United States v. De Castro

PUBLISH
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_____________________
No. 95-4648
_____________________
(D.C. Docket No. 94-320-CR-EBD)
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
MARIA J. DE CASTRO, a.k.a Fifi,
Defendant-Appellant.
_______________________________________________________
Appeal from the United States District Court for
the Southern District of Florida
_______________________________________________________
(April 30, 1997)
ON SUA SPONTE RECONSIDERATION
Before TJOFLAT and BLACK, Circuit Judges, and REAVLEY*, Senior
Circuit Judge.
REAVLEY, Senior Circuit Judge:
The prior panel opinion, reported at 104 F.3d 1289, is
withdrawn, and the following opinion is substituted in its stead.
Appellant Maria De Castro complains that the district court erred
in failing to let the jury decide the element of materiality in
her trial for making false statements in violation of 18 U.S.C. §
1010. In light of the Supreme Court’s recent decision in United
States v. Wells,1 we conclude that materiality is not an element
*
Honorable Thomas M. Reavley, Senior U.S. Circuit Judge for
the Fifth Circuit, sitting by designation.
1
117 S. Ct. 921 (1997).
of this crime. We also conclude that the admission of evidence
regarding a government investigation was not plain error.
Accordingly we affirm.
BACKGROUND
De Castro was charged with conspiracy to make and making
false statements to the Department of Housing and Urban
Development (HUD), for the purpose of obtaining federally insured
mortgages, in violation of 18 U.S.C. §§ 371 and 1010. She was
convicted of conspiracy and five of the six substantive counts.
The government’s proof showed that De Castro and others
submitted applications for mortgages insured by the Federal
Housing Administration (FHA), an agency within HUD, on behalf of
low income applicants. The applications contained false
employment information regarding the applicants. De Castro was a
mortgage broker who acted as an authorized underwriter for the
loans. De Castro, two real estate brokers, and several putative
“employers” participated in the scheme to obtain the government-
backed mortgages. The “employers” were business owners paid to
submit false employment verifications that were part of the loan
documentation. De Castro decided the amount of income indicated
in these documents, so as to meet HUD requirements. She signed a
certification form for each of the mortgages, stating that she
had reviewed the case file and found that it met HUD’s
requirements. The real estate brokers, Virginia and Osvaldo
Labrador, as well as several of the loan applicants and false
employers, testified for the government. One of the brokers
2
testified that “with [De Castro’s] signature, the cases could be
approved” by the FHA.
The district court instructed the jury that materiality was
an element of the offense. The court further instructed that
materiality was a question of law for the court to decide and
that the court had already determined that the alleged false
statements were material. The defendant objected to the
instruction and moved for a mistrial. Because it was then well-
established in this circuit that materiality was a question of
law,2 the district court overruled the objection and denied the
motion.
After the Supreme Court’s decision in United States v.
Gaudin, however, we now know that the Constitution requires the
jury to determine whether a false statement is material if
materiality is an element of the offense.3
ANALYSIS
A. Materiality Is Not an Element of 18 U.S.C. § 1010
Whether materiality is an element of 18 U.S.C. § 1010 is an
issue of law reviewed de novo.4 Section 1010 reads, in pertinent
part:
2
See United States v. Kramer, 73 F.3d 1067, 1074 (11th Cir.
1996) (noting that it was well-established that materiality was a
question of law before Gaudin).
3
United States v. Gaudin, 115 S. Ct. 2310, 2320 (1995)
(materiality under 18 U.S.C. § 1001 is a question for the jury);
Kramer, 73 F.3d at 1074 (applying Gaudin to 18 U.S.C. § 1623).
4
See United States v. Hooshmand, 931 F.2d 725, 737 (11th
Cir. 1991) (statutory interpretation is a question of law
reviewed de novo).
