Filed: Nov. 26, 2014
Latest Update: Mar. 02, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-4733 UNITED STATES OF AMERICA, Plaintiff - Appellee, v. MICHAEL WELLINGTON LOGAN, Defendant - Appellant. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Liam O’Grady, District Judge. (1:12-cr-00506-LO-2) Argued: October 28, 2014 Decided: November 26, 2014 Before WILKINSON and KING, Circuit Judges, and HAMILTON, Senior Circuit Judge. Affirmed by unpublished per curiam opinion
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-4733 UNITED STATES OF AMERICA, Plaintiff - Appellee, v. MICHAEL WELLINGTON LOGAN, Defendant - Appellant. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Liam O’Grady, District Judge. (1:12-cr-00506-LO-2) Argued: October 28, 2014 Decided: November 26, 2014 Before WILKINSON and KING, Circuit Judges, and HAMILTON, Senior Circuit Judge. Affirmed by unpublished per curiam opinion...
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-4733
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
MICHAEL WELLINGTON LOGAN,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Liam O’Grady, District
Judge. (1:12-cr-00506-LO-2)
Argued: October 28, 2014 Decided: November 26, 2014
Before WILKINSON and KING, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
ARGUED: Kevin R. Brehm, OFFICE OF THE FEDERAL PUBLIC DEFENDER,
Alexandria, Virginia, for Appellant. Alexander T.H. Nguyen,
OFFICE OF THE UNITED STATES ATTORNEY, Alexandria, Virginia, for
Appellee. ON BRIEF: Michael S. Nachmanoff, Federal Public
Defender, OFFICE OF THE FEDERAL PUBLIC DEFENDER, Alexandria,
Virginia, for Appellant. Dana J. Boente, Acting United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Alexandria,
Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Michael Wellington Logan (Logan) was convicted of numerous
offenses arising from his involvement in a scheme to defraud the
Navy Federal Credit Union (NFCU), a federally-insured financial
institution headquartered in Vienna, Virginia. On appeal, Logan
presses three arguments: (1) the district court erred when it
admitted certain testimonial evidence; (2) the district court
erred when it gave a willful blindness instruction; and (3)
there is insufficient evidence in the record to support his
convictions. For the reasons stated below, we affirm.
I
A
In 2007, Logan and Theodric Bingham (Bingham) created Cash
Money Brothers (CMB), a property management firm in Snellville,
Georgia. Between November 1, 2007 and September 12, 2008, Logan
and Bingham used CMB to defraud NFCU out of $467,283.19.
The scheme to defraud worked as follows. Either Logan or
Bingham would approach a potential client about investing in
real estate. Often, these people had little or no real estate
investment experience. Logan or Bingham touted CMB’s property
management services, which they said included finding a property
for the client to purchase with no money down, helping the
client obtain financing through NFCU, finding a suitable tenant
2
for the property, collecting rent payments, paying the mortgage
payments and property taxes when due, and making necessary
repairs to the property. As the sales pitch went, it was a win-
win for the client because they put no money down on the
property and all of the expenses for the property were to be
covered by the collected rent payments.
Once the potential client was sold on CMB’s property
management services, Logan went to work on finding a property to
purchase. In all, Logan and Bingham successfully duped five
individuals, and the scheme involved a total of nine properties.
After a suitable property was found, the client applied for
membership with NFCU and, once membership was accepted, the
client applied for a home equity loan on the property. Having
the client apply for a home equity loan instead of a first
mortgage was an integral part of the scheme. At NFCU, home
equity loans were easier to obtain because they involved “less
restrictive underwriting guidelines” than first mortgages.
(J.A. 474). 1 They also permitted the borrower to borrow sums
more than the property was worth. In this case, the amount of
each home equity loan was more than the recent purchase price of
1
As a former employee in NFCU’s mortgage equity department,
Bingham was familiar with how loans, in particular home equity
loans, were processed at NFCU.
3
the respective property, and in one case the home equity loan
amount exceeded two times the recent purchase price.
