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United States v. McCarns

United States District Court, E.D. California

July 29, 2016

UNITED STATES OF AMERICA, Plaintiff,
v.
DOMONIC MCCARNS, Defendant.

          ORDER

         Defendant Domonic McCarns has proceeded through counsel with a motion for new trial based on Federal Rule of Criminal Procedure 33, claiming he received constitutionally ineffective assistance of counsel. ECF No. 712. Defendant also requested an evidentiary hearing to explore trial counsel’s reasoning “relative to the allegations the defense has leveled” against that counsel. ECF No. 726 at 4.[1] The government opposed the motion and the request for evidentiary hearing, and defendant filed a reply brief.

         On October 27, 2015, the parties were ordered to show cause why defendant’s motion for new trial should not be denied without prejudice to defendant’s right to pursue his claims of ineffective assistance of counsel in collateral proceedings under 28 U.S.C. § 2255. ECF No. 745. Both parties timely responded to the order to show cause. ECF Nos. 751, 752. On December 9, 2015, the court heard argument, ECF No. 755, and by order filed December 29, 2015, the order to show cause was discharged and in lieu of an evidentiary hearing defendant was granted leave to depose his trial counsel, James Greiner (hereafter Greiner). ECF No. 758 at 3-4. The order placed specific limitations on the deposition. Id. Trial counsel was deposed on February 9, 2016.[2] Thereafter, the parties filed further briefing in support of and opposition to the motion for new trial. ECF Nos. 779, 780, 783. The court heard argument on the motion on May 11, 2016 and took the motion under submission. On June 29, 2016, the court denied the motion in a summary oral ruling from the bench. ECF No. 790. For the reasons explained in this order, that ruling is confirmed.

         I. LEGAL STANDARDS

         A. Motion for a New Trial under Fed. R. Crim. Proc. 33

         Federal Rule of Criminal Procedure 33 authorizes the court, on motion of a defendant, to “vacate any judgment and grant a new trial if the interest of justice so requires.” Fed. R. Crim. P. 33(a). The court has discretion to consider a claim of ineffective assistance of counsel on a motion for new trial, see United States v. Steele, 733 F.3d 894, 897 (9th Cir. 2013), and, for the reasons set forth in the December 29, 2015 order, has decided to review defendant’s ineffective assistance of counsel claims on the merits of the Rule 33 motion now pending before the court. See ECF No. 758 at 3.

         B. Conspiracy to Commit Mail Fraud In Violation of 18 U.S.C. § 1349

         Defendant was convicted by a jury on December 2, 2013 of conspiracy to commit mail fraud in violation of 18 U.S.C. § 1349. ECF No. 466. The elements of conspiracy are “an agreement between two or more persons to accomplish an illegal objective, coupled with one or more overt acts in furtherance of the illegal purpose.” United States v. Hubbard, 96 F.3d 1223, 1226 (9th Cir. 1996).

“[I]nferences of the existence of such an agreement may be drawn ‘if there be concert of action, all the parties working together understandingly, with a single design for the accomplishment of a common purpose.’” United States v. Melchor-Lopez, 627 F.2d 886, 890 (9th Cir.1980) (quoting [United States v.] Monroe, 552 F.2d [860] at 862-63 [(9th Cir. 1977)). “The agreement need not be explicit, but may be inferred from circumstantial evidence.” Id. at 891. Once evidence of a conspiracy is established, only a slight connection between the defendant and the conspiracy is necessary to convict the defendant of knowing participation in the conspiracy. Id.; United States v. Aichele, 941 F.2d 761, 763 (9th Cir.1991). However, mere association with members of a conspiracy or knowledge of the conspiracy, “without an intention and agreement to accomplish a specific illegal objective, is not sufficient to make one a conspirator.” Melchor-Lopez, 627 F.2d at 891.

Id. The crime of mail fraud has two elements: “1) existence of a scheme to defraud, and 2) using or causing the use of the mails in furtherance of the scheme.” Id. at 1227-28. “‘To be part of the execution of the fraud … the use of the mails need not be an essential element of the scheme…. It is sufficient for the mailing to be ‘incident to an essential part of the scheme’ … or ‘a step in the plot.’” Id. at 1228 (quoting Schmuck v. United States, 489 U.S. 705, 711-12 (1989)).

         C. Ineffective Assistance of Counsel

         The federal law on claims of attorney ineffectiveness is clear:

First, the defendant must show that counsel’s performance was deficient. This requires showing that counsel made errors so serious that counsel was not functioning as the “counsel” guaranteed by the Sixth Amendment. Second, the defendant must show that the deficient performance prejudiced the defense.

Strickland v. Washington, 466 U.S. 668, 687 (1984). “[T]he performance inquiry must be whether counsel’s assistance was reasonable considering all the circumstances.” Id. at 688.

