United States v. Ezell Brown, Jr.

Case: 17-40740 Document: 00514586726 Page: 1 Date Filed: 08/06/2018

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

United States Court of Appeals

Fifth Circuit

No. 17-40740 FILED

August 6, 2018

Lyle W. Cayce

UNITED STATES OF AMERICA, Clerk

Plaintiff - Appellee

v.

EZELL BROWN, JR.,

Defendant - Appellant

Appeal from the United States District Court

for the Eastern District of Texas

Before HIGGINBOTHAM, DENNIS, and COSTA, Circuit Judges.

GREGG COSTA, Circuit Judge:

What should have been a straightforward prosecution charging the

defendant with lying in loan applications is now in its seventh year. The

reason for the delay? Mostly problems involving venue, a “right [that] does not

receive much attention these days, but was important enough to the Founders

that it . . . along with the related right to trial by jury are the only rules of

criminal procedure included in both the original Constitution and Bill of

Rights.” United States v. Romans, 823 F.3d 299, 325 (5th Cir. 2016) (Costa, J.,

concurring). The venue complication stems from some of the conduct in this

case occurring in far north Dallas where the borders of the Northern and

Eastern Districts of Texas meet. What was once largely farmland in that

Case: 17-40740 Document: 00514586726 Page: 2 Date Filed: 08/06/2018

No. 17-40740

western reach of the Eastern District is now a center of commerce. The result

is that, much like the situation that has long prevailed in New York City where

the Southern and Eastern Districts of New York often both have venue over

the same crime, some federal offenses will involve conduct in both the Eastern

and Northern Districts of Texas.

We decide whether the conduct that occurred in the Eastern District of

Texas—signing the loan application at the closing—was sufficient to establish

venue there. We also consider the defendant’s claims that a constructive

amendment occurred, that the evidence did not support his guilt, and that the

government’s closing argument was improper.

I.

Ezell Brown, Jr. owned and operated Uniq Financial Services, a

company that originates loans insured by the Fair Housing Administration. In

2012, an Eastern District grand jury charged Brown with four counts of fraud

relating to his loan business. The first three counts charged Brown with

making false entries to a federal credit institution in violation of 18 U.S.C.

§ 1006. The Department of Housing and Urban Development (HUD), which

includes the Fair Housing Administration, is the affected federal agency. The

final count charged conspiracy to commit bank fraud. Before trial, the

government dismissed Counts One and Four.

Trial commenced on the two remaining false entry counts. On the last

day of trial, the district court ruled that a government witness could not “base

his testimony establishing venue” on a particular loan document. This

development led the parties to reach an agreement in which Brown would

plead guilty to one of the counts and serve only one day in prison. As it has

the right to do under Federal Rule of Criminal Procedure 11(c)(1)(C) for deals

that try to guarantee a sentence, the district court rejected the plea agreement.

2

Case: 17-40740 Document: 00514586726 Page: 3 Date Filed: 08/06/2018

No. 17-40740

Brown then withdrew the plea. When the government elected to retry Brown

on the two false entry counts, Brown sought to dismiss one on double jeopardy

grounds. The district court denied that motion, and we affirmed. United States

v. Brown, 651 F. App’x 286, 290 (5th Cir. 2016).

So the case was tried a second time, again on Counts Two and Three.

The jury acquitted Brown of the former charge but found him guilty of the

latter.

Count Three involved the purchase of a home in Lancaster, Texas (south

of Dallas) by Sandria Johnson. Uniq originated and processed her loan. While

working on Johnson’s application, Brown’s employee Candace Mitchell became

concerned that Johnson did not earn enough from her part-time job at Charles

Pest Control, Inc. to qualify for a loan. Mitchell shared her concerns with

Brown, who said he would “take a look at it.”

Mitchell testified that she kept the Johnson loan file in her office. After

leaving work one night, Mitchell returned the next morning to find evidence of

additional income for Johnson in the file, including pay stubs and W-2s. Brown

was the only person remaining at the office after Mitchell had left the night

before. Mitchell also recounted that Brown had taught her how to falsify

documents used to support loan applications by using special computer

software. She also testified that Brown had provided her with contacts who

could help whitewash negative information in rent verifications for prospective

homebuyers.

