UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
February 17, 2009
UNITED STATES OF AMERICA, PLAINTIFF,
JOSEPH ARAM BABAJIAN ET AL., DEFENDANTS.
The opinion of the court was delivered by: Dean D. Pregerson United States District Judge
ORDER ON THE GOVERNMENT'S MOTIONS IN LIMINE
[Motions filed on December 15, 2008; Dkt. Nos. 131-136, 138]
This Order is subject to the revisions to the form of documents stated on the record during the hearing on February 9, 2009.
The Indictment alleges that Defendants Aram Babajian, Kyle Grasso, Lila Rizk, and Lester Robinson participated in a scheme to defraud lenders out of tens of millions of dollars by obtaining fraudulently inflated loans for homes from federally-insured lenders, from approximately July 2000 through January 2003. (Indict. ¶ 1.) Rizk and Robinson are real estate appraisers, while Babajian and Grasso are real estate agents. (Id. ¶ 5-16.) The alleged primary leaders of the conspiracy were mortgage brokers Mark Abrams and Charles Fitzgerald ("Abrams-Fitzgerald") and the various entities they controlled. (Id. ¶ 17-18.) Abrams and Fitzgerald are not defendants in the present Indictment.
The government now brings seven Motions in Limine for the Court's consideration.
II. MOTIONS IN LIMINE
A. Motion in Limine to Admit Prior Statements of Alleged Co-Conspirator Jamieson Matykowski
The government seeks to admit statements from 2002 made by Abrams-Fitzgerald employee Jamieson Matykowski to independent real estate agent Barry Sloane. Matykowski had the responsibilities of a buyer's agent for Abrams-Fitzgerald. He located and toured properties, negotiated purchase contracts, and handled the paperwork for transactions. (Indict. ¶ 63.) Matykowski also worked on two purchases for Abrams-Fitzgerald where Babajian and Grasso received payments, but allegedly performed no services. (Id.) In 2002, Matykowski had a conversation with Sloane. In this conversation, Matykowski admitted that Babajian and Grasso were receiving commissions on a real estate transaction for which they had provided no services, and that they received these commissions as part of an arrangement with Abrams-Fitzgerald.
The government intends to offer Sloane's corroborating testimony in the event Matykowski's testimony is challenged by Defendants. The government argues that Sloane's testimony is admissible under either Federal Rule of Evidence 801(d)(1)(B), as a prior consistent statement, or Rule 801(d)(2)(E), as a statement made in furtherance of the charged conspiracy.
A co-conspirator's statement is admissible where: 1) the conspiracy existed when the statement was made; 2) the defendant had knowledge of and participated in the conspiracy; and 3) the statement was made in furtherance of the conspiracy. United States v. Moran, 493 F.3d 1002, 1010 (9th Cir. 2007). However, any statements made for "personal objectives outside the conspiracy or as part of idle conversation are not admissible under Rule 801(d)(2)(E)." Id.
The parties dispute the reason why Matykowski informed Sloane about Babajian and Grasso's agreement with Abrams-Fitzgerald. (See Gov. Ex. C ¶ 17.) The evidence itself is ambiguous as to whether Matykowski's comments were actually in furtherance of the conspiracy; as they imply both that Matykowski's explanation was required to complete the transaction and alternatively merely a conversational description of background information related to the deal. See Moran, 493 at 1010 ("Statements made for personal objectives outside the conspiracy or as part of idle conversation are not admissible . . . ."). As such, the government's argument that Matykowski's purpose in telling Sloane was to prevent him from learning about the kickbacks scheme is speculative. The Court declines to grant the government's motion on this ground.
The government also moves to have Matykowski's comments to Sloane admitted under Rule 801(d)(1)(B), as prior consistent statements. A statement is not hearsay where the declarant testifies at trial, is subject to cross-examination concerning the statement, and the statement is "consistent with the declarant's testimony and is offered to rebut an express or implied charge against the declarant of recent fabrication or improper influence or motive." Fed. R. Evid. 801(d)(1)(B). Defendants argue*fn1 that it is premature to make any ruling on this basis, as Matykowski has not been subjected to cross-examination. The Court agrees.
