Opinion
Nos. 05-09-00972-CR, 05-09-00973-CR
Opinion issued April 7, 2011. DO NOT PUBLISH Tex. R. App. P. 47.
On Appeal from the 366th Judicial District Court Collin County, Texas, Trial Court Cause Nos. 366-81045-08 366-81400-08.
Before Justices MORRIS, FRANCIS, and MURPHY.
OPINION
John E. Barry appeals six convictions for money laundering, making a false statement to obtain property or credit, and securing execution of a document by deception. After the jury found appellant guilty of all six charges, the trial court assessed punishment at twenty-five years in prison and a $10,000 fine for each conviction. In three issues, appellant claims the trial court lacked jurisdiction over appellant, the evidence was legally and factually insufficient to support his convictions, and the trial court erred in admitting certain evidence. We affirm. Appellant, who lived in Florida, owned a company called TKI that bought and sold single-family homes. Appellant's "credit partners" provided appellant with their personal information such as name, address, social security number, and bank account numbers. When appellant found a home to buy, a credit partner was selected as the buyer. Appellant or someone working under his direction provided the mortgage lender with the credit partner's information; credit partners did not interact with the lender. The mortgage lender performed account and employment verifications and determined whether the credit partner was qualified for the loan. After appraisals on the property were done, all loan related documentation was sent to the credit partner who signed and returned the documentation for closing. When the loan closed, a portion or all of the sales proceeds went to TKI. Appellant then sent the credit partner a cash payment, usually around $20,000. Often, the home selected by TKI sold twice-once to a trust company operated by TKI and shortly thereafter to a credit partner for a higher amount. Most loans used to finance these properties were "stated loans," also known as "no doc" loans. A "stated" or "no doc" loan allowed the borrower to state what his income was so a credit partner was not required to provide documentation to verify income. On the loan application, the credit partner's employer was listed as JAB Consulting, also one of appellant's companies. When the lender called to verify employment, appellant said the credit partner worked for him and gave an inflated monthly income, such as $20,000 per month. Before the lender performed a verification of deposit, appellant wired funds into the credit partner's account. Following the verification of deposit, the funds were wired back to appellant's account. The loan application often stated the house would be owner-occupied; a home occupied by its owner qualified for a lower interest rate than did a home purchased as a rental property. The property loan values were supported by inflated appraisals. After the majority of these homes ended up in foreclosure, appellant was charged with money laundering, making a false statement to obtain property or credit, and securing execution of a document by deception relating to the purchase and finance of houses at 909 Hills Creek Drive and 823 Hills Creek Drive, both in McKinney. Seven individuals pleaded guilty and agreed to testify against appellant at trial. In addition, the State offered the testimony of five nonaccomplice witnesses as well as thousands of pages of documentation. The jury found appellant guilty of all three counts for each house, resulting in six convictions. These appeals followed. In his third issue, appellant claims his prosecution was unconstitutional because "his only contact with Texas was through means of interstate commerce which is exclusively through the power of the federal government." Appellant also argues he would have to avail himself of the laws of Texas for jurisdiction to be proper and because he did not and the State did not establish appropriate minimum contacts, Texas has no jurisdiction over him. Appellant cites no authority for his contention the State would have to establish he had "appropriate minimum contacts" with Texas before he could be charged with an offense, nor does he provide any analysis why a civil standard should apply to a criminal case. A party "must ground his contention in analogous case law or provide the Court with the relevant jurisprudential framework for evaluating his claim," even when making a novel argument for which there is no authority directly on point. Tong v. State, 25 S.W.3d 707, 710 (Tex. Crim. App. 2000). Because appellant does not, we conclude this argument is inadequately briefed. See Tex. R. App. P. 38.1(i); Tong, 25 S.W.3d at 710. He also argues his prosecution was unconstitutional because any contact he had with Texas was through the use of "interstate commerce" and federal law preempts any claim Texas may have. Again, appellant cites no case law or federal statute supporting his preemption claim. We likewise conclude this issue is inadequately briefed. See Stahle v. State, 970 S.W.2d 682, 692 (Tex. App.