As for Johnson, she agreed that various documents supporting her loan

application were falsified, including a Request for Verification of Employment,

a pay stub, and a Form W-2 wage and tax statement, all showing that Johnson

earned $1,669.50 per month. She testified that she had not seen the documents

before and that she did not know who created them. Johnson also testified

3

Case: 17-40740 Document: 00514586726 Page: 4 Date Filed: 08/06/2018

No. 17-40740

that a Verification of Rent indicating she had been paying $800 a month to

rent a house was false. She had lived at the listed address, but she paid no

rent because her mother owned the house.

The Johnson loan closed in July 2006. Although Uniq’s office was located

in the Northern District of Texas, the closing occurred at a title company in the

sliver of north Dallas that is in Collin County, which is part of the Eastern

District. At the closing, Mitchell signed the Uniform Residential Loan

Application in Brown’s name and with his consent. The application repeated

the same lies about Johnson’s income and rent listed in the W-2s, pay stubs,

and rent-verification form.

II.

We first address whether signing the loan application in the Eastern

District established venue there. 1 Brown relies on an 80-year-old Fourth

Circuit case, Reass v. United States, 99 F.2d 752 (4th Cir. 1938), which held

that a charge of making a false statement to a federal credit institution can

only be tried in the district where the federal agency received the document.

Id. at 755 (concluding that the “communication of the false statements to the

corporation constitutes the very essence of the crime”); accord United States v.

Katzoff, 268 F. Supp. 2d 493 (E.D. Pa. 2003). Reass viewed the false statement

crime as one involving a “single act which occurs at one time and at one place,”

99 F.2d at 754, so it rejected application of the default venue statute for

continuing offenses, which provides that “any offense against the United

States begun in one district and completed in another, or committed in more

1 The government argues that Brown waived his venue challenge by not raising it

before trial. See FED. R. CRIM. P. 12(b)(3)(A)(i). Brown counters that he had good cause for

not doing so because he did not know until trial the location of the title company, which is

the government’s venue hook. See FED. R. CRIM. P. 12(c)(3) & advisory committee notes to

2014 amendment. This is a more difficult question than whether venue is proper in the

Eastern District, so we do not decide the waiver question.

4

Case: 17-40740 Document: 00514586726 Page: 5 Date Filed: 08/06/2018

No. 17-40740

than one district, may be inquired of and prosecuted in any district in which

such offense was begun, continued, or completed.” 18 U.S.C. § 3237(a). Reass

thus would require trying this case in Colorado where HUD received the loan

application, even though neither the defendant nor any witnesses resided

there.

We have long taken a different view of venue for false statement crimes.

In a prosecution of a postal employee for lying to a Washington D.C.-based

Loyalty Board about his membership in the Ku Klux Klan, we held that the

catch-all section 1001 false statement crime is a continuing offense so venue

was proper in Miami federal court where the defendant signed the false

statement and placed it in the mail. De Rosier v. United States, 218 F.2d 420,

422–23 (5th Cir. 1955). In another section 1001 case, we held that the

continuing nature of a false statement offense supported venue in the district

where a doctor signed and mailed false Medicare claims (the Western District

of Texas) in addition to where the government received those claims (the

Northern District of Texas). United States v. Herberman, 583 F.2d 222, 225–

27 (5th Cir. 1978) (explaining that “when the forms containing the alleged false

statements were prepared and forwarded to [the agency] in Dallas, there was

set in motion the events which allegedly culminated in the commission of the

offenses charged”).