The Court grants the government's Motion in Limine to admit the statements of alleged co-conspirator Matykowski to Sloane as a prior consistent statement, subject to the requirements of Federal Rule of Evidence 801(d)(1)(B).
B. Motion in Limine to Admit Testimony of Former Wife of Defendant Kyle Grasso
The government seeks to admit testimony of the former wife of Defendant Kyle Grasso, subject to the confidential communications privilege. Defendants do not oppose this Motion on these grounds.
The Court grants the government's Motion on this issue, subject to the confidential communications privilege.
C. Motion in Limine to Admit Defendant Rizk's Admissions in Regulatory Agency's Disciplinary Action
The California Office of Real Estate Appraisers ("COREA") is a state agency that licenses, regulates, and disciplines real estate appraisers in the state. COREA investigated Defendant Rizk's conduct in the transaction at 2055 Stradella Road in Los Angeles. This property is expressly identified in the Indictment, and the government alleges that Rizk provided an inflated appraisal for it. (Indict. 59-60.) In its statement of charges against Rizk, styled as an "Accusation," COREA alleged several violations of the Uniform Standards of Professional Appraisal Practice, including that Rizk:
1) overstated the estimate of market value for the Stradella property and produced a misleading appraisal; 2) made numerous errors in reporting comparable sales data; 3) failed to adequately collect and analyze available comparable sales data; and 4) failed to disclose the concurrent listing of the Stradella property. (Mot. 3-4; Gov. Ex. 3618 ¶ 8, Ex. A, ¶ 5.) Rizk stipulated to "the truth of each and every charge and allegation" contained in the Accusation in a "Stipulation for Order of Public Reproval" ("Stipulation"). (Id.) The Stipulation also provides that Rizk's admissions "shall not be admissible in any other criminal or civil proceeding." (Gov. Ex. 3618 ¶ 10.) This Stipulation was then adopted as COREA's "Decision and Order" on January 10, 2005 ("COREA Decision").
The government seeks to admit this evidence under Rule 408(a)(2), in order to show: 1) Rizk herself generated the Stradella property's appraisal (rather than another person); 2) the Stradella appraisal grossly overvalued the Stradella property; and 3) the Stradella appraisal was deficient, misleading, and grossly breached professional rules in the appraisal field. (Mot. 5-6.)
Federal Rule of Evidence 408 applies to "Compromises and Offers to Compromise" and reads as follows:
(a) Prohibited uses. Evidence of the following is not admissible on behalf of any party, when offered to prove liability for, invalidity of, or amount of a claim that was disputed as to validity or amount, or to impeach through a prior inconsistent statement or contradiction:
(1) furnishing or offering or promising to furnish--or accepting or offering or promising to accept--a valuable consideration in compromising or attempting to compromise the claim; and
(2) conduct or statements made in compromise negotiations regarding the claim, except when offered in a criminal case and the negotiations related to a claim by a public office or agency in the exercise of regulatory, investigative, or enforcement authority.
(b) Permitted uses. This rule does not require exclusion if the evidence is offered for purposes not prohibited by subdivision (a). Examples of permissible purposes include proving a witness's bias or prejudice; negating a contention of undue delay; and proving an effort to obstruct a criminal investigation or prosecution.
Fed. R. Evid. 408. Under 408(a)(1), a settlement agreement cannot itself be used as evidence. However, 408(a)(2) permits the admission of evidence where it is "made in compromise negotiations," and "offered in a criminal case and the negotiations related to a claim by a public office or agency in the exercise of regulatory, investigative, or enforcement authority." Fed. R. Evid. 408(a)(2). As such, the rule distinguishes between a settlement agreement, on the one hand, and negotiations or statements made during an investigation. See Fed. R. Evid. 408, Committee Notes to 2006 Amendment (stating that an "offer or acceptance of a compromise of any civil claim is excluded under the Rule if offered against the defendant as an admission of fault").
