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United States v. Soto

United States Court of Appeals, First Circuit

August 25, 2015

CARMEN SOTO; PEDRO SOTO; and STEVEN SOTO, Defendants, Appellants

As Amended September 1, 2015.

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Matthew A. Kamholtz, with whom Feinberg & Kamholtz, was on brief, for appellant Carmen Soto.

Steven A. Feldman, with whom Feldman and Feldman, was on brief, for appellant Pedro Soto.

Benjamin L. Falkner, with whom Krasnoo|Klehm LLP, was on brief, for appellant Steven Soto.

John M. Pellettieri, Attorney, Appellate Section, Criminal Division, United States Department of Justice, with whom Leslie R. Caldwell, Assistant Attorney General, Sung-Hee Suh, Deputy Assistant Attorney General, Carmen M. Ortiz, United States Attorney, John A. Capin, Assistant United States Attorney, and Brian A. Pérez-Daple, Assistant United States Attorney, were on brief, for appellee.

Before Torruella, Thompson, and Kayatta, Circuit Judges.


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TORRUELLA, Circuit Judge.

The Soto family -- Steven and his parents Carmen and Pedro[1] -- operated a real estate business in Lynn, Massachusetts, which they used to orchestrate several

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fraudulent real estate transactions in late 2006 and early 2007. As a result of these transactions, the Sotos were each convicted of multiple counts of mail fraud; Steven and Pedro were also convicted of multiple counts of aggravated identity theft. Defendants now appeal their convictions, alleging a host of errors before the district court. In addition, Carmen challenges the portion of her sentence requiring her to pay almost $800,000 in restitution. For the reasons detailed below, we reject these challenges and affirm.

I. Background

A. The Fraudulent Transactions

The Sotos used Paradise Real Estate, the real estate brokerage firm they legitimately owned and operated, to conduct a number of fraudulent real estate transactions. Four separate transactions underlie the charges in the indictment, but they share a common theme. In each transaction, at least one member of the Soto Family used the identity of a third-party individual to consummate the " sale" of real estate. To finance the transaction, a loan would be obtained based on an application containing knowingly false information. Not surprisingly, the loans were often not repaid, resulting in the properties entering foreclosure soon after the transaction closed.

In addition to the Sotos, three individuals played important roles in the scheme -- some without their knowledge. First was Gregory Bradley. Bradley, who was a friend of Steven's, often played the role of buyer despite his being in prison from August 2006 through September 2008. To overcome this obstacle, Steven approached the second repeat player, Kim Litwin. Litwin is Bradley's aunt, and, after consulting with Bradley, she agreed to help Steven use Bradley's identity. Finally, we have Milagros Espinal, a notary public. Without Espinal's knowledge, Steven obtained a duplicate notary kit in her name and used the kit to make documents appear notarized, and thus legitimate.

With the key players identified, we can now describe the four real estate transactions at issue.

1. 242 Main Street

The first relevant transaction took place in Fall 2006 and involved 242 Main Street in Springfield, Massachusetts -- a property owned by Pedro. Steven arranged for Bradley, through Litwin, to purchase the property from Pedro for $182,000. Someone posing as Bradley -- the record is unclear as to who -- spoke to a mortgage loan officer by phone and told the loan officer that Bradley was a store manager at Drestars barbershop -- a barbershop opened by Steven in Lynn, Massachusetts. This, of course, was not true as Bradley was incarcerated at the time. The loan officer was also told that Bradley possessed $14,191 in liquid assets. This, too, was false. The $14,191 was actually the amount in Litwin's bank account; on Steven's instructions, she had recently added Bradley to the account to make it appear as though he had sufficient assets.

In November 2006, Steven and Litwin attended the closing for the property. Litwin produced a forged document drafted by Steven and " notarized" with the false Espinal notary kit to claim power of attorney to conduct the transaction on behalf of Bradley. Using the power of attorney, Litwin signed documents confirming the false information about Bradley's employment, assets, and intent to live in the property as his primary residence.

2. 55 Lawrence Street

The next transaction involved 55 Lawrence Street, a three-family home in Salem,

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Massachusetts. In the fall of 2006, Beatrice Jimma Shea, the owner of the property, asked Pedro -- who had previously been successful in helping Shea rent a unit in the home -- to help her either find a tenant for one of the units or sell the property. Pedro arranged for Shea to enter into an agreement with Bradley whereby Bradley would lease 55 Lawrence Street and have the option of purchasing the property and converting it into condominiums. Shortly thereafter, Steven, posing as Bradley, attempted to convince Shea to sell the property to him so he could turn around and sell the units as condominiums. When Shea refused, Steven forged her signature on numerous documents, thus giving Bradley power of attorney to conduct the transactions. To make the documents appear legitimate, Steven used the fake Espinal notary kit.

