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United States v. Raza

United States Court of Appeals, Fourth Circuit

November 20, 2017

UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
MOHSIN RAZA, Defendant-Appellant. UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
FARUKH IQBAL, Defendant-Appellant. UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
MOHAMMAD ALI HAIDER, Defendant-Appellant. UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
HUMAIRA IQBAL, Defendant-Appellant.

          Argued: September 15, 2017

         Appeals from the United States District Court for the Eastern District of Virginia, at Alexandria. Claude M. Hilton, Senior District Judge. (1:15-cr-00118-CMH-1, 1:15-cr-00118-CMH-3, 1:15-cr-00118-CMH-4, 1:15-cr-00118-CMH-2)

         ARGUED:

          Geoffrey Paul Eaton, WINSTON & STRAWN LLP, Washington, D.C., for Appellants.

          Jack Hanly, OFFICE OF THE UNITED STATES ATTORNEY, Alexandria, Virginia, for Appellee.

         ON BRIEF:

          G. Derek Andreson, Thomas M. Buchanan, Ilan Wurman, WINSTON & STRAWN LLP, Washington, D.C., for Appellant Mohsin Raza. John N. Nassikas III, R. Stanton Jones, Dirk C. Phillips, Robert A. DeRise, ARNOLD & PORTER LLP, Washington, D.C., for Appellant Humaira Iqbal. Peter H. White, Gary Stein, Jeffrey F. Robertson, Brittany L. Lane, SCHULTE ROTH & ZABEL LLP, Washington, D.C., for Appellant Farukh Iqbal. Thomas G. Connolly, Patrick O'Donnell, Stephen W. Miller, Lauren E. Snyder, HARRIS, WILTSHIRE & GRANNIS LLP, Washington, D.C., for Appellant Mohammad Ali Haider.

          Dana J. Boente, United States Attorney, Joseph A. Capone, Special Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Alexandria, Virginia, for Appellee.

          Before NIEMEYER, KING, and HARRIS, Circuit Judges.

         Affirmed by published opinion. Judge King wrote the opinion, in which Judge Niemeyer and Judge Harris joined.

          KING, Circuit Judge.

         In February 2016, the defendants in these proceedings - Mohsin Raza, Humaira Iqbal, Farukh Iqbal, and Mohammad Ali Haider - were convicted by a jury in the Eastern District of Virginia of the offenses of wire fraud and conspiracy to commit wire fraud. Those crimes were predicated on a fraudulent mortgage lending scheme centered at the Annandale branch of SunTrust Mortgage in Fairfax County, Virginia.[1] The defendants have appealed, maintaining that the trial court fatally undermined their convictions by giving erroneous instructions to the jury. As explained below, we reject the contentions of error and affirm.

         I.

         A.

         On April 23, 2015, a federal grand jury in Alexandria, Virginia, returned a seven-count indictment against the defendants - who were former employees of SunTrust's Annandale branch.[2] The indictment's first count charged them with conspiracy to commit wire fraud affecting a financial institution, in contravention of 18 U.S.C. § 1349.[3]Counts 2 through 7 made substantive allegations of wire fraud affecting a financial institution, in violation of 18 U.S.C. § 1343.[4] The substantive offenses were interposed against defendants Raza and Farukh Iqbal (Count 2); Raza and Humaira Iqbal (Counts 3 and 5); Raza alone (Counts 4 and 6); and Raza and Haider (Count 7).

         The fraud scheme underlying the indictment involved a total of twenty-five mortgage loans made by SunTrust from May 2006 through February 2007.[5] Pursuant thereto, the defendants prepared fraudulent mortgage loan applications for prospective SunTrust borrowers. The false information contained in the loan applications underlying the indictment included, inter alia, false employment claims, inflated incomes, and overstated assets. As a result, SunTrust made twenty-five mortgage loans on thirteen properties located in various cities and counties in eastern Virginia.[6]

         B.

         The trial of the defendants was conducted in Alexandria in late January and early February of 2016. To understand those proceedings, a brief explanation of the relationships between the defendants and their responsibilities at SunTrust is appropriate. During the relevant time frame, defendant Raza managed SunTrust's Annandale office. Raza's wife, defendant Humaira Iqbal, worked as Raza's personal assistant. Humaira's brothers, defendants Farukh Iqbal and Haider, worked for Raza as loan officers. Each of the defendants performed loan officer duties during the fraud scheme.