In filling out the membership and home equity loan
applications, the borrower included false information supplied
by either Logan or Bingham. The false information on these
applications was necessary, first to gain NFCU membership and,
second, to increase the chances that NFCU would approve the home
equity loan application. Because the borrower was applying for
a home equity loan, Logan and Bingham made arrangements to have
the property put in the borrower’s name, without the borrower’s
knowledge or consent, before the home equity loan’s closing
date. Thus, the borrower had no knowledge that he actually
owned the home before he went to the closing.
The fraudulent home equity loan application was reviewed by
one of the two employees of NFCU that were bribed by Logan and
Bingham to approve the application. According to one of these
employees, Duane Nixon, he was paid $700 for each fraudulent
home equity loan that he helped close.
Once the fraudulent home equity loan application was
approved, Logan and/or Bingham accompanied the borrower to the
closing. Once the home equity loan proceeds were dispersed, the
borrower was instructed to give CMB access to such proceeds. In
some cases, a joint-checking account in Georgia was opened to
allow the home equity loan proceeds to be wired directly from
4
NFCU to the joint-checking account. Logan assured these
borrowers that the joint-checking account would be used to
manage the property and repay the home equity loan. In other
cases, the home equity loan proceeds were wired from NFCU to a
borrower’s bank account in Georgia and then either given
directly to Logan or transferred to CMB’s account. For all but
one of the home equity loans, the borrower received a small
portion of the loan proceeds, usually about $4,000.00. For one
transaction, Logan said the money was paid for “having the
process go smooth.” (J.A. 406). Unfortunately for each
borrower, once Logan and Bingham gained access to the home
equity loan proceeds, they almost immediately spent the money
for their respective personal uses. As the scheme unfolded, CMB
did collect rent and make repairs on certain properties, but
eventually all of the home equity loans fell into default and
the properties were sold in foreclosure, resulting in a
$467,283.19 loss to NFCU.
B
On March 27, 2013, by way of a superseding indictment, a
federal grand jury sitting in the Eastern District of Virginia
charged Logan with: (1) one count of conspiring with Bingham and
Nixon to commit bank and wire fraud, 18 U.S.C. §§ 1343, 1344,
and 1349; (2) six counts of wire fraud, and aiding and abetting
the same, id. §§ 2 and 1343; and (3) four counts of money
5
laundering, and aiding and abetting the same, id. §§ 2 and 1957. 2
Following a jury trial, the jury convicted Logan of all counts.
On September 20, 2013, Logan received concurrent sentences of 42
months’ imprisonment on each count of conviction. He noted a
timely appeal.
II
Logan contends that the district court committed reversible
error when it admitted, over his objection, certain testimonial
evidence from the five borrowers who were duped in the scheme to
defraud NFCU. As part of proving the scheme to defraud NFCU,
the government introduced testimonial evidence from each of the
five borrowers showing that Logan and/or Bingham assisted each
borrower with submitting false membership and home equity loan
applications to NFCU. The borrowers also testified that they
submitted such false applications because CMB was going to
completely manage the purchased property. The government also
introduced testimonial evidence showing that each borrower was
2
The facts set forth in this opinion formed the basis of
the conspiracy count. Four wire transfers from NFCU to two
borrower/Logan joint-checking accounts in Georgia formed the
basis of four of the six wire fraud counts. Two wire transfers
from NFCU to a borrower’s individual checking account in Georgia
formed the basis of the two remaining wire fraud counts. Four
transfers from a borrower’s checking account to the CMB account
formed the basis of the four money laundering counts.
6
instructed by either Logan or Bingham to give CMB access to the
home equity loan proceeds. Finally, the government introduced
testimonial evidence from the borrowers showing that Logan made
false statements concerning property management issues that
arose after the closing, made unauthorized expenditures from the
joint-checking accounts to which he had access, failed to make
home equity loan payments as promised, and, at times, refused to
provide information about the status of properties when
requested to do so.
