United States v. Lorie Westerfield , 714 F.3d 480 ( 2013 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 12-1599
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
L ORIE W ESTERFIELD,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 08 CR 466 10—Samuel Der-Yeghiayan, Judge.
A RGUED N OVEMBER 29, 2012—D ECIDED A PRIL 9, 2013
Before E ASTERBROOK, Chief Judge, and P OSNER and
M ANION, Circuit Judges.
M ANION, Circuit Judge. Lorie Westerfield was a lawyer
working for a title insurance company in Illinois when
she facilitated fraudulent real estate transfers in a
mortgage fraud scheme. The scheme used stolen
identities of homeowners to “sell” houses that were not
for sale to fake buyers, and then collect the mortgage
proceeds from lenders who were unaware of the fraud.
2 No. 12-1599
Westerfield facilitated five such real estate transfers,
and was later indicted on four counts of wire fraud. She
claimed that she had been unaware of the scheme’s
fraudulent nature and argued that she had merely per-
formed the typical work of a title agent. A jury disagreed,
and convicted her on three of the counts. On appeal, she
challenges her conviction for insufficient evidence and
argues that the district court improperly admitted a co-
defendant’s testimony during trial. Additionally, she
challenges her sentence based on the district court’s
application of the U.S. Sentencing Guidelines and the
district court’s restitution calculation. We affirm.
I. Facts
On June 11, 2008, Lorie Westerfield and eleven co-
defendants were charged in a twenty-count indictment
alleging that the defendants were involved in a scheme
of mortgage fraud and identity theft. This scheme orga-
nized fraudulent real estate transactions in which indi-
viduals posing as home buyers would obtain mortgage
proceeds without actually buying a home. Instead, the
fake buyers would “purchase” a home from fake sellers
who used the names of the homeowners of record
when filling out the required paperwork. The real home-
owners and the people whose names were used as pro-
posed buyers on the paperwork were not involved in
the scheme or even aware that their identities had been
stolen. The mortgage lenders were also unaware that
the scheme was fraudulent, and they unknowingly
issued mortgage proceeds to finance the non-existent
real estate transfers.
No. 12-1599 3
Freddie Johnson was a principal organizer of this
scheme. He worked with other defendants to find home-
owners whose identities could be stolen and who had
homes that were unencumbered by liens. Other scheme
participants then found names of people with good
credit ratings whose identities could be used as buyers
in the fraudulent transactions. Johnson then worked
with mortgage brokers involved in the scheme, including
a co-defendant named LeAndre Burnett, to draft fraudu-
lent mortgage loan applications based on the stolen
identities. These mortgage loan applications contained
multiple fraudulent misrepresentations. The applica-
tions misrepresented the buyers’ names, incomes, assets,
employment records, liabilities, and intended uses of
the properties. They also did not disclose that the
named buyers were seeking to purchase multiple pro-
perties within the same time period. The fake buyers
supported these applications with counterfeit and fraud-
ulently obtained documents.
Once financing had been arranged for the fraudulent
real estate transactions, Johnson recruited people—
sometimes strangers off the street—to attend the
real estate closings and sign various financing docu-
ments. These fake buyers and sellers would not sign
their real names, but would instead use stolen identities.
A title agent would guide the fake buyers and sellers
through these real estate closings, while a “closer”
would supposedly monitor the closings on behalf of
the mortgage lenders.
Westerfield was the title agent for five of the fraudulent
transactions in this scheme. Westerfield was an attorney
4 No. 12-1599
licensed to practice in Illinois, and from September 2001
to December 2003, she worked as an independent con-
tractor for Attorneys’ Title Guaranty Fund, Inc., a title
company that issued insurance policies for real estate
closings. At trial, Johnson testified that he believed
that Westerfield had become involved in the scheme
through Burnett, who had been one of Westerfield’s
clients. He also stated that he had assumed that Burnett
had informed Westerfield about the scheme’s fraudulent
activities because Burnett “was making a lot of money”
through this scheme and needed “to have somebody
to trust.” But Burnett did not testify at trial, and the
government did not provide any direct evidence
showing that Westerfield knew that she was par-
ticipating in fraudulent real estate transactions.