[S]trategic choices made after thorough investigation of law and facts relevant to plausible options are virtually unchallengeable; and strategic choices made after less than complete investigation are reasonable precisely to the extent that reasonable professional judgments supported the limitations on investigation. In other words, counsel has a duty to make reasonable investigations or to make a reasonable decision that makes particular investigations unnecessary.

Id. at 690-91. The court must presume that counsel acted effectively and evaluate strategic decisions to determine whether they were “reasonable at the time.” Harrington v. Richter, 562 U.S. 86, 107 (2011); see also Strickland, 466 U.S. at 689 (internal citation omitted) (“A fair assessment of attorney performance requires that every effort be made to eliminate the distorting effects of hindsight, to reconstruct the circumstances of counsel’s challenged conduct, and to evaluate the conduct from counsel’s perspective at the time. Because of the difficulties inherent in making the evaluation, a court must indulge a strong presumption that counsel’s conduct falls within the wide range of reasonable professional assistance; that is, the defendant must overcome the presumption that, under the circumstances, the challenged action ‘might be considered sound trial strategy.’”).

         In Harrington, the Supreme Court emphasized the deference Strickland requires, noting that a court must presume that counsel acted effectively and reiterating that “[t]he question is whether an attorney’s representation amounted to incompetence under ‘prevailing professional norms, ’ not whether it deviated from best practices or most common custom.” 562 U.S. at 105.

         It also is petitioner’s burden to establish prejudice: “A defendant must show that there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different. A reasonable probability is a probability sufficient to undermine confidence in the outcome.” Strickland, 466 U.S. at 694.

         “Failure to satisfy either prong of the Strickland test obviates the need to consider the other.” Rios v. Rocha, 299 F.3d 796, 805 (9th Cir. 2002); see also Siripongs v. Calderon, 133 F.3d 732, 737 (9th Cir. 1998) (“[It] is unnecessary to consider the prejudice prong of Strickland if the petitioner cannot even establish incompetence under the first prong.”)

         II. ANALYSIS

         A. Relevant Background

         The Superseding Indictment in this case alleges that between March 19, 2005 to at least June 30, 2006, defendant McCarns conspired with multiple co-defendants “to target homeowners in financial distress and perpetrate an ‘equity stripping’ scheme and artifice to defraud” the homeowners and “to obtain property and money by means of materially false and fraudulent pretenses, representations, and promises, and to use the United States Mails and any private and commercial interstate carrier to execute the scheme. . . .” ECF No. 153 at 2, 4. The scheme was run through Head Financial Services (HFS), a company incorporated by co-defendant Charles Head (Head) in August 2001, id. at 2, and Creative Loans, LLC (Creative Loans), created by Head in June 2004. Id. at 3. “Other business entities” also were involved in the scheme, including property management entities known as Nations Property Management and A-One Property Investments. Id. Defendants also “used other business names and websites to perpetuate the fraud, including but not limited to Foreclosure.com, Funding Foreclosure[3], and $30kperyear.com.” Id.

         McCarns was tried with two co-defendants, Charles Head and Benjamin Budoff. The government’s case-in-chief against McCarns consisted of documentary evidence and testimony from homeowner witnesses and company insiders. The government called several other witnesses at trial to offer testimony against Head and/or Budoff. In his motion for new trial, McCarns contends he received constitutionally ineffective assistance of counsel as a result of trial counsel’s failure to object to the admission of three government exhibits, Exhibits 60, 68, and 70; by counsel’s failure to adequately cross-examine and impeach both homeowner and company witnesses; and by his failure to seek an order from the court granting immunity to exculpatory witnesses who planned to assert their Fifth Amendment rights against self-incrimination. The government argues counsel was not ineffective in handling the exhibits that are the focus of McCarns’ motion, Exhibits 60, 68, and 70, contending counsel “deflected their sting by making clear to the jury that they were not found with or possessed by McCarns.” ECF No. 724 at 15. The government also argues that counsel’s examination of the homeowner witnesses was “exhaustive” and not ineffective, id. at 19, and that the way counsel handled the company insider witnesses also was within the bounds of competent professional assistance, id. at 27. Finally, the government contends the proposed motion to compel immunity would have failed and counsel therefore was not ineffective in failing to seek immunity for the potentially exculpatory witnesses. Id. at 30-33.

         In his opening statement, McCarns’ trial counsel introduced the jury to the two part “theme” of the defense: “No connection. Put it in writing.” ECF No. 548 at 44. He explained that the evidence would show no connection between McCarns and the fraud conspiracy charged by the government. Id. Second, he argued that written evidence would contradict the government’s assertions of alleged false statements by McCarns, and would show that everything McCarns sold to the homeowners was put into written documents sent to homeowners to read and review before signing, and that there would be other documents demonstrating that some of the government’s assertions were false. Id. at 44-46. At his deposition taken in connection with the pending motion, counsel testified extensively concerning his use of this strategy with respect to exhibits offered by the government and cross-examination of both homeowner and company witnesses. See, e.g., Greiner Dep. at 65-68, 72-73, 75, 79-81, 92-96, 103, 105, 107, 132-33, 144, 157, 162, 164, 166, 175, 188, 202. Independently, the court recalls that throughout trial, trial counsel regularly paused once he had examined a witness to compare notes with Mr. McCarns before yielding a witness.