-Dallas 1998, pet. ref'd) (although he cited to rules of evidence, appellant waived issue because he did not provide analysis of relevant authority). Even if we address his complaints, we find they lack merit. The legislature enacted section 1.04 of the penal code which provides Texas "has jurisdiction over an offense that a person commits" if either "the conduct or a result that is an element of the offense occurs inside this state." Tex. Penal Code Ann. § 1.04(a)(1) (West 2003). As detailed below, the record shows that although appellant may have been in Florida, his conduct or, at a minimum, a result of his conduct constituted various elements of the offenses with which he was charged. Therefore, the State had jurisdiction over appellant. With respect to his preemption argument, our research did not reveal any federal statute preempting the Texas penal code sections at issue here; thus, we cannot conclude the historic police powers of the State are superseded in these cases. See Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947) (analysis of preemption starts with assumption historic police powers of States were not to be superseded by federal act unless it was clear and manifest purpose of Congress). We overrule appellant's third issue. In his first issue, appellant claims the evidence is legally and factually insufficient to support his convictions because the accomplice witness testimony was not sufficiently corroborated and no evidence establishes appellant had the requisite intent. In reviewing a challenge to the sufficiency of the evidence, we examine all the evidence in the light most favorable to the verdict and determine whether a rational trier of fact could have found the essential elements of the offense beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 319 (1979); Brooks v. State, 323 S.W.3d 893, 899 (Tex. Crim. App. 2010) (plurality op.). We defer to the jury's credibility and weight determinations because the jury is the sole judge of the witnesses' credibility and the weight to be given their testimony. See Jackson, 443 U.S. at 326. The accomplice witness rule provides a conviction cannot stand on accomplice testimony unless it is corroborated by other evidence tending to connect the defendant with the offense. Tex. Code Crim. Proc. Ann. art. 38.14 (West 2005). In making our review, we eliminate all of accomplice witness testimony from consideration and then examine the remaining portions of the record to see if there is any evidence that tends to connect the accused with the commission of the offense. Castillo v. State, 221 S.W.3d 689, 691 (Tex. Crim. App. 2007). The corroborating evidence need not be sufficient by itself to establish guilt; the non-accomplice evidence must simply link the accused in some way to the commission of the crime, such that rational jurors could conclude this evidence sufficiently tended to connect the accused to the offense. Id. A person commits the offense of money laundering if he knowingly conducts, supervises, or facilitates a transaction involving the proceeds of criminal activity. Tex. Penal Code Ann. § 34.02(a)(2) (West Supp. 2010). A person commits an offense if (1) he intentionally or knowingly makes a materially false or misleading written statement to obtain property or credit, including a mortgage loan, or (2) with intent to defraud or harm any person, he, by deception causes another to sign or execute any document affecting property or service or the pecuniary interest of any person. Id. §§ 32.32(b), 32.46(a)(1). The indictments and the charges in each case provided, under Count 1, appellant committed the offense of money laundering when he knowingly conducted, supervised, or facilitated a transaction involving the proceeds of criminal activity in the amount of $200,000 or more in connection with the purchase of residential property located at 909 Hills Creek Drive, McKinney and 823 Hills Creek Drive, McKinney, and that the $200,000 or more were the proceeds of either (1) making a false statement to obtain property or credit in an amount of $200,000 or more or (2) securing execution of a document by deception affecting property with a value of $200,000 or more or both. Under Count 2, the indictments and the charges also provided appellant intentionally or knowingly made a materially false or misleading written statement to obtain property located at 909 Hills Creek Drive, McKinney and 823 Hills Creek Drive, McKinney, which had a value of $200,000 or more for Frank Kearney and said materially false and misleading written statements consisted of written verification of Kearney's employment to Sebring Capital Partners, L.P. and 1st Metropolitan Mortgage. Count 3 of the indictments and charges alleged appellant, with intent to defraud or harm another by deception, by