As a threshold matter, the Court finds that Defendant Rizk's Stipulation is a settlement agreement, as it was offered or accepted in exchange for the settlement of COREA's charges. The Stipulation is not a negotiation or a response to an investigation, but an agreement. The COREA Decision attaches the Stipulation in disposing of its charges and refers to the Stipulation as the final understanding of the parties with respect to these charges. (See Gov. Ex. 3618 "Decision and Order" ("The attached Stipulation for Order of Public Reproval is hereby adopted by the Director of the Office of Real Estate Appraisers as its Decision in this matter.").) Therefore, although the government seeks to have the Stipulation admitted under Rule 408(a)(2), the Court finds that it is inadmissible under (a)(1).*fn2
The Court therefore denies the government's Motion in Limine to admit Defendant Rizk's Stipulation with COREA.
D. Motion in Limine to Admit Expert Testimony of Real Estate Appraisal Expert Ronald Buss
The government moves to admit the expert opinion of Ronald Buss. Buss will testify that, in his expert opinion, Defendant Rizk's property appraisals: 1) grossly overstated the value of the homes; and 2) failed to consider relevant information that indicated the homes' value was far less than her appraisal. (Mot. 2.)
Rule 702 of the Federal Rules of Evidence provides that where "scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise."
The government states that Buss has worked as a real estate appraiser for over three decades. He currently works for a company that provides valuation services, Buss-Shelger Associates, where he has worked since 1984. He has been certified as a General Real Estate Appraiser by California, as well by the Appraisal Institute. He is also a licensed California Real Estate Broker. He has been a member of numerous institutes and professional organizations for appraisers and real estate brokers.
Defendant Babajian first argues that an expert is not necessary here, because a jury can understand the difference in value between two different home listing prices. This argument ignores the rationale for Buss' testimony, which is to explain why the difference is significant. Babajian also argues that the testimony is not relevant, as he himself had nothing to do with the appraisals. But the government argues that Babajian was, in fact, involved with the appraisals, which further are relevant to Babajian's participation in the overall conspiracy.
Defendant Rizk next argues that Buss' expertise is listed in too general a fashion and does not provide sufficient information to determine whether "his valuation is any more reliable than [Defendant] Rizk's." (Opp'n 12.) However, the question is not whether Buss' testimony is more reliable than Defendant Rizk's, which is a credibility determination, but whether Buss is qualified as an expert. The Court also sees no prejudice to Defendants from Buss' testimony, which again is relevant to establish a central component of the conspiracy, as charged in the Indictment.
Defendants may conduct further voir dire of Buss about his qualifications, out of the presence of the jury, at Defendants' request. Subject to this qualification, the government's motion is granted and the Court preliminarily finds that Buss' experience, skill, and education render him fit to testify as a real estate appraisal expert.
E. Motion in Limine to Preclude Evidence of Alleged Victim Negligence
The government moves to preclude the admission of any evidence concerning alleged negligence on the part of lenders injured by the Abrams-Fitzgerald scheme. The government seeks to preclude this evidence on relevancy and prejudice grounds, as it argues Defendants may seek to "divert the jury's attention -- and waste the Court's valuable time -- by pointing their fingers at the victim lenders who funded the loans." (Mot. 2.)
Defendants concede that negligence or the failure to act with reasonable care by a victim is not an affirmative defense to a criminal fraud charge. See United States v. Ciccone, 219 F.3d 1078, 1083 (9th Cir. 2000). Nevertheless, Defendants argue that the government's motion should be denied.
Defendants argue that negligence is closely tied to one of the elements of bank fraud*fn3 - materiality. Material statements are those which "would reasonably influence a bank to party with money or property." Ninth Circuit Manual of Model Jury Instructions § 8.106 ("Bank Fraud - Scheme to Defraud by False Promises or Statements"(18 U.S.C § 1344(2))). Defendants argue that the lenders' negligence is thus relevant because: 1) the role of the lender in each transaction is pivotal to prove conspiracy; 2) it is important to present a complete picture of the real estate industry during the time period of the alleged fraud; and 3) that Defendant Babajian's state of mind (his intent to defraud) is related to whether the victim lenders behaved negligently, because he had no reason to doubt that victim lenders were "carefully investigating and analyzing appraisals and loan packages." (Babajian Opp'n 10.) While none of these reasons ultimately serve to explain why evidence of the lenders' negligence should be admitted, there may be evidence which has multiple uses as to both negligence and materiality.