         The SunTrust loan officers assisted prospective borrowers in obtaining residential mortgages and refinancing existing mortgages. During a consultation with such a loan officer, a prospective borrower would provide information relating to, inter alia, the borrower's income, employment, and assets. The loan officer utilized that information to prepare the prospective borrower's mortgage loan application. In preparing an application, the loan officer would select the type of loan that SunTrust should consider for approval. The different types of SunTrust loans had distinct interest rates and separate requirements with respect to supporting evidence. For example, pursuant to SunTrust guidelines, a "full document" loan required supporting documents corroborating the loan applicant's income, employment, and assets. On the other hand, a "stated income, stated asset" loan required only those documents necessary to verify the applicant's employment for the prior two years.

         After completing a loan application, the loan officer forwarded it to a SunTrust underwriter in Richmond for review and possible approval. The underwriter would sometimes conditionally approve a loan application, subject to the bank's receipt of additional supporting documents. If the loan officer and the applicant thereafter fulfilled the specified conditions - for example, by providing the underwriter with the applicant's pay stubs or bank statements - the loan application would be approved for closing. SunTrust would then fund the loan by wiring money from Georgia to a bank account in Virginia. Following the loan closing, SunTrust paid a commission to the loan officer.

         1.

         The prosecution's case-in-chief, which encompassed five trial days, consisted of four categories of evidence. First, the prosecutors called two coconspirators who explained the wire fraud conspiracy and the fraud scheme. Next, the prosecution presented testimony from the SunTrust borrowers involved in the mortgage loans underlying the wire fraud offenses. Third, other SunTrust borrowers were called to buttress the conspiracy evidence and to provide evidentiary support for the fraudulent practices underlying the wire fraud scheme. Finally, a SunTrust official explained the significance to SunTrust of the misrepresentations on the pertinent loan applications and the risks those misrepresentations posed to the bank.

         a.

         Rina Delgado worked as a loan officer at SunTrust's Annandale branch during Raza's tenure as the branch manager. She described a fraud scheme that was largely overseen by Raza and his wife Humaira Iqbal. As explained by Delgado, either Raza or Humaira reviewed each loan application originated at Annandale before it was submitted to the SunTrust underwriters. Raza and Humaira would check the prospective borrower's income, assets, and liabilities, seeking to ascertain whether the applicant was qualified for SunTrust mortgage loans. If an applicant's income was insufficient, Raza and Humaira would sometimes have Delgado inflate the applicant's income on the loan application.

         Delgado described in detail how the defendants used a series of false representations and fraudulent documents to circumvent SunTrust's loan requirements. She identified an incident when Humaira Iqbal needed a landlord to verify that a loan applicant was paying rent. Humaira had Delgado impersonate the applicant's landlord over the phone and falsely confirm to a SunTrust underwriter that the applicant was current on his rental payments. In a similar vein, Farukh Iqbal and Haider asked Delgado to secure fraudulent accounting records to verify the assets shown on pending loan applications. Delgado responded by providing Farukh with false bank statements that were used to further the scheme. Delgado pleaded guilty in federal court in 2013 to an information that charged a wire fraud conspiracy offense. Pursuant to her plea agreement with the United States Attorney, she cooperated with the prosecutors. Delgado was sentenced to prison for her involvement in the fraud conspiracy.

         Another key prosecution witness concerning the conspiracy offense was Ranjit Singh - a tax preparer in northern Virginia. In 2015, Singh confessed to the FBI that he had manufactured and delivered false tax and payroll documents to the defendants. Singh cooperated with the FBI and the prosecutors and was given immunity. In 2006 and 2007, Singh sold false pay stubs and false W-2 forms to Farukh Iqbal and Haider. Singh knew that those defendants were SunTrust loan officers and that the false documents would be used to help loan applicants qualify for SunTrust mortgage loans. In carrying out the fraud scheme, Farukh and Haider provided Singh with the identities of loan applicants, the names of purported employers, employment dates, and salaries. Singh used that information in his tax and payroll programs to generate false documents that he provided to loan officers. Singh produced a spreadsheet at trial - introduced as Government's Exhibit 50B - that identified the false documents he had prepared in connection with the fraud scheme. See J.A. 2153-61. Several spreadsheet entries corresponded with false documents that supported phony loan applications prepared by the defendants and used in furtherance of the fraud scheme.

         b.