Although these cases reject the Fourth Circuit’s view that the false

statement offense occurs only where the government receives the document,

Brown correctly points out that their signing-plus-mailing-equals-venue

holding does not directly address his situation because Johnson’s loan

application was signed in the Eastern District but mailed from the Northern

District. But the broader “continuing offense” holding of De Rosier and

Herberman strongly suggests that the act of making the false statement is

5

Case: 17-40740 Document: 00514586726 Page: 6 Date Filed: 08/06/2018

No. 17-40740

alone sufficient to establish venue. See United States v. Greene, 862 F.2d 1512,

1515–16 (11th Cir. 1989) (recognizing that precedent had not addressed

whether making the lie alone creates venue but concluding that view was a

natural consequence of cases using a continuing violation theory to find venue

where the lie and mailing occurred). That is because making the false

statement is what first “set[s] in motion” the crime. Herberman, 583 F.2d at

227. A later case confirms that this is the logical application of 18 U.S.C.

§ 3237(a) as the statute provides venue for continuing offenses where they

“were begun, continued, or completed.” United States v. Bryan, 896 F.2d 68

(5th Cir. 1990). A prosecution for creating false receipts of tax deductions,

Bryan did not mention the place of mailing in holding that “venue properly lies

where a false statement is prepared and signed, even though received and filed

elsewhere.” Id. at 72 (citing 18 U.S.C. § 3237(a)). 2

Other circuits that have addressed this question in recent decades agree

that the making of the false statement gives rise to venue. See United States

v. Clark, 728 F.3d 622, 623–25 (7th Cir. 2013) (reversing district court that

thought section 1001 prosecution could only be brought where the government

received the false statements); Greene, 862 F.2d at 1515–16 (concluding in

section 1014 prosecution that venue existed where false application was

completed); United States v. Zwego, 657 F.2d 248, 251 (10th Cir. 1981) (holding

2 None of these Fifth Circuit cases addresses venue under 18 U.S.C. § 1006. But we

see no reason why it should not also be treated as a continuing offense. We have applied the

continuing offense venue statute to the general false statement statute (18 U.S.C. § 1001),

see Herberman, 583 F.2d at 227; the offense of making false statements in tax returns (26

U.S.C. § 7602(2)), Bryan, 896 F.2d at 72; and even a false statement offense specific to HUD

(18 U.S.C. § 1012), see Henslee v. United States, 262 F.2d 750, 752–53 (5th Cir. 1959). And

other circuits have applied the same principle to the offense of making false statements “for

the purpose of influencing the Federal Housing Administration” or any FDIC-insured bank

(18 U.S.C. § 1014). See Greene, 862 F.2d at 1515–16; United States v. Zwego, 657 F.2d 248,

251 (10th Cir. 1981).

6

Case: 17-40740 Document: 00514586726 Page: 7 Date Filed: 08/06/2018

No. 17-40740

that the “proper venue for the offense of making false statement to a federally

insured bank may be either where the false statements were prepared,

executed, or made, or where the offense was completed upon receipt of the false

information by the bank”). The Fourth Circuit’s earlier view that venue lies

only in the place of government receipt thus appears to be a relic. Indeed, it

seems inconsistent with the Supreme Court’s instruction that the location of a

crime “must be determined from the nature of the crime alleged and the

location of the act or acts constituting it.” United States v. Anderson, 328 U.S.

699, 703 (1946), cited in United States v. Cabrales, 524 U.S. 1, 7 (1998). The

act criminalized in section 1006 is “mak[ing] any false entry in any book, report

or statement.” And the purposes of the venue requirement—convenience of

the defendant and witnesses and ensuring that the jury has a connection to

the case, Romans, 823 F.3d at 326 (Costa, J., concurring); Clark, 728 F.3d at

625 (citing United States v. Johnson, 323 U.S. 273, 275–76 (1944))—are much

better served by trying this case in the Eastern District of Texas where the

alleged lie took place than in Colorado where the agency happened to receive

the application.

Venue was proper.

III.

Having concluded that the trial could take place in the Eastern District,

we now consider Brown’s arguments that it was infected with error. He first

argues that there was a constructive amendment or at least fatal variance for

Count Three because the government focused its closing argument on lies in

the loan application as opposed to lies in the supporting documents, which

Brown contends is all the indictment charged. Although he acknowledges

7

Case: 17-40740 Document: 00514586726 Page: 8 Date Filed: 08/06/2018

No. 17-40740

some uncertainty about which of those labels is a better fit for this claim, 3 that

legal question ends up not mattering because the factual premises of this

argument do not hold up. 4

His first premise—that the indictment charged only falsehoods in the W-

2, pay stubs, and rent verification forms—is not how we read the indictment.

Count Three provides:

3 The difference is not always clear. See United States v. Adamson, 291 F.3d 606, 615

(9th Cir. 2002); 1 CHARLES ALAN WRIGHT ET AL., FED. PRAC. & PROC. § 128 (4th ed.). A

constructive amendment occurs when the court “permits the defendant to be convicted upon

a factual basis that effectively modifies an essential element of the offense charged” or upon

“a materially different theory or set of facts than that which [the defendant] was charged.”

