United States v. Nicholas Lindsey

FILED
NOT FOR PUBLICATION
JUN 28 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 14-10004
Plaintiff - Appellee, D.C. No. 2:11-cr-00217-LDG-
CWH-1
v.
NICHOLAS LINDSEY, MEMORANDUM*
Defendant - Appellant.
Appeal from the United States District Court
for the District of Nevada
Lloyd D. George, Senior District Judge, Presiding
Argued and Submitted March 18, 2016
San Francisco, California
Before: NOONAN, GOULD, and FRIEDLAND, Circuit Judges.
Nicholas Lindsey appeals his jury conviction and sentence for nine counts of
wire fraud in violation of 18 U.S.C. § 1343 and one count of aggravated identity
theft in violation of 18 U.S.C. § 1028A. The district court sentenced Lindsey to
consecutive sentences of 108 months for wire fraud and 24 months for identity
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
theft. The court also imposed $2,286,911 in restitution. Lindsey timely appealed.
We have jurisdiction under 18 U.S.C § 3742(a) and 28 U.S.C. § 1291. In an
opinion filed concurrently with this memorandum disposition, we hold that lender
negligence in verifying loan application information, or even intentional disregard
of the information, is not a defense to fraud, so evidence of such negligence or
intentional disregard is inadmissible as a defense against charges of mortgage
fraud. We further hold, as a matter of law, that when a lender requests specific
information in its loan applications, false responses to those requests are
objectively material for purposes of proving fraud. In this memorandum
disposition, we address the remainder of Lindsey’s claims, affirming in part as to
the convictions, and vacating the sentence and remanding because of our rulings on
the obstruction of justice enhancement and the restitution calculation. We also
deny Lindsey’s application for bail pending appeal.
1. In his opening brief, Lindsey contended that there were three sidebar
conferences that do not appear in the trial transcript concerning Lindsey’s chosen
defense, the admission of expert witness testimony by unqualified individuals, and
Lindsey’s decision to testify on his own behalf. Lindsey argues that the lack of a
transcript leaves him unable to prove that he preserved his objections as to the first
two issues, subjecting him to a more difficult standard of review on appeal than he
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would face if his objections were preserved. As to the third issue, Lindsey argues
that the lack of transcript prevents him from proving that he was not properly
warned of the risks of testifying. Although court reporters are required to record
all proceedings in open court, see 28 U.S.C. § 753(b)(1), to warrant a reversal a
defendant must suffer prejudice from an incomplete transcript. United States v.
Carrillo, 902 F.2d 1405, 1409 (9th Cir. 1990). After Lindsey’s opening brief was
filed, the government provided transcripts of one of the previously sealed sidebars.
The transcript of this sidebar showed that Lindsey had preserved his objections to
the expert witness testimony. Although the transcript does not reveal whether
Lindsey preserved his materiality claim, we review Lindsey’s materiality claim de
novo, as opposed to under the more deferential plain error standard, in the opinion
filed concurrently with this memorandum disposition. Accordingly, we conclude
that Lindsey suffered no prejudice as a result of the court reporter’s failure to
transcribe these sidebars with respect to preservation of the objections regarding
the expert witness and materiality issues. As to the unrecorded sidebar in which
the district court canvassed Lindsey regarding his decision to testify, the record is
insufficient to tell whether this omission from the transcript was prejudicial to
Lindsey. For example, there is no declaration from Lindsey or his trial attorney
regarding whether Lindsey voluntarily testified. This claim is more appropriate for
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a habeas corpus proceeding, in which Lindsey may supplement the record with
evidence if he is able to demonstrate that the omission of this sidebar from the
transcript was prejudicial. See 28 U.S.C. § 2255(b). His current claim of error
from lack of sidebar transcript relating to his decision to testify is therefore denied
without prejudice to his renewing that claim if able to do so in a habeas corpus
petition properly filed under 28 U.S.C. § 2255.
2. The district court did not abuse its discretion in permitting lenders’
employees to testify as lay witnesses rather than as expert witnesses. Under Fed.
R. Evid. 701, a lay witness’s testimony must be, inter alia, “rationally based on the
perception of the witness.” A lay witness’s testimony “based upon personal
observation and recollection of concrete facts” satisfies that standard. United
States v. Beck, 418 F.3d 1008, 1015 (9th Cir. 2005) (quoting United States v. Allen,
787 F.2d 933, 935 (4th Cir. 1986), vacated on other grounds, 479 U.S. 1077
(1987)). Lindsey has offered no explanation for why the witnesses’ testimony,
which was based on their personal observations while working for the
lenders—rather than on scientific, technical, or specialized knowledge—did not
qualify as lay testimony.
3. The district court did not plainly err in permitting testimony regarding
prior bad acts. Although the admission of testimony that Lindsey possessed stolen
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cars or worked without a mortgage license was likely erroneous under Fed. R.
Evid. 404(b), Lindsey has not shown how the admission of this evidence affected
his substantial rights, i.e., changed the outcome of the trial. See United States v.