3
Whoever, for the purpose of obtaining any loan . . . from
any person . . . with the intent that such loan . . . shall
be offered to or accepted by the Department of Housing and
Urban Development for insurance, . . . or for the purpose of
influencing in any way the action of such Department, makes,
passes, utters, or publishes any statement, knowing the same
to be false . . . shall be fined not more than $5,000 or
imprisoned not more than two years, or both.
As we noted in the prior panel opinion, the word “material”
does not appear in the statute. However, in Gevinson v. United
States, we upheld an indictment charging violations of § 1010
because “[m]ateriality, while not alleged in haec verba, is
alleged in substance and this is sufficient.”5 We stated that
the evidence at trial was sufficient to make out a case “of
knowingly and wilfully uttering and passing a false material
statement with the intent to influence FHA in a transaction
pending before FHA.”6 Relying on Gevinson, we stated in United
States v. Black that in order to obtain a valid conviction under
§ 1010, “it was necessary for the government to prove beyond a
reasonable doubt that [the defendant] knowingly made a false
statement concerning a material fact to HUD as charged in the
indictment . . . .”7
We have previously implied a materiality element into
analogous false statement statutes. For example, in United
States v. Swearingen, we held that materiality was an element of
5
358 F.2d 761, 763 (5th Cir.), cert. denied, 87 S. Ct. 51
(1966).
6
Id. at 765 (emphasis added).
7
644 F.2d 445, 447 (5th Cir.), modified on other grounds,
651 F.2d 392 (5th Cir. 1981) (emphasis added).
4
18 U.S.C. § 1344(a)(2),8 and in United States v. Rapp, we listed
materiality as an element of 18 U.S.C. §§ 1005 and 1014.9
In Wells, the Supreme Court held that materiality was not an
element of § 1014. The Court expressly overruled Rapp.10 It
began its analysis with “a natural reading of the full text” of
the statue, noting that the text of § 1014 does not contain an
express materiality requirement.11 It then rejected the argument
that “at common law the term ‘false statement’ acquired [an]
8
858 F.2d 1555, 1556, 1558 (11th Cir. 1988), cert. denied,
109 S. Ct. 1540 (1989). At the time, 18 U.S.C. § 1344 stated:
(a) Whoever knowingly executes, or attempts to execute, a
scheme or artifice--(1) to defraud a federally chartered or
insured 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 $10,000 or imprisoned not more than five years, or
both.
9
871 F.2d 957, 963-64 (11th Cir.), cert. denied, 110 S. Ct.
233 (1989). 18 U.S.C. § 1005 reads in pertinent part:
Whoever makes any false entry in any book, report, or
statement of [any Federal Reserve bank, member bank,
national bank or insured bank] with intent to injure or
defraud such bank [or various government actors] shall be
fined not more than $5,000 or imprisoned not more than five
years, or both.
18 U.S.C. § 1014 reads in pertinent part:
Whoever knowingly makes any false statement or report, or
willfully overvalues any land, property or security, for the
purpose of influencing in any way the action of . . . any
[FDIC-insured bank] upon any . . . loan shall be fined
$5,000 or imprisoned not more than two years, or both.
10
Wells, 117 S. Ct. at 925 & n.3.
11
Id. at 926-27.
5
implication of materiality that came with it into § 1014.”12 It
noted that § 1014 was originally enacted by Congress as part of
its recodification of the federal criminal code in 1948, and that
materiality was included in other provisions involving false
representations.13 The Court therefore inferred that Congress
had deliberately chosen not to include the term materiality in §
1014. It also noted that, despite amendments to the statute over
the years, the core phraseology criminalizing “false
statement[s]” made “for the purpose of influencing” the actions
of enumerated institutions had not changed.14 The Court also
rejected the argument that implying a materiality element was
necessary to prevent criminalizing relatively trivial or innocent
conduct, and the argument that the rule of lenity was
applicable.15
We conclude that the reasoning employed by the Court in
Wells when it analyzed § 1014 applies with equal force to § 1010.
