United States District Court, E.D. Pennsylvania
OPINION
SLOMSKY, J.
I.
INTRODUCTION
On
March 12, 2015, Defendant John D. Glenn, Jr.
(“Defendant”) was charged in an Indictment with
one count of conspiracy to commit bank fraud and two counts
of bank fraud. (Doc. No. 1.) The Indictment concerned, among
other things, a property known as “the Waverly
Property” and involved a scheme, in which Defendant
played a central role, to induce mortgage lenders to make a
loan secured by this property through misrepresentations and
fraudulent conduct. (Id.) These mortgage lenders
were Orton Equities Inc. (“Oroton”), Stout Street
Funding LLC (“Stout Street”), and National
Capital Management, LP (“National Capital
Management”). (Id.) On February 23, 2017,
following an eight-day trial, a jury convicted Defendant of
conspiracy to commit bank fraud, in violation 18 U.S.C.
§ 1349, and bank fraud, in violation of 18 U.S.C. §
1344[1]
and 2.[2] (Doc. No. 141.) On March 13, 2017,
Defendant filed a pro se Motion for Judgment of
Acquittal or New Trial. (Doc. No. 151.) On August 24, 2018,
in an Opinion and Order, the Court denied Defendant's
pro se Motion, finding that (1) the evidence
presented by the Government at trial was sufficient to
establish Defendant's guilt beyond a reasonable doubt on
all charges, and (2) the interest of justice did not require
a new trial. (Doc. No. 232.)
On
August 29, 2018, Defendant was sentenced to serve 168
months' imprisonment to be followed by five years of
supervised release. (Doc. No. 237.) Restitution of $981,
717.70 and a special assessment of $300 were ordered to be
paid. (Id.) That same day, Defendant appealed his
conviction and sentence to the Third Circuit Court of
Appeals. (Doc. No. 234.)
Despite
his case being on appeal, Defendant filed on January 7, 2019
a second pro se Motion for Acquittal/New Trial, this
time under Federal Rule of Criminal Procedure 33(b)(1)
(“Newly Discovered Evidence”).[3] (Doc. No. 259.)
In this second pro se post-trial Motion, Defendant
claims that the three victim mortgage lending companies in
this case were not financial institutions under the bank
fraud statutes because they were “hard money
lenders.”[4] Defendant contends that he learned of this
fact after reading the trial transcripts.[5] (Doc. No. 260 at
34.) As such, he claims that this information was
“newly discovered” and therefore his current
claim about the lenders not being financial institutions is
timely. Defendant also asserts that correspondence he
received from the Federal Deposit Insurance Corporation
(“FDIC”) on March 7, 2019, stating that Oroton,
Stout Street, and National Capital Management were not
affiliated with an FDIC insured institution, is also
“newly discovered evidence” supporting his claim
that the victim companies were not financial institutions
under the bank fraud statutes.
On May
5, 2019, the Third Circuit stayed Defendant's appeal and
directed this Court to address and dispose of Defendant's
second Motion for Acquittal/New Trial. (Doc. No. 264.) On
June 11, 2019, the Government filed a Response to
Defendant's post-trial motion. (Doc. No. 269.) In its
response, the Government contends that when the bank fraud
statutes and associated definitional statutes are examined,
the victim companies undoubtedly were “financial
institutions.” Moreover, the Government claims that
Defendant had ample opportunity to raise his challenge to the
status of the victim mortgage lenders much earlier in the
case and for this reason the evidence he relies upon is not
newly discovered. The Court agrees with the Government on
both points, albeit for a modified reason on the second point
regarding the effect of what Defendant contends is his new
evidence, and therefore Defendant's second motion for a
new trial and/or acquittal will be denied.[6]
II.
BACKGROUND
A.
The Indictment and the Scheme to Defraud Three Mortgage
Lending Businesses
On
March 12, 2015, a grand jury returned a three-count
Indictment against Defendant. (Doc. No. 1.) The Indictment
charged him with one count of conspiracy to commit bank
fraud, in violation of 18 U.S.C. § 1349, and two counts
of bank fraud, in violation of 18 U.S.C. § 1344 and 2.
Count I states in part:
From in or about June 2010 through at least September 2010,
in the Eastern District of Pennsylvania, and elsewhere,
defendant
JOHN D. GLENN, JR.,
knowingly and willfully conspired and agreed, together and
with Otis M. Johnson[7]and others known and unknown to the Grand
Jury, to knowingly and willfully execute and attempt to
execute a scheme and artifice to defraud Oroton, Stout
Street and National Capital, which are mortgage lending
businesses, and to obtain monies owned by and under the
care, custody and control of those mortgage lending
businesses by means of materially false and fraudulent
pretenses, representations and promises, in violation of 18
U.S.C. § 1344.