Logan argues that, because the superseding indictment only
charged him with defrauding NFCU (and not the borrowers as
well), the borrowers could only testify concerning “their
personal knowledge about the NFCU loan and membership
applications in question and their personal knowledge regarding
the bank accounts identified in the indictment.” Appellant’s
Br. at 20. As this argument goes, “the trial testimony of the
borrowers . . . went beyond that limited scope” and was “clearly
irrelevant” because such testimony “would have occurred after
the transmission of the loan funds by NFCU when the fraud
against NFCU was over.” Appellant’s Br. at 20-21. Thus, Logan
posits, the challenged testimonial evidence--false statements
and actions after the transfer of the home equity loan proceeds-
-was inadmissible under Rules 403 and 404(b) of the Federal
Rules of Evidence.
7
We review evidentiary rulings of the district court for an
abuse of discretion. United States v. Delfino, 510 F.3d 468,
470 (4th Cir. 2007). An error of law is, by definition, an
abuse of discretion. United States v. Singh,
518 F.3d 236, 251
(4th Cir. 2008). We will not “vacate a conviction unless we
find that the district court judge acted arbitrarily or
irrationally in admitting evidence.” United States v. Benkahla,
530 F.3d 300, 309 (4th Cir. 2008) (citation and internal
quotation marks omitted).
Under Rule 404(b)(1), “[e]vidence of a crime, wrong, or
other act is not admissible to prove a person’s character in
order to show that on a particular occasion the person acted in
accordance with the character.” Fed. R. Evid. 404(b)(1). Such
evidence, however, may “be admissible for another purpose, such
as proving motive, opportunity, intent, preparation, plan,
knowledge, identity, or absence of mistake, or lack of
accident.” Fed. R. Evid. 404(b)(2). Moreover, “[t]o be
admissible under Rule 404(b), evidence must be (1) relevant to
an issue other than character; (2) necessary; and (3) reliable.”
United States v. Siegel, 536 F.3d 306, 317 (4th Cir. 2008)
(citation and internal quotation marks omitted). Rule 404(b) is
“an inclusive rule, admitting all evidence of other crimes or
acts except that which tends to prove only criminal
disposition.” United States v. Young,
248 F.3d 260, 271–72 (4th
8
Cir. 2001) (citation and internal quotation marks omitted).
And, “[a]s a rule of inclusion, the rule’s list is not
exhaustive.” United States v. Queen, 132 F.3d 991, 994–95 (4th
Cir. 1997).
The Rule 404(b) inquiry, however, applies only to evidence
of other acts that are “extrinsic to the one charged.” United
States v. Chin, 83 F.3d 83, 87 (4th Cir. 1996). “[A]cts
intrinsic to the alleged crime do not fall under Rule 404(b)’s
limitations on admissible evidence.”
Id. at 87–88. “Evidence
of uncharged conduct is not other crimes evidence subject to
Rule 404 if the uncharged conduct arose out of the same series
of transactions as the charged offense, or if [evidence of the
uncharged conduct] is necessary to complete the story of the
crime on trial.”
Siegel, 536 F.3d at 316 (citation and internal
quotation marks omitted); see also
Chin, 83 F.3d at 88 (noting
that “[o]ther criminal acts are intrinsic when they are
inextricably intertwined or both acts are part of a single
criminal episode or the other acts were necessary preliminaries
to the crime charged”) (citation and internal quotation marks
omitted). Evidence is intrinsic if it is necessary to “provide
context relevant to the criminal charges.” United States v.
Cooper,
482 F.3d 658, 663 (4th Cir. 2007).
In this case, the challenged testimonial evidence--false
statements and actions after the transfer of the home equity
9
loan proceeds--does not fall within the reach of Rule 404(b).
Rather, the challenged testimonial evidence was relevant and
direct evidence under Rule 401(a) proving the scheme to defraud
NFCU. The scheme to defraud NFCU involved two parts. The first
part of the scheme to defraud NFCU involved duping each borrower
into getting a home equity loan with NFCU with the false promise
of complete property management. By falsely promising each
borrower that the property would be completely managed, Logan
and/or Bingham lured each borrower into submitting false
membership and home equity loan applications to NFCU and induced
them into giving CMB access to the home equity loan proceeds.
