United States v. Kessler Holzendorf

Case: 13-13440 Date Filed: 08/14/2014 Page: 1 of 12
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-13440
Non-Argument Calendar
________________________
D.C. Docket No. 3:11-cr-00081-MMH-JBT-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
KESSLER HOLZENDORF,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(August 14, 2014)
Before ED CARNES, Chief Judge, TJOFLAT and JORDAN, Circuit Judges.
PER CURIAM:
Case: 13-13440 Date Filed: 08/14/2014 Page: 2 of 12
After a jury trial, Kessler Holzendorf was convicted on one count of
conspiracy to commit mail and wire fraud, 15 substantive counts of mail fraud, and
15 substantive counts of wire fraud. He was sentenced to 48 months imprisonment
and ordered to pay $98,160 in restitution. The district court also entered a
$1,500,000 forfeiture judgment against Holzendorf for which he and several of his
coconspirators were jointly and severally liable. He appeals his convictions and
sentence on a number of grounds.
I.
The government presented substantial evidence at trial establishing that
Holzendorf and several coconspirators operated an extensive mortgage fraud
scheme in Florida from 2006 to 2007. As part of their scheme, Holzendorf and his
confederates recruited individuals to purchase homes and assisted those individuals
in filling out loan applications that often contained several material
misrepresentations. For example, the loan applications often embellished the
purchaser’s income and employment history, and they also stated that the
purchaser intended to use the home as a primary residence even though that was
almost always false.
The scheme was designed to make it possible for the purchasers to get “keys
and cash” at closing. Although new homeowners typically cannot get cash back at
closing because they do not have any equity built up in the property, Holzendorf’s
2
Case: 13-13440 Date Filed: 08/14/2014 Page: 3 of 12
scheme circumvented that restriction by including in the purchase agreements a
purchase price that was greater than the amount that the seller was actually asking
for the property. The false price was reflected in addendums to the purchase
agreements, which directed the lender to pay Home Improvement & Repair by
Design (HIRD), a company owned by Holzendorf, between $50,000 and $250,000
for the installation of a pool or other improvements on the property. All of the
participants in Holzendorf’s scheme knew that the listed improvements would
never be made. After closing, HIRD would receive payment from the lender in the
amount listed in the purchase agreement addendum, and Holzendorf would then
kick back most of that money to the purchaser, though he kept a portion as a
convenience fee.
II.
Holzendorf raises several issues challenging his convictions and sentence.
First, he contends that his indictment was constructively amended or, in the
alternative, that there was a prejudicial variance between the facts proved at trial
and the facts alleged in the indictment. Second, he asserts that the district court
abused its discretion when it denied his motion for a bill of particulars outlining the
specific misrepresentations that were made to the victims. Third, he claims that the
district court abused its discretion when it refused to give three of his requested
jury instructions. Fourth, he contends that the district court erred in ordering
3
Case: 13-13440 Date Filed: 08/14/2014 Page: 4 of 12
restitution because the government failed to carry its burden of showing that the
victim seeking restitution suffered a pecuniary loss. Finally, Holzendorf asserts
that the district court erred when it entered a forfeiture order based on the gross
proceeds from the mortgage fraud scheme. 1
A.
Holzendorf makes two arguments concerning his indictment. He contends
that the government constructively amended his indictment by prosecuting him
based on a scheme “of getting the keys to a house and a bundle of cash,” even
though such a scheme “[did] not appear in the indictment.” In the alternative, he
contends that there was a material variance from his indictment because it alleged
only that Holzendorf and his coconspirators misrepresented to lenders that the
purchasers planned to use the homes as a primary residence, but the government
then relied on additional misrepresentations to bolster its evidence of fraud.
Holzendorf did not raise those arguments before the district court, so we
review only for plain error. United States v. Madden, 733 F.3d 1314, 1321 (11th
Cir. 2013); United States v. Dennis, 237 F.3d 1295, 1300 (11th Cir. 2001). To
prevail, he must show that (1) an error occurred; (2) that error was plain; (3) it
affected his substantial rights; and (4) it seriously affected the fairness, integrity, or
public reputation of the judicial proceedings. United States v. Romano, 314 F.3d
1
Holzendorf also challenges several of the district court’s evidentiary rulings, but his
arguments about them are not persuasive and do not merit discussion.
4
Case: 13-13440 Date Filed: 08/14/2014 Page: 5 of 12
1279, 1281 (11th Cir. 2002). A constructive amendment occurs “when the
essential elements of the offense contained in the indictment are altered to broaden
the possible bases for conviction beyond what is contained in the indictment.”
United States v. Keller, 916 F.2d 628, 634 (11th Cir. 1990). By contrast, a
variance occurs where “the evidence produced at trial differs from what is alleged
in the indictment.” Id. at 633.
