Eleventh Circuit Court of Appeals - Published Opinions

Friday, June 17, 2011

Hill: Mortgage fraud convictions affirmed; Kastigar hearing required

In U.S. v. Hill, No. 07-14602 (June 14, 2011), in a 163-page opinion, the Court affirmed mortgage fraud convictions and sentences.

The Court held that it was not error to deny a severance on the ground that the district court limited the 18 defendants to a total of 16 peremptory challenges, fewer than they each would have had if tried separately. The Court noted that 16 is more than the 10 peremptory challenges allotted to a single defendant. The Court also rejected the argument that a defendant’s trial should have been severed because he was charged in only a few counts.

The Court found no error in jury selection in the failure to ask the venire whether they knew all of the witnesses who would testify at trial, because the one juror who, as it turned out, did know a witness, was an alternate juror who did not participate in deliberations.

The Court found no prima facie evidence to support a Batson challenge to the prosecution’s use of peremptory strikes to eliminate potential black jurors. The Court noted that the government only used 64% of its peremptory strikes to eliminate black venirepersons, could have excluded five more blacks than it did, and there were nine blacks left to serve on the jury. In addition, in a mortgage fraud case, “the only relevant color is the color of money, and that shade of green is race neutral.” Moreover, most of the defendants, and their lawyers, were white.

The Court rejected the argument that FRE 701 was violated by the admission of testimony of bank officials that they would not have approved loans if misrepresentations in the loan applications would have been disclosed to them. The Court noted that the topic was within the experience of the bank officers, and it did not require expert testimony to establish “that lending institutions would be reluctant to approve a loan application if they it contained false statements about material facts.”

The Court found no error in the district court’s statement that unless the defense agreed to “reasonable stipulations in order to expedite the trial proceedings,” the court would consider this in future sentencing proceedings. The Court noted that it is permissible to give a defendant a “carrot” in exchange for a guilty plea, and found that the district court had not stated at sentencing that it was imposing a longer sentence on a particular defendant because he had not entered into some stipulations.

The Court found no reversible error in the district court’s refusal to give a “good faith defense” jury instruction regarding certain charges. The Court found that the instructions requiring the jury to find that the defendants “wilfully” violated the law required the jury to rule out the possibility that the defendants actually harbored a good faith belief in the legitimacy of their scheme.

The Court rejected a challenge to the giving of a “deliberate ignorance” jury instruction, noting that even if the evidence was insufficient to support this instruction, the evidence of the defendants’ actual knowledge made the error harmless.

The Court rejected defendants’ challenges to the sufficiency of the evidence, including an appraiser’s argument based in part on the fact that the person under whose supervision she was working was not charged with any crime: “The law accommodates imperfection and is home to the idea that it is better to have some justice than none.”

The Court rejected a Double Jeopardy challenge to two convictions based on the fact that the trial court granted Rule 29 motions of acquittal orally from the bench, and then reversed itself before the conclusion of the lengthy Rule 29 hearing, and before the defense opened its case. The Court distinguished Smith v. Massachusetts, 543 U.S. 462 (2005), on the ground that in Smith the trial court reversed its judgment of acquittal after the defense had put on evidence, and after it rested its case.

Turning to one defendant’s Kastigar challenge to the government’s use of evidence against him that he proffered during immunized plea negotiations, despite a proffer agreement that, the Court found, precluded such use, the Court found that the trial court erred in failing to hold an evidentiary hearing. The Court noted that the government should have been required to prove that all of the evidence it introduced at trial – not just the evidence the defendants objected to – was derived from a source independent from the testimony that was compelled under a grant of immunity. The trial court also erred in only giving the defendant 30 minutes to review the government’s “document dump.” In addition, a prosecutor’s admission that the government “used” the defendant’s information “for leads and so forth” indicated that, unless this prosecutor testified at a hearing and could “explain” that admission, the government could not prove that it made no derivative use of the defendant’s information.

Turning to sentencing, the Court rejected the argument that sentences were procedurally unreasonable because the district court’s statements showed that it was “slavishly” adhering to the Guidelines. The Court did not so construe the district court’s remarks at sentencing.

The Court also rejected substantive reasonableness challenges to the sentences, including the sentence of 336 months imposed on Hill, noting his leadership role in a “massive” conspiracy involving $110 million of fraudulent loans.