United States v. James Fidel Sotolongo

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 17-13085
Non-Argument Calendar
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D.C. Docket No. 6:13-cr-00099-JAJ-KRS-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JAMES FIDEL SOTOLONGO,
STEPHANIE MUSSELWHITE,
Defendants-Appellants.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(August 30, 2018)
Before TJOFLAT, ROSENBAUM, and NEWSOM, Circuit Judges.
PER CURIAM:
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James Sotolongo and Stephanie Musselwhite (collectively, “Defendants”)
appeal from the district court’s denial of their joint motion for a new trial based on
newly discovered evidence and alleged Brady/Giglio 1 violations following their
convictions by jury of several offenses arising out of a mortgage-fraud conspiracy.
Defendants argue that the court abused its discretion by denying their motion and
by failing to hold an evidentiary hearing or to allow discovery. After careful
review, we affirm the denial of their new-trial motion.
I.
We begin with a description of the scheme and some of the relevant
evidence, which we take mainly from our opinion affirming their convictions and
sentences. See United States v. Musselwhite, 709 F. App’x 958 (11th Cir. 2017).
From 2006 to 2007, James Sotolongo, the finance director at Century Motors
Financial in Winter Park and Daytona Beach, Florida, devised a scheme to take
advantage of the then-booming real-estate market. See id. at 961. At that time,
property values were quickly escalating and “[p]roperties were being purchased,
sold, relisted, and resold at a high volume.” Id.
Sotolongo’s scheme involved using straw buyers with good credit scores to
obtain expensive residential real estate, which he planned to rent out for several
years and then resell for a huge profit. Id. at 961–62. The straw buyers, including
1
Brady v. Maryland, 373 U.S. 83 (1963); Giglio v. United States, 405 U.S. 150 (1972).
2
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Abdul “Jack” Rifai, the owner of Century Motors, submitted loan applications
containing false statements, which four FDIC-insured banks relied upon in
agreeing to fund the mortgage loans. Id. at 962. The closing documents likewise
contained false statements the banks relied upon in disbursing the loan funds. Id.
Christopher Mencis was the mortgage broker for all but one of the seven
properties charged in the indictment. Id. Mencis and his company helped line up
financing and aided with the preparation of loan applications. The straw buyers’
loan applications generally contained significant false statements involving matters
such as their annual earnings, their jobs, and the purpose for which the property
was being purchased. Id.
Sotolongo, Mencis, the straw buyers, and the banks participated in closings
overseen by title agent Stephanie Musselwhite. Id. When a lender is involved in
the transaction, the title agent, also known as the closing agent, is responsible for
preparing settlement statements in compliance with the lender’s closing
instructions. Musselwhite assisted the fraud by preparing settlement statements
that falsely represented that her title company had received deposits and cash to
close from the borrowers at or before closing, when in fact no deposits or transfers
had been made. Once the banks disbursed the mortgage-loan funds, those funds
were used to satisfy the straw buyers’ deposit and cash-to-close obligations. Id.
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Sotolongo, Musselwhite, Mencis, and one other person were indicted for
their roles in the mortgage-fraud scheme in April 2013. Count 1 charged all four
with having conspired, in violation of 18 U.S.C. § 371, to make false statements to
FDIC-insured financial institutions, in violation of 18 U.S.C. § 1014, and to
commit bank fraud, in violation of 18 U.S.C. § 1344. Counts 2 through 12 charged
Defendants Sotolongo and Musselwhite with substantive executions of a bank-
fraud scheme, in violation of § 1344. Count 13 charged Mencis with making false
statements to an FDIC-insured financial institution. And Count 14 charged
Sotolongo, Musselwhite, and the other person with having made a false statement
to an FDIC-insured financial institution. Mencis pled guilty to the § 1014 charge
and cooperated with the government. Rifai, who was not charged for his role as a
straw buyer for three of the seven properties, also cooperated.
Defendants denied guilt and proceeded to trial, which took place in April
2014. Mencis and Rifai testified for the government. The jury acquitted
Defendants of a few charges but found them guilty of most others. 2 The district
court entered judgment in February 2015, sentencing Sotolongo to a total term of
100 months in prison and Musselwhite to a total term of 60 months in prison.
2
More precisely, the jury returned a guilty verdict against Musselwhite on Counts 1, 4
through 12, and 14, and against Sotolongo on Counts 1 through 12. The jury acquitted
Musselwhite on Counts 2 and 3 and Sotolongo on Count 14.
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Defendants appealed their convictions, raising a variety of challenges,
including the sufficiency of the evidence to support their convictions. After
hearing oral argument, we rejected these challenges and affirmed their convictions.