Westerfield’s five real estate transactions were for two
“buyers”—“Meghan Ross,” who pretended to buy three
homes, and “Eddie Robinson,” who pretended to buy
two homes. Westerfield served as both a title agent pre-
paring the required paperwork and as an attorney pur-
portedly representing the sellers. In her role as a title
agent, Westerfield drafted the title commitments un-
derlying the title insurance procured on behalf of the
sellers. These commitments contained information
about the buyer, the purchase price of the property, the
lender providing the mortgage financing, and the
amount of financing the lender was providing.
Westerfield also had little contact with her clients. She
only met her clients at the closings, and for the fifth
closing, she drafted powers of attorney that allowed
No. 12-1599 5
Johnson to sell the home without the presence of a fake
seller. In all the closings, Westerfield guided the fake
buyers and sellers through the closing procedures and
told them where to sign their designated names on a
variety of documents. Westerfield then arranged to
have the mortgage proceeds sent to an unknown third
party through letters of direction. Westerfield directed
the mortgage proceeds from the first transaction to
R.M.D., LLC, a corporate entity owned by Johnson, and
directed the proceeds from the remaining four transac-
tions to Richard Preston, who turned out to be the
dead brother of one of Westerfield’s co-defendants. The
government never presented evidence showing that
Westerfield received a cut of these mortgage proceeds,
but she did receive $12,250 for her customary attorney’s
fees and title-company fees.
The indictment charged Westerfield with four counts
of wire fraud in violation of 18 U.S.C. § 1343 for four of
the five real estate transactions that she had facilitated.
She was not charged for the initial transaction that she
facilitated, and she was not involved in the transactions
in the other sixteen counts. The other eleven defendants
accepted plea bargains, but Westerfield pleaded not
guilty on all four counts and her case went to trial in
March 2011. The government presented evidence of
Westerfield’s activities as documented through various
financial records and based on the testimony of many
people, including Westerfield’s co-defendants, a title
company representative, identity theft victims, and three
closers who were supposed to be representing the mort-
gage lenders. Westerfield did not call any witnesses,
and she did not testify herself.
6 No. 12-1599
The jury convicted Westerfield on three of the four
counts on March 21, 2011. Westerfield moved for a judg-
ment of acquittal and argued that the government
had not provided sufficient evidence to support her con-
viction, but the district court denied her motion. On
February 28, 2012, the district court sentenced
Westerfield to 72 months in prison with three years of
supervised release, and ordered her to pay $916,300 in
restitution. Westerfield appealed.
II. Discussion
Westerfield first challenges her conviction based
on the sufficiency of evidence and on the admission of
Johnson’s testimony during trial. If we uphold the con-
viction, she argues that we should remand for resen-
tencing under the U.S. Sentencing Guidelines and for
a recalculation of the restitution value. We consider
each of these arguments in turn.
A. Sufficiency of Evidence
Westerfield first argues that the district court erred
when it denied her motion for a judgment of acquittal. We
review a district court’s decision to deny a motion
for judgment of acquittal de novo. United States v. Macari,
453 F.3d 926, 936 (7th Cir. 2006). When considering such
a motion, we examine “whether a jury verdict has evi-
dentiary support in a criminal case by asking if there
was sufficient evidence, when viewed in the light most
favorable to the government, to allow a rational trier of
No. 12-1599 7
fact to find all of the essential elements of an offense
beyond a reasonable doubt.” United States v. Owens, 301
F.3d 521, 527 (7th Cir. 2002). To establish wire fraud
under § 1343, the government must show “(1) that the
defendant participated in a scheme to defraud; (2) with
the intent to defraud; (3) and used . . . interstate
wire . . . in furtherance of the fraud.” United States v.
Howard, 619 F.3d 723, 727 (7th Cir. 2010).