Accordingly, it seems that there needs to be an instruction informing the jury that negligence is not an affirmative defense to fraud. Defendants are thus not entitled to make erroneous legal arguments regarding negligence, but may attempt to introduce evidence on other admissible grounds.
The Court denies the government's Motion in Limine, but acknowledges that negligence is not an affirmative defense. The parties may prepare and request an appropriate jury instruction. The Court will rule on the relevance and admissibility of matters relating to Lehman Brothers or other affected lenders on an issue by issue basis.
F. Motion in Limine to Admit Evidence of Fraudulent Property Listings
As described in the Indictment, one component of Defendants' scheme was to falsify information in the Multiple Listing Service ("MLS").*fn4 (Indict. ¶ 4.) Specifically, the government alleges that Defendants Babajian and Grasso listed homes in the MLS for millions of dollars more than the true purchase prices that Abrams-Fitzgerald were actually paying to purchase the property. (Indict. ¶ 54(b).) This enabled Abrams-Fitzgerald to defraud lenders by qualifying them for an inflated loan on the property. (Mot. 2.)
The government seeks to introduce evidence of two real estate listings in the MLS which it alleges were fraudulent, but which were not included in the Indictment: 1332/1340 Summitridge Drive and 1261 Angelo Drive. The government states that the fraudulent listings of these properties demonstrate Defendants' knowledge and direct involvement in the mortgage fraud scheme. In particular, the government contends this evidence is important to rebut any argument by Defendants that the Indictment's allegations of fraud relating to the MLS listings for 805 North Alta Drive can be explained as an innocent mistake.
There are nine properties in the Indictment, and Babajian and Grasso allegedly committed acts with regard to eight of them. Their involvement is similar for all of these eight properties, however there are only specific allegations regarding the altering of MLS listings on two properties. (See Indict. ¶ 25(j); ¶ 54; "Overt Act 23" at p. 47 (805 N. Alta Dr.); "Overt Act 58" at p.54 and "Overt Act 78" at p.58 (3386 Mandeville Canyon Rd.).) Babajian and Grasso altered purchase contracts to restrict reporting to MLS on three more properties. (See Indict. "Overt Act 100" at p.62 (9373 Claircrest Dr.); "Overt Act 114" at p.65 (2155 Roscomare Rd.); "Overt Act 145" at p.71 (2074 Benedict Canyon Dr.).) As such, the conduct with regard to 805 N. Alta is relatively unique in the Indictment, which is the property for which the government seeks to add two corroborating property transactions.
The Indictment alleges that until August 8, 2000, Bababjian and Grasso listed the 805 North Alta Drive house as being worth $2,050,000. Babajian and Grasso accepted an offer for $2,000,000 on the house from Abrams-Fitzgerald. On August 16, Rizk appraised the house at $4,495,000. On August 21, Babajian and Grasso caused MLS to alter the sales price to reflect a sale of $4,495,000 -despite their previous listing of $2,050,000. Abrams-Fitzgerald then sent a loan application to a lender, containing the appraisal for $4,495,000. On September 20, the lender loaned approximately $2,800,000 to Abrams-Fitzgerald ($800,000 higher than its actual sale price).
Babajian and Grasso deny knowing that the purchase price had any connection to an inflated appraisal or an inflated loan application, and they deny responsibility for their reporting of the 805 North Alta Drive appraisal, which the government states they blame on an administrative assistant. As such, the government seeks to add two additional properties - 1332/1340 Summitridge (composed of two adjacent properties) and 1261 Angelo Drive.
