), for which she received a
sentence of five years’ probation. On the first day of trial in
December 2011, the district court took up the government’s
motion in limine and questioned why introducing the stale
conviction was necessary since Rucker could impeach Chan-
dler with “the fact that she pled guilty in this case.” The court
preliminarily granted the motion and ordered counsel to
approach the bench before attempting to use the conviction for
impeachment.
During the government’s case, Sheila Chandler testified
that she had pled guilty to two of the counts of wire fraud
charged in the instant indictment, as well as nine counts of
wire fraud charged in a previous federal case. Chandler stated
that she began working as a loan originator in 1999 or 2000 and
worked at various places. In 2004, while she was with Chal-
lenge Mortgage, she began to lie to lenders on behalf of buyers
and create false documents such as W-2 forms and earnings
statements to support loan applications. Chandler met Rucker
in 2005 when he was also working at Challenge Mortgage as a
loan officer.
Chandler further testified that in 2008, after she left
Challenge Mortgage and while she was working for her son’s
mortgage brokerage company, Rucker called her and said that
Haymon wanted to find buyers for a couple of houses that he
had because there was a lot of money to be made and that she
could make $10,000 per house. In connection with the sale of
the house at 3758 Buchanan Street, Rucker provided Chandler
4 No. 13-1297
with Leequiter Smith’s name, address, social security number,
and date of birth. After pulling Smith’s credit, Chandler
believed that she could obtain a loan for her. Chandler forged
the seller’s signature on a $85,000 purchase agreement and
gave it to Rucker to take to Smith for her signature. Chandler
indicated on the uniform residential loan application that
Smith was going to live in the residence so that she could
obtain a FHA loan with a lower down payment and interest
rate even though Chandler knew that Smith was planning to
rent the residence to another. Chandler explained that Smith
did not have money for a down payment. To address this
problem, Haymon agreed that he would provide money for the
down payment and Rucker disclosed an acquaintance, also
named Smith, who he thought would assist them. Chandler
created a gift letter, purportedly from Rucker’s acquaintance,
that provided, “I, Lamar Smith, donor, do hereby certify the
following: I have made a gift of $4,000 to Leequiter Smith,
whose relationship is sister.” Chandler knew that Lamar Smith
was not Leequiter Smith’s sibling. Chandler gave the gift letter
to Rucker who had both parties sign it and then he returned it
to Chandler. Chandler also obtained a copy of the cashier’s
check that was used for the down payment, which appeared to
be funded by Lamar Smith instead of Haymon, and copies of
the bank statements of Lamar Smith and Leequiter Smith
showing that the gift money was transferred from Lamar
Smith’s bank account to Leequiter Smith’s bank account. All
this documentation was provided to the lender. After the
closing, Rucker gave Chandler two $5,000 money orders for
her participation.
No. 13-1297 5
Prior to cross-examining Chandler, defense counsel
addressed the court:
[DEFENSE COUNSEL]: First, I’d like to ask permis-
sion from the Court to be able to use Ms. Chandler’s
—Ms. Chandler’s 2000 conviction for theft of public
funds.
….
THE COURT: Counsel, she just admitted pleading
guilty to 11 counts.
[DEFENSE COUNSEL]: And she also—she also
admitted, Your Honor, that she’s been lying since
2004. I mean, that’s—that’s only not—she got a
sentence of 5 years of probation, convicted in 2000.
By 2004, she’s right back doing the same sort of
thing.
THE COURT: Response?
[DEFENSE COUNSEL]: As far—if I may—I’m sorry.
If I may, as far as prejudice to the witness, I don’t see
how it prejudices her at all. She’s already convicted.
[ASSISTANT UNITED STATES ATTORNEY]:
Conviction adds absolutely nothing. She’s admitted
over a long period of time that she’s a dishonest
person. He can certainly use that to impeach her.
She’s got 11 convictions. Another conviction that is
stale doesn’t add anything.
The district court denied the request.
6 No. 13-1297
On cross-examination, Chandler agreed that she was “in
fact, a liar,” that she had falsified loan documents for Haymon
many times, and that they were all stealing money. Chandler
said that she gave Rucker a loan package for 3758 Buchanan to
take to Smith. Chandler denied speaking to Smith on the
telephone about the documents in the loan package. Chandler
also agreed that her plea agreement contemplated that the
government would move for a downward departure pursuant
to U.S.S.G. § 5K1.1 in exchange for her truthful testimony.