Westerfield argues that she merely performed the
typical actions of a real estate lawyer, and the govern-
ment therefore failed to show that she had the neces-
sary intent to defraud. The government did not present
any direct evidence that Westerfield knew that the
scheme was illegal, but instead argued that circum-
stantial evidence demonstrated Westerfield’s intent.
The government therefore requested, and the district
court granted, an “ostrich” jury instruction that told
jurors they could “infer knowledge from a combination
of suspicion and indifference to the truth.” If the jury
found “that the defendant had a strong suspicion that
things were not what they seemed or that someone
had withheld some important facts yet shut her eyes
for fear of what she would learn,” the jury could con-
clude that Westerfield acted with the necessary intent.
Such an instruction allows a jury to convict a defendant
solely on circumstantial evidence. See United States v.
Carrillo, 435 F.3d 767, 779-80 (7th Cir. 2006) (“It is appro-
priate to give the ostrich instruction where the
defendant claims a lack of guilty knowledge, and the
government presents circumstances from which a
jury could conclude that the defendant deliberately
avoided the truth.”).
8 No. 12-1599
At trial, the government presented evidence that
Westerfield had prepared real estate transactions in-
dicative of fraud. She had helped two buyers purchase
five homes with financing from different lenders
during a short period of time. August Butera, the
senior president and general counsel of Attorneys’ Title
Guaranty Fund, Inc., testified that this behavior would
have made him concerned. Borrowing from multiple
lenders is a “red flag issue,” Butera explained, because
it allows fraudulent transactions to avoid immediate
detection. He further commented that he would have
been especially concerned because the purchases were
financed almost completely on mortgage loans. Three
of the homes had been purchased with 100% financing,
one with 95% financing, and one with 90% financing.
These are all high loan-to-value ratios that are normally
offered only for the purchase of a single, primary resi-
dence.
The government also presented evidence that Wester-
field would have realized that she was not engaged
in normal real estate transactions based on the unusual
nature of her clients. Johnson testified that he had
recruited the fake buyers and sellers for the fraudulent
transactions, and he stated that he recruited people he
didn’t even know because “[a]nybody could fit the pro-
file.” He testified that some of these people he picked
up “down by an abandoned building . . . by shelters,”
and acknowledged that he “literally pick[ed] people off
the street.” At least one of them had a marijuana and
cocaine habit. Westerfield had no previous relationship
with the fake buyers and sellers but instead met them
No. 12-1599 9
only at the real estate closings. These fake buyers and
sellers relied on Westerfield to guide them through
the closing process, and the government presented evi-
dence suggesting that Westerfield rushed her clients
through the process without explaining the implications
of the paperwork they were signing. For Westerfield’s
final transaction, she never even met the fake sellers,
but instead drafted powers of attorney that allowed
Johnson to sell the property without them.
Finally, the jury heard evidence that Westerfield ar-
ranged to have the proceeds from the real estate transac-
tions directed to a third party not involved in the
real estate transactions. The closers working for Attor-
neys’ Title Guaranty Fund, Inc., testified that a
seller rarely—if ever—directs 100% of the proceeds to a
third party. But Westerfield nonetheless drafted letters
of direction that directed the money to R.M.D., LLC,
and Richard Preston. Westerfield had received instruc-
tions to draft these letters of direction from Burnett, who
in turn, had received the instructions from Johnson.
Westerfield would have realized that these real
estate transactions were fraudulent even though the
closers, who represented the mortgage lenders at the
closings, did not. The closers were supposed to ensure
that all the documents were properly signed according
to the lenders’ instructions, which were usually five or
six pages long. But even though these closers were in-
volved in the real estate transactions, they did not
actively work with the buyers and sellers to fill out the
forms. They instead gave the parties instructions on how
10 No. 12-1599
to complete the appropriate forms and then continued
their own work in a separate room. Additionally, the
closers often managed multiple transactions at the
same time, and did not sit down and work on just one
transaction.1 Finally, Attorneys’ Title Guaranty Fund,
Inc., only had an informal system to detect when a
buyer purchased multiple homes but fraudulently stated
that each home was a primary residence. If the closers
observed that a buyer was purchasing multiple homes
within a short period of time, the closers were expected
to pass that information on to the president of Attor-
neys’ Title Guaranty Fund, Inc. But in Westerfield’s
case, different closers were assigned for each of the fraud-
ulent transactions, thus enabling the repeat buyers to
avoid detection.2 Westerfield, on the other hand, was
present for each transaction.
