Judgment of Acquittal for Mortgage Fraud Defendants Reversed

United States v. Carnagie, ___ F.3d ___, 2008 WL 2807466 (10th Cir. 2008)
The Court of Appeals reverses the trial court’s grant of a judgment notwithstanding the guilty verdict on charges of conspiracy to defraud the United States and conspiracy to money launder. The two defendants were involved in a massive scheme involving many people--home buyers, real estate agents and mortgage loan officers–to create and use false documents to qualify for FHA mortgages. The pay-offs to the actors were qualifying for a loan, real estate commissions, and kickbacks from the commissions, respectively. The trial court reversed on the ground that there was a fatal variance in that there was evidence that supported many small conspiracies, but no evidence which would support one overarching massive conspiracy of which the two defendants were a part.

Read the opinion for a discussion of (1)proof of interdependence–an acting together for shared benefit–to support a single (wheel-type) conspiracy. The Court determined that there was not that proof of interdependency. (2) Variance and notice. The Court determined that there was no prejudice from the variance because the defendants had notice of all the smaller conspiracies they were alleged to have been linked to. (3) Prejudicial spillover of evidence of smaller conspiracies not involving the defendants but admitted to show the larger conspiracy. The Court ruled there was no prejudicial spillover.