United States District Court, E.D. California
ORDER AND FINDINGS AND RECOMMENDATIONS
KENDALL J. NEWMAN UNITED STATES MAGISTRATE JUDGE
is a federal prisoner, proceeding without counsel, with a
motion to vacate, set aside or correct his sentence pursuant
to 28 U.S.C. § 2255. (ECF No. 284.) Movant challenges
his 2014 convictions for mail fraud affecting a financial
institution in violation of 18 U.S.C. § 1341 (counts
2-12) and money laundering in violation of 18 U.S.C. §
1957 (count 13.) Movant is serving a sentence of 288 months.
raises three claims. First, movant argues a lack of venue.
(ECF No. 284 at 2.) Second, movant argues that the government
failed to prove exclusive or concurrent jurisdiction.
(Id. at 3.) Third, movant argues that his activities
were lawful, citing Jesinoski v. Countrywide, 135
S.Ct. 790 (2015). (Id.) For the reasons stated
herein, the undersigned recommends that movant's motion
Background of Movant's Conviction
September 11, 2014, movant entered a waiver of the right to a
jury trial and a stipulation of facts concerning his case.
(ECF Nos. 140, 141, 143.) The bench trial occurred on
September 15, 2014. (ECF No. 149.) The government relied on a
stipulation of fact and a stipulation regarding the mailing
of various documents. The stipulation of fact provided, in
relevant part, as follows:
1. Between January 7, 2010 and August 20, 2013, I resided in
Minnesota, Nevada, California. I was a principal of the KATN
Trust, a purported revocable living trust, through which I
operated my business, which was variously called a Banker
Acceptance Program, Mortgage Debt Relief Program, and
Homeowner Rehabilitation Program. KATN is an acronym for
“Kicking Ass, Taking Names.”
2. I and my associates convinced more than 1, 000 homeowners
to participate in a fraudulent residential mortgage relief
program and to make payments to myself, my family and my
associates totaling well over $3, 400, 000.00 in fees and
“loan” payments. In reliance upon the
misrepresentations made by myself and my associates, many of
these homeowners stopped making payments on their existing
mortgage loans and disregarded notices sent to them by their
lending institutions. As a result, the financial institutions
suffered losses, and many homeowners became delinquent on
their loans and ultimately had their homes foreclosed upon.
3. My program targeted distressed homeowners in Sacramento,
California and elsewhere who were typically experiencing
difficulties making their existing monthly mortgage payments.
Many did not speak English as their first language. We
promised the homeowners their outstanding mortgage debt would
be reduced by 75%. More specifically, the homeowners were
promised that as a result of their participation in the
mortgage relief program, their existing debt would be
replaced with a new “loan” in an amount equaling
25% of their original obligation. These new
“loans” would be owed to my business entity KATN.
The homeowners were assured that if they participated in the
mortgage relief program, the original lenders would have no
way to foreclose on their properties.
4. In promoting the mortgage relief program, I falsely
claimed that I was a registered private banker with access to
an enormous line of credit and the ability to pay off
homeowners' mortgage debts in full. We further falsely
claimed that the mortgage relief program had a tremendous
record of past success in saving homeowners from foreclosure.
In truth, we never made any payments to financial
institutions on behalf of homeowners in satisfaction of their
pre-existing mortgage debt obligations; the purported
“loan” payments received from homeowners were
simply divided amongst myself, my family and my associates
for personal use; there was not a single instance in which a
homeowner's debt was paid, forgiven or otherwise
extinguished as a result of the mortgage relief program; and
many of the homeowners' properties were foreclosed upon
by the original lenders.
5. Upon first entering the mortgage relief program,
homeowners were required to provide an additional fee of
approximately $1000. Portions of these funds would then be
transferred to accounts controlled and accessed by myself or
my associates. Subsequently, fraudulent documents were
executed and recorded in local County Recorder's offices.
The new recordings included a “Substitution of Trustee
and Full Reconveyance” deed, which purported to
substitute myself as the “beneficiary/new
trustee” for the legitimate mortgage holding financial
institution, and “Deeds of Trust” that
purportedly secured the distressed homeowners' new
“loans.” Among other things, these recordings
served to make it difficult for financial institutions to
foreclose on properties securing defaulted mortgage loans.
When the documents were recorded, additional fees of
approximately $1, 000 or more were collected from the
homeowner, referred to as “closing costs.”
Finally, the mortgage relief program collected
“loan” payments from homeowners. Regardless of
where the “loan” payments were originally
directed, a large percentage of these deposits were
continually transferred to accounts controlled and accessed
by myself and by associates.
6. In the Summer of 2011, I signed and caused to be filed
bankruptcy petitions in the United States Bankruptcy Court
for the District of Nevada. One consequence of filing a
bankruptcy petition is that creditors are temporarily
prohibited from taking steps to recover debts from debtors.
This prohibition, known as the “automatic stay, ”
applies to actions such as property foreclosures. In these
petitions, I claimed the original, legitimate home mortgage
loans owed by each of the homeowners participating in the
mortgage relief program as my liabilities, and the financial
institutions that extended these mortgage loans as my
creditors. We periodically filed amended schedules to the
pending bankruptcy petition, adding the properties and loan
obligations of new mortgage relief program participants. We
also regularly opposed motions by the financial institutions
seeking relief from the automatic stay. We utilized these
bankruptcy filings to take advantage of the automatic stay
and thereby postpone foreclose actions by financial
institutions on homeowner properties. Postponing the
foreclose actions allowed us to claim that the mortgage
relief program was working, to attract new homeowners to
participate in the mortgage relief program, and to encourage
the homeowners to continue making payments to us rather than
the financial institution.
