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United States v. Williams

United States Court of Appeals, Tenth Circuit

August 4, 2017

MATTHEW WILLIAMS, Defendant-Appellant.


          Daniel T. Hansmeier, Appellate Chief (Melody Brannon, Federal Public Defender, and Thomas W. Bartee, Assistant Federal Public Defender, with him on the briefs), Office of the Federal Public Defender for the District of Kansas, Topeka, Kansas, appearing for Appellant.

          Carrie N. Capwell, Assistant United States Attorney (Thomas A. Beall, United States Attorney, with her on the brief), Office of the United States Attorney for the District of Kansas, Kansas City, Kansas, appearing for Appellee.

          Before TYMKOVICH, Chief Judge, MATHESON, and MORITZ, Circuit Judges.

          MATHESON, Circuit Judge.

         A jury convicted Matthew Williams of bank fraud in violation of 18 U.S.C. § 1344(1), and aggravated identity theft in violation of 18 U.S.C. § 1028A. He appeals and asks that we reverse his convictions because the evidence against him was insufficient.

         Mr. Williams began a mortgage loan application at Pulaski Bank (the "bank") using his father's personal and financial information and his status as a Purple Heart veteran. After his father received the application packet in the mail, he called the bank to explain he had not applied for a loan. The bank referred the matter to law enforcement, but continued to work with Mr. Williams to process the loan and obtain additional documents to clarify the applicant's identity. The bank sent Mr. Williams a notice of incompleteness because it lacked several required documents, signatures, and a photo identification. In response, Mr. Williams provided some of the required documents to the bank, including a fake earnings statement and a letter expressing his intent to proceed with the loan. The bank sent a final notice of incompleteness to Mr. Williams. Mr. Williams did not respond, and the bank closed his application file.

         Mr. Williams argues his misrepresentations on the incomplete application could not support a bank fraud conviction because they (1) were not material to the bank's decision to issue him a loan; and (2) did not impose a risk of loss on the bank. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm Mr. Williams's bank fraud and aggravated identity theft convictions.

         I. BACKGROUND

         A. Factual History

         Mr. Williams challenges the sufficiency of the government's evidence, which requires us to view the evidence in the light most favorable to the Government. We present the factual background accordingly.

         1. Bank Processes

         The testimony at trial established that the bank has a four-step process for issuing mortgage loans: (1) application; (2) processing; (3) underwriting; and (4) closing. Each step has its own verification processes and safeguards.

         First, in the application phase, a loan officer:

• Helps a potential borrower fill out a preliminary application;
• Runs a credit report;
• Requests verification documents, such as a photo identification ("ID"), pay stubs, bank statements, and tax returns; and
• Adjusts the information on the preliminary application as necessary based on the verification documents.

         Preliminary applications for a loan guaranteed by the U.S. Department of Veterans Affairs (a "VA loan") require an addendum confirming the VA will insure the loan. The loan application packet consists of the preliminary application, the VA addendum, around 30 disclosures to the borrower that require signatures, [1] and a letter indicating the borrower's intent to proceed.[2] The borrower must sign and date all of the documents in the packet and return them to the bank.

         Second, at the processing step, a processor reviews the borrower's credit report, calculates available income, verifies the reported income, and reviews the application packet. The bank generally requires a complete preliminary application packet before advancing the loan to this second stage. The bank will sometimes overlook deficiencies in completeness to advance a loan. An employee said:

Well, they're supposed to date it but we do have people who don't date it. We don't not [sic] accept it if it's not dated . . . Well, I mean, they're supposed to date it. . . No, we're not going to not accept this application 'cause it's not dated.

ROA, Vol. 2 at 162-63. She also explained: "Now, if someone's taking a long time or maybe we've just got a little bit of documentation, we'll go ahead and turn it in so we can get the file going. So, we don't always have all the documentation when it goes to a processor." Id. at 144.

         Third, after the processor's work is complete, the application goes to the third stage: underwriting.[3] The underwriter decides whether to approve a loan. Underwriting involves review of the applicant's credit report, income, assets, debts, employment history, the home appraisal, and whether the applicant has sufficient funds to make the down payment and pay closing costs. The underwriter's options include suspending the application for additional information, approving it with conditions, or just approving it.

         Fourth, if the underwriter approves, the loan goes to the final stage: closing. The closer runs an additional credit search, conducts a title search, and verifies the borrower's employment, title insurance, and homeowner's insurance. The closer also prepares the final loan document for the borrower's signature. Until the completion of closing, the bank does not commit to loaning money.

         2. Mr. Williams's Loan Application

         On July 19, 2014, Mr. Williams entered into a contract to purchase a home in Kansas for $480, 000.

         On July 25, 2014, Mr. Williams called Theresa Mentzel, a loan officer at the bank, to inquire about a loan. She asked him questions to prepare a mortgage application. He falsely told her that his legal name was Earl Williams, who is his father, and provided her with his father's social security number, date of birth, and Texas address.[4] He also gave her, as if it were his own, the name of Earl Williams's current employer, monthly income and expenses, and bank account information. He authorized her to run a credit report on "Earl Williams, " which she did. Mr. Williams told Ms. Mentzel he wished to apply for a VA loan. He said, again falsely, that he was exempt from the high funding fee applicable to VA loans because he had received a Purple Heart and was on VA disability. Ms. Mentzel used this information and obtained a VA certificate of eligibility, which confirmed Earl Williams was a veteran, exempt from paying a funding fee, and qualified for a low interest rate.