inflating Kearney's personal checking account, caused Sebring and Washington Mutual Bank to execute wire transfers directing funds to be deposited into escrow accounts and that the wire transfers affected property located at 909 Hills Creek Drive, McKinney and 823 Hills Creek Drive, McKinney, and each property had a value of $200,000 or more. Frank Kearney, David Muzeni, Ellen Summers, Robert Summers, and Frank Field each pleaded guilty to the offense of money laundering and agreed to testify against appellant. Joshua Melton and William Douglas Mitchell each pleaded guilty to the offense of making a false statement to obtain property or credit and agreed to testify against appellant. The testimony of these witnesses established appellant was in the business of buying single-family homes using mortgage loans with false information as his means of financing the purchases. Appellant recruited Kearney, Muzeni, and the Summers as "credit partners," or buyers of the homes. Field was recruited by TKI to find properties. Field hired Mitchell to do appraisals; Mitchell referred his son-in-law, Melton, who also did appraisals, to TKI. Appellant represented to the buyers that the homes he located were either distressed or undervalued. Appellant told the buyers the homes would be used as rental properties and the buyer would not be responsible for mortgage payments or other costs. Once the loan closed, each buyer received a cash payment, usually $20,000 or more, for his or her role in the transaction. Appellant represented this money was not income because it was capital gains, and the buyers did not need to pay taxes on it. He also told the buyers the houses could be sold in a few years and they would likely make additional money from the sale. Kearney and his wife each purchased three homes for appellant. Each time Kearney was involved in a purchase, he was notified that a house had been located and told when to expect the loan documentation. He received the loan documents by FedEx; the documents were tabbed to indicate where he needed to sign. During trial, Kearney reviewed the loan application for the house at 909 Hills Creek Drive, verifying his name, social security number, and birthdate. The loan amount was $575,000. Although the loan application stated the property would be used as the primary residence, Kearney stated that was false; he did not intend to live in the house. In fact, when he later became concerned about the residency statement, he called appellant who told him not to worry and that it would not be necessary for Kearney to live there. Appellant indicated the house would be rented and the rental income would cover the mortgage payments. The application also represented that Kearney had been a financial advisor for over two years with JAB Consulting, one of appellant's companies, earning $20,000 a month. This statement was also false; Kearney was a recruiter for a branch of the military, earning approximately $6,000 a month. A separate document entitled "Verification of Employment" also stated Kearney was a JAB employee earning $20,000 a month. Kearney confirmed appellant's signature on the employment verification document. Kearney also signed a Verification of Deposit form. To ensure the account had sufficient funds for the loan application process, appellant wired $25,000 into Kearney's account. That amount was wired back to appellant once the bank had verified the amount of funds in Kearney's account. Kearney was unaware that 909 Hills Creek Drive had been listed originally for sale for $342,000. He likewise did not know $233,000 of the $575,000 loan amount went to appellant's account. In December 2006, about eight months after he purchased the 909 Hills Creek Drive home, Kearney purchased the house at 823 Hills Creek Drive for $635,000. He again received documents for the closing and signed his name where indicated. The loan application for this house stated he had been a financial consultant for eight years and had been employed by JAB Consulting for two and one-half years, earning $25,000 a month. This employment verification was signed by a "John Cohen" but the handwriting appeared to be appellant's. Although Kearney's account verification showed a savings account of $103,338, he testified he never had that much money. Over $100,000 was wired into Kearney's account for the deposit verification and again wired out after the account was verified. Kearney testified the seller of the house was Frank Field, trustee for the "823 Hills Creek Trust." Kearney knew Field worked for appellant because he met him one time when they were playing golf with appellant. Kearney did not know the house was purchased from the previous owners earlier the same day by the "823 Hills Creek Trust" and then sold to him for $635,000. He also did not know that most of the loan proceeds were wired into appellant's account. Muzeni and the Summers testified to similar dealings with