Holzendorf has not met his burden under plain error review because he has
failed to show that an error even occurred. The government did not constructively
amend his indictment by characterizing the fraudulent scheme to the jury as one in
which a buyer got “keys and [some] cash” when purchasing a home. Instead, the
references to “keys and [some] cash” simply served as shorthand to describe the
scheme, which was alleged with specificity in the indictment. Holzendorf has also
failed to show that there was a variance between the evidence produced at trial and
the scheme alleged in the indictment. The indictment alleged that the loan
documents in question included “material misrepresentations [that] included, but
were not limited to, that the property would be used by the buyer/borrower as
his/her primary residence when, in fact, the property was not going to be used as
the buyer’s/borrower’s primary residence,” (emphasis added). Contrary to
Holzendorf’s assertion, the indictment did not limit the type of misrepresentations
that the government sought to prove and the government’s evidence did not prove
5
Case: 13-13440 Date Filed: 08/14/2014 Page: 6 of 12
a crime different from the one alleged in the indictment. There was no
constructive amendment or variance. See Keller, 916 F.2d at 633–34.
B.
Holzendorf’s next contention is that the district court erred by denying his
request for a bill of particulars. We review the district court’s denial of that
request for a clear abuse of discretion. United States v. Warren, 772 F.2d 827, 837
(11th Cir. 1985). The purpose of a bill of particulars is to “inform[] a defendant of
the nature of the charges against him so that he will have sufficient detail to
prepare for [his] defense, to avoid or minimize the danger of surprise at trial, and to
enable him to plead double jeopardy” in a later prosecution for the same offense.
United States v. Perez, 489 F.2d 51, 70–71 (5th Cir. 1973).2 A defendant may not
request a bill of particulars “to obtain a detailed disclosure of the government’s
evidence prior to trial,” id. at 71, or to acquire “information which is already
available through other sources,” United States v. Martell, 906 F.2d 555, 558 (11th
Cir. 1990) (quotation marks omitted). To show an abuse of discretion, a defendant
must establish that he was actually surprised at trial and that the denial of the
request for a bill of particulars prejudiced his substantial rights. United States v.
Colson, 662 F.2d 1389, 1391 (11th Cir. 1981).
2
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), we
adopted as binding precedent all decisions of the former Fifth Circuit handed down before
October 1, 1981.
6
Case: 13-13440 Date Filed: 08/14/2014 Page: 7 of 12
In this case, the district court did not abuse its discretion by denying
Holzendorf’s motion. Holzendorf sought a bill of particulars detailing every single
material misrepresentation the government intended to show at trial. That request
was nothing more than a thinly veiled attempt to have the government make a
detailed disclosure of the evidence that it planned to present at trial. That is not an
appropriate basis for seeking a bill of particulars. See Perez, 489 F.2d at 71.
Regardless, Holzendorf cannot show that he was actually surprised at trial because
his indictment described the nature of the fraudulent scheme and the government
included in its response in opposition to his motion a list of nine types of
misrepresentations that it intended to prove at trial. See Colson, 662 F.2d at 1391.
Not only that, but the information that Holzendorf sought was already available
from other sources. See Martell, 906 F.2d at 558. He could have acquired that
information by reviewing his coconspirators’ trial transcripts and plea agreements,
which included several specific examples of misrepresentations made in the
transactions that were at issue in Holzendorf’s trial. See id. The district court did
not abuse its discretion.
C.
Holzendorf also contests the district court’s refusal to give three of his
requested jury instructions. First, he asked that the jury be instructed on a good
faith defense to allegations of fraud. Second, he sought to have the court give the
7
Case: 13-13440 Date Filed: 08/14/2014 Page: 8 of 12
jury an instruction on corporate knowledge because part of his defense was that the
victim lenders were knowing participants in his alleged fraud scheme. Third, he
requested that the court instruct the jury on his theory of defense. We review the
district court’s actions for an abuse of discretion. United States v. McQueen, 727
F.3d 1144, 1154 (11th Cir. 2013). We will find reversible error only if (1) the
requested instruction was a correct statement of the law, (2) its subject matter was
not substantially covered by other instructions, and (3) the failure to give it
seriously impaired the defendant’s ability to defend himself. United States v.
Martinelli, 454 F.3d 1300, 1309 (11th Cir. 2006).
The district court did not abuse its discretion when it refused to instruct the
jury as Holzendorf requested. First, with respect to the good faith defense, that
instruction was substantially covered by the district court’s jury instructions on
intent, which stated that the jury could not convict Holzendorf without finding that
he acted with intent to defraud. Second, the corporate knowledge instruction
would not have assisted the jury in resolving an issue presented to it because the
jury was tasked with determining whether Holzendorf acted with intent to defraud,
not whether the lenders knew about the fraud. See United States v. Chirinos, 112
F.3d 1089, 1101 (11th Cir. 1997) (“The district court, however, is not required to
give the requested jury instruction if it would not have assisted the jury in
resolving the issues presented to it.”). And in any event, the jury could have
8
Case: 13-13440 Date Filed: 08/14/2014 Page: 9 of 12
convicted Holzendorf even if it found that the lenders had not been deceived by his
fraud. See Pelletier v. Zweifel, 921 F.2d 1465, 1498 (11th Cir. 1991) (“[T]he
government can convict a person for mail or wire fraud even if his targeted victim
never encountered the deception — or, if he encountered it, was not deceived.”),
abrogated on other grounds by Bridge v. Phoenix Bond & Indem. Co., 553 U.S.
