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United States v. Litos

United States District Court, N.D. Indiana, Hammond Division

February 24, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
MINAS LITOS, et al., Defendant.

OPINION AND ORDER

ANDREW P. RODOVICH, Magistrate Judge.

This matter is before the court on the Motion to Preserve and Produce Agents' Notes [DE 39], the Motion for Exculpatory Information Relative to the Issue of Materiality [DE 42], the Motion to Compel Government for Disclosure of Rule 404(b) Evidence [DE 43], the Motion for Early Return of Subpoenas for Records [DE 44], and the Motion for Jencks Material [DE 46], filed by the defendant, Minas Litos, on September 30, 2013. For the following reasons, the Motion to Preserve and Produce Agents' Notes [DE 39] is DENIED, the Motion for Exculpatory Information Relative to the Issue of Materiality [DE 42] is DENIED, the Motion to Compel Government for Disclosure of Rule 404(b) Evidence [DE 43] is DENIED, the Motion for Early Return of Subpoenas for Records [DE 44] is GRANTED, and the Motion for Jencks Material [DE 46] is DENIED.

Background

The indictment charges the defendants with one count of conspiracy to commit wire fraud and fifteen counts of wire fraud. It describes a mortgage fraud scheme. The defendants operated a real estate business that bought and sold homes in Gary, Indiana. They attempted to find buyers who would purchase multiple properties. As part of the scheme, the defendants induced individuals by claiming that no money was needed to buy a home. For almost every transaction, the defendants lined up the financing for the buyers. In many cases, a buyer did not see the loan application until closing. Before the closings, the defendants conducted a series of financial transactions to hide from the lenders the fact that the defendants were providing the down payment funds. As a further inducement, the defendants paid kickbacks to some of the buyers. Like the down payment money, the defendants did not disclose the payments to the lenders. Altogether, the indictment and discovery materials reveal that the defendants conducted 45 fraudulent transactions with multiple lenders.

Discussion

In order to convict a defendant of wire fraud, the government must prove: (1) the defendant participated in a scheme to defraud; (2) the defendant intended to defraud; and (3) a use of an interstate wire in furtherance of the fraudulent scheme. United States v. Radziszewski, 474 F.3d 480, 484-85 (7th Cir. 2007). "A scheme to defraud requires the making of a false statement or material misrepresentation, or the concealment of material fact." United States v. Sloan, 492 F.3d 884, 890 (7th Cir. 2007) (internal quotations marks and citations omitted). Intent to defraud means the defendant willfully acted "with the specific intent to deceive or cheat, usually for the purpose of getting financial gain for one's self or causing financial loss to another." United States v. Howard, 619 F.3d 723, 727 (7th Cir. 2010) (quoting United States v. Britton, 289 F.3d 976, 981 (7th Cir. 2002)). The defendant has made several discovery requests to aid in defending these charges.

The defendant first moves the court to compel the government to turnover exculpatory information related to the issue of materiality. Specifically, the defendant believes that the government has information that would show that Bank of America encouraged its loan officers to write loans without concern for the applicant's creditworthiness and that such evidence would rebut the government's argument that the alleged fraud was based on information material to the bank's lending practices.

Under Brady, the government is required to disclose evidence that is favorable to the defendant and material to the defense. However, in United States v. Bagley, 473 U.S. 667, 105 S.Ct. 3375, 87 L.Ed.2d 481 (1985), the Supreme Court stated:

The Brady rule is based on the requirement of due process. Its purpose is not to displace the adversary system as the primary means by which truth is uncovered, but to ensure that a miscarriage of justice does not occur. Thus, the prosecutor is not required to deliver his entire file to defense counsel, but only to disclose evidence favorable to the accused that, if suppressed, would deprive the defendant of a fair trial... (footnotes omitted)
473 U.S. at 675 , 105 S.Ct. at 3380.

See also Strickler v. Greene, 527 U.S. 263, 280, 119 S.Ct. 1936, 1948, 144 L.Ed.2d 286 (1999); Kyles v. Whitley, 514 U.S. 419, 437, 115 S.Ct. 1555, 1567, 131 L.Ed.2d 490 (1995) ("We have never held that the constitution demands an open file policy...").

" Brady does not require a prosecutor to divulge every scintilla of evidence that might conceivably inure to a defendant's benefit." Lieberman v. Washington, 128 F.3d 1085, 1092 (7th Cir. 1997). The government only is required to disclose material exculpatory evidence which, by definition, is evidence that has a reasonable probability of affecting the outcome of the trial. Lieberman, 128 F.3d at 1092; United States v. Hamilton, 107 F.3d 499, 509 (7th Cir. 1997).

Here, the parties dispute whether the information the defendant seeks is material and subject to turnover under Brady. In support of his argument that the information is material, the defendant cites to United States v. Phillips, 731 F.3d 649 (7th Cir. 2013). In Phillips, the defendants desired to present evidence that the lender told them that the borrower's income on the loan application should include the total income from which the loan would be repaid rather than just the borrower's income. The District Court excluded this evidence as irrelevant, ruling that "if mortgage applicants sign something and they send it in, they're attempting to influence the bank...'" Phillips, 731 F.3d at 651. The Seventh Circuit explained that making a statement that is false and influences a bank is not a crime unless the statement was knowingly false. Phillips, 731 F.3d at 652. The court acknowledged that materiality was not an element of the offense but stated that it was relevant because if the loan applicant did not think that his falsehood would influence the bank, it was unlikely that he intended to influence bank. Phillips, 731 F.3d at 652. The Seventh Circuit determined that whether the loan officer influenced the false statement was pertinent to whether the defendants knowingly made a false statement and whether they intended to influence the bank. Phillips, 731 F.3d at 653.

In Phillips, the parties wanted to introduce evidence to show that they did not intend to defraud the bank. The evidence would have demonstrated that they misunderstood what information the loan application asked them to provide - not that they intentionally provided false information to deceive the bank. Here, the evidence the defendant seeks does not reflect his intent or understanding of the loan application. Rather, he requests information to show that one of the victim banks did not rely ...


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