Overall, the jury learned that Westerfield had helped
two individuals purchase five homes in a short peri-
od of time with financing from different lenders at
1
The closers were supposed to represent the lenders at the
closings, but they were barely involved in the closing pro-
cess. This lack of sensitivity in just five transactions
caused the lenders to lose almost a million dollars. With so
much money at stake, it seems obvious that the closers
should have been more involved in the real estate transactions.
2
The closers’ failure to scrutinize the real estate transactions
in which they were supposed to represent the lenders has
understandably led to changes at Attorneys’ Title Guaranty
Fund, Inc. The company has revised its anti-fraud policies,
and now has a formal system that tracks buyers’ purchases.
No. 12-1599 11
high loan-to-value ratios. She rushed the buyers and
sellers—who were clueless and obviously fake—through
the closing process and then gave the mortgage
proceeds to a third party. Based on this evidence, a rea-
sonable jury could conclude that if Westerfield had
been unaware that she was facilitating an illegal
scheme, she only lacked such knowledge because she
was deliberately ignorant. See Carrillo, 435 F.3d at 779-80.
The district court therefore did not err in denying
Westerfield’s motion for judgment of acquittal.
B. Johnson’s Testimony
Westerfield next argues that the district court wrongly
admitted Johnson’s testimony. Johnson testified about
the scheme that he had helped organize. He explained
the general workings of the scheme, then focused on
Westerfield’s role in it. When a party objects to the ad-
mission of evidence, we review a district court’s deci-
sion to admit the evidence for abuse of discretion.
United States v. Thomas, 294 F.3d 899, 904 (7th Cir. 2002).
Westerfield objected only once during Johnson’s testi-
mony:
[Gov’t.]
Generally speaking, did you pay the participants you
recruited to each of these transactions?
[Johnson]
Yes, sir.
Do you know whether LeAndre Burnett and Lorie
Westerfield had any financial arrangements?
12 No. 12-1599
No, sir.
Did you suspect that they did?
Yes, sir.
[Defendant]
Objection to suspicion, Judge.
The Court:
Okay. I’ll allow it. The objection is overruled. I’ll
let the answer stand.
Westerfield’s attorney did not specify a rule of evidence
in this objection, but context and Westerfield’s briefs
indicate that this is an objection to the foundation of the
testimony under Federal Rule of Evidence 602. Rule 602
states: “A witness may testify to a matter only if evi-
dence is introduced sufficient to support a finding that
the witness has personal knowledge of the matter. Evi-
dence to prove personal knowledge may consist of the
witness’s own testimony.” Fed. R. Evid. 602.
Johnson had testified extensively about the real estate
scheme that he had helped organize. He had specifically
talked about Burnett’s role in the scheme, and had said
that Burnett “was making a lot of money” and needed
“to have somebody to trust” in the scheme. Therefore,
when Johnson testified that he suspected that Burnett
had a financial arrangement with Westerfield, Johnson’s
testimony had already established his personal knowl-
edge of Burnett’s role in the scheme.
The government argues that Johnson’s testimony was
admissible as opinion testimony from a lay witness.
No. 12-1599 13
But Johnson was an occurrence witness who testified
about his personal thoughts. Nonetheless, if we were to
characterize his statement as opinion testimony, we
would examine it under Federal Rule of Evidence 701.
This rule allows opinion testimony by lay witnesses
when the testimony is: “(a) rationally based on the wit-
ness’s perception; (b) helpful to clearly understanding
the witness’s testimony or to determining a fact in
issue; and (c) not based on scientific, technical, or
other specialized knowledge within the scope of
Rule 702.” Fed. R. Evid. 701.
