United States v. Domenico Rabuffo
14-14585
| 11th Cir. | Nov 20, 2017Background
- From 2005–2007 defendants (Domenico & Mae Rabuffo, Raymond Olivier, Curtis Davis, others) ran a mortgage-stripping real-estate scheme centered on the "Hampton Springs" lots, using straw purchasers and falsified loan documents to obtain bank-funded lot and construction loans.
- Straw buyers signed loan applications and HUD statements with inflated income/employment; loan proceeds routed through a law-firm escrow (Pavey & Smith) and joint accounts controlled by Domenico and others.
- SunTrust Mortgage funded construction loans; SunTrust Bank (its parent) later discovered massive delinquencies and losses (SunTrust alone ≈ $18M).
- Defendants were indicted and convicted of bank fraud (18 U.S.C. § 1344), conspiracy (18 U.S.C. § 1349), and related counts; they appealed various trial rulings and sentencing enhancements.
- The Eleventh Circuit affirmed convictions and sentences in all material respects but held convictions could not be sustained under § 1344(2) due to a mid-trial change in mens rea law (Loughrin); affirmance rested on § 1344(1) findings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Effect of Loughrin mid-trial change on § 1344(2) counts | Gov: convictions stand because jury was instructed on both § 1344(1) and (2) | Defendants: removal of "intent to defraud" for § 1344(2) after opening statements nullified their defense; sought mistrial | Court: Removing mens rea for § 1344(2) was error under Cancelliere; convictions under § 1344(2) cannot be sustained, but convictions affirmed under § 1344(1) as alternative theory proven |
| Sufficiency of evidence for Mae's conspiracy conviction (§ 1349) | Gov: evidence (ownership, fund transfers, authorizing disbursements, personal use of funds) shows knowing participation | Mae: she acted at Domenico's direction and lacked knowledge that loans funded by fraud | Court: Evidence sufficient; jury reasonably inferred Mae knowingly and voluntarily joined conspiracy |
| Whether fraud targeted a federally-insured institution (jurisdictional element) | Gov: SunTrust Mortgage loans were funded/insured by SunTrust Bank; defendants knew parent bank would be at risk | Olivier: SunTrust Mortgage (pre-2009) was not a covered financial institution; parent ownership insufficient | Court: Evidence supported that SunTrust Bank funded/insured loans and defendants knew bank bore risk; convictions stand under § 1344 |
| Exclusion of SunTrust/DOJ settlement and related evidence | Defendants: evidence of SunTrust Mortgage underwriting failures and DOJ settlement would undermine materiality/reliability and support Brady claims | Gov: scheme-focused offense; bank practices or negligence do not negate defendants' intent/materiality | Court: Exclusion was not an abuse of discretion under Rule 403; defendants’ arguments do not show Brady violation; materiality independent of lender negligence |
Key Cases Cited
- Loughrin v. United States, 134 S. Ct. 2384 (2014) (holding intent-to-defraud is not an element of § 1344(2))
- United States v. Cancelliere, 69 F.3d 1116 (11th Cir. 1995) (altering indictment mens rea mid-trial impermissibly broadens basis for conviction)
- United States v. Key, 76 F.3d 350 (11th Cir. 1996) (proof of federally insured institution is jurisdictional element for § 1344)
- Neder v. United States, 527 U.S. 1 (1999) (materiality element focuses on defendant's scheme; reliance not required)
- Jackson v. Virginia, 443 U.S. 307 (1979) (standard for sufficiency of the evidence review)
- Gall v. United States, 552 U.S. 38 (2007) (standards for appellate review of sentencing reasonableness)
- United States v. Dennis, 237 F.3d 1295 (11th Cir. 2001) (bank fraud may be established under alternate methods in § 1344)