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United States of America v. Edward Mccusker and

December 20, 2012


The opinion of the court was delivered by: McLaughlin, J.


Defendants Edward McCusker and Jacqueline McCusker were indicted on charges of conspiracy to commit mail and wire fraud, mail fraud, wire fraud, and conspiracy to launder proceeds, in relation to an allegedly fraudulent foreclosure relief operation. Following a three-week trial, the jury convicted Edward McCusker on all eleven counts and Jacqueline McCusker on all but one count. The defendants now move for a judgment of acquittal on all counts. For the following reasons, the Court denies the motion for a judgment of acquittal in part and grants it in part.

I. Case Summary

On December 8, 2007, a grand jury indicted Edward and Jacqueline McCusker, along with three other co-defendants, on fifteen counts stemming from a mortgage-based scheme to defraud.

The indictment charged that the defendants falsified and submitted, or conspired to falsify and submit, forged documents in order to obtain loans on properties which they and their straw purchasers acquired from homeowners facing foreclosure. These false documents included forged purchase and sale agreements, lease agreements, and loan applications. The indictment also charged the defendants with conspiring to launder the proceeds of that fraud.*fn1

Beginning on May 31, 2011, Edward and Jacqueline McCusker were tried in front of a jury in the Eastern District of Pennsylvania. Through the course of the three-week trial, the prosecution presented testimony from fifteen witnesses to support their contention that the McCuskers knowingly and intentionally participated in the scheme to defraud and that they produced false statements in furtherance of this scheme.

For example, the jury heard testimony from John Bariana, a former partner of the McCuskers, about the nature and structure of the mortgage scheme. Mr. Bariana testified that the general practice of American Mortgage, later Axxium Mortgage, was to expedite the loan approval process using any possible means. Mr. Bariana described the various roles held by the co-defendants, including the McCuskers; this included falsifying purchase and sale agreements, promissory notes, and creating fictitious leases.

The jury also heard testimony from four homeowners who had sold their homes through the program. Each homeowner testified that they had not signed any purchase and sales agreements and that the signatures on such agreements, purported to be theirs, did not in fact belong to them.

In addition, a representative from Long Beach Mortgage Company, James McDiarmid, testified as to its loan-making process. Long Beach was one of the lenders used by American Mortgage and Axxium Mortgage. Mr. McDiarmid testified that in order to initiate a loan processing at Long Beach, a broker must first provide to them a purchase and sales agreement via mail. Subsequently, during the process of determining "conditional loan approval," Long Beach required that the broker fax to them other types of documents, including documents confirming employment and income from leases. In his capacity as custodian of records, Mr. McDiarmid also testified that such documents were found in the possession of the electronic files of Long Beach and introduced into evidence in the instant case.

On June 22, 2011, the jury found Edward McCusker guilty of all eleven counts: one count of conspiracy to commit mail and wire fraud, four counts of mail fraud, six counts of wire fraud, and conspiracy to launder the proceeds of that fraud. The jury acquitted Jacqueline McCusker of one count of mail fraud and convicted her on each of the remaining counts.

II. Sufficiency of Evidence

A. Standard of Review for Overturning a Jury Verdict Defendants are entitled to a judgment of acquittal under Rule 29 of the Federal Rules of Criminal Procedure if "the evidence is insufficient to sustain a conviction." Fed. R. Crim. P. 29(a). In determining whether this standard is satisfied, the district court must view the evidence as a whole and in the light most favorable to the government. United States v. Hoffecker, 530 F.3d 137, 146 (3d Cir. 2008). A verdict will be overruled "only if no reasonable juror could accept the evidence as sufficient to support the conclusion of the defendant's guilt beyond a reasonable doubt." United States v. Coleman, 811 F.2d 804, 807 (3d Cir. 1987) (citations omitted).

B. Mail Fraud Convictions (Counts 2-5)

1. Background

18 U.S.C. § 1341 prohibits any mailing through the United States Postal Service that is in connection with a scheme or artifice to defraud. 18 U.S.C. § 1341. The jury found Edward McCusker guilty of four instances of mail fraud and Jacqueline McCusker guilty of three. These instances relate to "packages" which contained closing documents for the sale and execution of four residences/loans. The packages were introduced into evidence by James McDiarmid, custodian of records for Long Beach Mortgage Company, as part of the company's electronic files. It is alleged that the four packages were mailed from co-defendants Bennett & Doherty to Long Beach.

The defendants argue that the government has not put forth sufficient evidence that the packages named in Counts 2 through 5 were mailed through the United States Postal Service.

2. Analysis

To establish that a document was mailed in violation of 18 U.S.C. § 1341, the government may use evidence of business practice or office custom. United States v. Hannigan, 27 F.3d 890, 892 (3d Cir. 1994). The business practice evidence must, however, make "some reference to the correspondence in question." United States v. Hitchens, No. 00-654-2, 2001 WL 1257167, at *2 (E.D. Pa. Oct. 19, 2001), citing United States v. Burks, 867 F.2d 795, 797 (3d Cir. 1989). If these two elements are established, the government "need not affirmatively disprove every conceivable alternative theory as to how the specific correspondence was delivered." Hannigan, 27 F.3d at 892-93.

The government argues that the testimony of Mr. McDiarmid is sufficient evidence that the packages were mailed. In his capacity as a regional operations manager of Long Beach (and as custodian of its records), Mr. McDiarmid testified to Long Beach's general policies and procedures during the period at issue. He explained that a requirement of the closing condition was that Long ...

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