7. On October 11, 2012, I was indicted in the pending case,
and ordered detained pending trial. However, the mortgage
relief program continued to operate at my direction, largely
through the efforts of others involved. The bankruptcy
proceeding continued, and new homeowner properties were
periodically added to amended schedules. In addition, members
of the scheme continued to oppose efforts by financial
institutions to obtain relief from the automatic stay.
Homeowner loan payments continued to be received and
distributed amongst those participating in the scheme.
8. Throughout the life of the scheme, the homeowners would
receive periodic correspondence from myself and my associates
updating them on the progress of the program, and encouraging
them to continue making their monthly “loan”
payments. Often this correspondence was sent through the
United States mail.
9. If called to testify as a witness, C.T. would testify that
she participated in the program because she listened to
webinars describing it and learned that she would owe only
25% of her previous loan, that she would not have to deal
with her prior bank anymore, and that the program worked.
Evidence would be presented that she paid a total of at least
$9, 935.54 in fees and monthly payments. She would testify
that ultimately, she learned the program did not work, and
that her original lender still owned the loan to her house.
In addition, C.T. would testify that the following mails were
sent to or from her home in Sacramento, California, in
connections with her participation in the program. On or
about February 3, 2011, she received a letter sent from Las
Vegas advising her of a change in where to send her monthly
payments. On or about May 8, 2011, she received a letter from
Las Vegas concerning the bankruptcy filing, and attaching a
letter from an attorney requesting her monthly payments. On
or about September 6, 2012, she received a letter from Las
Vegas concerning the servicing of her “loan.” And
on or about February 8, 2013, she sent a package of
documents, including a fraudulent check created by associates
of the program, from her home in Sacramento to an unnamed
conspirator in Pittsburg, California.
10. If called to testify as a witness, L.R. and H.R. a
married couple, would testify that they participated in the
program with respect to a number of properties, including
their home in Vallejo, California. They would testify they
participated because of their belief that their existing
loans would be replaced by new loans totaling only 25% of
what they previously owed. Evidence would be presented that
they paid a total of at least $7, 874.98 in fees and monthly
payments. Evidence would be presented on or about November 1,
2010, they received a welcome letter re: their KATN loan
together with payment coupons at their home in Vallejo.
Evidence would also be presented that on or about June 14,
2012, they received a letter updating them on the progress of
the program and requesting payments at their home in Vallejo.
11. Witness N.M. would testify that she participated in the
program. Evidence would be presented that she paid a total of
at least $608.38 in fees and monthly payments. Evidence would
also be presented that on or about June 15, 2011, she
received a letter from Las Vegas at her home in Stockton,
California, which included an update on the bankruptcy
proceeding and which requested continuing payments.
12. Witnesses A.E. and A.M. would testify that they
participated in the program and evidence would establish that
they paid a total of at least $16, 122.98 and $2, 700.00 in
fees and monthly payments, respectively. Evidence would also
be presented that on or about June 14, 2012, A.M. in
Riverbank, California, and A.E. in Modesto, California
received the same letter from Las Vegas updating them on the
program and requesting continued payment.
13. Witness A.C. would testify that she participated in the
program with respect to her home in Fresno, California.
Evidence would be presented that she paid a total of at least
$12, 275.28 in fees and monthly payments. In addition,
evidence would be presented that on or about April 15, 2013,
she mailed her monthly loan payment from Fresno to Pittsburg,
California. On or about August 20, 2013, she received in the
mail from Las Vegas a set of payment coupons re: her KATN
loan at her home in Fresno.
14. In addition, the government would be able to prove that
on or about October 5, 2010, I withdrew $10, 750 in cash from
an account I controlled in the name of the KATN Revocable
Living Trust (Checking Account No. xxxxxx0304) at Wells Fargo
Bank in Rogers, Minnesota. The previous day, October 4, 2010,
at my direction, an associate involved in the mortgage relief
program transferred a total of $23, 975 in homeowner payments
from an account in Stockton, California (JP Morgan Chase
Checking Account No. xxxxx9911) to my account.
15. In all, the government would be able to prove that from
January of 2010, through August of 2013, more than $5, 800,
000 in fees and monthly payments was paid by homeowners in
the program to the defendant and his associates. Of those
funds, the government would be able to prove that more than
$2, 500, 000 was paid into accounts controlled by Tikal.
16. Many of the financial institutions owning the true and
actual loans on the homeowners' properties were
FDIC-insured, and many of them sustained actual losses, both
in the form of foregone participant loan payments, legal fees
to lift the automatic stay and clear clouded titles, and in
foreclosing on defaulted properties.
(ECF No. 140 at 3-8.)
conclusion of the bench trial, the District Court found
movant guilty on counts two through thirteen.
opposition to the pending motion, respondent argues that the
motion should be denied because movant raised the claims
raised in the instant motion on appeal. ...