The basic allegations of 1332/1340 Summitridge Drive are as follows. The 1332/1340 Summitridge property was listed on July 5, 2000 on MLS by an unrelated agent for approximately $1,700,000, with the 1332 Summitridge adjacent property selling separately for approximately $950,000. Abrams-Fitzgerald purchased the property for $1,700,000 on approximately July 7, 2000, with Babajian and Grasso as their agents. On July 12, 2000, Rizk appraised the 1340 Summitridge property separately as worth $2,400,000. On July 26, 2000, Babajian listed 1340 Summitridge separately as approximately $2,500,000. Abrams-Fitzgerald prepared two purchase contracts to be sent to lenders specifying that the 1340 Summitridge property was worth $1,700,000 and the 1332 property was worth $2,450,000.
However, the purchase of these properties was cancelled and the loan applications were apparently never sent.
The second property listing the government seeks to introduce, for 1261 Angelo Drive, includes similar allegations. In September 1999, Abrams-Fitzgerald bought the property for $2,800,000. Babajian and Grasso represented them in this purchase. On September 13, 2000, Babjian and Grasso listed the 1261 Angelo property for $8,150,000, which remained the listing until January 21, 2001. In January 2001, Abrams-Fitzgerald sent a loan package to a lender stating that the home was being bought for $7,700,000, as appraised by Rizk, and seeking a loan of $4,700,000. On January 2001, Abrams-Fitzgerald approved a second listing with Babajian and Grasso, who listed the 1261 Angelo property at $8,995,000. The government alleges that the property was purchased through a "straw man" with good credit, and that the lender was defrauded into funding a loan of $4,700,000. A review of Rizk's appraisal of this property wrote that Rizk's appraisal did not support the appraised value "by a wide margin." (Gov Exs., Ex. 7667 at 3.)
The government asserts that the allegedly inflated MLS listings for 1332/1340 Summitridge Drive and 1261 Angelo Drive are admissible as they are "inextricably intertwined" with the charged crimes.*fn5 If a defendant is indicted for less than all of the actions which constitute a "single criminal episode," those acts may be considered inextricably intertwined and thus are not examined as "other act" evidence under Federal Rule of Evidence 404(b). U.S. v. Williams, 989 F.2d 1061, 1070 (9th Cir. 1993). There are two general categories of cases where "other act" evidence is inextricably intertwined with the crime: 1) the other act evidence serves as a basis for the criminal charge; and 2) when necessary to permit the prosecutor to offer a coherent and comprehensible story. U.S. v. Vizcarra-Martinez, 66 F.3d 1006, 1012-23 (9th Cir. 1995). The government argues that the evidence from the additional two properties falls into the first category. The Court agrees.
In order for the "other acts" to serve as a basis for the criminal charge, there must be "sufficient contextual or substantive connection between the proffered evidence and the alleged crime to justify exempting the evidence [from Rule 404(b)]." Vizcarra-Martinez, 66 F.3d at 1013. Here, the government alleges that inflating MLS listings was a component of a conspiracy to defraud lenders. (Indict. ¶ 54-55.) While each incident of fraud may indicate a divisible crime, the conspiracy to commit various acts of fraud may encompass more conduct than what is mentioned in the Indictment. The acts themselves also contain the basic pattern of the charge in the indictment. According to the government, the de facto buyers of all three properties were Abrams-Fitzgerald. The real estate agents representing them in the three purchases were Babajian and Grasso. The appraiser of all three homes was Rizk. The events also occurred near the same time - between July 2000 and January 2001 - while the overall scheme is alleged to have been ongoing from July 2000 through January 2003. Finally, the common goal of all alleged conspirators was the same -to enable Abrams-Fitzgerald to acquire inflated loans for over-valued property.
Defendants raise a number of objections*fn6 to the above evidence, including: 1) the evidence is untimely, cumulative, and overly burdensome in the context of trial which is already lengthy; 2) the evidence is highly prejudicial because it is extraneous and suggests guilt by association; 3) the government has not laid a foundation for these properties; and 4) it is premature for the Court to rule on the government's motion before trial. None of these arguments are ultimately persuasive.
