United States v. Lindley
695 F.3d 44
| 1st Cir. | 2012Background
- Appellants and coconspirators executed a Boston mortgage fraud scheme using straw buyers to inflate purchase prices and launder proceeds, yielding nearly $2 million between 2005–2006.
- Twenty-one properties were involved; two HUD-1 forms per property documented actual vs inflated prices.
- Lindley, Levine, Ernst, Haltiwanger, and Lindley’s associates faced multiple counts of wire fraud, money laundering, and conspiracy after indictment in 2008.
- Trial in 2010 ended with guilty verdicts for most counts; Lindley and Levine were convicted on many counts, with some acquittals for Lindley.
- Appellants challenge severance, evidentiary rulings, jury instructions (including willful blindness and jury nullification), loss calculations under the sentencing guidelines, and Levine’s leadership role.
- Court affirms in full after addressing each challenge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Severance denial effectiveness | Ernst argues severance was necessary to protect his right to testify | District court erred in denying severance due to potential cross-examination conflicts | No manifest abuse; severance not required |
| Sufficiency of evidence for Lindley’s knowledge | Evidence shows Lindley knew or willfully blinded to scheme | Evidence insufficient to prove knowledge beyond reasonable doubt | Sufficient evidence supports knowledge and willful blindness |
| Willful blindness instruction | Instruction properly allowed inference of knowledge from deliberate avoidance | Instruction improper as to willful blindness standard | Instruction appropriate for Lindley and Haltiwanger |
| Loss calculation under U.S.S.G. 2B1.1 | Intended loss accurately measures culpability given market collapse | Actual loss should be used or gain considered; market fluctuations undermine intended loss | Intended loss reasonable; no resentencing required despite potential alternative formulas |
| Admissibility of 404(b) evidence (Daniel) and summary charts | 404(b) evidence relevant to motive; charts aid jury understanding | Evidence prejudicial and improper as summary/testimony; potential hearsay issues | No reversible error; charts and 404(b) evidence properly admitted |
| Levine’s leadership role enhancement under § 3B1.1 | Levine acted as organizer/leader influencing scheme | Levine’s role not supervisory enough for enhancement | District court did not clearly err; Levine affirmed as leader/organizer |
Key Cases Cited
- United States v. Zafiro, 507 U.S. 534 (1993) (severance driven by risk of prejudice; not per se required)
- United States v. DeCologero, 530 F.3d 36 (1st Cir. 2008) (standard for reviewing severance decisions; prejudice must be shown)
- United States v. Martin, 815 F.2d 818 (4th Cir. 1987) (willful blindness factors; caution against relying on expertise to interpret red flags)
- United States v. Azubike, 564 F.3d 59 (1st Cir. 2009) (willful blindness test; warning signs and deliberate avoidance)
- Frigerio-Migiano, 254 F.3d 30 (1st Cir. 2001) (list of red flags for willful blindness)