Justia U.S. 10th Circuit Court of Appeals Opinion Summaries

Defendant-Appellant Harald Dude secured a $1.9 million loan on his Aspen home from Washington Mutual Bank. He sought to borrow another $500,000 from Wells Fargo Bank. As part of the application process, Defendant completed a form for Wells Fargo's title insurance company, Plaintiff-Appellee Stewart Title Guaranty Company. The form required Defendant to disclose existing liens on property. Knowing that the company failed to discover the existence of the Washington Mutual loan, Defendant did not list the lien on Stewart Title's form. Wells Fargo proceeded with the second loan based on representations made on the form. Several years later, Defendant elected to sell the property. Stewart Title was contacted to provide title insurance. A second title search failed to reveal the Washington Mutual loan. The company again provided its disclosure form to Defendant who again omitted the Washington Mutual loan. At some point, Defendant stopped making payments on the Washington Mutual loan. Eventually it threatened the property's new owner with foreclosure. The new owner made a claim on her title insurance with Stewart Title. Honoring what it perceived to be its contractual obligations, Stewart Title paid Washington Mutual’s loan amount in full. Stewart Title then sued. A jury found Defendant liable for fraudulent misrepresentation. On appeal, Defendant and his company argued there was insufficient evidence to hold him liable. Finding sufficient evidence for which the jury could have found Defendant liable, the Tenth Circuit affirmed the verdict against him. View "Stewart Title v. Dude, et al" on Justia Law

At the behest of the Oklahoma Department of Securities, Oklahoma courts found early investors in a Ponzi scheme carried out by a third party to have been unjustly enriched and required disgorgement. Judgments were entered against those investors. The issue before the Tenth Circuit was whether the judgments entered against Robert Mathews, Marvin Wilcox, and Pamela Wilcox qualified as a nondischargeable debt under 11 U.S.C. 523(a)(19). The bankruptcy court decided the debts were nondischargeable because they were in violation of securities laws. The district court affirmed. Upon review, the Tenth Circuit reversed and remanded: "the Department's position conveniently serves its ends (and in the abstract) a public good. But the language of the statute cannot reasonably be stretched that far." View "Oklahoma Dept. of Securites v. Wilcox, et al" on Justia Law

Following trial, a jury convicted Defendant Wallace Laverne Lawrence III on: (1) seven counts of wire fraud/aiding and abetting involving the use of internet ads in a scheme to defraud persons seeking help in paying bills; (2) two counts of fraud in connection with access devices/aiding and abetting, and involving the use of stolen credit-card, debit-card, and bank numbers to obtain goods and services; and (3) one count of aggravated identity theft/aiding and abetting. Defendant appealed, challenging the sufficiency of the evidence to support his conviction on the wire fraud and identity theft counts, and objecting to the use of sentence enhancements for obstruction of justice and being a leader or organizer. Upon careful review of the district court record and Defendant's appellate brief, the Tenth Circuit found no merit to any of Defendant's arguments, and affirmed the district court's judgement.

Defendant Carri O. Adams was tried and convicted, with co-defendant Wallace Laverne Lawrence III, on seven counts of wire fraud/aiding and abetting for her role in a scheme using internet ads to defraud persons seeking help in paying bills. The district court imposed a sentence of eighteen months on each count, to run concurrently, followed by two years of supervised release on each count, also to run concurrently, and ordered Defendant to pay restitution. After timely initiation of this appeal, defense counsel moved to withdraw and filed an "Anders" brief explaining why he believed there to be no non-frivolous grounds for appeal. Upon review, the Tenth Circuit granted counsel's motion and dismissed the appeal.

Defendant Larry Koch appealed a jury’s verdict that found him guilty of conspiracy to commit bank fraud. Defendant admitted others committed bank fraud but disputed that he knowingly participated in their conspiracy. Alternatively, Defendant argued his conviction should have been overturned because the government failed to indict him sooner than it did. Upon review, the Tenth Circuit found sufficient evidence presented at trial with which the jury could conclude Defendant was guilty. Furthermore, Defendant's failed to carry his burden of proving he suffered actual prejudice from the time the government charged him with conspiracy and the time he went to trial. Accordingly, the Court affirmed the district court's judgment.

The United States Commodity Futures Trading Commission (CTFC) and the Oklahoma Department of Securities brought suit against multiple corporate defendants (including Prestige Ventures Corporation) and several individuals, Kenneth Lee and his wife and two sons, Simon Yang. The Lees and Mr. Yang appealed pro se a district court's order entered in favor of CTFC. In their complaint, the CTFC alleged that defendants operated a Ponzi scheme that bilked at least 140 investors out of millions of dollars, in violation of a number of provisions of the Commodity Exchange Act and the Oklahoma Uniform Securities Act of 2004. Plaintiffs also alleged that millions of dollars were funneled to Defendants from Prestige by Mr. Lee, in cash and in the form of houses, cars, and boats. The court authorized a receiver to take possession of and sell the houses and boats. further, the court entered a broad array of permanent injunctive orders prohibiting defendants from further dealings in commodity futures and transacting investment-related business in Oklahoma. The court further ordered Defendants to pay over $5 million in restitution and a number of penalties, and ordered Defendants to disgorge large sums of cash. Each of the Lees filed a substantively identical motion for reconsideration of the Order. Having considered these issues and having reviewed the briefs, the record,and the applicable law in light of the applicable review standards, the Tenth Circuit affirmed the judgment of the district court for substantially the reasons stated in the district court’s order of summary judgment and its Order.

