United States v. Jerry Kerley
784 F.3d 327
| 6th Cir. | 2015Background
- Whaley devised a scheme recruiting straw buyers to purchase Black Bear Ridge Resort cabins; Bevins prepared loan applications that falsely inflated buyers’ finances, and Kerley’s title company (GLT) prepared HUD-1s falsely stating buyers brought their own funds.
- Eight transactions (late 2005–2006) closed using manufactured cashier’s checks, early disbursements, and falsified remitters; loans later defaulted and lenders (SunTrust, Citizens) suffered large losses.
- Lee and Bevins pled guilty and cooperated; Whaley and Kerley were tried together and convicted of conspiracy, multiple counts of wire and bank fraud, false statements to a financial institution, and money laundering; sentences: Whaley 60 months, Kerley 48 months; restitution ~$1.9M.
- Defendants raised multiple evidentiary and sufficiency challenges at trial: admissibility of lender- representative lay opinion testimony, admissibility of government summary exhibits, Whaley’s request to sever (reverse Bruton) to present his pre-indictment statement, sufficiency of intent evidence (Whaley), and sufficiency/other challenges to Kerley’s money-laundering conviction and his sentencing loss calculation.
- The district court admitted lender representatives’ testimony as permissible lay opinion based on particularized workplace knowledge and admitted IRS agent’s summary exhibits as admissible secondary-evidence summaries; a magistrate judge denied severance and redaction disputes were resolved such that statements were excluded where hearsay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of lender-representative testimony as lay opinion (Rule 701) | Testimony was proper because witnesses had particularized knowledge of their lenders’ underwriting and could explain materiality. | Defendants: witnesses weren’t personally involved in the loans and testimony was expert in nature (should meet Rule 702). | Admitted: court held witnesses’ employment-derived, particularized knowledge made Rule 701 testimony proper; not expert testimony. |
| Admissibility of government summary exhibits and summary-witness testimony | Summaries accurately synthesized voluminous admitted evidence and assisted jurors. | Defendants: summaries merely reiterated government interpretation and amounted to argument. | Admitted: treated as secondary-evidence summaries (hybrid of Rule 1006), accurate, with limiting instruction. |
| Denial of Whaley’s reverse-Bruton severance motion / right to present advice-of-counsel defense | Whaley: redaction/removal of references to Kerley would prevent him from presenting his defense (rule of completeness); severance required. | Government: Whaley’s pre-indictment statements inculpating Kerley are hearsay and inadmissible; alternative means (Whaley’s testimony) available to present defense. | Denied: exclusion of Whaley’s statements didn’t violate constitutional right; statements were inadmissible hearsay and Whaley could testify himself. |
| Sufficiency of evidence of Whaley’s intent to defraud (wire/bank fraud) | Government: Whaley orchestrated scheme, prepared purchase agreements, directed straw buyers and closings, and concealed buyers’ lack of funds. | Whaley: insufficient proof he intended to defraud lenders. | Affirmed: viewing evidence in prosecution’s favor, a rational juror could find intent beyond reasonable doubt. |
| Kerley’s money-laundering conviction sufficiency and predicate-completion timing | Government: Whaley’s deposit of a GLT check into GBO was a post- scheme monetary transaction (distinct predicate) and evidence shows Kerley aided/abetted with intent. | Kerley: deposit was part of the same scheme (not a completed predicate), proceeds were not "profits" under Santos, and no specific intent to facilitate laundering shown. | Affirmed: deposit was after completion of fraud (distinct), Santos inapplicable under Kratt (no merger problem), and sufficient evidence supported aiding/abetting intent. |
| Sentencing — loss calculation and restitution apportionment | Government: loss measured by amount the lenders actually recovered from REO sales; joint-and-several restitution appropriate. | Kerley: loss should credit lenders’ foreclosure credit bids (fair market value at sale); restitution should be apportioned. | Denied: §2B1.1 credits against loss apply to amounts recovered from disposition (REO sales), not credit bids; district court’s loss and joint restitution findings upheld. |
Key Cases Cited
- Bruton v. United States, 391 U.S. 123 (1968) (co-defendant statements raising Confrontation Clause issues)
- United States v. White, 492 F.3d 380 (6th Cir. 2007) (distinguishing lay vs. expert testimony limits)
- United States v. Hill, 643 F.3d 807 (11th Cir. 2011) (mortgage-fraud lender-representative testimony)
- United States v. Munoz-Franco, 487 F.3d 25 (1st Cir. 2007) (admission of testimony based on employment-derived knowledge)
- United States v. Valencia, 600 F.3d 389 (5th Cir. 2010) (lay testimony from officer based on duties held at company)
- Bank of China, N.Y. Branch v. NBM LLC, 359 F.3d 171 (2d Cir. 2004) (investigatory findings by witness with particularized knowledge admissible under Rule 701)
- United States v. Santos, 553 U.S. 507 (2008) ("proceeds"—profits vs. receipts—analysis in money-laundering context)
- United States v. Kratt, 579 F.3d 558 (6th Cir. 2009) (applying Santos to §1957 and merger concerns)
- Jackson v. Virginia, 443 U.S. 307 (1979) (standard for sufficiency of the evidence review)
- Robers v. United States, 134 S. Ct. 1854 (2014) (MVRA interpretation relevant to loss/restitution analysis)