United States v. Sorensen

Opinion by Judge O’SCANNLAIN; Dissent by Judge LOVELL.

O’SCANNLAIN, Circuit Judge:

We must decide whether a mortgage broker can be convicted of making false statements with regard to a loan application which was never signed.

I

In 1994, the FBI began a series of sting operations investigating mortgage brokers and other individuals suspected of loan fraud. As part of this effort, a confidential informant for the FBI, Vincent Schuman, contacted Ronald P. Sorensen, a mortgage broker. Posing as a borrower, Schuman told Sorensen that he was looking for a mortgage broker to help him obtain a loan from the Resolution Trust Corporation (“RTC”) to finance a purchase of residential property. The two men set up an in-person meeting to be held at Schuman’s apartment.

After this conversation, the FBI caused documents purporting to be a sales contract for a house in Santa Barbara (the one Schuman told Sorensen he intended to purchase) to be delivered to Sorensen. The contract indicated that the selling price was $350,000 and that Schuman had placed a down payment of $150,000. Thus, it appeared that Schuman needed a loan of $200,000 to cover the remainder of the purchase price.

Schuman and Sorensen met in person on January 24, 1995, and the FBI covertly videotaped the meeting. At the outset, Sorensen asked Schuman what the source of his down payment was. Schuman told him that he had obtained a loan from his uncle. Schuman noted that the funds for the down payment were in a bank account under his name, but that the money belonged to his uncle. Sorensen told Schu-man that he would just write on the loan application that the money for the down payment was from his bank account.

The conversation then turned to the subject of Schuman’s employment. Schuman explained that he had not been employed, or filed tax returns, for ten years. Soren-sen said that such facts were not problematic and that he would just put down that Schuman was self-employed, commenting that no one would take the time to verify this information.

Sorensen continued filling out the loan application, later inquiring about Schu-man’s ownership of automobiles. Schu-man told Sorensen that he did not own any cars, but that he drove his uncle’s Rolls Royce and Ferrari. Sorensen explained that to be approved for the loan Schuman would have to list ownership of a car, noting that this information would not be checked by anyone. Sorensen then asked again for a car listing. This time, Schu-man stated he had a BMW. The loan application listed Schuman as owning a $50,000 BMW.

When Sorensen asked what other property Schuman owned, Schuman informed him that he owned no property. Sorensen explained that they would have to list something because most people with this much money have items such as antiques or paintings. Again, Sorensen noted that the accuracy of this information would not be checked. Sorensen and Schuman agreed to list Schuman as owning $30,000 in jewelry on the application.

Sorensen then called Irene Kennedy of the RTC and asked what documentation she would need for a loan. Kennedy told Sorensen that all the RTC needed was a form 1003, a standard loan application. Sorensen agreed to fax the form 1003 to her.

After the call, Sorensen told Schuman that “we have to show income, and we have to put down that you do something.” Sorensen then put down that Schuman was self-employed, writing that Schuman was self-employed by V.M.S. Enterprise (a fictitious company name upon which the two men agreed). Sorensen instructed Schu-man to have the V.M.S. Enterprise listed in directory information. Sorensen and Schuman then worked on deriving a false income figure to list on the form 1003.¹ Sorensen then said he would type up the information and fax it to Kennedy.

On January 26, 1995, Sorensen caused a seventeen-page loan application to be faxed to Kennedy. This document included the following false statements: that Schuman had been self-employed by V.M.S. Enterprise for ten years, that his income from employment was $12,000 per month, that he owned a $50,000 BMW, and that he owned $30,000 in jewelry. Neither Sorensen nor Schuman, however, had signed the loan application.

On February 27, 1997, the government filed a single-count indictment charging Sorensen with submitting a false statement to the RTC with intent to influence action on a loan in violation of 18 U.S.C. § 1014. A First Superseding Indictment was filed on May 15, 1997, alleging the same offense. This Indictment charged the following:

SORENSEN knowingly made, and caused to be made a false statement and report to the Resolution Trust Corporation (“RTC”) for the purpose of influencing action on a loan. That is, in order to obtain a $200,000 mortgage loan from the RTC on behalf of the Borrower, defendant SORENSEN submitted and caused to be submitted to the RTC a residential loan application [containing false statements],

Sorensen pled not guilty. After a three-day trial, the jury returned a verdict of guilty. Sorensen was sentenced to one day of imprisonment and a fine of $2,500. Sorensen now appeals, arguing that the government failed to produce sufficient evidence at trial to support his conviction.