appellant. Muzeni's children were friends with appellant's children; appellant is the Summers's son-in-law. Appellant told Muzeni he bought and sold distressed, foreclosed, and bank-owned properties that were listed at 40-50% of their value. His credit partners bought the homes and would take a portion of the equity out of the property at that point. Appellant held the properties for a couple of years, then flipped them for additional gains. The credit partners were not required to put up any money, and appellant's company, TKI, handled all the mortgage payments and managed the property. Appellant told Muzeni he needed to use credit partners so the houses would not show up on TKI's financial statements. Muzeni bought his first home for appellant in 2003 and gave appellant his personal information, including his bank account number, for the loan application. Appellant explained the lender would require a verification of deposit. Appellant told Muzeni he would wire money into Muzeni's account for the verification and instructed him to wire the money back to appellant as soon as the verification was complete. Appellant then told Muzeni to keep an eye out for the loan documentation. When it arrived, appellant told him the documents needed to be signed and returned the same day. Appellant gave Muzeni his UPS account number to cover the cost of returning the signed, notarized loan documents. Muzeni purchased seven or eight houses in this manner. Each time, he received between $20,000 and $50,000 from appellant. Although he did not read the loan papers at the time he signed them, he later reviewed the loan documentation associated with those houses. Each packet contained false statements, including that he would live in the house and he was employed by JAB Consulting. Muzeni testified he was a stay-at-home dad during his dealings with appellant and that he did not live in any of the houses. He also testified he did not complete any of the loan applications or loan documents. According to the Summers, they gave appellant their personal information, including bank account and social security numbers. They received packets of documents to sign and returned them that same day according to appellant's instructions. Neither had worked for JAB Consulting although their loan applications stated they did. Likewise, they had not intended to live in any of the houses even though the loan documentation stated otherwise. Appellant told them they did not need to worry about making any payments on the mortgages. Following each completed loan, each one received cash payments deposited to their bank accounts. Both appraisers testified their appraisals for appellant had inflated values. Appellant contacted Mitchell by email and asked him to do the appraisal for 909 Hills Creek Drive. Mitchell used two comparables sales from Hills Creek Drive and a comparable sale on a custom home to arrive at the appraised value of $579,000. He testified the appraised value was inflated. Melton also did an appraisal on 909 Hills Creek Drive. Appellant emailed him stating he needed an appraisal because he had a buyer for the house and the purchase price was $575,000. Melton used the house next door, 911 Hills Creek Drive, as a comparable; he had done the appraisal of 911 Hills Creek as well. Melton then used two higher valued properties outside the subdivision as comparables even though other houses within the subdivision could have been used. He did so in order to get a higher valuation for 909 Hills Creek. Melton conceded that because he relied on a previously inflated appraised value on the house at 911 Hills Creek as a comparable, the house at 909 Hills Creek would have a higher appraised value. Field located properties for appellant and did maintenance work. Some of the houses he located for appellant were bought and sold the same day; Field was the trustee for the TKI trust that bought the house the first time. When the house was then sold to one of appellant's credit partners, the proceeds were wired to appellant's account. Field bought the house at 823 Hills Creek from the owners for $358,000 and sold it to a credit partner on the same day. The proceeds of the sale, $627,209.41, were wired to TKI's bank account. Field believed that money would be used to maintain the property and pay the mortgage. Although appellant claims the above testimony was insufficiently corroborated and, therefore, the evidence is legally insufficient to support his convictions, we cannot agree. Loretta Green worked at Sebring Capital Partners, a wholesale mortgage lender. She was a loan underwriter and later worked in the secondary market packaging and selling loans to investors. Sebring was the mortgage lender on the 909 Hills Creek house. When reviewing loan applications to determine whether the prospective borrower was qualified, Sebring considered the person's income, his total debts outstanding, and bank accounts and their