Johnson’s testimony was based on his perception
because he had helped organize the scheme and had
personally seen Westerfield facilitate fraudulent real
estate transactions. See United States v. Wantuch, 525
F.3d 505, 513 (7th Cir. 2008) (holding that lay opinion
testimony was rationally based on the witness’s percep-
tion because the witness had observed and participated
in the defendant’s illegal activities). Additionally, John-
son’s testimony was useful to the jury because it
explained how the mortgage fraud scheme operated.
Finally, Johnson’s testimony was not expert testimony
within the scope of Rule 702. Therefore, because Johnson
had sufficient personal knowledge under Rule 602, and
his statement was permissible under Rule 701 to the
extent that it was opinion testimony, the district court’s
decision to overrule Westerfield’s objection was not
an abuse of discretion.
Westerfield further urges us to review the remainder
of Johnson’s testimony even though she did not object to
14 No. 12-1599
it in the district court. Westerfield contends on appeal
that Johnson lacked personal knowledge in other
portions of his testimony. Specifically, she argues that
Johnson lacked personal knowledge to testify about Bur-
nett’s relationship with Westerfield. She also argues that
Johnson lacked personal knowledge to testify that
Westerfield had prepared the real estate documents
for the fake buyers and sellers at the closings.
Because Westerfield did not object to these statements
at trial, we review only for plain error. United States v.
Prude, 489 F.3d 873, 880 (7th Cir. 2007). The record estab-
lishes that Johnson had personal knowledge of the
scheme through his own involvement in it. He worked
closely with Burnett to organize the scheme, and he
worked with Westerfield to fill out the paperwork at
the closings. This personal involvement in the scheme
satisfies any Rule 602 concerns. Similarly, his testimony
was acceptable under Rule 701 because it was based on
his own experience in the scheme and because it further
explained how the scheme operated. We therefore see
no plain error in the remainder of Johnson’s testimony.
C. Sentencing Guidelines
Because we uphold Westerfield’s conviction, we now
address Westerfield’s argument that the district court
improperly calculated the value of loss from her convic-
tions under § 2B1.1(b)(1) of the U.S. Sentencing Guide-
lines. Westerfield did not object to the value of loss
used in the sentencing calculations in the district court,
and the government therefore responds that we cannot
No. 12-1599 15
address this argument because it has been waived. But
Westerfield did not explicitly waive this argument,
and there was no strategic reason for her to waive it
implicitly. See United States v. Anderson, 604 F.3d 997, 1001-
02 (7th Cir. 2010). We conclude that Westerfield merely
forfeited this issue, and we therefore review for plain
error. United States v. Canady, 578 F.3d 665, 669 (7th
Cir. 2009).
Westerfield argues that the district court incorrectly
used the value of loss from all five of the transactions
she facilitated ($916,300) instead of only the three trans-
actions for which she was convicted ($714,000) in its
calculations under § 2B1.1(b)(1). But § 1B1.3(a)(2) of the
Sentencing Guidelines states that when the district
court totals the “relevant conduct” of multiple counts
under § 3D1.2(d), the court should include “all acts and
omissions . . . that were part of the same course of
conduct or common scheme or plan as the offense of
conviction.” U.S.S.G. § 1B1.3(a)(2). To establish such
“relevant conduct” in the factual findings, “a district
court should explicitly state and support, either at the
sentencing hearing or (preferably) in a written statement
of reasons, its finding that the unconvicted activities
bore the necessary relation to the convicted offense.”
United States v. Duarte, 950 F.2d 1255, 1263 (7th Cir. 1991).
We may nonetheless affirm without a recitation of
“magic words” that reference § 1B1.3(a)(2) if the record
supports the district court’s conclusion. United States
v. Patel, 131 F.3d 1195, 1204 (7th Cir. 1997); see also
United States v. Salem, 597 F.3d 877, 889 (7th Cir. 2010)
(requiring district courts to state key findings needed
16 No. 12-1599
for a sentencing, and advising counsel to prompt courts
to do so if the key findings are omitted).