In 2003, the Securities and Exchange Commission (SEC) sought a preliminary injunction against ClearOne Communications, Inc. based on suspicions of irregular accounting practices and securities law violations. During a hearing on the preliminary injunction, Defendant and former CEO Susie Strohm was asked if she was involved in a particular sale by ClearOne that was the focus of the SEC’s case. She said she was not and approximated that she learned of the sale either before or after the end of ClearOne’s fiscal year. Based on this testimony, Defendant was later convicted of one count of perjury. She argued on appeal to the Tenth Circuit that her conviction should be reversed because (1) the questioning at issue was ambiguous, (2) her testimony was literally true, and (3) even if false, her testimony was not material to the court’s decision to grant the preliminary injunction. The Tenth Circuit disagreed on all three points. The Court found the questions were not ambiguous and there was sufficient evidence to demonstrate Defendant knowingly made false statements. Also, Defendant's testimony was material to the preliminary injunction hearing because it related to a transaction the SEC believed demonstrated ClearOne’s accounting irregularities. The Court therefore affirmed Defendant's conviction.

Defendant Maurice Ragland was sentenced to 168 months in prison for his role in a mortgage fraud operation. He challenged his sentence as substantively unreasonable. From January 2002 to January 2004, Defendant participated in a mortgage fraud conspiracy through an appraisal business called TERM Appraisers. Defendant's role in the conspiracy consisted of providing fraudulent appraisals that manipulated values of comparable properties and falsely attributed features to homes being appraised. In addition to the false appraisals, TERM associates stole the identities of licensed appraisers and forged their signatures and license numbers on appraisals. TERM associates also created false identities and license numbers for nonexistent appraisers and used those identities to prepare the fraudulent appraisals. At sentencing, the court imposed a 16-level enhancement for a loss between $1 million and $2.5 million, and determined the proper Guidelines range to be 151 to 188 months' imprisonment. Defendant sought a variance, arguing that the Guidelines calculations did not reflect his allegedly minor role in the conspiracy. The district court refused his request, concluding that Defendant played a critical role in the conspiracy because the inflated appraisals were essential to the fraudulent mortgage loans. Upon review, the Tenth Circuit found that Defendant's perception that he should have received a shorter sentence did not rebut the presumption that his sentence was substantively reasonable. Accordingly, the Court concluded that the district court did not abuse its discretion in calculating Defendant's sentence.

In January 2009, Defendant-Appellant Robert Blechman and a codefendant, Itsik (Issac) Yass, were tried together in the District of Kansas on charges of mail fraud, aggravated identity theft, and conspiracy to commit mail fraud and aggravated identity theft. Evidence introduced at trial showed that Yass operated a business that he used to temporarily halt home foreclosures by "attaching" foreclosure properties to fraudulent bankruptcy cases in order to take advantage of the Bankruptcy Code’s automatic stay provision. After a two-week trial, the jury found Blechman and Yass guilty of all of the counts charged against them. The district court granted Blechman's motion for judgment of acquittal on the identity theft counts and ultimately sentenced Blechman to a total of eighteen months' imprisonment on the remaining counts. Blechman appealed, challenging the district court’s admission of an America Online (AOL) record that connected him to an e-mail address and three PACER records revealing that he accessed fraudulent bankruptcy cases in Tennessee that were similar to the Kansas bankruptcies identified in the indictment. Blechman argued that these records contained double hearsay and that the district court erroneously admitted them under the business records exception to the hearsay rule. Upon review, the Tenth Circuit held that the district court erred in admitting the challenged AOL and PACER records under Rule 803(6). Nevertheless, because the Court concluded that the error was harmless, it affirmed Blechman's convictions.

Appellants F. Jeffrey Miller and Hallie Irvin were charged in an eleven-count indictment with a variety of crimes stemming from an alleged conspiracy to defraud mortgage lenders in connection with the subprime housing market. After a month-long jury trial, Miller and Irvin were each convicted on several of the charges and sentenced. They appealed their convictions, citing numerous evidentiary and legal errors. Miller also challenged his sentence. Miller was a builder and developer involved in residential construction in Kansas, Missouri, and other states. With many competing developers marketing their homes to well-qualified buyers, Miller chose to focus his business on buyers with low income and poor credit. The marketing of Miller’s homes was handled by Stephen Vanatta, who would refer potential buyers to a mortgage broker named James Sparks for financing. Because a prior felony conviction for passing a bad check prohibited Vanatta from maintaining a checking account, his portion of commissions were paid by checks issued to his wife, appellant Irvin. Upon review, the Tenth Circuit found the district court erred on three of the eleven charges against Defendant Miller, but affirmed the district court in all other aspects. The Court remanded the case for further proceedings.