II

It is undisputed that Sorensen submitted a purported loan application containing false statements to the RTC. It is similarly undisputed that the form was unsigned. The pivotal question in this case is whether a violation of section 1014 can be established where the false statements made by Sorensen to the RTC are contained only on a loan application that was unsigned.²

In answering this question, we begin, as we must, with the text of the statute. See United States v. Wells, 519 U.S. 482, 117 S.Ct. 921, 926, 137 L.Ed.2d 107 (1997). Section 1014 provides, in relevant part, that: “Whoever knowingly makes any false statement or report ... for the purpose of influencing in any way the action of ... the Resolution Trust Corporation ... upon any application ... or loan ... shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.” 18 U.S.C. § 1014. Sorensen contends that, because the document he submitted was unsigned, it cannot constitute an “application” for purposes of section 1014. Therefore, he argues, he cannot be convicted of attempting to influence the RTC “upon any application” for the simple reason that there was no “application” upon which the RTC could have been influenced.

In United States v. Zwego, 657 F.2d 248 (10th Cir.1981) the defendant made false statements orally to a federally insured bank, but never submitted a formal loan application. See 657 F.2d 248, 250-51 (10th Cir.1981). Nevertheless, the Tenth Circuit held that such oral statements could form the basis of a violation of section 1014 because the bank in question had a policy of granting loans on the basis of an oral application and without a written, signed application. See id. In the present case, by contrast, the government expressly conceded at oral argument that the RTC lacks the power to grant a loan without a signed application and never funds a loan until after it receives a signed loan application. Accordingly, we must conclude that the government failed to establish that Sorensen made false statements for the purpose of influencing the action of the RTC “upon any application” as required by section 1014.³

In reaching this conclusion, we are persuaded by the Fifth Circuit’s recent decision in United States v. Jobe. See 101 F.3d 1046 (5th Cir.1996). Stanley Jobe was found guilty of violating section 1014 because he was listed as a guarantor on a co-defendant’s loan presentation form (which differs from a loan application), which contained false statements. Jobe himself never submitted a formal loan application containing a false statement. See id. at 1064-65. The Fifth Circuit reversed Jobe’s conviction, reasoning that, because there had been no loan application on which Jobe had made a false statement, the evidence was insufficient to support his conviction under section 1014. See id. at 1065. Sorensen’s conviction must similarly be reversed because the government failed to produce evidence of a signed loan application containing false statements.⁴

IV

Sorensen may well have intended to defraud the RTC.⁵ Nevertheless, his actions never matured into a violation of section 1014 because he did not submit an application upon which the RTC could have granted a loan. Because the government failed to offer evidence supporting an essential element of the statutory crime, we must reverse.⁶

REVERSED and REMANDED.

1 . During their conversation, Schuman repeatedly stated that he was willing to have documents forged to support his application. Sorensen, however, refused each time, stating that he wanted to avoid using forged documents.

2 . The dissent cites the fact that neither party briefed the issue of whether there was ever an "application” for purposes of section 1014. However, this is largely irrelevant because, as the dissent concedes, the parties cannot deprive the court of jurisdiction by their agreement. Cf. United States v. Dickerson, 166 F.3d 667, 682 (4th Cir.1999) ("Even where the parties abdicate their responsibility to call relevant authority to this Court's attention, they cannot prevent us from deciding the case under tire governing law simply by refusing to argue is.") (internal citations omitted). Moreover, although not extensively addressed in the parties' briefing, this issue was explored in depth at oral argument.

3 . The government makes much of the fact that section 1014 prohibits the making of false statements to influence the RTC "in any way.” Id. The government contends that the fact that the RTC lacks the power to grant a loan without such a signed application is immaterial because section 1014 covers the influencing of the RTC in any way. According to the government, upon receipt of an unsigned loan application, the RTC takes other, preliminary steps to determine whether to fund the loan (such as obtaining credit reports and appraisals), such that the jury could reasonably have concluded that Sorensen made false statements that influenced the RTC in some way.

Even though the government is correct that section 1014 does prohibit the influencing of the RTC "in any way,” the government's theory nevertheless fails to recognize the statutory requirement that the influencing be "upon any application.” As explained earlier, there was no application upon which the RTC could have been influenced. Accordingly, the government has not produced sufficient evidence to establish the statutory requirements of section 1014.

4 . We pause to note that we are not holding that the making of false statements on an unsigned application can never violate section 1014. Rather, we hold, consistently with the plain statutory language, that section 1014 prohibits making false statements on applications. The lack of a signature is relevant in this particular case because the RTC defines an application as a signed form. In the cases discussed by the dissent, the institutions in question had different definitions of the crucial term "application.” Crucially, they were willing to disburse money based on oral representations or unsigned forms.

5 . Sorensen argues that he did not. He claims that he purposefully submitted an unsigned application because he viewed the submission of an unsigned form as a preliminary stage before the actual formal application, such that he would have the opportunity to amend the application after verifying the information contained in the unsigned form 1003. According to Sorensen, he normally submits a loan application only after verifying the information contained therein, but submitted a loan application earlier in this case because of repeated urging by Kennedy (Sorensen's contact at the RTC) to send the form 1003 forthwith. To comply with her requests, but to leave himself an opportunity later to verify the loan application information, Sorensen explained he submitted an unsigned application with the intention of later verifying the veracity of the information.

6 . Because we reverse for insufficient evidence, we need not address Sorensen's remaining claims of error.