         In May 2006, Silvana Rosero obtained $437, 000 in mortgage loans from SunTrust to purchase residential real estate in Occoquan, Virginia. A wire transfer of those loan proceeds from a SunTrust account in Atlanta to a BB&T account in Richmond formed the basis for the wire fraud charge in Count 2 against Raza and Farukh Iqbal. Rosero's loan application - prepared by Farukh - reflected that Rosero earned $14, 000 per month as an operations manager at Horizon Mortgage. Her SunTrust loan file contained a W-2 form showing that Rosero had made $155, 000 the previous year, and the file contained salary payment statements supporting those earnings. Those false documents bore the name of Ranjit Singh, who confirmed that the phony documents had been prepared by him. Rosero testified that her SunTrust loan application - and its supporting documents - misrepresented her employment and vastly overstated her income. Rosero also confirmed that she had not provided Farukh with the false information and fraudulent documents and had never met Singh.

         In June 2006, a borrower named Leslie Lamas obtained $365, 000 in mortgage loans from SunTrust to purchase a residential property in Annandale. A wire transfer of those loan proceeds from a SunTrust account in Atlanta to a bank in Fairfax, Virginia, formed the basis for the wire fraud charge in Count 3 against Raza and Humaira Iqbal. Lamas obtained her loans from SunTrust with the assistance of Humaira, although Raza was the SunTrust loan officer identified on the Lamas loan application. The application reflected that Lamas earned $9, 540 per month, and her SunTrust loan file contained a false earnings statement - prepared by Ranjit Singh - that corroborated her income. Lamas testified, however, that her income was not nearly that high when she obtained her SunTrust loans. Furthermore, she had not provided Humaira with any supporting documents to that effect.

         In June 2006, Reynaldo Valdez obtained $414, 000 in SunTrust mortgage loans to purchase a home in Fairfax. A wire transfer of those loan proceeds from a SunTrust account in Atlanta to a bank in Fairfax formed the basis of the wire fraud charge in Count 4 against Raza. Valdez's loan application at SunTrust - prepared and submitted with Raza's assistance - reflected that Valdez was a practicing dentist, that he earned $11, 580 per month, and that he had $68, 000 in the bank. His SunTrust loan file contained a bank statement and an earnings statement supporting those false assertions. Valdez confirmed at trial that he was not a dentist. He actually worked in his sister's medical office doing clerical and maintenance work. Valdez admitted that his SunTrust loan application vastly overstated his income and assets, and that he had not provided the false documents found in his SunTrust loan file. Those documents - a false earnings statement and a false W-2 form - had been prepared by Ranjit Singh.

         In July 2006, a borrower named Harwinder Singh obtained $470, 000 in SunTrust mortgage loans - in his wife's name - to purchase a residence in Ashburn, Virginia. A wire transfer of those loan proceeds from a SunTrust account in Atlanta to a bank in Fairfax formed the basis for the wire fraud charge in Count 5 against Raza and Humaira Iqbal. Humaira - working with Raza - had assisted Harwinder Singh in completing the SunTrust loan application. Harwinder overstated his wife's income at the urging of Humaira and his realtor. The loan application reflected that Mrs. Singh worked as a systems engineer at Orberthur Systems, earned $14, 825 per month, and had $45, 000 in a Wachovia Bank. Her loan file contained earnings and bank statements corroborating those false numbers. Mrs. Singh was actually a quality technician at Orberthur Systems and earned only $25, 000 per year. Harwinder Singh and his spouse had never banked with Wachovia, and neither of them gave Humaira any false documents.

         In July 2006, Santos Valdez-Mejia obtained $405, 000 in SunTrust mortgage loans on a residential property in Alexandria. A wire transfer of those loan proceeds from SunTrust in Atlanta to a bank in Fairfax formed the basis for the wire fraud charge in Count 6 against Raza. The Valdez-Mejia loan application, prepared for him by Raza, reflected that Valdez-Mejia earned $9, 875 per month and that he worked as an area manager for a restaurant chain. His SunTrust loan file contained false earnings statements prepared by Ranjit Singh. When Valdez-Mejia applied for his SunTrust mortgage loans, he was actually working hourly wage jobs - as a cook and as a manual laborer. Valdez-Mejia confirmed at trial that his income was substantially less than $9, 875 per month. He had never advised Raza that he worked as an area manager for a restaurant or that he earned such a monthly income.

