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United States v. Cardillo

United States District Court, D. New Jersey

May 27, 2015

UNITED STATES OF AMERICA,
v.
DANIEL CARDILLO, Defendant.

Paul J. Fishman, United States Attorney, Jacqueline Carle, Assistant U.S. Attorney, OFFICE OF THE U.S. ATTORNEY Camden, NJ, Attorney for the United States

Justin Loughry, Esq., LOUGHRY & LINDSAY LLC, Camden NJ, Attorney for Defendant Daniel Cardillo.

OPINION

JEROME B. SIMANDLE, Chief District Judge.

I. INTRODUCTION

Defendant Daniel Cardillo stands accused of one count of conspiracy to commit wire fraud in violation of 18 U.S.C. §§ 1343 & 1349 & 371. The Superseding Indictment, filed on March 20, 2013, alleges that Cardillo was a "straw purchaser" of real estate in a larger conspiracy to profit from the sale of ocean town condominiums by obtaining mortgage loans for unqualified borrowings using fraudulent loan applications, fraudulent HUD-1 Settlement Statements, and other documents.

Before the Court are motions in limine by United States [Docket Items 39, 44, and 68] and Defendant Cardillo [Docket Items 40 & 42].[1] The Court will address each in turn.

II. BACKGROUND

The Superseding Indictment identifies 26 allegedly fraudulent real estate transactions from 2006 to 2008 that followed two general patterns. The first pattern involved sameday closings, in which Defendant John Leadbeater would purchase the property "dry, " meaning that little or no funds were produced for the transaction, and then a straw purchaser would purchase the same property on the same day at a substantially increased sales price, using false documents. (Superseding Indictment [Docket Item 15] ¶ 19.) According to the Superseding Indictment, Defendant Cardillo served as one of several straw purchasers, who

would neither pay deposits or closing costs to acquire the properties; would not have to make monthly mortgage payments after they owned the properties; would receive an up-front payment after the closing for allowing their names and credit information to be used in connection with the transaction; and/or would not have to manage the properties.... (Id. ¶ 12) (original formatting removed). Leadbeater allegedly directed title clerks to prepare documents for the closings, including fraudulent HUD-1 Uniform Settlement Statements signed by the straw purchasers "reflecting deposits and funds brought to closing by the Straw Purchaser that had never been made." (Id. ¶ 19(e).) The title companies allegedly distributed proceeds of fraudulently obtained mortgage loan to the conspirators by wiring funds into an account controlled by Leadbeater or by issuing a check made payable to one of Leadbeater's companies, such as BCJL Enterprises or Lead 1 Investments. (Id. ¶ 19(f).)

The second pattern involved fraudulent line-item payments off of the HUD-1 Settlement Statements. (Id. ¶ 20.) According to the Superseding Indictment, Leadbeater and co-conspirators recruited a straw purchaser to buy real estate "at a sales price that included a substantial increase to cover a pay-out" to Leadbeater or his co-conspirators. (Id. ¶ 20(b).) Again, the straw purchasers obtained loan applications with false documentation, and attended closings at which Leadbeater directed the title clerks to prepare documents and distribute proceeds to Leadbeater or his companies, or to a coconspirator's company. (Id. ¶ 20(c)-(e).)

At oral argument, the Government represented that Cardillo is alleged to have participated in only one of the 26 fraudulent real estate transactions: the purchase of a condominium unit at 620 West Burke Avenue in Wildwood, N.J. The Superseding Indictment lists the closing date of that purchase as December 7, 2007, and the "lender" as "Country Wide Home Loans, " but, according to Cardillo, he purchased the unit on or about December 13, 2007. (Compare Superseding Indictment at 17 with Cardillo Mot. [Docket Item 40-1] at 2.) The Government alleges that co-conspirators Ernesto Rodriguez and Michelle Martinez, who both worked as mortgage brokers for Strong Point Mortgage, processed several of the fraudulent loan applications, including the Cardillo application. (Superseding Indictment at 2; Gov't Opp'n [Docket Item 45] at 15.) A co-conspirator with the initials J.M. served as the title agent for Shore Title Agency, and was involved in several of the transactions, including Cardillo's and at least four others. (Superseding Indictment at 4.) Although the Government does not allege that Cardillo had personal contact with all of the co-conspirators, those involved in the Cardillo transaction allegedly participated in other fraudulent transactions with a wider circle of co-conspirators, including Paul Watterson, who recruited straw purchasers, and Deborah Hanson, a mortgage broker. The Government contends that Defendant Leadbeater received approximately $159, 000 as a kickback in the Cardillo transaction, and that witnesses will testify that Cardillo was upset because he did not receive a large kickback he was promised. Cardillo still resides in the unit that he purchased through allegedly fraudulent means.

Following oral argument, the Government filed a supplemental brief [Docket Item 53] and a motion to admit evidence of several audio taped conversations between Cardillo and a confidential informant that occurred after the charged conduct. [Docket Item 68.][2]

Defendant Cardillo filed several motions in limine and a motion to dismiss, joined others brought by Defendant Leadbeater, and opposed motions filed by the Government. Specifically, Cardillo seeks disclosure from the Government of certain material, including any potentially exculpatory evidence known to the Government, and prior bad act evidence that the Government intends to use. He seeks an order for Government agents to preserve and produce rough notes of Government witnesses and for the Government to produce original documents as evidence. Cardillo also seeks to dismiss Count I of the Superseding Indictment because it is time-barred and because it is duplicitous, meaning that it charges more than one conspiracy in a single count, in violation of Fed. R. Crim. P. 8(a). He also brings a motion to strike surplusage from the Superseding Indictment. He also brings a cross-motion to dismiss "for absence of allegations/evidence that Daniel Cardillo defrauded the victim' lender." (Notice of Cross-Motion [Docket Item 42] at 2.)