709 F. App’x at 978.
II.
In April 2017, while their direct appeals were pending, Defendants filed in
the district court a joint motion for a new trial based on newly discovered evidence
and alleged Brady/Giglio violations. They claimed that, well after the trial, they
learned of “significant impeachment evidence” pertaining to both Mencis and
Rifai. They argued that this new evidence undermined their convictions, that the
government violated Brady by failing to disclose it, and that the government
violated Giglio by knowingly offering or failing to correct false testimony.
With regard to Mencis, Defendants learned that he had participated in illegal
gambling activity with an individual named Christopher Tanner during the same
period of the mortgage-fraud scheme (2006–07). Tanner was indicted along with
other individuals in 2013 in the Western District of Oklahoma on charges of
racketeering, conducting an illegal-gambling business, and money laundering.
Mencis testified for the government at Tanner’s trial in February 2015. Without
citing to Mencis’s testimony in the Tanner case or to any other evidence,
Defendants asserted that Mencis was a “likely or possible” target of that
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prosecution. They claimed that, without knowledge of Mencis’s additional
criminal activity and cooperation, the defense was unable to determine whether
Mencis’s testimony for the government in both cases would result in additional
actual or perceived benefit over and above that specified in his plea agreement in
this case.
With regard to Rifai, Defendants learned that he was never charged for his
conduct in this case, contradicting Rifai’s and the government’s assurances at trial
that charges would be forthcoming. Defendants claimed that, due to the applicable
statute of limitations, Rifai had effectively been granted immunity for his crimes.
They maintained that the government was required either to disclose the existence
of any such immunity agreement or to correct the misleading testimony once the
government decided not to prosecute him. They argued that the decision not to
prosecute Rifai was highly material because it would have either established the
magnitude of his incentive to testify or undermined the government’s case that the
activity Rifai engaged in with Defendants was criminal.
Defendants requested an evidentiary hearing and the opportunity to conduct
discovery regarding the government’s knowledge of the Mencis evidence and its
handling of the Rifai non-prosecution. The government filed a response in
opposition to the joint motion, attaching an FBI 302 report documenting what
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appears to be an initial interview with Mencis for the Tanner case on July 2, 2014,
over two months after the trial in this case.
The district court denied Defendants’ joint new-trial motion. The court
concluded that the evidence of Mencis’s unrelated gambling activity was merely
impeaching, not material, and likely would not have produced a different result.
As for the Rifai evidence, the court likewise found that it was merely “additional
impeachment evidence” that was not material and would not produce a different
result. Regarding the alleged Brady/Giglio violations, the court found that no
evidence was suppressed because the government was not aware of the Mencis
evidence before trial and because Rifai’s status as unindicted coconspirator
remained unchanged after the trial. Finally, the court denied an evidentiary
hearing, noting that it was well-equipped to rule on the motion without an
evidentiary hearing because it had heard and evaluated the trial testimony of both
Mencis and Rifai. Defendants now appeal.
III.
We review for an abuse of discretion the district court’s denial of a motion
for a new trial, whether that denial is based on newly discovered evidence or on a
Brady/Giglio violation. See United States v. Vallejo, 297 F.3d 1154, 1163 (11th
Cir. 2002). We likewise review the denial of an evidentiary hearing for an abuse
of discretion. United States v. Massey, 89 F.3d 1433, 1443 (11th Cir. 1996). In
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reviewing for an abuse of discretion, we will affirm unless the district court made a
clear error of judgment or applied the wrong legal standard. United States v.
Lyons, 403 F.3d 1248, 1255 (11th Cir. 2005).
IV.
The Federal Rules of Criminal Procedure permit the district court to vacate a
judgment and grant a new trial “if the interest of justice so requires,” including
where newly discovered evidence casts doubt on the validity of a conviction. Fed.
R. Crim. P. 33(a), (b)(1). Motions for a new trial are “highly disfavored” and
should be granted only with great caution. United States v. Scrushy, 721 F.3d
1288, 1304 (11th Cir. 2013). An evidentiary hearing on a Rule 33 motion is not
required where “the record contain[s] all the evidence needed to dispose of each of
the grounds asserted as a basis for a new trial.” Id. at 1305 n.30.