         In February 2007, Zahoor Hashmi obtained $387, 000 in SunTrust loans to refinance a mortgage on an Alexandria residential property. A wire transfer of those loan proceeds from a SunTrust account in Atlanta to a bank in Fairfax formed the basis for the wire fraud charge in Count 7 against Raza and Haider. Hashmi had secured his initial mortgage loan in 2005 from another lender. He thereafter sought to refinance with SunTrust because he was behind on his bills. Hashmi's refinancing application - prepared by Haider - falsely indicated that Hashmi was vice-president of a business called AA Motors. Hashmi had never worked at AA Motors, and he had not told Haider otherwise. His SunTrust loan file contained a false pay stub prepared by Ranjit Singh.

         c.

         The prosecution presented additional conspiracy and fraud scheme evidence by calling several other former SunTrust borrowers. Francy Castillo had obtained mortgage loans from SunTrust in 2006. Her loan application - prepared by Raza - falsely reflected that Castillo was president of a company called NGDC, earned a monthly salary of $17, 000, and had $100, 000 in a Wachovia bank. Castillo confirmed at trial that, when she obtained her SunTrust loans, she was actually working two hourly jobs - as a waitress and as a caretaker. Castillo had never worked for NGDC, she earned substantially less than $17, 000 per month, and she never had $100, 000 in any bank.

         Khalid Yousaf obtained a mortgage loan from SunTrust in 2005 and refinanced just a year later. Raza handled both of Yousaf's SunTrust loans. When he refinanced, Yousaf was working two jobs - driving a cab and operating a Dollar Store - and made about $3, 000 per month. His refinancing application with SunTrust, however, reflected that he was vice-president of a business called DPP Services and earned $13, 000 per month. Yousaf had never heard of DPP Services, had never earned $13, 000 per month, and had not told Raza otherwise.

         Oscar Carrion testified that his wife made approximately $15, 000 per year in 2006. Her SunTrust loan application - prepared by Raza - reflected that she earned nearly that much monthly. The loan application of Juan Pablo Yanez - prepared by Humaira - reflected that he was president of a construction company and earned more than $11, 000 per month. Yanez was actually a laborer earning hourly wages. Jagtar Dhanoa's SunTrust loan application - prepared by Humaira - falsely indicated he was a senior analyst at Ikon Solutions. He was actually working as a Pizza Hut cook and as a cab driver.

         d.

         Barbara Daloia, a vice-president of SunTrust's national underwriting team in North Carolina, explained the potential consequences to SunTrust of loan applicants failing to submit accurate information on mortgage loan applications. As Daloia explained, SunTrust sometimes contracted with investment banks to sell its originated mortgage loans by way of secondary sales agreements. Pursuant thereto, SunTrust agreed to repurchase any such loans that failed to comply with its underwriting guidelines. Thus, if such a secondary market purchaser discovered that a SunTrust loan it had purchased had been procured by fraud, SunTrust was obliged to repurchase the fraudulent loan.

         Furthermore, according to Daloia, if SunTrust sold a fraudulently procured loan and was not compelled to repurchase it, SunTrust was nevertheless exposed to the risk of default. Daloia had reviewed all the loan files used by the prosecution at trial. She explained that, on twelve of the properties, SunTrust had made two loans simultaneously - one for eighty percent of the property's value and the other for the remaining twenty percent. SunTrust would thus retain two separate liens on each of those properties, with a first lien being retained on the larger eighty percent loan. The second lien would be retained on the smaller loan. Daloia explained that SunTrust would sell only the larger loan - with the first lien - and would always hold for itself the smaller loan and the second lien. Thus, in the event of a sale, SunTrust would nevertheless be exposed to the risk of the smaller loan's default.

         In sum, Daloia emphasized the significance to SunTrust of the information required on its loan applications. As she related to the jury,

anything on the loan application is of importance, the loan amount, the borrower's name, their current address, the property type, whether it was a purchase or a refinance, if they owned any other properties. All of that is important on the application.

See J.A. 657. Daloia stressed that supporting documents were similarly important to SunTrust's loan process - such as those required for full document loans and stated income, stated asset loans - because those documents ...


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