639, 128 S. Ct. 2131 (2008). Finally, with regard to the jury instruction on
Holzendorf’s theory of defense, nothing prevented him from arguing his defense
theory to the jury during closing arguments, and the district court’s refusal to give
a specific instruction concerning his theory did not seriously impair his defense.
The district court did not abuse its discretion. Martinelli, 454 F.3d at 1309.
D.
Holzendorf challenges the district court’s restitution order, contending that
the government failed to prove by a preponderance of the evidence that one of the
victim lenders — CitiMortgage, Inc. — suffered a $98,160 pecuniary loss that
would entitle it to restitution. “We review de novo the legality of an order of
restitution, but review for abuse of discretion the determination of the restitution
value of lost or destroyed property. We review for clear error factual findings
underlying a restitution order.” United States v. Valladares, 544 F.3d 1257, 1269
(11th Cir. 2008) (quotation marks omitted). “The government bears the burden of
9
Case: 13-13440 Date Filed: 08/14/2014 Page: 10 of 12
demonstrating the amount of the victim’s loss by a preponderance of the
evidence.” United States v. Futrell, 209 F.3d 1286, 1290 (11th Cir. 2000).
In this case, the district court did not err in ordering Holzendorf to pay
$98,160 in restitution to CitiMortgage. In support of the restitution order, the
government presented an affidavit from a CitiMortgage representative who
testified that CitiMortgage held a second mortgage on one of the properties
involved in Holzendorf’s scheme. The affidavit stated that CitiMortgage had
suffered a complete loss of $98,160 on that second mortgage after a foreclosure on
a first mortgage on the property that was fraudulently obtained through the scheme.
In opposition, Holzendorf presented evidence showing only that CitiMortgage was
not the holder of the first mortgage that was foreclosed. He did not present any
evidence calling into question CitiMortgage’s assertion that because of the fraud it
suffered a complete loss on the second mortgage taken out on the property.
Because the government presented unrefuted evidence that CitiMortgage was
harmed by Holzendorf’s fraud, the district court did not clearly err in concluding
that CitiMortgage was a victim entitled to restitution under the Mandatory Victims
Restitution Act of 1996. See 18 U.S.C. § 3663A(a)(2) (defining “victim” under the
statute). In addition, the government did not clearly err by relying on the
CitiMortgage affidavit to find that the loss amount was $98,160.
10
Case: 13-13440 Date Filed: 08/14/2014 Page: 11 of 12
E.
Holzendorf’s final challenge relates to the district court’s forfeiture
judgment, which held him and several of his coconspirators jointly and severally
liable for a forfeiture amount of $1,500,000. He contends that the district court
erred by determining the forfeiture amount based on the gross proceeds from his
fraudulent scheme. 3 He asserts that the district court instead should have reduced
the $1,500,000 figure to reflect that some of the fraudulent loans had been paid off
or otherwise satisfied without financial loss to the victims.
The criminal forfeiture statute, 18 U.S.C. § 982, governs the forfeiture of
property involved in or traceable to the commission of certain enumerated
offenses. Holzendorf’s crimes are not among those enumerated offenses.
Nevertheless, the government could still seek a forfeiture order in this case because
28 U.S.C. § 2461(c) provides that, in criminal cases, courts shall order forfeiture
through the civil forfeiture statute, 18 U.S.C. § 981, when no specific provision of
the criminal forfeiture statute applies. When that approach is taken, the district
court is required to follow the criminal forfeiture procedures set out in 21 U.S.C.
§ 853, with the exception of those procedures in § 853(d). See 28 U.S.C.
§ 2461(c).
3
There is no dispute concerning the district court’s calculation of the gross proceeds from
Holzendorf’s scheme.
11
Case: 13-13440 Date Filed: 08/14/2014 Page: 12 of 12
The district court did not err by entering a forfeiture judgment in the amount
of the gross proceeds because that is just what § 853 requires. See United States v.
Keeling, 235 F.3d 533, 537 (10th Cir. 2000) (“[F]or purposes of § 853, ‘proceeds’
contemplates gross proceeds . . . .”); United States v. McHan, 101 F.3d 1027, 1042
(4th Cir. 1996) (same); cf. United States v. Browne, 505 F.3d 1229, 1281 (11th
Cir. 2007). Holzendorf’s argument relies on the procedure for determining
“proceeds” under § 981 — the civil forfeiture statute. See 18 U.S.C.
§ 981(a)(2)(C) (“In cases involving fraud in the process of obtaining a loan or
extension of credit, the court shall allow the claimant a deduction from the
forfeiture to the extent that the loan was repaid, or the debt was satisfied, without
any financial loss to the victim.”). However, as we have just noted, § 2461(c)
requires a district court ordering forfeiture under that provision to follow the
procedures provided for in § 853, not the procedures laid out in § 981.
Holzendorf’s challenge fails.
AFFIRMED.
12