         B. Exhibits 60, 68 and 70

         1. Background re “Open” and “Secret” Fraud Periods

         A substantial part of defendant’s motion is grounded in his contention that from January 2004 to December 2004, Head “ran a business based exclusively on fraud, ” ECF No. 712 at 19, and that by the time McCarns was hired as a sales agent in February 2005, “Head was using a completely different business model.” Id. at 22. Defendant contends the post-2004 business model only involved fraud by Head and “company managers” and not by “sales agents, ” including McCarns. McCarns contends sales agents, including him, “were not instructed to deceive the homeowners at all” and “uniformly believed they were selling a legitimate product, helping homeowners, and had no idea that fraud was being committed against financial institutions by Charles Head and his managers.” Id. This premise underlies the first part of McCarns’ ineffective assistance of counsel claim, specifically, his contention that counsel was ineffective in failing to object to the admission of three documents, Exhibits 60, 68, and 70.[4]McCarns argues these three documents were integral to the government’s case against him and highly prejudicial. Specifically, defendant contends these three documents were linked by the government to testimony from homeowners to whom McCarns sold the foreclosure rescue program but were created and used only during the time prior to McCarns’ employment.

         At the outset, the court notes that at deposition, trial counsel responded to questions about the business model used by Charles Head during 2004, the so-called “50/50 split with the LLCs.” Greiner Dep. at 46. This is the business model McCarns contends was an “open fraud” involving all of Head’s employees and which he contrasts with the supposed “secret fraud” during the period of his employment, which he contends only involved management and not him or other sales agents. Id.; see also ECF No. 712 at 19-23.

         When questioned during his deposition about this distinction and an exhibit that might have been used to highlight differences between the two periods, trial counsel responded that he had determined not to draw a distinction between the conduct of 50/50 employees and McCarns because (1) there had been a limiting instruction that the testimony of two witnesses, Shannon Taylor and Justin Wiley, were admitted as to Head only and could not be used against McCarns; and (2) McCarns had not worked at Head Financial Services during the 50/50 time frame, and he “made that clear in [his] opening and . . . in [his] closing.” Greiner Dep. at 46-47; see also ECF No. 548 at 37-44; ECF No. 562 at 25, 36, 40, 53-57.

         Regarding counsel’s first explanation, he is correct. At the start of trial, the court instructed the jury that “[s]ome evidence may be admitted for a limited purpose only” and that when the court instructs the jury “that an item of evidence will be or has been admitted for a limited purpose, you must consider it only for that limited purpose and for no other.” ECF No. 548 at 16. During Shannon Taylor’s testimony, the court instructed the jury that certain documents were “admitted with respect to the Government’s case against Mr. Head. The testimony is subject to the limiting instruction the court gave at the beginning.” ECF No. 549 at 47. A limiting instruction also was given at the start of Justin Wiley’s testimony. See ECF No. 551 at 126 (“Ladies and gentlemen, I’m giving you an instruction you’ve heard before, but it applies with respect to this witness as well. I understand you are about to hear evidence that Mr. Charles Head committed other acts not charged here. You may consider this evidence only for its bearing, if any, on the question of Mr. Head’s intent, motive, opportunity, preparation, plan, absence of mistake, absence of accident, and for no other purpose. You may not consider this evidence as evidence of guilt of the crime for which Mr. Budoff and Mr. McCarns are now on trial.”).

         Regarding trial counsel’s second point, the record shows that in both his opening statement and his closing argument, counsel drew significant distinctions between the business model of Head Financial Services during the “50/50 LLC” period in 2004, and the business model to which the company transitioned just before McCarns was hired in early 2005. See ECF No. 548 at 37-44; ECF No. 562 at 53-56. In his opening statement, counsel stated that when McCarns arrived the business was “transforming and being compartmentalized into various areas, ” that McCarns was an employee with no management authority, and that sales agents like McCarns operated very differently than the individuals who had worked during the 50/50 era. ECF No. 548 at 41. Counsel used the anticipated testimony of Shannon Taylor to highlight one of the key relevant differences: that in 2004, Head and two of his employees came to her house with documents to sign, while McCarns’ job was to talk to people on the telephone. Id. at 39, 44. In closing, counsel argued, inter alia that the business model of Head Financial Services changed significantly after Keith Brotemarkle was hired in January 2005, that Brotemarkle “did a corporate takeover of Funding Foreclosures with Kou Yang, ” that Brotemarkle and Yang were the two committing fraud, and that “Brotemarkle raided that company, set it up to hide his fraud and Kou’s fraud, and used the employees, who worked diligently at their job day in and day out” and that McCarns “got physically beat up because he questioned management.” See ECF No. 562 at 54-57.