         On July 30, 2014, the bank sent a copy of the application, which included information provided during Mr. Williams's phone call, and the necessary disclosure forms to Earl Williams's Texas address. Earl Williams received the packet, called the bank, and spoke with Ms. Mentzel's assistant, Judith Atkinson. He told her that he had not applied for a loan and was concerned because the loan application included his social security number. Ms. Atkinson alerted her manager but was told to "just proceed on the loan." ROA, Vol. 2 at 194-95

         Denise DeRousse, a senior vice president at the bank with responsibility for monitoring fraud and loss, became involved with the loan application at some point following Earl Williams's call. Ms. Mentzel was unsure "who was who, or who was telling the truth, " or whether there had been a mistake and Ms. DeRousse thought "[i]t could still be, in [her] mind, an error" and still viewed Mr. Williams as "a person who might be a potential customer." Id. at 227, 228, 181. Aware that critical loan documents were missing, and still viewing Mr. Williams as a potential client whom she did not want to "interrogat[e], " Ms. DeRousse turned the investigation over to law enforcement. Id. at 228. She determined the bank was not then at a risk of loss, and she decided she would not investigate further unless Mr. Williams submitted documents that would allow the bank to proceed with his loan application. She told the bank's mortgage officers to notify her if Mr. Williams provided additional documentation.

         Following her manager's directions, Ms. Atkinson called Mr. Williams and asked him to submit the disclosure forms and his photo ID. He said he would come to the bank the following week with the requested documents, but he did not.

         On August 8, 2014, Ms. Atkinson emailed Mr. Williams a notice of incompleteness. The notice advised he had 10 business days to provide the requested information or the bank would send a final notice of incompleteness.

         On August 19, 2014, Mr. Williams provided the bank with the following documents, all using his father's name: (1) an undated, electronically-signed loan application, (2) two signed but undated disclosure forms, including a notice of intent to proceed with the loan application, and (3) a fake earnings statement showing monthly net wages of $3, 275.25. He also arranged for the Defense Finance and Accounting Service to send the bank a letter verifying that Earl Williams was receiving $3, 585 in monthly retirement pay. Mr. Williams did not provide a photo ID, which the bank required from every customer.[5]

         On August 22, 2014, the bank emailed a final notice of incompleteness to Mr. Williams. The notice advised that he had five business days to provide the requested information, or the bank would close his file. Mr. Williams did not respond with the required documents, so the bank closed his application. Mr. Williams's application never made it to the underwriting phase because the bank "never had enough documentation- complete documentation to send it to the underwriter." ROA, Vol. 2 at 166.

         B. Procedural History

         1. Indictment

         A grand jury in the District of Kansas returned a two-count indictment against Mr. Williams. Count 1 charged bank fraud in violation of 18 U.S.C. § 1344(1), and Count 2 charged aggravated identity theft in violation of 18 U.S.C. § 1028A.

         2. Trial and Oral Motion for Judgment of Acquittal

         At trial, the Government called nine witnesses. Mr. Williams did not present evidence. The testimony established the facts outlined above.

         At the close of the Government's evidence, Mr. Williams moved for a judgment of acquittal under Federal Rule of Criminal Procedure 29 on the bank fraud charge-Count 1-and argued the Government had failed to prove two essential elements: (1) that his statements were material to the bank's decision as to whether to issue him a loan, and (2) that the bank suffered a risk of loss or civil liability. He also argued the aggravated identity theft charge-Count 2-was invalid because it was premised on the bank fraud charge. The district court denied the motion.

         The jury found Mr. Williams guilty of both charges.[6]

         3. Post-Trial Motion for Judgment of Acquittal

         Mr. Williams filed a post-trial motion for a judgment of acquittal under Rule 29, reasserting his arguments from the close of evidence. The district court again denied the motion. It ruled there was sufficient evidence to show the bank suffered a risk of loss because Mr. Williams submitted a fraudulent loan application and expressed his intent to proceed with it. The materiality element also was satisfied, the district court ruled, because Mr. Williams applied for a VA home mortgage loan and his misrepresentations influenced the bank's decision whether to issue the loan. Because the evidence was sufficient on Count 1, the court said it also was sufficient on Count 2.

         4. Sentencing

         Mr. Williams received a prison sentence of 27 months-three months for bank fraud and 24 months for aggravated identity theft. The district court also imposed a two-year term of supervised release.


         Mr. Williams challenges the sufficiency of the evidence underlying both of his convictions. Because the aggravated identity theft conviction was premised on the bank fraud conviction, the Government and Mr. Williams agree that whether the evidence was sufficient for the bank fraud conviction is the determinative issue on appeal.[7]

         Mr. Williams argues the Government failed to prove the first element of bank fraud because it failed to show that his misrepresentations (1) were material, or (2) imposed a risk of loss on the bank. We disagree. Based on the trial evidence, a rational jury could find that Mr. Williams's misrepresentations were both material and imposed a potential risk of loss on the bank.

         A. General Legal Background

         1. Standard of Review

         "To review [a] sufficiency of the evidence [challenge], we engage in de novo review, considering the evidence in the light most favorable to the government to determine whether any rational jury could have found guilt beyond a reasonable doubt." United States v. Los Dahda, 853 F.3d 1101, 1106 (10th Cir. 2017), petition for cert. filed, (July 7, 2017) (No. 17-43). "[W]e consider all of the evidence, direct and circumstantial, along with reasonable inferences[, ] . . . [b]ut we do not weigh the evidence or consider the relative credibility of witnesses." Id.[8] Thus, our review of the evidence is "highly deferential." United States v. Bowen, 527 F.3d 1065, 1076 (10th Cir. 2008) (quotations omitted).

         2. Bank Fraud

         18 U.S.C. ...

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