After Chandler finished testifying, the district court further
explained its ruling regarding her 2000 conviction:
I did not allow you to go into the conviction that
was over ten years old because of the age on that,
and I was not satisfied that you gave me sufficient
reasons. I did not find that the probative value
outweighed the prejudicial value on that. I just
wanted to make a ruling on that.
Leequiter Smith testified that she met Rucker about six
years earlier and they had a four-year on and off romantic
relationship. In 2008, Smith was working at Family Dollar in
Chicago, Illinois and mentioned to Rucker that she needed
additional income. Rucker told her that she could purchase
3758 Buchanan and rent it in order to generate additional
income. Rucker also told her that if she bought the house she
would get $10,000. Rucker asked Smith for her W-2 forms,
check stubs, and bank statement. Rucker also brought Smith
papers to sign. Before she bought 3758 Buchanan, Rucker
showed her the outside of the home, but she never went inside.
Smith was not aware of the price of the home until the day of
No. 13-1297 7
closing. Because Smith did not have a down payment, Rucker
gave her a $4,000 cashier’s check from a Lamar Smith, which
she deposited into her bank account. Smith later gave Rucker
a copy of her bank statement showing the $4,000 deposit.
When asked if Rucker provided her with any documentation
at the time he brought the $4,000 check, Smith said “he gave
me a paper,” which she identified as the gift letter from Lamar
Smith. Smith said that she signed the gift letter even though
she does not have a brother and did not know anyone named
Lamar Smith. According to Smith, Rucker was aware that she
was an only child. Smith added that Rucker brought her to the
closing in Indiana on July 14, 2008. After the closing, Rucker
brought Smith two $5,000 money orders. According to Smith,
Rucker was supposed to find a renter for her but he never did.
Smith made three payments on the mortgage and then stopped
because of her financial difficulties.
On cross-examination, Smith persisted in her testimony that
she has never been inside 3758 Buchanan. Smith testified that
she did not remember ever meeting Haymon. Smith also
testified that she had just one telephone conversation with
Chandler to obtain her fax number in order to fax Chandler a
bank statement.
A representative of the lender, Taylor, Bean & Whitaker,
testified that the funds for the purchase of 3758 Buchanan were
transferred from Ocala, Florida, to Indiana Title Company on
July 14, 2008. The lender’s representative also testified that had
the lender known about the falsified documents submitted in
support of the loan application, it would have rejected the loan.
8 No. 13-1297
According to the Lake County Indiana Assessor’s office, the
fair market value of 3758 Buchanan in July 2008 was $43,000.
On July 14, 2008, Haymon cashed a $44,000 check at a currency
exchange in Chicago and purchased eight $5,000 money
orders. As of early 2010, the claimed improvements to 3758
Buchanan, identified in the invoice supporting the $44,000
mechanics lien filed by Priced Right and released on July 14,
2008, had not been made.
Rucker testified on his own behalf and denied participating
in any fraudulent activity in connection with the sale of 3758
Buchanan. According to Rucker, he had an intimate relation-
ship with Smith but the intimate aspect of their relationship
ended when he reconciled with his wife. Haymon showed the
property at 3758 Buchanan to Rucker but he found it too small
for his family. Thereafter, Rucker referred Smith to Haymon.
Rucker had an agreement with Haymon that he would receive
$10,000 for referring a buyer. In May 2008, Smith met with
Rucker and Haymon at Haymon’s office before Rucker took
her to 3758 Buchanan where she walked through the property
and met the seller, Margaret Peterson. When they returned to
Haymon’s office, Haymon asked Smith if she liked the prop-
erty and she said yes. Haymon told Smith about his down
payment assistance program and he explained to her that he
would pay her insurance for the first year and at the end of the
closing she would receive $10,000. Smith left the meeting after
Haymon said that he had to get the house appraised and send
a purchase agreement to the seller.
Rucker testified further that since he had to drive to Smith’s
house in Chicago to pick up a cookie order from her aunt, he
also picked up Smith’s W-2, her last two pay stubs, and her
No. 13-1297 9
bank statements, and brought them back to Indiana. Rucker
gave these documents to Chandler’s son to take to his mother.