         2. Handling of Exhibits

         Defendant’s challenge to the performance of his counsel concerning trial exhibits 60, 68, and 70 is grounded in the fact that there were significant similarities between the sales pitches described in the documents and the testimony of homeowner witnesses to whom McCarns sold the program.

         Exhibit 60 is a five page document entitled “Foreclosure Transaction Procedure” that details marketing mechanisms, sales pitches including a section entitled “BAIT-n-SWITCH”, and procedures to follow for completing the transactions. ECF No. 712-16.

         Exhibit 68 is a document from HFS setting forth a “Sales Pitch.” It describes a program based on the equity in a customer’s home, representing that HFS has investors that will (1) give the customer money to help pay bills; (2) pay all arrears on a loan “so you will be current if there is little time before your sale date”; (3) completely pay off a mortgage; and (4) “pay a firm to handle credit repair. . . .” ECF No. 712-15. The sales pitch represents that the customer’s monthly payment will be lower than the current monthly payment and the “only real drawback” is that the investor will have to be on title with the customer for a period of time. Id. It instructs to “STRESS” that the customer will still be on title but the investor will also be on title. Id. (emphasis in original). It then provides instructions for proceeding if a customer “say[s] yes.” Id.

         Exhibit 70 is a multipage document, which includes a two-page handwritten sample “Equity Purchase Agreement”; a one-page document with two handwritten email addresses for Charles Head; several pages of marketing efforts and costs; several pages of what appear to be sales pitches to potential customers; and a list of counties in Florida. ECF No. 712-17; ECF No. 559 at 165-71.

         Two of the three documents played a significant role in the government’s case against McCarns. In closing argument, the government argued that Exhibit 68 was “the foreclosure sales pitch.” ECF No. 561 at 144. The government emphasized a section of the exhibit that in all capital letters instructed the sales team to “stress” to the homeowners that they would still be on title but an investor would be on title with them. Id. The government argued this instruction matched the testimony from the homeowners, all of whom testified they were told they would remain on title, and many of whom were sold the program by McCarns. Id. at 143-44. Similarly, Exhibit 70, the government argued, corroborated the homeowners’ testimony that they were told they would retain most of their equity; Exhibit 70 was the “sales pitch” for that representation. Id. at 146. The review of the homeowners’ testimony provided below shows that many homeowners did testify consistently with these aspects of these exhibits.

         As noted above, defense counsel stipulated to the authenticity of Exhibits 68 and 70 as part of a stipulation by the parties concerning the admissibility of trial exhibits. ECF No. 431. Exhibits 68 and 70 were offered into evidence through the testimony of Chris Fitzpatrick, a special agent for the Internal Revenue Service Criminal Investigation Division. ECF No. 559 at 150, 164-65. Special Agent Fitzpatrick testified that the documents were recovered in Charles Head’s home during execution of a search warrant. Id. at 164-65. During cross-examination, McCarns’ trial counsel elicited testimony from Fitzpatrick that there was no evidence either exhibit was ever given to McCarns, and that no copies of Exhibit 68 had been found at the business, or any of several other business locations. ECF No. 560 at 82-84. At his deposition, counsel testified he did not view Exhibit 68 as “critical” because his cross-examination “placed the document into context in front of the jury, ” i.e., that it was found in Heads’ home office and that neither Exhibit 60 nor 68 were “critical” because “McCarns never saw them, never had them.” Greiner Dep. at 34-35. He also testified about his closing argument and his cross-examination of Special Agent Fitzpatrick, both of which emphasized that there was no connection between McCarns and either Exhibit 68 or Exhibit 70. See, e.g., id. 52, 56-57, 67-68, 70. This approach was consistent with his two-part trial strategy discussed above: to show no connection between McCarns and any conspiracy, and to show that written documents disproved any testimony concerning alleged false statements by McCarns. See, e.g., ECF No. 548 at 44-45; Greiner Dep. at 65-66.

         Defendant now contends that “an informed, knowledgeable and thorough examination of Exhibit 68 by Mr. McCarns’ attorney, in consultation with his client, ” would have provided the basis for “a potentially successful severance motion, ” an in limine motion limiting its admissibility only to Charles Head, or at least a more vigorous cross-examination of certain witnesses to establish that Exhibit 68 related only to the 2004 business model. ECF No. 712 at 27. The record shows that trial counsel made a motion to sever raising several contentions but not relying on Exhibit 68. ECF No. 288. The motion was denied without prejudice. ECF No. 297. Given the similarities between Exhibit 68 and the testimony of several homeowners to whom McCarns sold the program, it is not at all clear that an in limine motion restricting use of Exhibit 68 to Charles Head would have been successful. Moreover, defendant has not shown how using Exhibit 68 to support his severance motion would have resulted in a different ruling.