(Doc. No. 1 ¶ 11.) (Emphasis added.)
Count
II states in part:
In or about June 2010 through at least September 2010, in the
Eastern District of Pennsylvania, defendant
JOHN D. GLENN, JR.,
together with Otis M. Johnson, and others known and unknown
to the Grand Jury, knowingly executed, and aided and abetted
the execution of, a scheme to defraud Stout Street, a
mortgage lending business, to obtain monies owned by and
under the care, custody and control of that financial
institution by means of materially false and fraudulent
pretenses, representations and promises.
(Id. at 11 ¶ 2.) (Emphasis added.)
And
Count III states in part:
In or about August 2010 through at least September 2010, in
the Eastern District of Pennsylvania, defendant
JOHN D. GLENN, JR.,
together with Otis M. Johnson, and others known and unknown
to the Grand Jury, knowingly executed, and aided and abetted
the execution of, a scheme to defraud National Capital, a
mortgage lending business, to obtain monies owned by and
under the care, custody and control of that financial
institution by means of materially false and fraudulent
pretenses, representations and promises.
(Id. at 13 ¶ 2.) (Emphasis added.)
B.
Overview of the Scheme to Defraud Three Mortgage Lending
Businesses
In
mid-2010, a residential property (“the Waverly
property”) located in Bryn Mawr, Pennsylvania was in
foreclosure. (Id. at 1 ¶ 1.) Michael Meehan,
who co-owned the property with his then-wife, Karen Meehan,
sought to sell it by way of a short sale to avoid
foreclosure.[8] (Id.) Initially, they entered
into an agreement of sale of the Waverly property for $856,
431 with a Thomas Cappie. (Doc. No. 157 at 17:17-20:2.)
Cappie, however, was unable to secure financing to complete
the transaction. (Id. at 20:17-21:2). As a result,
Cappie assigned his interest to Defendant, who had agreed to
purchase the Waverly property. (Id. at 22; Doc. No.
1 at 1 ¶¶ 2-3.)
To
secure funding for the purchase, Defendant applied for loans
from the three mortgage lending businesses: Oroton, Stout
Street, and National Capital Management. (Doc. No. 1 at
¶ 13.) To do so, he held himself out as the principal of
two businesses, International Small Business Network, LLC
(“ISBN”) and SSJ Realty, LLC (“SSJ
Realty”). He also claimed that he was a successful real
estate investor to further induce the companies to make the
loans. (Id. ¶ 3.)
1.
Scheme to Defraud Oroton
In June
2010, Defendant applied for a loan of $1.6 million under
Cappie's name with Oroton. (Id. at 5 ¶ 1.)
Defendant told the Oroton loan officer that the purpose of
the loan was to finance the purchase of the Waverly property
from Meehan to Cappie, even though Cappie was no longer part
of the Waverly transaction. (Id.) Defendant
represented that his company, ISBN, would then purchase the
property from Cappie for $1.85 million with funds it had
received from another lender, Stout Street. (Id.) In
reality, Stout Street had not agreed to such a transaction.
Defendant also provided Oroton with another agreement of sale
between Cappie as the seller and Shannen Kurz and ISBN as the
buyers.[9] (Doc. No. 157 at 103:5-10.)
Oroton
agreed to loan the $1.6 million contingent on the second sale
of the Waverly property to ISBN. (Doc. No. 1 at 6 ¶ 3.)
On July 7, 2010, the closing for the loan took place.
(Id. ¶ 4.) Defendant, along with a
representative of Oroton, Cappie, Michael Meehan, and Otis
Johnson attended the closing. (Id.) Before the
closing was complete and Oroton wired the funds, the Oroton
loan officer discovered that the actual payoff amount of the
existing mortgages was only approximately half the amount of
the Oroton loan about to be committed. (Id.) He also
was unable to verify the Stout Street $1.85 million loan
commitment. (Id.) Ultimately, Oroton declined to
fund the loan. (Id. ¶ 5.) Thus, Oroton is not a
named victim in a substantive bank fraud charge.
2.
Scheme to Defraud Stout Street
Meanwhile,
also in June 2010, Defendant approached Stout Street for a
$480, 000 loan to finance the same Waverly property.
(Id. at 7 ¶ 6.) Defendant sought the loan
purportedly on behalf of ISBN and represented that Shannen
Kurz, as the vice president of ISBN, would be the named
borrower. (Id. ¶ 8.) He provided Stout Street
with an agreement of sale of the Waverly property for $800,
000 showing Michael Meehan as the seller and Kurz, on behalf
of ISBN, as the buyer. (Doc. No. 158 at 19:10-25.) The
document was notarized by Defendant. (Id. at
24:8-17.) Defendant also submitted ISBN's purported
corporate resolution to show that Kurz had authority to bind
the company in real estate transactions, as well as
ISBN's articles of organization, IRS tax form, operating
agreement, and certificate of formation to prove the
company's legitimate LLC status. (Id. at
33:15-35:6.)