balances. When a Sebring employee called to verify Kearney's employment, appellant told the lender Kearney worked for JAB Consulting as a financial consultant and earned $20,000 a month. According to Green, if Sebring had known this information was false, it would not have approved this loan. Likewise, she stated Sebring would not have funded the loan if it knew appellant wired $25,000 into Kearney's account for the account verification or that Kearney did not intend to occupy the house as his primary residence. After examining the loan documentation at trial, Green said $233,000 of the loan proceeds were disbursed to an undisclosed account. When asked if Sebring would have funded the loan had it known that money was being wired to appellant, Green said, "We would not fund a loan with that disbursement on there." Chris Howard worked for a mortgage broker called LMI Funding. People wanting mortgage loans were referred to Howard who would then try to find a lender. He brokered the loan on the 909 Hills Creek Drive property for appellant. Howard spoke to appellant several times a day for a few months and described appellant as the "go-to" person who was directing the transaction. Howard received Kearney's personal information, including his purported monthly income and employment, from appellant via email; after Howard filled out the loan application, he faxed the employment verification to appellant who signed it and returned it to Howard. Appellant testified he developed the investment program. He described how the program worked and said it was legitimate. He denied listing JAB Consulting as any credit partner's employer and denied giving written or verbal verification of the same. Appellant conceded he wired money into credit partners' accounts to make it appear that they had more money. He also conceded he did not disclose to any lenders that the people buying the houses received cash payments after the loans closed. He claimed he was able to sell 15 of approximately 100 houses purchased by his credit partners but conceded that he did not have any evidence to support the existence of those sales. He also agreed there was "significant fraud" in the credit partners' transactions and that the common denominator in every transaction was appellant. After reviewing the nonaccomplice testimony and evidence, we conclude there is sufficient evidence, including appellant's own testimony, tending to connect appellant to the offenses committed. Furthermore, after reviewing the entire record, we conclude the evidence is legally sufficient to show appellant (1) intentionally or knowing made a materially false or misleading statements to obtain property or credit in the amount of $200,000 or more and (2) with the intent to defraud or harm any person, appellant caused others to sign or execute documents affecting property or the pecuniary interest of any person. We also conclude the evidence is legally sufficient to show appellant knowingly conducted, supervised, or facilitated the transactions involving the proceeds of criminal activity in the amount of $200,000 or more in connection with the purchases of residential properties located at 909 Hills Creek Drive and 823 Hills Creek Drive, McKinney. We overrule his first issue. In his second issue, appellant claims the trial court abused its discretion by allowing evidence of extraneous bad acts. Appellant contends the trial court allowed the State to "enter numerous documents and explore testimony which either directly or indirectly referenced other properties," making appellant "appear as the evil mastermind behind a sweeping fraud that overtook an otherwise pleasant, upper middle class neighborhood." Although appellant refers to "numerous documents," he does not specify under issue two which evidence he complains of on appeal. He states he will discuss this evidence "more explicitly, supra" but does not do so. Record references in the statement of facts to "multiple extraneous properties touched by appellant" refer to specific exhibits and not to the trial. Further, appellant does not point this Court to his objections to the disputed evidence and makes only a single reference in his fact statement to a general request that the trial court "strike all evidence of extraneous offenses from consideration." Appellant's trial lasted eight days. The reporter's record from trial is sixteen volumes, some of which contain hundreds of pages. We are not required to leaf through a voluminous record hoping to find the reversible error urged by appellant. See Cook v. State, 611 S.W.2d 83, 87 (Tex. Crim. App. [Panel Op.] 1981); Guilder v. State, 794 S.W.2d 765, 768 (Tex. App.-Dallas 1990, no pet.). Further, appellant cites no legal authority in support of his argument. Tex. R. App. P. 38.1(i). Because he has not adequately briefed this issue, we decline to address it. We overrule appellant's second issue. We affirm the trial court's judgments.