         Trial counsel’s strategy for handling Exhibits 68 and 70 was consistent with his overall trial strategy: he elicited testimony that there was no evidence McCarns had any connection to either of these documents. This falls within “the wide range of reasonable professional assistance” that is the governing standard for this ineffective assistance of counsel claim. McCarns has failed to demonstrate that counsel’s handling of these two documents constituted ineffective assistance of counsel.

         Exhibit 60 was offered into evidence through the testimony of Justin Wiley, who worked for Head Financial Services. ECF No. 551 at 128, 141. As noted above, the court gave a limiting instruction to the jury prior to the start of Justin Wiley’s testimony. Wiley testified that Exhibit 60 was a four-page script given to him and two others by Charles Head during two weekend meetings at Head’s home in March 2004. Id. at 130-31, 140-42.[5] During Wiley’s direct examination, McCarns’ trial counsel interposed an objection designed to clarify that the script had only been given to Wiley and two others, not McCarns. Id. at 141. The witness clarified that “Josh Coffman, Akemi Botari” and he had gone to Head’s home for the two weekends in March 2004. Id. at 142. On cross-examination, counsel elicited testimony from Wiley that he had left working for Charles Head in November 2004, prior to McCarns “ever showing up and working.” Id. at 162-63. In closing, the government argued that Exhibit 60 was brought in as to Charles Head only. ECF No. 561 at 160. Trial counsel’s handling of this document as well was not ineffective, and McCarns suffered no prejudice from its admission.

         C. Witnesses

         1. Homeowner Witnesses

         In its case-in-chief, the government presented seven homeowner witnesses who were victims of the charged fraudulent foreclosure program and who testified that Domonic McCarns either sold them the program or were involved in their transaction with the company. Six of these witnesses testified that McCarns had sold them the program: Sharolynn Cardenas, Sheila Jones, Debra Kovacs, Bertha Woods, Denise Ahearn, and Kelly DiSanto. Five testified that they always spoke with McCarns over the telephone and never met him in person, ECF No. 548 at 78, 143 (Cardenas); ECF No. 551 at 185-86 (Jones); ECF No. 553 at 195, 209 (Kovacs); ECF No. 554 at 94, 126-27 (Woods); ECF No. 554 at 174-75, 188-89 (Ahearn), and one testified simply that her contacts with McCarns were over the telephone, ECF No. 559 at 105 (DiSanto). Deborah Brockway testified that she spoke with a female sales agent and with McCarns as part of entering into the program[6], and also when she received a check for $108, 000 after she signed documents. ECF No. 555 at 116, 118-21.

         The government presented two additional homeowner witnesses, Jerome Pearlman and Alfred Limas, who testified concerning their involvement with Funding Foreclosures (Pearlman) and Nations Property Management/Creative Loans (Limas). Neither testified they had worked with McCarns.

         With the exception of Pearlman, all the witnesses described a similar scheme.

         a. Sharolynn Cardenas

         Cardenas testified as follows. She was referred to McCarns for help after she and her husband filed for bankruptcy. ECF No. 548 at 77-78. In their second conversation, McCarns told her she would receive a packet in the mail with papers to fill out and that when she received the packet she and her husband should tell their lawyer to cancel the bankruptcy action they had filed. Id. at 79. He represented that the program would help them “make good on [their] credit” and, “within a year . . . be able to help [them] get [their] home back.” Id. Specifically, McCarns told her the equity in their home, $200, 000, would be put in an escrow account and that after they paid the mortgage for a year the equity would be returned to them “to use to buy back [their] home.” Id. at 80. Cardenas checked with their mortgage broker who had referred her to McCarns to see if the program was “legit” and the broker told her to “go ahead.” Id. When she and her husband went to the title company to sign the papers, they learned they would be selling their home. Id. at 81. They declined to sign the papers and instead went to the mortgage broker’s office. Id. He reassured them they would get their house back. Id. at 81-82. Approximately forty-five minutes later, McCarns called Cardenas. Id. He was angry she and her husband had not signed the papers, and he told her that “after two to three months [their] name would be back on the deed for the home.” Id. Ultimately, they signed the documents. Id. at 83. About a week later they received documents that said they were renting their home for $1500 per month, with no pets. Id. at 83-84. A quick deed was included in the packet. Id. at 84. Cardenas called McCarns again, who told her she would remain in the house, no one would take it away from her, and within a year she would get her money back and she could buy back her house. Id. He reiterated that the equity in her house, which she testified was supposed to be $200, 000, would be held in escrow for a year. Id. at 85. As part of the arrangement, she received a check for $20, 000 to help pay bills and re-establish the family credit. Id. She never received the $200, 000 back. Id. After signing the documents, she made rent payments to Funding Foreclosures, but stopped when the roof on her home caved in; she could not get insurance proceeds to fix the roof so had to close her in-home business. Id. at 86-89. At the time of trial she was still living in the home. Id. at 90.