III. DISCUSSION

A. Cardillo's Omnibus Pre-trial Motion

Cardillo's pre-trial motion [Docket Item 40] seeks to dismiss the indictment on statute of limitations grounds and on the grounds that Count I is duplicitous. In the alternative, Cardillo requests a bill of particulars and seeks disclosure of 404(b) evidence. Cardillo also joins Defendant Leadbeater's pretrial motion [Docket Item 38]. Several issues raised by Cardillo have already been resolved by the Court's Opinion in Leadbeater, (see Feb. 10, 2015 Opinion ("Opinion") [Docket Item 76]) and the Court incorporates those decisions by reference, where applicable.

1. Duplicity of Count I

Cardillo makes the same argument as Leadbeater and contends that Count I, which lists 26 separate real estate transactions, actually "charges a series of separate and distinct conspiracies lumped together in this one count in violation of Fed. R. Crim. P. 8(a)." (Cardillo Mot. at 8.) The Court resolved Defendants' motions in its Leadbeater Opinion of February 10, 2015. (See Opinion at 5-12). The Court incorporates that discussion here and holds that Count I is not duplicitous as a matter of law. After the prosecution rests, Cardillo may renew this motion, if he has grounds to establish that the evidence proved multiple conspiracies and that a substantial right of his was prejudiced by the variance between the proof and the indictment. At this time, the Court will deny Cardillo's motion without prejudice.

2. Statute of limitations

Defendant Cardillo argues that this prosecution is barred by the statute of limitations.

Generally, for non-capital offenses, a five-year statute of limitations applies to federal criminal prosecutions. See 18 U.S.C. § 3282(a) ("no person shall be prosecuted, tried, or punished for any offense, not capital, unless the indictment is found or the information is instituted within five years next after such offense shall have been committed"). However, 18 U.S.C. § 3293 extends the statute of limitations to 10 years for financial institution offenses, including a conspiracy to commit wire fraud that "affects a financial institution" under 18 U.S.C. § 1343, as is charged against Defendants. See 18 U.S.C. § 3293(2) ("No person shall be prosecuted, tried, or punished for... a conspiracy to violate... section 1341 or 1343, if the offense affects a financial institution... unless the indictment is returned or the information is filed within 10 years after the commission of the offense."); 18 U.S.C. § 20 (defining "financial institution"). In 2009, Congress amended the definition of "financial institution" to include "a mortgage lending business... or any person or entity that makes in whole or in part a federally related mortgage loan." 18 U.S.C. § 20(10) (2009). Cardillo argues that Countrywide Home Loans was not a "financial institution" within this statutory framework in 2007, the time of the relevant transactions. The Government concedes that the Cardillo transaction "does not appear to involve an FDIC insured bank." (Gov't Supp. Br. [Docket Item 53] at 3.) Cardillo contends that the charge of conspiracy must be dismissed because the only transaction he is alleged to have engaged in did not involve a "financial institution" and falls outside the five-year limitations period:

[T]he indictment mentions only CW Home Loans, Inc. as an entity that provided the funds for Cardillo's purchase of the West Burke Ave unit, and it mentions no other entity. Since Countrywide Home Loans Inc., was not itself a financial institution and the indictment identifies no other such candidate for fulfilling the role of an affected' financial institution in the Cardillo transaction, the enlarged statute of limitations in Section 3293 cannot apply.

(Cardillo Mot. at 17; see also First Cardillo Mem. [Docket Item 71] at 11-13.)

The Court's reasoning in the Leadbeater Opinion applies equally here. (See Opinion at 13-15.) Even assuming that Countrywide Home Loans was not a "financial institution, " the charge of conspiracy against Cardillo falls within the statute of limitations. At least six of the charged 26 transactions involved FDIC insured banks as the mortgage originator, which clearly qualify as transactions affecting financial institutions and are governed by a 10-year limitations period.[3] (Gov't Opp'n [Docket Item 45] at 21; Superseding Indictment at 15-17.) None of the transactions identified in the Superseding Indictment occurred more than 10 years before the Superseding Indictment was filed in March 20, 2013. One transaction is timely under even the five-year statute of limitations. (See Superseding Indictment at 17, noting date of last transaction as March 26, 2008.) Because the transaction involving Countrywide Home Loans is part of the conspiracy charged in Count One, and at least one of the fraudulent real estate transactions in Count One is timely under either limitations period, the charge of conspiracy in Count I is timely.[4] Cardillo's motion to dismiss Count I as untimely is denied.

3. Bill of particulars

Defendant Cardillo moves, under Fed. R. Crim. P. 7(f), for a bill of particulars specifying (1) every act or omission, by date, time, and location that Defendant is alleged to have committed from December 13, 2007 that evidences any participation in or connection to the March 26, 2008 transaction;[5] and (2) the acts or omissions, by date, time, and location Defendant is alleged to have committed in connection with the 25 transactions in which he was not a purchaser, acts or omissions by Defendant which aided or furthered those transactions, and the persons with whom he committed said acts.

Federal Rule of Criminal Procedure 7(f) permits the court, in its discretion, to "direct the filing of a bill of particulars." Fed. R. Crim. P. 7(f); United States v. Fischbach and Moore, Inc., 576 F.Supp. 1384, 1388 (W.D. Pa. 1983). The purpose of a bill of particulars is to inform the defendant of the nature of the charge against him with sufficient precision to enable him to prepare for trial, to minimize the danger of surprise during trial, and to protect him against a second prosecution for an inadequately described offense. United States v. Addonizio, 451 F.2d 49, 63-64 (3d Cir. 1971) (quoting United States ...


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