Using these forged documents, the Sotos " sold" each of the three units of 55 Lawrence Street to straw buyers. Pedro sold Unit 1 to Pamela Landess in January 2007 after agreeing to pay her $8,000 for her participation. At closing, Steven -- still posing as Bradley -- used the forged power of attorney to sign Bradley's name as attorney in fact for Shea, the seller.

Carmen, meanwhile, paid Medelin de la Cruz $10,000 for her assistance in purchasing Units 2 and 3 for $225,000 and $230,000, respectively. In preparation for the sales, Carmen and Steven submitted de la Cruz's loan applications which substantially overstated de la Cruz's salary, failed to disclose de la Cruz's prior mortgages, and falsely represented that de la Cruz intended to make each unit her primary residence. The loans were approved, and the closings took place in January and February of 2007. Like with Unit 1, Steven attended the Unit 2 closing as Bradley and used the forged power of attorney to sign Bradley's name as attorney in fact for Shea, the seller. As for Unit 3, a different approach was taken. Prior to closing, Steven used the fake Espinal notary kit to transfer title from Shea to Bradley. Thus, Litwin was able to attend the closing for Unit 3 as attorney in fact for Bradley, the seller.

3. 399 Orange Street

In January 2007, Steven and Pedro arranged for Bradley to purchase 399 Orange Street in Springfield, Massachusetts. On the loan application, Pedro provided his phone number as the contact number for Bradley. When the loan officer -- somewhat skeptical of the application -- called the number two days before the closing, someone purporting to be Bradley answered the phone and verified false information. At the closing itself, Steven signed Bradley's name on the loan documents containing the same false information that had been verified two days earlier. This included, for example, that Bradley earned $11,500 each month from his employment at Steven's barbershop and from his ownership of Aggressive Construction -- a fake company formed by Steven in Bradley's name. Steven also verified the accuracy of the loan application's liability section, which omitted any mention of Bradley's mortgage for 242 Main Street.

4. 21 Dudley Street

Finally, in December 2006/January 2007, Karen and Christopher Faison, the owners of 21 Dudley Street in Haverhill, Massachusetts, agreed to allow the Sotos to convert their property into three condominiums, to sell the units, and to keep any proceeds above the $365,000 they originally paid for the property. The sale of these units began as legitimate sales: Carmen's cousin and her husband were to purchase the first unit and Á ngel Rodríguez, Carmen's

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longtime family friend, intended to purchase the other two units as investments. Prior to the closings in May 2007, however, Rodríguez changed his mind when he realized that the mortgage payments would exceed the rent rolls.

Rodríguez thus informed Carmen that he did not want to go through with the purchases, but Carmen proceeded anyway. She enlisted Yé ssica Amaro -- Rodríguez's stepsister and Steven's girlfriend -- to execute a forged power of attorney and to attend the closings on Rodríguez's behalf.[2] With the power of attorney in hand, Amaro completed the transactions. As a result, absent his knowledge and despite his intentions to the contrary, Rodríguez purchased both units and obtained two loans to do so.

B. The Trial Proceedings

In connection with these four fraudulent real estate transactions, the Sotos were charged in a thirteen-count indictment on September 8, 2011. Steven was charged with seven counts of mail fraud (Counts One, Four, Six, Seven, Ten, Twelve, and Thirteen) and six counts of aggravated identity theft (Counts Two, Three, Five, Eight, Nine, and Eleven); Pedro was charged with five counts of mail fraud (Counts One, Four, Six, Seven, Ten) and three counts of aggravated identity theft (Counts Three, Five, and Eleven); and Carmen was charged with four counts of mail fraud (Counts Six, Seven, Twelve, and Thirteen).

After a fourteen-day trial -- the relevant details of which are addressed below -- Pedro and Carmen were convicted on all counts, while Steven was convicted on every count except the two mail fraud counts related to 21 Dudley Street (Counts Twelve and Thirteen). The district court sentenced Steven to sixty-five months of imprisonment followed by four years of supervised release and ordered him to pay $1,055,474 in restitution. Pedro, meanwhile, was sentenced to forty-eight months of imprisonment, three years of supervised release, and ordered to pay $1,055,474 in restitution. Finally, the district court sentenced Carmen to one year and one day of imprisonment (six months of which were served in home confinement), three years of supervised release, and an order to pay $792,559 in restitution. All three Sotos timely appealed.

II. Discussion

A. Motion to Suppress

1. Relevant Background

While law enforcement did not become aware of the fraudulent real estate transactions until 2007, Steven was on their radar much earlier in relation to a number of unrelated fraudulent schemes. First, on March 16, 2006, Eastern Bank issued a fraud alert after Steven and his brother, Pedro, Jr., negotiated counterfeit checks.