         b. Sheila Jones

         Jones testified that while she was going through a foreclosure, she “received a little flyer in the mail that said Funding for Foreclosures.” ECF No. 551 at 166. She called the number on the flyer and spoke with McCarns. Id. He told her she could not refinance the home, “but that he had an angel investor that could help [her] out.” Id. The “angel investor” would invest in her home, which would be put in trust, and she could make payments for a year, after which the house would be returned to her and she would split the equity with the investor. Id. at 166-67. The buy-back price she agreed to with McCarns was $195, 000. Id. at 180. McCarns also told her she would have to make payments of $1, 100 per month for a year, and that she would receive $5, 000 to pay her son’s tuition. Id. at 167-68. During the signing, she noticed instructions not to transfer any funds to the seller. Id. at 169. She sought and received reassurance from the notary that her home would be put in trust. Id. After the signing, she spoke with McCarns who also reassured her the home would be put in trust. Id. He also told her she had time to rescind, which she did not do. Id. at 170. Three days after the rescission period ended she received a check for $5, 000. Id. at 170-71. She made her payments as required and believed her home was in trust, “until the FBI showed up.” Id. at 171. In fact, the initial set of papers signed by Jones resulted in the transfer of her home to Daniel Castillo, id. at 209, and the property was not held in trust. Ultimately, Jones lost the home to foreclosure. Id. at 180.

         c. Debra Kovacs

         Debra Kovacs made contact with Domonic McCarns in 2005 while she was trying to refinance her home. ECF No. 553 at 194-95. He called her at her home after she had been filling out refinance forms online. Id. at 195. Kovacs told him she had been told refinancing was not possible, but he assured her he could refinance the home. Id. at 196. After that, he called her to send her to a title company to sign papers, but she “never made it there.” Id. He called her again and told her it would be easier to send someone to her house. Id. at 197. Based on the conversations she had with McCarns, she thought she would be refinancing the house and someone would be going on the title with her for one year. Id. at 198. At the end of a year, she would call McCarns, they would refinance the house, and the other person would be taken off the title, leaving her as the only person on the title. Id. She understood she would be making monthly payments. Id. at 199. She believed she had discussed the equity in the home with McCarns, and that the equity would stay in the home. Id. at 200. She received $1, 000.00 as part of the transaction. Id. at 201. In fact, she signed a grant deed to her home, and ended up losing the home. Id. at 203-04.

         d. Bertha Woods

         Bertha Woods fell behind on her mortgage payments and became concerned about foreclosure. ECF No. 554 at 92-93. She was referred to a company she remembered as “foreclosure.com, ” and spoke to McCarns. Id. at 93-94. He told her they could help with the house and she could rebuild her credit if she made payments. Id. at 94-95. He told her it would cost her “a little more to get the house back.” Id. at 95. She understood she would be making payments of $500 a month to “some kind of management.” Id. at 96. She decided to enter into the program, and a notary came to her home with papers to sign. Id. She noticed different names on the papers she was signing, and she called McCarns. Id. He told her the names were those of people in the firm “and this is the way they do it.” Id. She had understood that the house would still be hers. Id. at 97. But when the papers came, she saw they were going to put it in a trust under someone else’s name. Id. He assured her that the name was of a person in the company and “everything would be okay.” Id. When she signed the papers, she still thought she would be the owner of the home. Id. She also understood that if she did not keep up the payments, breach the contract, or lose the home she would get part of the equity and the company would get part of the equity from the home. Id. at 98-99. About a month later, she received notice that her mortgage had been paid in full. Id. at 99. She also got a letter from an attorney for Kenny and Marjorie Sly saying that the house was foreclosed on and she had to move out of the house. Id. at 100. Woods called McCarns’ number but did not get through because the number had been “changed or disconnected.” Id. at 100-01. Woods ended up talking to someone who told her the house was still hers and she needed to call numbers for the FBI and the IRS. Id. at 101. The house went through foreclosure and a sheriff’s sale, but no one bought it so she had a chance to get it back. Id. She was still in the house at the time of trial. Id.

         e. Denise Ahearn (Nowlin)

         Denise Ahearn, previously known as Denise Nowlin, testified that she contacted Domonic McCarns after her mortgage broker had done “everything he could to help [her] keep up.” Id. at 174. It appears she consulted the mortgage broker after receiving a notice of foreclosure from the bank. See id. at 184-86. The mortgage broker referred her to McCarns, who had reached out to the mortgage broker. Id. at 174. Ahearn spoke with McCarns “many times.” Id. at 175. He told her he could help her save her house “by having a trustee or investors” buy it. Id. She specifically asked that her name be left on the deed because she “didn’t want [her] house to get taken from underneath [her]” and he assured her “that wouldn’t happen.” Id. He told her that after the trustee was put on the deed she would pay rent for a year and then be able to buy the house back for less than she put into it. Id. She was under the impression that she would still own part of the house during this period. Id. at 175-76. She was not willing to sign unless McCarns guaranteed that he could not sell the house, or she wanted her name on the deed to give her that protection. Id. at 176. McCarns told Ahearn to file for bankruptcy so that he could “get the investors that he needed”, which she did. Id.

