United States v. Vera Kuzmenko

• Court: Court of Appeals for the Ninth Circuit
• Decided: June 5, 2019
• Docket: 16-10129
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUN 5 2019 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, No. 16-10129

Plaintiff-Appellee, D.C. No. 2:11-cr-00210-JAM-1 v.

VERA KUZMENKO, MEMORANDUM*

Defendant-Appellant.

UNITED STATES OF AMERICA, No. 16-10419

Plaintiff-Appellee, D.C. No. 2:11-cr-00210-JAM-9 v.

RACHEL SIDERS,

Appeal from the United States District Court for the Eastern District of California John A. Mendez, District Judge, Presiding

Argued and Submitted February 5, 2019 San Francisco, California

Before: THOMAS, Chief Judge, and PAEZ and BERZON, Circuit Judges.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Vera Kuzmenko and Rachel Siders appeal their convictions for mail and

wire fraud. Kuzmenko also appeals her conviction for money laundering and

witness tampering. Kuzmenko and Siders argue that the district court violated

their constitutional right to present a complete defense by excluding certain expert

testimony. They also argue that the district court used an improper methodology in

determining the amount of loss at sentencing. Finally, Kuzmenko argues that if her

wire fraud and mail fraud convictions are reversed, her witness tampering

conviction should also be reversed. We have jurisdiction under 28 U.S.C. § 1291

and we affirm.

1. Defendants contend that the district court erroneously excluded their expert

testimony regarding lending standards under United States v. Lindsey.1 In

Lindsey—which was filed during the course of this appeal—we addressed the

admissibility of certain evidence in criminal mortgage fraud cases. 850 F.3d 1009,

1011 (9th Cir. 2017). The court concluded that while “evidence of general lending

standards in the mortgage industry is admissible to disprove materiality,” evidence

of individual lender behavior, including evidence of lender negligence and

1 We review “for abuse of discretion the district court’s decision whether to exclude expert testimony.” United States v. Morales, 108 F.3d 1031, 1035 (9th Cir. 1997) (citations omitted). We review de novo “a district court’s decision to preclude a defendant’s proffered defense.” Lindsey, 850 F.3d at 1014 (citation omitted).

2 intentional disregard of relevant information, is not admissible as a defense to

mortgage fraud. Id. at 1019.

Here, after the government filed a motion in limine to exclude irrelevant

expert testimony, Kuzmenko filed a response memorandum “solely to note a

continuing objection to exclusion of evidence of lender participation or fault in the

charged fraudulent scheme.”2 Kuzmenko proffered the expert report of Professor

Shaun P. Martin and noted that Professor Martin would provide expert testimony

in support of lender criminal liability as a defense if permitted. Nowhere did

Kuzmenko propose to offer evidence of the state of the mortgage industry so that

the jury could evaluate materiality. Under these circumstances, the district court

did not err. See Lindsey, 850 F.3d at 1011–12.

Furthermore, even if the proffer could be understood as encompassing

evidence of general lending standards to disprove materiality, any error in

excluding the expert testimony was harmless. There was overwhelming evidence

that the false statements in the loan applications were material to the lenders’

2 Kuzmenko preserved this issue for appeal because she objected to the government’s motion to exclude expert testimony and proffered proposed testimony. Siders did not preserve this issue for appeal as she filed a statement of non-opposition to the government’s motion. Because we conclude the district court did not err, we need not address plain error review. See United States v. Tamman, 782 F.3d 543, 552 (9th Cir. 2015).

3 decision-making process.3 As part of their scheme, Defendants made extensive

misrepresentations on loan applications regarding, inter alia, income, employment,

residence, assets, and liabilities. This information was valuable to lenders as they

repeatedly asked for it throughout the application process, requested supporting

documentation, and hired underwriters to review loan packages and verify

information.

Moreover, a First Franklin employee testified to the importance of certain

aspects of the loan application including income, employment, assets, liabilities,

and primary residence. And, Defendants, who were both experienced in the real

estate industry, believed the false statements were material to the lenders’ decision-

making process. In light of the overwhelming evidence of materiality, any error

was harmless. See Neder v. United States, 527 U.S. 1, 19 (1999).

2. Defendants argue that district court used an improper methodology in

determining the amount of loss under U.S.S.G. § 2B1.1(b)(1).4 In United States v.

Hymas, we concluded that the district court correctly calculated loss by “taking the

3 Materiality is evaluated objectively; the government need not prove actual reliance upon the misrepresentations. Lindsey, 850 F.3d at 1014 4 We review de novo a “district court’s interpretation of the Sentencing Guidelines,” United States v. Rivera, 527 F.3d 891, 908 (9th Cir. 2008) (citation omitted), and review “the district court’s factual findings used in sentencing, including the calculation of loss to the victims, for clear error,” United States v. Blitz, 151 F.3d 1002, 1009 (9th Cir. 1998) (citation omitted).

4 principal amount of the loan and subtracting any credits from the subsequent sale

of the property.” 780 F.3d 1285, 1293 (9th Cir. 2015) (citing United States v.

Morris, 744 F.3d 1373, 1375 (9th Cir. 2014)). We noted that “the district court did

not err by considering the losses submitted by successor lenders who had

purchased the loans.” Id. Accordingly, here, the district court correctly used the

principal amount of the loan minus the amount of foreclosure to calculate the

asserted loss amounts.

Further, we reject Defendants’ challenge to the sufficiency of the evidence.

The record adequately supports the loss amounts determined by the district court.

See United States v. Zolp, 479 F.3d 715, 719 (9th Cir. 2007) (citations omitted)

(The district court “need not make its loss calculation with absolute precision;

rather, it need only make a reasonable estimate of the loss based on the available

information.”).

3. Kuzmenko argues that if the district court erred in excluding the expert

testimony, her entire conviction, including the witness tampering count, should be

reversed “because of the spillover effect from the other counts.” As we conclude

the district court did not err in excluding the expert testimony, we need not address

this argument.

AFFIRMED.