Then, a couple weeks later, on April 3, 2006, Motorcycles of Manchester reported to New Hampshire authorities that they had sold two motorcycles to a male and female using a fraudulent cashier's check issued by St. Jean's Credit Union. An investigation revealed that Steven had recently opened an account at the credit union and purchased three official bank checks with information similar to the counterfeit check. When authorities showed a Motorcycles of Manchester employee a photo array, she stated that two

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people " looked familiar" : Steven and Amaro.

A similar incident occurred at North Reading Motor Sports Inc. On April 12, 2006, the company alerted authorities that on or about April 6, 2006, St. Jean's Credit Union had issued a check to Steven in the amount of $5.00. However, the check had been altered to read $20,350.00 and had been used to purchase two motorcycles from North Reading Motor Sports. In connection with the purchase, Steven had submitted a credit application listing Paradise Real Estate as his employer. A third incident with comparable details occurred at Kelly Motor Sports in Danvers, Massachusetts, as well.

On April 28, 2006, after learning that Steven was the affiant on documents submitted to the Massachusetts Registry of Motor Vehicles, Massachusetts State Police obtained a warrant to arrest Steven, who lived with his parents at 56 Lawrence Road in Lynn, Massachusetts (" 56 Lawrence Road" or the " Soto Family Residence" ). When law enforcement went to arrest Steven, they were unable to locate him. However, one of the officers executing the warrant entered a fenced-in area of the property, used a flashlight to look into a garage window, and observed a motorcycle with a license plate matching one of the motorcycles that had been purchased fraudulently and reported stolen. Based primarily on this discovery, the police obtained a search warrant for 56 Lawrence Road. The search of the house and a desktop computer found inside the house uncovered three stolen motorcycles and a significant number of documents, many related to the use of counterfeit checks to purchase the motorcycles. For reasons unclear from the record, the authorities never arrested Steven, instead continuing their investigation.

Almost one year later, on February 2, 2007, Steven returned to Eastern Bank, this time pretending to be Bradley. He withdrew $9,500 from an account he had opened in December 2006 under Bradley's name without incident, but due to his odd behavior, the bank teller became suspicious and alerted Eastern Bank's fraud investigator. The investigator, recognizing Steven's picture from the March 2006 alert, issued another security alert. Later that same day, Steven returned to Eastern Bank and, using a driver's license and credit card issued in Bradley's name, tried to cash a check paid to Bradley. The bank quickly notified the police.

When the officers arrived and questioned Steven, he told them that Bradley was his friend and business partner and that because Bradley was in jail, Bradley had given Steven power of attorney. In support of this claim, Steven showed the officers documentation notarized by Espinal. The bank teller, however, informed the police that Steven never claimed power of attorney but rather passed himself off as Bradley. Given this information, the officers arrested Steven.

As they escorted Steven from the bank, the police saw Steven gesture to a female sitting inside a grey Chrysler. A short while later, at the police station, the officers overheard Steven's phone call where he told the listener " [d]on't show up at the police station with the Chrysler" and " [c]all Jeff, he'll know what to do with the cars." Despite this warning, Amaro and Litwin soon arrived at the police station in the grey Chrysler. The officers, suspicious of both the gesture in the bank parking lot and Steven's subsequent phone call, checked the registration for the Chrysler. They discovered that it had been purchased just a few days earlier -- on January 29, 2007 -- and was registered to Bradley. Given that Bradley was incarcerated at the

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time and that Steven had just attempted to pass himself off as Bradley at Eastern Bank, the officers suspected that this registration was also fraudulent, so when Amaro and Litwin confirmed that the Chrysler belonged to Bradley, the police seized it.

An inventory search of the Chrysler uncovered documents related to three vehicles purchased in Bradley's name in December 2006 and January 2007, a Gateway laptop computer, and a document seeming to give Steven power of attorney for Bradley. Subsequent investigation by the police discovered that the power of attorney was forged and that Steven had claimed to be Bradley when the Chrysler was purchased at the dealership.

On March 30, 2007, United States Secret Service Special Agent Trent Everett applied for a search warrant for the Gateway laptop. The affidavit in support of the warrant discussed the investigation of Steven prior to the 2006 search of the Soto Family Residence, the information obtained in connection with that search, the events surrounding Steven's February 2007 arrest, the investigation following the arrest, and the inventory search of the Chrysler. As to the 2006 search of the Soto Family Residence, the affidavit stated as follows:

6. Later on April 28, 2006, I accompanied local and State Police officers to execute the arrest warrants for Steven and Pedro Soto[, Jr.]. Upon arrival at 56 Lawrence Road, an officer saw a motorcycle bearing Massachusetts license plate number SZ6659 through a garage window. Officers immediately learned that the motorcycle had been reported stolen on April 1, 2006 in Danvers, Massachusetts. After observing that nobody appeared to be present at 56 Lawrence Road, officers set up a ...

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