         On cross-examination, Ahearn testified she understood that the bankruptcy filing would stop the foreclosure. Id. at 203. McCarns told her that once he got the investors, he would call and tell her to cancel the bankruptcy. Id. at 176. McCarns eventually called and told her to cancel the bankruptcy, which she did. Id. at 177. McCarns set up a meeting with a broker for her at a McDonald’s to sign the paperwork. Id. She signed the papers without reading them, and then asked for a copy of the documents. Id. at 177-78. The broker promised to send copies but never did. Id. at 178. McCarns also told her she would get a copy of the documents, but she never did. Id.

         After that, McCarns stopped responding to Ahearn’s calls, even though she was trying to reach him to find out where to send her $2, 000 rental payment. Id. at 179.[7] Ahearn finally got an email from a woman with instructions where to send the payment. Id. She sent one payment and then fell behind again. Id. She started getting mail for someone named Armil Rucker, and after consulting an attorney she went to the registrar of deeds and found out that Armil Rucker was the only name on the deed to her house. Id. at 180. When asked by the prosecutor if she had ever received a specific amount of equity from her home -- almost $72, 000 --, or whether she had “knowingly give[n] permission to anyone else” to take that amount of equity out of it, she responded she had not. Id. at 182. Ahearn learned that what McCarns had told her about keeping her name on the deed and keeping her home was not true when she got a notice from the FBI that she “had been a victim of a crime.” ECF No. 555 at 34.

         f. Kelly DiSanto

         Kelly DiSanto testified that she called a company called Creative Loans after she and her husband ran into financial difficulties. ECF No. 559 at 104-05. She spoke with McCarns, who told her he would help save the house. Id. at 105. Again, McCarns told her the company would take joint title on the house for a year, during which DiSanto and her husband would pay rent less than the amount of their mortgage. Id. At the end of the year, the company would come off title, and they would split the equity in the house. Id. at 105-06.

         DiSanto and her husband had to file bankruptcy to avoid foreclosure because the process was taking “longer.” Id. at 106. McCarns told her the company would reimburse the DiSantos for the bankruptcy, but it never did. Id. The DiSantos signed documents for the Creative Loans program in the presence of a notary sent to their house. Id. at 107.

         A couple of months after they signed the documents they received their first rental bill. Id. at 108. DiSanto made timely payments, and at the end of the year contacted McCarns to find out what the next step was. Id. at 108-09. He told her she and her husband were ineligible because they had violated the contract by making some of their payments late. Id. at 109. Ultimately he told her they would have to buy the house back at a higher price because of the late payments. Id. The higher price was $670, 000, which was not consistent with the original agreement. Id. at 109-10. They paid the higher price because they were just starting a family and had bought the house while it was still under construction and did not want to lose it. Id. at 110.

         g. Deborah Brockway

         Deborah Brockway, too, testified about being sold a program by someone she would make payments to for over a year, at the end of which time she could get her house back. ECF No. 555 at 116-17. She understood she would pay $25, 000 and would receive $10, 000. Id. at 117. She worked with a saleswoman named Beverly, but apparently was referred to McCarns for “more explanations, more clarity” during the initial stages. Id. at 119.[8] Once Brockway started writing checks to the company, someone who might have been McCarns contacted her to tell her the company had found a buyer for her home. Id. at 118-19. She had started making payments right away, and the name of the company changed along the way from Nations Property, to Creative Loans. Id. at 120. Brockway’s house was then sold to someone named Michael. Id. After the sale, she received a check for $108, 000, which was the amount of equity in her house. Id. She called and spoke with McCarns, who told her that the check was not hers and needed to go “directly to them.” Id. at 121. She told him she did not think that was right; she thought it was the proceeds from the sale of her home. Id. McCarns was “very aggressive” and told her she would be in “big trouble” if she did not send “them” the check right away. Id. So she then got a cashier’s check in the full amount and sent it to McCarns. Id. at 122.