Bracy, 67 F.3d 1421, 1433 (9th Cir. 1995).
4. The district court did not abuse its discretion in applying the abuse of a
position of trust enhancement. Under U.S.S.G.§ 3B1.3, the district court may
increase the offense level by two if the “defendant abused a position of public or
private trust . . . in a manner that significantly facilitated the commission or
concealment of the offense.” This enhancement is appropriate for defendants who
possess professional or managerial discretion. U.S.S.G. § 3B1.3, Application Note
1; see also United States v. Laurienti, 731 F.3d 967, 973 (9th Cir. 2013) (“[T]he
presence or lack of professional or managerial discretion represents the decisive
factor in deciding whether a defendant occupied a position of trust.” (internal
quotations and citations omitted)). Lindsey was employed as a mortgage loan
officer and a team leader for his mortgage group, and used that position of
authority to perpetrate the scheme.
5. The district court did not abuse its discretion in applying the sophisticated
means enhancement. Under U.S.S.G. § 2B1.1(b)(10)(C), the district court may
increase the offense level by two for crimes of “sophisticated means.” This is
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defined as an “especially complex or especially intricate offense conduct pertaining
to the execution or concealment of an offense,” for example, soliciting operations
in a separate jurisdiction. U.S.S.G. § 2B1.1, Application Note 9(B). This
enhancement applies when the criminal scheme is extensively planned and is more
sophisticated than a routine offense. United States v. Aragbaye, 234 F.3d 1101,
1108 (9th Cir. 2000), superseded by statute on other grounds as recognized by
United States v. McEnry, 659 F.3d 893, 899 n.8 (9th Cir. 2011). Lindsey was
convicted of operating a scheme in which he solicited straw buyers from other
states, paid them for their identities, and controlled the mortgaged properties to
generate income. This scheme was extensively planned and more sophisticated
than a routine mortgage fraud.
6. The district court found that Lindsey perjured himself during trial and
applied an obstruction of justice enhancement, but did not explain at sentencing
why the perjury was material or willful. Accordingly, we must vacate the sentence
and remand for the district court to fully explain its reasoning on the enhancement.
See United States v. Jimenez-Ortega, 472 F.3d 1102, 1103 (9th Cir. 2007) (per
curiam).
7. We also vacate the amount of restitution and remand for further
proceedings. The Presentence Report and testimony at sentencing indicates that
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the victims in this case are the financial institutions that suffered losses at the time
of foreclosure, as opposed to the lenders who made the original loans. The correct
restitution calculation in this circumstance begins with the amount the victim paid
for the loan and/or collateral, and subtracts the amount recouped from the resale of
the collateral at foreclosure. See United States v. Luis, 765 F.3d 1061, 1067 (9th
Cir. 2014); see also Robers v. United States, 134 S. Ct. 1954, 1856 (2014).
However, Agent Burris’ testimony regarding the calculation of restitution is not
entirely clear. We cannot discern from the record whether the victims purchased
loans, or collateral properties, or both. Also, it is not clear whether Agent Burris
began her calculations with the original loan amount, or with the amount the
second financial institution paid for the loan and/or collateral. If Agent Burris’
calculations began with the original loan amount, then the restitution calculation
was erroneous. Accordingly, we remand for the district court to recalculate the
amount of restitution in accordance with Luis and Robers.
8. Lindsey has also filed a motion for bail pending appeal. See Fed. R. App.
P. 9(b).1 The district court found that Lindsey had not shown by clear and
1
Although on appeal Lindsey erroneously labeled this a motion pursuant to
Fed. R. App. P. 9(a), which describes the standard for release before judgment of
conviction, we construe it as a Fed. R. App. P. 9(b) motion, as this is a post-
conviction motion.
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convincing evidence that he was not a danger to the safety of any other person or
the community, or that he was not likely to flee. See 18 U.S.C. § 3143(b)(A). We
review these findings for clear error, see United States v. Handy, 761 F.2d 1279,
1283 (9th Cir. 1985), and conclude that the district court’s conclusions were not
clearly erroneous.
In United States v. Reynolds, we held that “danger may, at least in some
cases, encompass pecuniary or economic harm.” 956 F.2d 192, 192 (9th Cir.
1992). This is an appropriate case in which to conclude that the economic or
monetary harms caused by Lindsey show his dangerousness. Lindsey ran an
elaborate mortgage fraud scheme that targeted vulnerable and impoverished
individuals and convinced them to act as straw buyers for properties in Las Vegas.
He also stole their identities and purchased other properties without their
knowledge. When the scheme caused foreclosures on the properties, Lindsey
profited while lenders lost money and the straw buyers were left with ruined credit.
This conduct shows that Lindsey is a danger to individuals and the community, and
that the district court’s findings were not clearly erroneous. We reject the
challenge on appeal to the district court’s denial of bail pending appeal.
AFFIRMED IN PART, VACATED AND REMANDED IN PART.
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