To obtain a new trial based on newly discovered evidence, the movant must
establish all of the following: (1) the evidence was discovered after trial; (2) the
failure to discover the evidence was not due to a lack of due diligence; (3) the
evidence is not merely cumulative or impeaching; (4) the evidence is material to
issues before the court; and (5) the evidence is of such a nature that a new trial
would probably produce a different result. United States v. Barsoum, 763 F.3d
1321, 1341 (11th Cir. 2014). “The failure to satisfy any one of these elements is
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fatal to a motion for a new trial.” United States v. Schlei, 122 F.3d 944, 991 (11th
Cir. 1997) (quoting United States v. Lee, 68 F.3d 1267, 1274 (11th Cir. 1995)).
To obtain a new trial based on a Brady violation, the defendant must show
all of the following: (1) the government possessed evidence favorable to the
defendant; (2) the defendant did not possess that evidence and could not have
possessed the evidence with due diligence; (3) the government suppressed the
evidence; and (4) there was a reasonable probability of a different outcome if the
evidence had been disclosed to the defendant. Vallejo, 297 F.3d at 1164.
In order to establish a Giglio violation, “the defendant must demonstrate that
the prosecutor knowingly used perjured testimony, or failed to correct what he
subsequently learned was false testimony, and that the falsehood was material.”
Id. at 1163–64 (quotation marks omitted). The materiality element is met if there
is “a reasonable likelihood the false testimony could have affected the judgment of
the jury.” United States v. McNair, 605 F.3d 1152, 1208 (11th Cir. 2010).
Here, the district court did not abuse its discretion by denying Defendants’
joint motion for a new trial. First, the court reasonably concluded that the Mencis
and Rifai evidence did not meet the requirements of a Rule 33(b)(1) motion for a
new trial based on newly discovered evidence.
With respect to Mencis, the evidence that he may have been involved in
contemporaneous, unrelated criminal activity and that he later testified for the
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government in a separate case “at most would merely have impeached [Mencis],”
which is not sufficient to grant a new trial. See Garcia, 13 F.3d at 1471–72
(evidence that a government witness was a suspect in an unrelated murder
investigation at the time of the defendant’s trial was “at most” merely impeaching);
United States v. Champion, 813 F.2d 1154, 1171 (11th Cir. 1987) (“Newly
discovered impeaching evidence is insufficient to warrant a new trial.”). Nor was
this evidence of such a nature that a new trial would probably produce a different
result. The fact that Mencis testified for the government in another case does not,
on its own, show that he was a “likely or possible target” of the investigation.
Appellants offered no evidentiary support for that contention, such as a trial
transcript, and the FBI 302 report indicates that Mencis simply placed sports bets
through one of the defendants. Plus, as the district court noted, Mencis was subject
to vigorous cross-examination during trial. Accordingly, the district court properly
denied a new trial on this ground.
Likewise, the district court did not abuse its discretion in finding that the
Rifai evidence did not meet the requirements for a new trial under Rule 33(b)(1).
Evidence that Rifai ultimately was not charged is merely impeaching and would
not have affected the outcome of the trial. While Rifai was befuddled at trial as to
whether he had been charged, the parties clarified the matter by stipulating to the
jury that there was no agreement that Rifai would be charged and that no charges
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were pending. As the district court found, the jury could readily infer that Rifai
was an unindicted coconspirator who testified against Defendants in “an attempt to
curry favor with the government to avoid prosecution.” That Rifai ultimately was
not charged does not change his status at the time of trial in any material way.
There is nothing to suggest that the government, at the time of trial, did not
actually intend to bring charges against Rifai at a later time. And Defendants had a
full and fair opportunity to cross-examine Rifai and portray him as someone who
effectively cut a deal with the government in exchange for his testimony.
Defendants have not shown that the district court made a clear error of judgment in
denying a new trial on this ground.
Second, the district court properly denied a new trial based on the
government’s alleged failure to disclose the Mencis evidence. The government did
not suppress favorable evidence in violation of Brady because the prosecution in
Defendants’ case first became aware of Mencis’s involvement in the other case in
August 2015, over a year after Defendants’ trial. In fact, Mencis was first
interviewed by the FBI about his gambling activity in July 2014, over two months
after Defendants’ trial. Because the government did not possess the Mencis
evidence before or at the time of trial, it could not have suppressed evidence
favorable to Defendants. See Vallejo, 297 F.3d at 1164.
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Without disputing this timeline, Defendants maintain that the government
knew or should have known about Mencis’s gambling activity before trial. But
they offer nothing more than speculation to support that claim. See United States
v. Jordan, 316 F.3d 1252 n.81 (11th Cir. 2003) (“[M]ere speculation or allegations
that the prosecution possesses exculpatory information will not suffice to prove
‘materiality.’”). In any case, even if the government knew that Mencis had placed
illegal sports bets in the past—it would not have known of his cooperation in the
Tanner case since his cooperation did not begin until after Defendants’ trial—we
agree with the district court that there is no reasonable probability of a different
outcome if the evidence had been disclosed to him. See Vallejo, 297 F.3d at 1164.