The second part of the scheme involved duping NFCU into
believing the membership and home equity loan applications were
legitimate. This was achieved with the false information
supplied to the borrowers by Logan and/or Bingham and the
assistance of the two NFCU insiders. The challenged testimony
was relevant and necessary to prove an integral component of the
first part of the scheme--that the promises made by Logan and
Bingham concerning complete property management were false. The
only way to prove the first part of the scheme was by
introducing the testimony of the borrowers demonstrating that
Logan and Bingham did not live up to the promises they made
concerning complete management.
10
In sum, the challenged testimony was admissible under Rule
401(a) to prove the scheme to defraud NFCU. Moreover, there is
nothing unduly prejudicial about the challenged testimony that
would bar its admission under Rule 403. We find no abuse of
discretion.
III
Logan challenges the district court’s decision to give the
jury a willful blindness instruction, arguing that the
instruction was not supported by any evidence that he
deliberately ignored information concerning the scheme to
defraud NFCU. In holding that the willful blindness instruction
was appropriate, the district court reasoned:
[Counsel for Logan], your theory of the case is that
Mr. Logan could have done what he did in this
corporate entity [CMB] and not have appreciated the
significance of the unlawfulness of his acts. And I
think that as you argued in opening statement or
indicated you are going to argue in closing, that
makes the deliberate ignorance instruction 59 relevant
because the jury will have to determine whether in
fact Mr. Logan knowingly and intentionally
participated in this scheme or whether he was an
unwitting person. And so, I think the deliberate
ignorance instruction is proper under those
circumstances.
(J.A. 578). During its charge to the jury, the district court
gave the following standard jury instruction on willful
blindness:
11
The Government may prove the defendant acted knowingly
by proving beyond a reasonable doubt that this
defendant deliberately closed his eyes to what would
otherwise have been obvious to him. No one can avoid
responsibility for a crime by deliberately ignoring
what is obvious. A finding beyond a reasonable doubt
of an intent of defendant to avoid knowledge or
enlightenment would permit the jury to find knowledge.
Stated another way, a person’s knowledge of a
particular fact may be shown from a deliberate or
intentional ignorance or deliberate or intentional
blindness to the existence of a fact. It is, of
course, entirely up to you as to whether you find any
deliberate ignorance or deliberate closing of the eyes
and any inferences to be drawn from such evidence.
You may not conclude that the defendant had knowledge,
however, from proof of mistake, negligence,
carelessness, or a belief in an inaccurate
proposition.
(J.A. 662-63).
We review a district court’s decision to give a willful
blindness instruction for an abuse of discretion. United States
v. Jinwright, 683 F.3d 471, 478 (4th Cir. 2012). The government
can prove the knowledge element of a crime by showing that the
defendant either had actual knowledge or was willfully blind to
facts he should have known. United States v. Abbas,
74 F.3d
506, 513 (4th Cir. 1996). “A willful blindness instruction is
appropriate when the defendant asserts a lack of guilty
knowledge but the evidence supports an inference of deliberate
ignorance.”
Id. (citation and internal quotation marks
omitted). When given, a “willful blindness instruction allows
the jury to impute the element of knowledge to the defendant if
the evidence indicates that he purposely closed his eyes to
12
avoid knowing what was taking place around him.” United States
v. Schnabel, 939 F.2d 197, 203 (4th Cir. 1991). For a district
court to give a willful blindness instruction, “all that is
necessary is evidence from which the jury could infer deliberate
avoidance of knowledge.” United States v. Whittington,
26 F.3d
456, 463 (4th Cir. 1994).