According to Rucker, there came a point in time when Haymon
called him and told him that the title company wanted to see
the down payment come from Smith’s bank account. As a
result, an associate of Haymon’s named Lamar Smith got a
cashier’s check from the bank and put it into an envelope
which he gave to Haymon. Haymon gave the check to Rucker,
and he brought it to Smith and told her to put it into her bank
account. On a different occasion, Rucker went to Smith’s
workplace to bring her a manila envelope of documents that
Haymon and Chandler said she needed to re-sign. Rucker did
not look at the documents in the envelope. According to
Rucker, Smith was speaking to Chandler on the phone as she
was signing the documents while Rucker was shopping inside
the Family Dollar Store. Rucker brought the envelope back to
Haymon who later gave it to Chandler. Rucker said he did not
know what documents were in the envelope. Rucker attended
the closing but had to leave the room shortly after it began and
did not return until the closing was over. After the closing,
Rucker received his $10,000 referral fee and later brought
Smith her $10,000. Rucker testified that he did not think there
was any impropriety or fraud taking place and, at the time,
knew nothing of the mechanics lien that Haymon put on the
property. Rucker found a renter for the property but it did not
work out because the renter could not get the utilities turned
on.
At the conclusion of the trial, the jury deliberated and
returned a guilty verdict against Rucker. Thereafter, the court
10 No. 13-1297
sentenced Rucker to 30 months’ imprisonment. Rucker timely
appealed.
II. Discussion
Rucker’s sole argument on appeal is that the district court
erroneously precluded the defense from introducing evidence
of Chandler’s 2000 conviction for a theft concerning a program
receiving federal funds, because Chandler’s credibility was
central to the government’s case and the probative value of the
prior conviction substantially outweighed its prejudicial effect.
In response, the government argues that the district court did
not abuse its discretion in finding that the probative value of
Chandler’s remote conviction did not substantially outweigh
the prejudicial effect of presenting cumulative evidence.
Alternatively, the government argues that any error was
harmless.
This Court reviews evidentiary rulings of the district court
for abuse of discretion. United States v. Henderson, 736 F.3d
1128, 1130 (7th Cir. 2013). Federal Rule of Evidence 609(b)
applies to remote convictions, that is, convictions for which
“more than 10 years have passed since the witness’s conviction
or release from confinement for it, whichever is later.” Fed. R.
Evid. 609(b). Such a conviction is admissible only if the court
makes a finding that “(1) its probative value, supported by
specific facts and circumstances, substantially outweighs its
prejudicial effect; and (2) the proponent gives an adverse party
reasonable written notice of the intent to use it so that the party
has a fair opportunity to contest its use.” Id. Remote convic-
tions are to “be admitted very rarely and only in exceptional
No. 13-1297 11
circumstances.” United States v. Redditt, 381 F.3d 597, 601 (7th
Cir. 2004) (quotation marks omitted).
In this case, there is no issue as to Rucker giving notice of
his intent to use the remote conviction to impeach Chandler
because the government’s pretrial motion in limine to preclude
use of that conviction clearly shows that the government had
notice. Also, it is undisputed that when Chandler testified in
December 2011, more than ten years had passed since her 2000
conviction for which she was not confined but rather served a
term of probation. See United States v. Rogers, 542 F.3d 197, 201
(7th Cir. 2008) (noting that “confinement for purposes of the
ten-year time limit in Rule 609(b) does not include periods of
probation” (quotation marks omitted)). Thus, the only issue is
whether the district court abused its discretion in finding that,
under the circumstances, the probative value of the prior
conviction did not substantially outweigh its prejudicial effect.
As to the specific facts and circumstances that would
support the required finding by the trial court, Rucker main-
tains that Chandler’s 2000 conviction for a theft concerning a
program receiving federal funds was especially probative
because it shows that her trial testimony, that she began lying
in 2004, was false. Rucker, however, mischaracterizes Chan-
dler’s testimony. Chandler testified that she began to lie to
mortgage lenders on behalf of buyers and to create false
documents in 2004, not that she was never dishonest before
2004. As such, Chandler’s 2000 conviction does not have the
probative value that Rucker assigns to it.
Rucker also maintains that Chandler’s testimony “was
arguably the lynchpin of the government’s case against him”
12 No. 13-1297
such that her credibility was a crucial factor the jury had to
consider in determining whether the government had proven
its case against him beyond a reasonable doubt. According to
Rucker, Chandler’s testimony that the fake gift letter was his
idea was the strongest and only evidence presented by the
government that he knowingly and with intent to defraud
participated in the alleged scheme to commit wire fraud.