At the prompting of the government’s attorneys, the
district court defined the scope of the scheme in
Westerfield’s case. The district court stated in the sen-
tencing hearing that the scheme included all five trans-
actions that Westerfield had facilitated. This statement
was made as part of the court’s analysis of the number
of victims needed for § 2B1.1(b)(2), but it is just as ap-
plicable to the analysis of the value of loss under
§ 2B1.1(b)(1).
Even if the district court’s discussion of the scope of
the scheme was insufficient for purposes of § 1B1.3(a)(2),
Westerfield’s offense level would remain the same
under her proposed calculations. Section 2B1.1(b)(1) of
the Sentencing Guidelines provides that loss values
between $400,000 and $1,000,000 lead to an increase of
14 offense levels, and both $916,300 and $714,000 fall
within this range. Westerfield acknowledges that her
offense level would remain the same under its pro-
posed calculations, but suggests that “a lower total
loss amount may have influenced the District Court’s
sentencing determination.” This hypothetical conjecture
is baseless, and certainly does not establish plain error.
See United States v. Crockett, 82 F.3d 722, 730 (7th Cir.
1996) (ruling that deficiencies in the district court’s state-
ments were “harmless” because the defendant’s “base
offense level would not . . . be affected”).
No. 12-1599 17
D. Restitution
Finally, Westerfield challenges the value of restitu-
tion that the district court imposed. The probation
officer’s Pre-Sentence Investigative Report stated that
Westerfield should pay $714,000 in restitution, but the
government informed the district court during the sen-
tencing hearing that the amount should actually be
$916,300. The district court agreed to modify the amount
of restitution to $916,300, and Westerfield did not ob-
ject. Because Westerfield did not object in the district
court, the government argues that Westerfield waived
this issue, but again, it was merely forfeiture. See
Anderson, 604 F.3d at 1001-02. We therefore review for
plain error. United States v. Dokich, 614 F.3d 314, 318
(7th Cir. 2010).
Federal courts may order restitution in a criminal
case only if they are authorized to do so by statute. United
States v. Pawlinski, 374 F.3d 536, 540 (7th Cir. 2004).
The Mandatory Victims Restitution Act (“MVRA”), 18
U.S.C. § 3663A, authorizes district courts to impose
restitution in wire fraud cases. If a conviction involves a
scheme, the MVRA requires restitution for “any person
directly harmed by the defendant’s criminal conduct in
the course of the scheme . . . .” § 3663A(a)(2). To estab-
lish a scheme, the district court should make specific
findings on whether the convictions were multiple itera-
tions of the same crime or whether the convictions
should be treated as a single scheme. United States v.
Locke, 643 F.3d 235, 247 (7th Cir. 2011). Failing to do
so may be plain error. Id. at 246. Although the
18 No. 12-1599
“relevant conduct” analysis for the Sentencing Guide-
lines is analytically different from this analysis under
the MVRA, we have recognized that the evidence is
similar and can overlap. Id. at 247 n.7.
Because the district court increased the restitution
value during Westerfield’s sentencing hearing, the
court did not have a prepared explanation for its deci-
sion to do so. Nonetheless, the court stated that “we’ve
addressed this with other co-defendants also and
I want to be consistent.” The court then indicated that
it was increasing the restitution value to include all
five fraudulent transactions because the restitution
would then be owed jointly and severally with five
other co-defendants. Because the district court had
already indicated that the five transactions would be
treated as a single scheme in its earlier “relevant con-
duct” discussion, the district court did not commit
plain error by increasing the restitution value to $916,300.
III. Conclusion
The jury heard sufficient evidence to convict Westerfield
of wire fraud and Johnson’s testimony was properly
admitted as evidence. Additionally, the district court
did not commit plain error in Westerfield’s sentencing.
We therefore A FFIRM Westerfield’s conviction and sen-
tence.
4-9-13