United States v. Lacey Phillips, 688 F.3d 802

Lacey Phillips and Erin Hall were denied a mortgage by Associated Bank due to Hall's bankruptcy and their low joint income (~$3,800/month) for a loan over $200,000.
They used mortgage broker Bowling, who prepared a falsified application: Hall omitted, combined Hall’s and Phillips’s income attributed to Phillips, and Phillips falsely listed as a sales manager; actual income was much lower.
Phillips signed the application and employment verification; Fremont Investment & Loan approved credit and the couple bought the home, later failing to keep up payments and foreclosing.
Bowling and Platinum Concepts repeated the process with other clients; Bowling pled guilty to bank fraud and testified for the prosecution against Phillips and Hall, who were convicted under § 1014 with restitution and supervised release terms.
The district court barred examination of Bowling’s statements that the §1014 program was lawful and foreclosed a mistake-of-fact defense; the court held §1014 requires no materiality and focuses on intent to influence the lender.
The majority affirmed, holding §1014 does not require materiality, requires knowledge of falsity and intent to influence, and that testimony about Bowling’s assurances would not negate the elements.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does §1014 require materiality as an element?	Phillips argues materiality can be a defense; lack of materiality negates intent to influence.	Hall argues §1014 requires no materiality; intent to influence suffices.	Materiality not required; §1014 requires knowledge of falsity and intent to influence.
May testimony about Bowling’s assurances negate the intent to influence the lender?	Defendants could testify that Bowling said the loan law allowed such statements and that this negates intent.	Bowling’s assurances would not negate the elements and could bolster the government’s case.	District court properly limited such testimony; it would not establish lack of intent to influence.
Is knowledge of the falsity required for §1014?	Defendants claimed lack of knowledge of falsity would undermine guilt if they believed the statements were lawful.	Law requires knowing falsity and intent to influence; belief in lawfulness does not absolve guilt.	Conviction sustained; knowledge of falsity and intent to influence required.
Did the district court err by excluding Bowling-related testimony on the meaning of 'borrower’s income' on a stated-income loan?	Evidence about interpretations could show lack of intent to lie or mislead.	Such testimony is irrelevant to the statutory elements and would be hearsay if offered improperly.	Exclusion proper; does not undermine §1014 elements and the jury could consider other evidence of intent.

United States v. Wells, 519 U.S. 482 (Supreme Court, 1997) (materiality not required by §1014; discusses limits without materiality)
Kungys v. United States, 485 U.S. 759 (Supreme Court, 1988) (materiality definition; dangers of immaterial statements)
Lambert v. California, 355 U.S. 225 (Supreme Court, 1958) (ignorance of the law defense; doctrines on lawful conduct)
United States v. Lane, 323 F.3d 568 (7th Cir. 2003) (distinguishes intent to influence vs intent to defraud under §1014)
United States v. Feola, 420 U.S. 671 (Supreme Court, 1975) (constrains on intent and knowledge in fraud statutes)
Ratzlaf v. United States, 510 U.S. 135 (Supreme Court, 1994) (intent and regulation of anti-fraud statutes)