953 F.3d 449
7th Cir.2020Background
- Jessica A. O’Brien, a licensed attorney and experienced real-estate professional, was indicted on April 11, 2017 for a 2004–2007 mortgage fraud scheme involving two investment properties (46th St. and 54th St.) and charged with mail fraud (Count I) and bank fraud (Count II).
- The indictment alleged an overarching scheme comprised of four transactions (2004 purchase, 2005 refinances, 2006 line of credit, 2007 sale to a straw buyer) but charged only one execution per count: April 16, 2007 mail (payoff check) and an April 16, 2007 Citibank loan disbursement ($73,000) for the 46th St. sale.
- Trial evidence included false loan applications and HUD‑1 forms, O’Brien’s role preparing closing paperwork and acting as seller/seller’s attorney, undisclosed kickbacks and straw‑buyer arrangements, and testimony/documents indicating Citibank funded the April 2007 loans and later suffered a loss on the 46th St. foreclosure sale.
- O’Brien moved to dismiss for duplicity and statute of limitations defects, and later moved for judgment of acquittal/new trial claiming insufficient evidence and improper admission of time‑barred acts; the district court denied relief and O’Brien appealed.
- The Seventh Circuit affirmed: it held the indictment permissibly alleged a single continuing scheme (no duplicity), the charged executions fell within the ten‑year limitations period for fraud affecting a financial institution, the evidence was sufficient for both mail‑fraud (affecting a financial institution) and bank‑fraud convictions, and admission of pre‑2007 acts was proper as direct evidence of the scheme.
Issues
| Issue | O'Brien's Argument | Government's Argument | Held |
|---|---|---|---|
| Duplicity | Four distinct transactions are separate offenses; indictment improperly aggregates unrelated acts | Indictment alleges one continuing scheme using different means; government may allege a single execution | No duplicity; indictment fairly alleges a continuing course of conduct constituting a single scheme |
| Statute of limitations | Earlier (2004–2006) acts are time‑barred and government relied on them | Each count alleged an execution on April 16, 2007; ten‑year limitations applies for fraud affecting a financial institution | Timely: indictment pleads April 16, 2007 executions; ten‑year limitations governs both counts |
| Sufficiency — Mail Fraud (Count I) | Argues government failed to prove fraud affected a financial institution or that Citibank funded loans | Presented loan docs, HUD‑1s, Citibank witness testimony, foreclosure loss showing Citibank was affected | Sufficient evidence that O’Brien devised scheme, used mail, and scheme affected Citibank; mail‑fraud conviction affirmed |
| Sufficiency — Bank Fraud (Count II) | Contends she lacked knowledge that funds came from Citibank and thus §1344(2) not proven | Showed O’Brien’s industry experience, prior Citibank dealings, loan docs identifying Citibank, O’Brien’s closings involvement | Sufficient for a rational jury to infer O’Brien knew funds originated from Citibank; §1344(2) conviction affirmed |
| Admissibility of prior acts | Evidence of 2004–2006 transactions and related deeds should be excluded as time‑barred/404(b) improper | Those acts were direct evidence of the charged ongoing scheme and some documents fell within the ten‑year window | No abuse of discretion; evidence admitted as direct proof of scheme (Rule 404(b) inapplicable when evidence is direct) |
Key Cases Cited
- United States v. Davis, 471 F.3d 783 (7th Cir. 2006) (duplicitous‑count analysis — continuing course of conduct may be charged as single offense)
- United States v. Hammen, 977 F.2d 379 (7th Cir. 1992) (government may allege one execution of an ongoing scheme)
- United States v. White, 610 F.3d 956 (7th Cir. 2010) (statute‑of‑limitations review is based on the face of the indictment)
- Loughrin v. United States, 573 U.S. 351 (2014) (§1344(2) does not require specific intent to defraud the bank itself)
- United States v. Bouchard, 828 F.3d 116 (2d Cir. 2016) (knowledge that funds came from a bank is required under §1344(2); discussed for comparison)
- United States v. Serpico, 320 F.3d 691 (7th Cir. 2003) (fraud affects a financial institution if it creates a new or increased risk of loss)
- United States v. Prieto, 812 F.3d 6 (1st Cir. 2016) (schemes to defraud may encompass many transactions and multiple lenders)
- United States v. LeDonne, 21 F.3d 1418 (7th Cir. 1994) (government may charge both subsections of §1344 in the same count)