Rucker overstates the significance of Chandler’s testimony.
While it was an important part of the government’s case,
Chandler’s testimony was not the only evidence showing that
Rucker knowingly participated in the fraud scheme.
Smith’s testimony substantiates Rucker’s knowing partici-
pation in the scheme and thereby corroborates Chandler’s
account of Rucker’s activities. Smith testified that Rucker told
her about the property, promised her $10,000 at closing, and
brought her all the necessary documents for the house pur-
chase including the fake gift letter and the misleading $4,000
cashier’s check. Smith also testified that Rucker collected all
her financial information, including Smith’s bank statement
showing the $4,000 “gift” that was deposited into her account,
and took her to the closing to purchase a house that she had
never been inside.
Additionally, apart from Chandler’s testimony, there was
circumstantial evidence presented at trial, corroborated with
documentary evidence, that established Rucker’s knowing
participation in the scheme to defraud the bank in connection
with the sale of 3758 Buchanan. See United States v. Roberts, 534
F.3d 560, 571 (7th Cir. 2008) (“[W]e have held that the Govern-
ment may prove a specific intent to defraud through circum-
stantial evidence and inferences drawn from the scheme itself
No. 13-1297 13
that show that the scheme was reasonably calculated to
deceive individuals of ordinary prudence and comprehen-
sion.” (quotation marks omitted)). Most notably, based on his
own trial testimony, it is clear that Rucker knew that after the
closing he was going to receive a $10,000 referral fee, and that
Smith was going to receive another $10,000 for doing nothing
at all, in a transaction for which Smith provided no funding
and for which Haymon provided the $4,000 down payment.
Even giving Rucker the benefit of the doubt and assuming that
the jury believed that Rucker truly thought the house was
worth $85,000, the disbursement of $20,000 (nearly a quarter of
the proceeds of the sale) to himself and Smith after the closing
and the $4,000 contribution by Haymon was strong evidence
that Rucker knew that fraud was afoot. Therefore, the jury did
not need to rely on Chandler’s testimony alone to conclude
that Rucker knowingly engaged in this scheme to defraud.
It is also critical to note that Rucker’s contention that the
district court abused its discretion is difficult to reconcile with
this Court’s decisions in United States v. Heath, 447 F.3d 535 (7th
Cir. 2006) and United States v. Gray, 410 F.3d 338 (7th Cir. 2005).
In Heath, the defendant was charged with a scheme to defraud
along with a co-defendant who had a plea agreement with the
government requiring him to testify against the defendant at
trial. 447 F.3d at 536–38. The district court allowed the defen-
dant to impeach the co-defendant with his nine prior convic-
tions all from the previous ten years, but refused to allow
reference to several other convictions that occurred outside the
ten-year window of Rule 609(b). Id. at 538. In rejecting the
defendant’s appellate contention that the district court erred in
excluding reference to the co-defendant’s remote convictions,
14 No. 13-1297
this Court held that “[i]t is hard to see what probative value a
few additional theft convictions would have when the jury was
already presented with extensive evidence that [the co-defen-
dant] was a thief and a cheat.” Id. at 539. This Court concluded
that the district court did not abuse its discretion in ruling that
the probative value of those remote convictions did not
substantially outweigh the prejudicial effect of presenting
cumulative evidence. Id.Similarly, in Gray, the defendants argued that they should
have been allowed to impeach their co-defendant, who
testified against them at trial, with his twelve-year-old perjury
conviction. 410 F.3d at 346. This Court found no abuse of
discretion in excluding the remote perjury conviction where
four serious felony convictions within ten-year window were
admitted for impeachment. Id. It is worth noting that unlike the
instant case, the felonies allowed for impeachment in Gray did
not involve a dishonest act. Id.
In this case, in light of the admission of Chandler’s eleven
prior convictions for wire fraud that were within the ten-year
window, her 2000 conviction had very little probative value, if
any. See Heath, 447 F.3d at 539; Gray, 410 F.3d at 446. Thus, the
district court did not abuse its discretion in finding that the
probative value of the remote conviction did not substantially
outweigh the prejudicial effect of presenting cumulative
evidence. Because we agree that there was no abuse of discre-
tion in excluding the prior conviction, we need not reach the
government’s alternative argument.
III. Conclusion
Based on the foregoing, Rucker’s conviction is AFFIRMED.