Because the evidence of the properties at 1332/1340 Summitridge Drive and 1261 Angelo Drive are introduced to help explain the knowledge and intent of Defendants as to their conduct regarding 805 North Alta Drive, the evidence is not extraneous, despite relating to properties outside the Indictment. Furthermore, as the allegations regarding 805 N. Alta are unique within the Indictment, the evidence is not cumulative. Defendants also have not shown that any prejudice will result from introducing this evidence, as they have several more months to examine the evidence before trial. Lastly, contrary to Defendants' argument, a court decision as to fraud is not required before the admission of evidence of acts which is inextricably intertwined with a single criminal transaction; nor is the evidence precluded on this Motion because the government must present a foundation for its admission at trial.
The Court finds that the government may present evidence regarding the allegedly inflated MLS listings of the properties at 1332/1340 Summitridge Drive and 1261 Angelo Drive.
G. Motion in Limine to Admit Summary Evidence of Properties and Appraisals
The government seeks to present summary evidence of voluminous documents including: 1) charts showing the movement of funds on the 9 homes charged in the Indictment (Gov. Exs., Ex. A); and 2) a list and summary of payments to Babajian, Grasso, and Rizk related to the mortgage fraud scheme (Gov Exs., Ex. B). The government also seeks to introduce two exhibits with summary information regarding 96 properties, including: 1) tables summarizing the escrow close dates, "true" sales price and "inflated" sales price, commissions and payment dates to Babajian and Grasso, and the name of the real estate appraisers (Gov. Exs., Ex. C); and 2) tables summarizing the appraisal dates, name of the appraiser, comparable real estate values, and the "true" versus "inflated" sales price (Gov. Exs., Ex. D).
The government seeks to introduce this summary evidence under Federal Rules of Evidence 611(a) and 1006.
Federal Rule of Evidence 1006 provides that the contents of "voluminous writings" may be presented "in the form of a chart, summary, or calculation." Defendants do not dispute that the evidence presented by the government should be presented in summary form, but argue that an expert witness is required to present the summary documents. Where no special knowledge is required to attest to the accuracy of the documents, an expert is not required to present summary evidence. United States v. Pree, 408 F.3d 855, 869 (7th Cir. 2005). Here, the underlying evidence consists of MLS listings, transfers of funds, and payments. As the government is presenting the persons responsible for supervising and compiling the summary reports as witnesses, no expert is required to present this evidence as long as the government witness "simply testifies as to what the Government's evidence shows." Id. The Court thus finds that the presentation of this evidence in summary form by non-expert witnesses is proper.
The Court will analyze Defendants' additional, separate objections as to each category of summarized evidence in turn.
a. Graphical Charts Demonstrating the Movement of Funds on 9 Charged Homes (Gov. Exs., Ex. A)
Defendant Babjian objects to these charts because they are "misleading" and constitute "improper propensity evidence under Rule 404(b)." (Babajian Opp'n 2.) Babajian does not explain this argument with reference to cases or specific aspects of the government's exhibits, and the Court similarly has been unable to find any support for this position.*fn7
The Court finds that the government's summary evidence of the movement of funds found in Exhibit A to its Motion in Limine is admissible.
b. Lists and Summaries of Payments to Babjian, Grasso, and Rizk (Gov. Exs., Ex. B)
Defendant Grasso argues that the Lists and Summaries of Payments are overbroad and argumentative, because they describe payments which are wholly unrelated to the nine houses in the Indictment. However, the scope of the Indictment extends beyond the nine properties, and specifically mentions the "hundreds of thousands of dollars" received by Babajian, Grasso, and Rizk for their work on the overall scheme. (Indict. ¶ 27(c)-(d).) As such, the government's evidence is directly relevant to the charges at issue.
Defendant Babajian next objects that the lists and summaries are "self-serving" and "conclusory," and specifically objects to the use of the phrase "details of specified payments." (Babajian Opp'n.) Babajian's actual objection is difficult to discern, but the Court disagrees that Defendants suffer any prejudice from a list of payments that describes the payor, the payee, the account from which a payment is transferred, the account receiving that payment, and the calculation of total payments received. The heading "Details of Specified Payments" is also neutral and not argumentative. Babajian's further argument that there is no foundation for this summary evidence is also unexplained and incorrect. The government has provided the underlying documents for inspection by Defendants, as well as provided information about the witnesses who will be testifying to this evidence.