On July
19, 2010, Stout Street approved the loan of $480, 000 to ISBN
to finance the purchase of the Waverly property and wired the
funds to an escrow account maintained by Otis Johnson's
title company, Mabstract. (Doc. No. 1 at 7 ¶ 9.) This
loan was to be secured by a first position mortgage on the
property. (Id.) Any prior existing mortgages were to
be satisfied at closing with the funds from Stout Street.
(Id.) Johnson, the title agent, with the complicity
of Defendant, handled this settlement of the Waverly
transaction and falsely represented on a HUD-1 settlement
document[10] that Shannen Kurz, on behalf of ISBN,
was the buyer and that Michael and Karen Meehan were the
sellers. (Id. ¶ 10, Doc. No. 158 at 35:11-35:3,
85:11-19.) The settlement document also falsely showed that
Defendant provided $450, 000 in earnest money towards the
Waverly property purchase and that the sellers provided $53,
548 to cover costs. (Doc. No. 1 ¶ 11.)
Stout
Street understood that the $480, 000 loan was to be used to
purchase the Waverly property and would be distributed in
strict accordance with the settlement document instructions.
(Id. at 8 ¶ 13.) This was not done. Instead,
Defendant and Johnson agreed to keep the funds in the
Mabstract escrow account. (Id. ¶ 14.) At
Defendant's direction, Johnson deposited $40, 000 of the
funds into the business bank account of Defendant's
childhood friend, Hassan Shaheed.[11] (Id. ¶ 15.)
Shaheed confirmed at trial that this money went to Defendant.
(Doc. No. 159 at 49:3-50:24.)
3.
Scheme to Defraud National Capital Management
Later
on, in August 2010, Defendant also sought a loan to purchase
the Waverly property from National Capital Management. (Doc.
No. 1 at 9 ¶ 16.) This time, he held himself out as the
principal of SSJ Realty, LLC and applied for a loan in the
amount of $550, 000. (Id.) The loan was to be
secured by a first position mortgage on the Waverly property.
Along with his application, Defendant provided the National
Capital Management loan officer with a personal financial
statement listing his assets and liabilities (Doc. No. 158 at
167:19-168:3, 170:10-24), an agreement of sale showing
Michael Meehan as the seller and SSJ Realty, LLC as the buyer
(Id. at 171:7-25), and his own federal tax returns
(Id. at 174:3-175:177:9).
National
Capital Management required that Defendant be represented by
counsel and further required an opinion of counsel.
(Id. at 179:16-180:10.) Defendant provided such a
letter, which National Capital Management viewed as
insufficient. (Id. at 180:4-14.) The loan officer at
National Capital Management then spoke with Defendant's
counsel who requested from the officer a boilerplate version
of a standard letter with the opinion of counsel.
(Id. at 180:15-181:1.) The loan officer provided the
letter and Defendant's counsel subsequently sent back a
completed version. (Id. at 181:5-8.) The letter,
dated August 26, 2010 and written by an employee of counsel,
indicated that SSJ Realty was a valid LLC operating in good
standing under the laws of Pennsylvania. (Id. at
181: 15-24; Gov't Ex. 7-8.) 24.) He also provided cash
from the account to Defendant at Defendant's direction.
(Id. at 52:16-24.)
On
August 27, 2010, National Capital Management approved the
loan and deposited a total of $550, 000 in the Mabstract
escrow account. (Doc. No. 1 at 9 ¶ 18.) At the closing,
a false settlement document was created, showing Michael and
Karen Meehan as the sellers and Defendant as the buyer with a
sale price of $855, 000 for the Waverly property. (Doc. No.
158 at 186:4-16.) It also showed that Defendant deposited
$344, 000 in the Mabstract escrow account as earnest money.
(Doc. No. 1 at 9 ¶ 17.) He made no such deposit.
Again,
Johnson did not distribute the escrow funds as per the
settlement instructions and did not pay off the prior
existing mortgages on the Waverly property. (Id.
¶ 19.) Rather, Defendant and Johnson agreed to
misappropriate the funds lent by National Capital Management.
(Id.) On or about August 30, 2010, Defendant
directed Johnson to take $80, 000 of National Capital
Management's funds in the Mabstract escrow account and
deposit the money into Hassan Shaheed's business account.
(Id. at 10 ¶ 20.) Defendant then directed
Shaheed to make deposits and payments to Defendant and other
individuals from this account. (Id. ¶ 21; Doc.
No. 159 at 47:16-23, 49:20-50:3, 50:6-24.)
III.
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