Beginning with the text of the statute, § 1010, like § 1014,
lacks an express materiality requirement. Both were passed as
part of the 1948 recodification, 62 Stat. 751-52. Section 1010
criminalizes statements made to HUD by one “knowing the same to
be false.” Section 1014 applies to one who “knowingly makes any
false statement” to the agencies covered. Like § 1014, § 1010
12
Id. at 927.
13
Id. at 928.
14
Id. at 929.
15
Id. at 931.
6
has been amended over the years,16 but the core phraseology
describing the conduct and mens rea of the defendant has not
changed. We can see no basis for requiring materiality under §
1010 when the Supreme Court has ruled that there is no such
requirement under § 1014. To the extent that Gevinson and Black
hold to the contrary, we conclude that they have been overruled
sub silentio by Wells.
B. Admission of HUD Findings
De Castro separately argues that the district court erred in
permitting the government to introduce a HUD “finding” of fraud.
Scott Kottman, a loan specialist and investigator for HUD, was
the government’s first witness. He testified that he began an
investigation after a large number of mortgage defaults in the
Phoenix area. He noticed that the majority of the bad loans
involved the same broker, Virginia Labrador, and that the same
employers kept appearing in the files. He then discovered that
home buyers were not employed where the files indicated, and
linked the paperwork in the files to De Castro. Kottman
testified that he investigated De Castro’s company, Phoenix
Mortgage, because of “[t]he unusually large number of false
claims.” He went on to testify that after the investigation De
Castro was suspended from doing business with the FHA. The
suspension letter was admitted into evidence without objection.
16
See 18 U.S.C.A. § 1010 historical notes (1976 & Supp.
1997) (noting 1967 and 1994 amendments).
7
Citing United States v. Christo17 and other authority, De
Castro complains that it is error to allow the introduction of
the results of an agency’s “findings” in a criminal trial. She
further argues that the error was compounded by the prosecutor’s
statements in his opening and closing arguments, such as the
statement in opening argument that HUD “found evidence of fraud,”
and the statement in closing argument that HUD “concluded there
was fraud on the part of Phoenix.”
De Castro concedes that there was not a proper objection to
the evidence or the argument of the prosecutor, and accordingly
the plain error of review standard applies.18
In Christo, the defendant was convicted of misapplication of
bank funds. The government’s theory was that bank overdrafts in
violation of a civil banking statute constituted criminal
misapplication. The jury was further instructed that the civil
violation could be considered in deciding criminal liability.
The court found plain error based on “the inclusion of [civil]
violations in the case,” and “indeed the whole tenor of the
trial.”19 In these regards Christo bears little similarity to
our case. In our case the government never contended, nor was
the jury instructed, that a violation of a civil statute was
sufficient to establish, or even relevant to, guilt under a
criminal statute made the basis of the indictment.
17
614 F.2d 486 (5th Cir. 1980).
18
See United States v. Olano, 113 S. Ct. 1770, 1776 (1993).
19
Id. at 492.
8
The error here, if any, does not rise to the level of plain
error. Kottman did not testify that there was an agency finding
of “fraud.” The government offered extensive evidence from the
participants in the scheme that De Castro submitted fraudulent
documents to HUD. The prosecutor never argued that a HUD finding
of fraud was sufficient to convict De Castro, and instead
reminded the jurors in closing argument of the testimony of ten
witnesses besides Kottman. Under the plain error standard, De
Castro does not carry her burden of showing that the claimed
error was prejudicial, meaning “that the error affected the
outcome of the District Court proceedings.”20 Even if De Castro
had met this prong of the plain error test, we should not
exercise our discretion to correct a plain error unless the error
seriously affected “the fairness, integrity or public reputation
of judicial proceedings.”21 The error, if any, in allowing the
evidence of the HUD investigation does not satisfy this last
element of the plain error test.
AFFIRMED.
20
Olano, 113 S. Ct. at 1778.
21
Id. at 1776.
9