In this case, beginning with the opening statement and
ending with closing argument, Logan asserted a lack of knowledge
concerning the scheme to defraud NFCU. He unsuccessfully
portrayed himself as a dedicated property manager completely
without knowledge of the fraud Bingham and others were
perpetrating on NFCU. Because there was sufficient evidence
from which the jury could find that Logan consciously closed his
eyes to the fact that he was involved in a scheme to defraud
NFCU, the district court acted well within its discretion when
it gave the willful blindness instruction. See Abbas, 74 F.3d
at 513-14 (holding that a willful blindness instruction was
appropriate where the evidence before the jury supported the
inference that the defendant consciously closed his eyes to the
fact that he was involved in an obvious drug transaction).
IV
Finally, Logan claims that there is insufficient evidence
in the record to support his convictions. The gist of Logan’s
13
argument is that there is insufficient evidence in the record
demonstrating that he acted with the specific intent to defraud,
a requisite element of his offenses. See United States v.
Adepoju, 756 F.3d 250, 255 (4th Cir. 2014) (noting that bank
fraud under § 1344(1) requires three elements: “(1) the
defendant knowingly executed or attempted a scheme or artifice
to defraud a financial institution, (2) he did so with intent to
defraud, and (3) the institution was a federally insured or
chartered bank”);
id. (noting that bank fraud under § 1344(2)
requires three elements: (1) “the defendant knowingly execute a
scheme to obtain property held by a financial institution
through false or fraudulent pretenses”; “(2) he did so with
intent to defraud[;] and (3) the institution was a federally
insured or chartered bank”); United States v. Simpson,
741 F.3d
539, 547 (5th Cir. 2014) (“The elements of conspiracy under 18
U.S.C. § 1349 [(conspiracy to commit mail, wire, bank,
securities or commodities, or health care fraud)] are: (1) two
or more persons made an agreement to commit an unlawful act; (2)
the defendant knew the unlawful purpose of the agreement; and
(3) the defendant joined in the agreement willfully, with the
intent to further the unlawful purpose.”); United States v.
Wynn,
684 F.3d 473, 477 (4th Cir. 2012) (“Thus, to convict a
person of . . . wire fraud, the government must show that the
defendant (1) devised or intended to devise a scheme to defraud
14
and (2) used the . . . wire communications in furtherance of the
scheme.”); id. at 474 (noting that, “[t]o establish a scheme to
defraud, the government must prove that the defendant[] acted
with the specific intent to defraud”) (citation and internal
quotation marks omitted); United States v. Campbell,
977 F.2d
854, 857 (4th Cir. 1992) (noting that, to obtain a money
laundering conviction under § 1957, the government is required
to prove that the defendant knowingly engaged in a monetary
transaction in property of a value of over $10,000 that was
derived from a specific unlawful activity).
We review challenges to the sufficiency of evidence de
novo. United States v. Roe, 606 F.3d 180, 186 (4th Cir. 2010).
“The jury’s verdict must be upheld on appeal if there is
substantial evidence in the record to support it, where
substantial evidence is evidence that a reasonable finder of
fact could accept as adequate and sufficient to support a
conclusion of a defendant’s guilt beyond a reasonable doubt.”
United States v. Perry,
757 F.3d 166, 175 (4th Cir. 2014)
(citation and internal quotation marks omitted). In considering
whether there is substantial evidence to support a conviction,
we must “view[] the evidence and the reasonable inferences to be
drawn therefrom in the light most favorable to the Government.”
Id. (citation and internal quotation marks omitted).
15
In this case, the record contains overwhelming evidence
demonstrating that Logan acted with the specific intent to
defraud. He and Bingham concocted a scheme to defraud NFCU by
duping each borrower into believing that CMB would completely
manage the purchased property. Logan helped various borrowers
with submitting false membership and home equity loan
applications to NFCU. Logan bribed two employees of NFCU to
approve the home equity loans, and he took the bulk of the loan
proceeds, after the proceeds were wired and/or laundered, and
spent such proceeds for his personal use. In view of this
evidence, the jury understandably found that Logan acted with
the requisite specific intent.
V
For the reasons stated herein, the judgment of the district
court is affirmed.
AFFIRMED
16