Third, the district court properly denied a new trial based on alleged
Brady/Giglio violations with regard to the Rifai evidence. To begin with, we agree
with the court that “there is no new nondisclosed evidence present.” Defendants
knew at the time of trial that Rifai was an unindicted coconspirator, and that status
has not changed, even if the possibility of prosecution is now foreclosed. Although
Defendants characterize the failure to charge Rifai after the trial as an “effective[]”
immunity deal, they do not seriously contend that there was an immunity
agreement before or at the time of trial, and the district court found that there was
not one. Accordingly, Defendants have not established a Brady violation with
regard to the Rifai non-prosecution.
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Defendants respond that the lack of agreement is “legally inconsequential”
because “[t]he key question is not whether the government and the witness entered
into an effective agreement, but whether the witness might have believed the
government was in a position to implement any promise of consideration.” See
Napue v. Illinois, 360 U.S. 264, 270 (1959). But as the district court stated, the
jury readily could have inferred that Rifai was an unindicted coconspirator who
testified against Defendants in “an attempt to curry favor with the government to
avoid prosecution.” Rifai’s potential motivations in that regard were not concealed
from the jury. The court therefore did not err in concluding that the Rifai evidence
was not “material,” even under the more relaxed standard applicable to Giglio
violations. See McNair, 605 F.3d at 1208.
More fundamentally, Defendants have failed to show that Rifai offered any
false testimony that needed to be corrected. See Vallejo, 297 F.3d 1163–64;
United States v. Meros, 866 F.2d 1304, 1309 (11th Cir. 1989) (“The prosecutor
obviously has no duty to correct that which is not false.”). The jury was given
clear information, in the form of a stipulation, that there was no agreement to
charge Rifai and that no charges were pending against him. While Rifai’s
testimony indicated that he expected to be charged, the lack of prosecution does
not prove his testimony false or even misleading, nor does it contradict the
prosecutor’s statement at trial that the government intended to bring charges
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against Rifai. Defendants were well-equipped to portray Rifai as someone who
effectively cut a deal with the government in exchange for his testimony. We
therefore cannot conclude that the jury was presented with any false information or
impression bearing on Rifai’s motivations to testify against Defendants.
Finally, the decision not to hold an evidentiary hearing was well within the
district court’s discretion. The “acumen gained by a trial judge over the course of
the proceedings” makes the court “well qualified” to rule on a motion for a new
trial without an evidentiary hearing. Schlei, 122 F.3d at 994. The court here
presided over Defendants’ trial and heard and evaluated the testimony of the
witnesses whose credibility is now challenged.
Furthermore, this case does not involve the unique circumstances where we
have found evidentiary hearings appropriate. See United States v. Espinosa-
Hernandez, 918 F.2d 911, 913–14 (11th Cir. 1990) (ordering an evidentiary
hearing based on new evidence of serious allegations of misconduct, including
false statements, by the case agent in charge of the operation leading to the
indictment); United States v. Hamilton, 559 F.2d 1370, 1373 (5th Cir. 1977)
(“Where evidentiary hearings are ordered, it is because of certain unique situations
typically involving allegations of jury tampering, prosecutorial misconduct, or
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third party confession.”). 3 Defendants’ allegations and arguments do not raise
more than a speculative possibility that the government violated Brady or Giglio
with regard to the Mencis and Rifai evidence. And post-trial discovery or an
evidentiary hearing based upon mere speculation that it could produce helpful
information is not appropriate. See United States v. Arias-Izquierdo, 449 F.3d
1168, 1189 (11th Cir. 2006); Champion, 813 F.2d at 1171 n.25.
In light of the “highly disfavored” nature of new-trial motions, Scrushy, 721
F.3d at 1304, the district court did not abuse its discretion by concluding that the
new evidence was merely impeaching and that Defendants failed to show that it
probably would change the result of their trial. The court also did not err in finding
that no new trial was warranted based on Brady/Giglio violations. For these
reasons, and because the same judge presided over Defendants’ trial, the district
court was well qualified to rule on their joint motion without a hearing, and it did
not abuse its discretion by declining to order discovery. Therefore, we affirm.
AFFIRMED.
3
We have adopted as binding precedent all decisions of the former Fifth Circuit
rendered prior to October 1, 1981. Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir.
1981) (en banc).
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