         In November 2006, Brockway received a call from someone who identified himself as Michael Scallin and said he had bought her house. Id. at 122-23. He told her he had bad news, that the FBI was investigating the company, and that it would be best if she did not send any more payments to him. Id. He told her he was getting ready to go into bankruptcy. Id. She did not still live in the house at the time of trial. Id. at 125.

         h. Jerome Pearlman

         As noted, the government also called homeowners Jerome Pearlman and Alfred Lima.[9] Pearlman testified that in early 2006 she owned a house with her wife. Id. at 39. They had fallen about four months behind on the payments and were concerned about foreclosure. Id. at 39-40. They received “an unsolicited phone call concerning help with mortgage arrears” and “set up an appointment to have someone come out and talk” to them about it. Id. at 40. Approximately two weeks later someone came to the house and described a program. Id. at 41. Pearlman could not recall who the person was, and believed the group was named Funding Foreclosures. Id. at 42. Ultimately the Pearlmans signed documents with Funding Foreclosures as a party to the agreement. Id. at 48. Besides the Pearlmans, the printed names for the other two signatures were Charles Head and Jack Corcoran. Id. at 49. Pearlman’s understanding was that by going into the program “Funding Foreclosures would be the intermediary between [the Pearlmans] and the bank” and that after “approximately 18 months, they would assist us in being able to procure a standard mortgage through one of the banks.” Id. at 51. Pearlman understood she and her wife would still be on title. Id. at 52, 56-57.

         The Pearlmans decided to join the program and signed documents when the notary brought them to their house. Id. at 53. They received copies of the documents, as the notary said they would. Id. Pearlman sent monthly payments in the amount of approximately $2, 000. Id. at 54. Thereafter, her “next memory of the process” was of “receiving a letter from the FBI.” Id. After that letter, they also got a letter from the bank that the house was going into foreclosure. Id. at 54-55. That letter was also addressed to Kerry Budoff, who the Pearlmans had been told “was the point person if we ever - if we had issues.” Id. at 55. They tried to contact Budoff, but the number they had was “actually a number to an elderly woman living in Encinitas, California.” Id. at 55-56.

         i. Alfred Limas

         Limas testified that in 2006 he had fallen far enough behind on payments at his home “for them to want to foreclose on it.” ECF No. 556 at 123-24. A woman at the title company that was going to foreclose on the property referred him to someone she thought could help. Id. at 124. She referred him to Nations Property Management, and he called it after the referral. Id. at 129. He told the person he reached that he was behind on payments and facing foreclosure, and that he did not want to lose all his equity but wanted to try to use the equity to save the house. Id. at 125. Subsequently, he signed documents. Id. at 131. Limas understood he was selling his home to pay off the existing mortgage, would receive $5, 000 in cash, and “after 12 months, split the equity and possibly re-buy [his] home back.” Id. at 131-32. During those twelve months, he would make payments to Nations Property Management. Id. at 132. He received the $5, 000, in the form of a check from Creative Loans, id. at 141, and he sent the monthly payments by check. Id. at 133. At some point, three of the checks were returned to him. Id. at 134-35. He tried to call the phone number he had and “never got a response.” Id. at 135. It was around this time that he had contact with IRS Special Agent Fitzpatrick. Id. at 135, 164.

         2. Defendant’s Contentions Concerning Homeowner Witnesses

         Defendant makes a number of contentions concerning alleged ineffectiveness of his trial counsel in connection with cross-examination of the homeowner witnesses. The contentions fall into three general categories: that counsel had information he could have used to impeach the homeowners but did not; that counsel failed to conduct adequate investigation, which would have uncovered the impeachment information; and that there were several times counsel elicited information favorable to McCarns during cross-examination but then failed to use the information during closing argument. The contentions as to each witness are described in turn, to the extent they apply, as follows.

         a) Sharolynn Cardenas

         i. Alleged Ineffectiveness

         Defendant contends trial counsel was ineffective in not cross-examining Cardenas about a civil lawsuit she had pending against McCarns, Funding Foreclosures and others. He also contends counsel failed to use a sworn declaration signed by Cardenas from the civil suit, disclosed to him by the government, or her July 2013 statement to the FBI, which would have revealed a number of contradictions between her trial testimony and the content of those declarations. He says her declaration would have shown that she received documents in June 2005, which “clearly articulated that she would be selling her home, be receiving $26, 000 in consideration for the equity in her home, and would be leasing her home for one year, at the end of which, she could buy back her home at a designated price if she fulfilled all of her obligations under the agreement.” ECF No. 712 at 49. The declaration would also have shown that she “physically met” with Peahu, her mortgage broker, and on his advice signed and mailed all the documents back to Funding Foreclosures, and that it was Peahu, not McCarns, who told her to tell her lawyer to dismiss the bankruptcy action. Id. at 49-50. The declaration would further have shown that Cardenas was aware funds from the house would be sent to Creative Loans rather than held in escrow. Id. at 50. The FBI statement would have shown that she never had a conversation about removing equity from her home, [10] and that her insurance claim was denied because the insurance company determined “‘the leak was caused by the ...


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