United States v. Troy Titus

475 F. App'x 826
CourtCourt of Appeals for the Fourth Circuit
DecidedApril 13, 2012
Docket10-4482
StatusUnpublished

This text of 475 F. App'x 826 (United States v. Troy Titus) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Troy Titus, 475 F. App'x 826 (4th Cir. 2012).

Opinion

Affirmed by unpublished PER CURIAM opinion.

Unpublished opinions are not binding precedent in this circuit.

PER CURIAM:

A jury convicted Troy Titus of mail fraud, wire fraud, conspiracy to commit mail and wire fraud, and various other offenses arising from an operation that bore the hallmarks of a Ponzi scheme. On appeal, Titus raises numerous claims, challenging pretrial, trial, and posttrial rulings by the district court. Finding no error, we affirm.

I.

A.

Because Titus was convicted by a jury, the following facts are recited in the light most favorable to the government. See United States v. Cabrera-Beltmn, 660 F.3d 742, 746 (4th Cir.2011). Prior to the revocation of his law license in 2005, Titus ran his own law firm in the Tidewater Region of Virginia. Co-conspirator and co-defendant Kristen Cardwell worked with him.

*829 In his capacity as an attorney, Titus assumed various roles. These roles included serving as trustee for the trust accounts of many clients, a responsibility that allowed him access to the funds in those accounts. He also acted as a real estate settlement agent, handling funds from one or more sides of real estate transactions. In furtherance of this role, Titus’s law firm maintained a trust account for real estate settlement activities with Monarch Bank (the “Monarch account”).

In addition to his activities as an attorney, Titus led seminars on real estate investment, estate planning, and tax avoidance. Titus solicited seminar attendees to become-clients of his law firm and invest funds with him in ventures that often involved the purchase of real estate. Titus assured these individuals that their investments would be secured by first or second liens on other real property.

In his various roles, Titus was subject to certain statutes, regulations, and professional rules. For example, Titus’s trustee relationship with his clients was governed by, inter alia, the Virginia State. Bar’s Rules of Professional Conduct. As relevant here, the Rules impose a duty on an attorney to avoid representation of “a client if the representation involves a concurrent conflict of interest” unless the client “consents after consultation, and ... the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client.” Va. Rules of Prof 1 Conduct R. 1.7. The Rules go on to prohibit certain transactions by an attorney that run particular risks of conflicts of interest:

(a) A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:
(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which can be reasonably understood by the client;
(2) the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and
(3) the client consents in writing thereto.
(b) A lawyer shall not use information relating to representation of a client for the advantage of the lawyer or of a third person or to the disadvantage of the client unless the client consents after consultation.

Id. at R. 1.8. In addition, Virginia law imposes a duty of loyalty on all trustees, requiring each trustee to “administer the trust solely in the interests of the beneficiary.” Va.Code Ann. § 55-548.02(A).

Titus’s activity as a real estate settlement agent was governed by the Virginia Consumer Real Estate Settlement Protection Act (“CRESPA”), codified in sections 55-525.16-525.32 of the Virginia Code, which sets forth the duties and responsibilities of real estate settlement agents. CRESPA requires real estate settlement agents to hold settlement funds in “fiduciary trust ... accounts;” and to keep the funds “segregated for each depository ... in the records of the settlement agent in a manner that permits the funds to be identified on an individual basis.” Va.Code. Ann. § 55-525.24(A)(l). CRESPA also requires that “[t]he funds ... be applied only in accordance with the terms of the individual instructions or agreements under which the funds were accepted ... [and] disbursed only pursuant to a written instruction or agreement specifying how and to whom such funds may be disbursed.” Id. at §§ 55-525.24(A)(2), (B). *830 In addition, CRESPA prohibits the intentional making of “any materially false or misleading statement or entry on a settlement statement.” Id. at § 55-525.25.

B.

By the early 2000s, Titus was experiencing serious financial difficulties. In addition to significant expenses associated with the operation of his law firm, Titus was saddled with additional expenses totaling around $65,000 per month. Titus had also amassed a running shortfall in the Monarch account of approximately $2.5 million. To overcome these financial difficulties Titus began defrauding his legal clients and real estate investors.

Titus fraudulently obtained funds via three avenues: by embezzling funds from his clients’ trust accounts, by misusing property entrusted to him by his clients, 1 and by misappropriating funds from his real estate investors. Titus began by using the funds to cover his monthly expenses and backfill his shortfall in the Monarch account. Later, in classic Ponzi scheme fashion, Titus began using more recently acquired funds to make payments to earlier victims.

By 2005, Titus’s scheme was unraveling. Multiple clients’ accounts were running shortfalls, and Titus owed massive amounts to his real estate investors. Complaints by his legal clients led to an investigation by the Virginia State Bar. This investigation ended with Titus stipulating to his mismanagement of trust accounts and agreeing to surrender his law license. The FBI began investigating his activities, which led to the underlying criminal action.

C.

A federal grand jury indicted Titus for bank fraud, in violation of 18 U.S.C. § 1344 (Count One); conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 1349 (Count Two); wire fraud, in violation of 18 U.S.C. § 1343 (Counts Three though Twenty-Six); mail fraud, in violation of 18 U.S.C. § 1341 (Counts Twenty Seven though Thirty-One); promotional money laundering, in violation of 18 U.S.C. § 1956

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Bluebook (online)
475 F. App'x 826, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-troy-titus-ca4-2012.