The Court finds that the government's summary evidence of the payments to Defendants found in Exhibit B to its Motion in Limine is admissible.
c. Tables Summarizing Dates of Purchase, the "True" and "Inflated" Sales Price, Commissions and Payment Dates to Babajian and Grasso, and the Name of the Real Estate Appraiser (Gov. Exs., Ex. C)
The Indictment alleges that one of the victim lenders, Lehman Brothers, bought and funded more than 80 artificially inflated loans as a part of the mortgage scheme. Of these loans, Babajian and Grasso received real estate agent commission payments from 22 of the underlying property transactions. Rizk and Robinson gave inflated appraisals of the underlying properties for 27 of these loans. The government prepared two summary tables containing data on 96 properties (including the properties mentioned in the Indictment), 89 of which relate to loans from Lehman Brothers, 7 of which relate to loans from other victim lenders.
The tables list the dates of purchase, the "true" and "inflated" sales price, commissions and payment dates to Babajian and Grasso, and the name of the real estate appraiser. (Gov. Exs., Ex. C.) The government has introduced this evidence for the purpose of describing the "full scope" of the overall fraud committed against the lenders, as well as the specific involvement by Defendants, which extends beyond the nine properties charged in the Indictment. (Mot. 3:1-8.)
Defendants first argue that these tables are overbroad, because they contain data regarding properties that are not the subject of this litigation and expand this case to a "ridiculous degree," such that a continuance of the trial would be required. However, although they are alleged generally, the Indictment expressly includes more than the nine listed properties. The Indictment charges that "approximately 20 [inflated] loans" were received on properties where Babajian and Grasso represented Fitzgerald and Abrams as buyers. (Indict. 66.a.-b.) On the summary chart, Babajian and Grasso are listed as receiving payments from the sale of approximately 30 of the properties. (Gov. Exs., Ex. C.) The Indictment states that Rizk alone or in combination with Robinson were the named appraisers for approximately 27 properties where inflated loans were received. (Indict. 66.c.) In the summary chart, Rizk alone or with Robinson are named appraisers on approximately 38 properties. (Gov. Ex., Ex. C.) As such, the summary evidence falls within the scope of the Indictment.
Defendants next object to one of the headings in the charts, used to describe the inflated loans received on the properties.
The government describes the second, higher numbers as "Inflated Sales Price," and the previous, lower number as "True Sales Price." Defendants object that the adjective "inflated" and its juxtaposition with "true" is argumentative, conclusory, and without foundation. The government argues that this a fair conclusion, because the chart provides evidence that a drastic, unjustified increase occurred. The term "true" also suggests that one price is accurate, while the other is not. While the government's witness may make logical inferences based on summary evidence, the summarizing evidence itself should not draw these conclusions. A truly neutral summarizing header would include "Government's alleged true [or inflated] sales price." The government's exhibit is thus not admissible unless it qualifies the adjectives "true" and "inflated" in this manner.
Next, Defendant Babajian argues generally that the tables are introduced to imply guilt by association. To the degree these tables reference conduct by Defendants described within the indictment, there is obviously no guilt by association. As to data which does not reference conduct by Defendants, this other evidence is admissible under 404(b) to provide background information, as well as knowledge, motive, or plan.
Lastly, Defendants have had sufficient notice of the evidence at issue here. The underlying documents have been provided to Defendants, and trial is not set for several months.
The Court finds that upon the government's revision of the adjectives "true" and "inflated," the government may submit its summary evidence found in Exhibit C to its Motion in Limine.
d. Tables Summarizing the Appraisal Dates, Name of the Real Estate Appraiser, Comparable Real Estate Values, and the "True" and "Inflated" Sales Price (Gov. Exs., Ex. D)
Defendants repeat their objections regarding the use of "true" and "inflated" as to these tables, and the Court again finds that these are not appropriate conclusions in summarizing documents, regardless of whether these are admissible opinions from the witnesses describing the contents of the summary documents.
The Court finds that upon the government's revision of the adjectives "true" and "inflated," the government may submit its summary evidence found in Exhibit D to its Motion in Limine.
IT IS SO ORDERED.