United States v. McMillan, 600 F.3d 434, 451 (5th Cir. 2010). If an amendment has occurred,

reversal is automatic. United States v. Thompson, 647 F.3d 180, 184 (5th Cir. 2011). In

contrast, harmless error applies to a variance which results when there are differences

between the indictment and the jury instruction but they do not rise to the level of the

defendant being convicted of a separate crime. See United States v. Jara-Favela, 686 F.3d

289, 300 (5th Cir. 2012).

4 Brown faces another hurdle with this claim. The ultimate concern with a

constructive amendment or variance is that the jury should not be allowed to convict the

defendant of a crime not charged in the indictment. When that happens, there are notice and

double jeopardy concerns. See United States v. Baker, 17 F.3d 94, 98 (5th Cir. 1994).

Although the arguments and proof the government uses to convict the defendant can shed

light on what the jury actually decided, here the jury instruction specifically focused on false

statements in the supporting documents and thus was consistent with Brown’s view of what

the indictment charged.

8

Case: 17-40740 Document: 00514586726 Page: 9 Date Filed: 08/06/2018

No. 17-40740

To be sure, the indictment only lists the “W-2, pay stubs, and Verification of

Rent for Buyer” under the heading “False Statement,” and does not expressly

mention the loan application. But the indictment also alleges that the false

statements were made “in connection with an application for a home mortgage

loan.” And the indictment states that the listed supporting documents “were

affirmed as true at the closing.” As the trial judge noted, this language could

only refer to the affirmation section of the application.

The even bigger problem for Brown is that the underlying assumption of

his claim—that there is a difference between what the supporting documents

say and what the loan application says—is mistaken. As one might expect, the

application copies the wage and rental information from the supporting

documents; indeed, that is why they are “supporting.” For example, the W-2s

and pay stubs list Johnson’s monthly income as $1,669.50. So does the loan

9

Case: 17-40740 Document: 00514586726 Page: 10 Date Filed: 08/06/2018

No. 17-40740

application. 5 The Rent Verification Form lists $800 a month for her house. So

does the application. Because the loan application copied the wage and rent

data from the supporting documents, a finding that the latter are false means

the application contained the same falsehoods. And vice versa.

As there was no difference between the jury concluding that the

supporting documents were false and it deciding that the application contained

those same falsehoods, there was no constructive amendment or variance.

IV.

What we just said about the loan application and supporting documents

containing the same lies disposes of Brown’s first challenge to the sufficiency

of the evidence. It does not matter that the loan application does not expressly

affirm the veracity of the supporting documents. The application itself, which

required verification that “the information provided in this application” was

“true and correct,” included the same false statements about income and rental

payments. 6 And the testimony from Candace Mitchell allowed the jury to

conclude that Brown did not just know about the lies, but created them.

As for Brown’s challenge to the materiality of these lies, he failed to raise

it in either a motion for acquittal or one seeking a new trial. As neither the

government nor the district court were provided with notice of that alleged

deficiency, see United States v. McDowell, 498 F.3d 308, 312–13 (5th Cir. 2007),

plain error review applies. United States v. Delgado, 672 F.3d 320, 331 (5th

Cir. 2012). But even under de novo review, Brown’s argument fails.

5 On the same page where Johnson’s application states a $1,669.50 monthly income,

another section shows that her monthly income at Charles Pest Control, Inc. was only

$669.50. Looking at the entire application, the missing “1” in that box is a typo.

6 What is more, a false statement offense does not require that the lie be sworn or

verified unless the statute includes such a requirement. See United States v. Krause, 507

F.2d 113, 117 (5th Cir. 1975) (noting that a false statement need not be sworn or verified to

be a section 1001 violation).

10

Case: 17-40740 Document: 00514586726 Page: 11 Date Filed: 08/06/2018

No. 17-40740

The government need not show that the false entry actually “affected the

lending decision,” as Brown contends. The false statement only needs to have

“natural tendency to influence, or be capable of affecting or influencing, a

government function.” United States v. Swaim, 757 F.2d 1530, 1534 (5th Cir.

1985) (explaining “material fact” in context of section 1001 violation); United

States v. Beuttenmuller, 29 F.3d 973, 982 (5th Cir. 1994) (applying that

materiality standing to section 1006 violation), overruled in part on other

grounds by United States v. Gaudin, 515 U.S. 506 (1995). An officer in HUD’s

Quality Assurance Department testified how a prospective homeowner’s rent

history and income affect the lending decision. Of course, the relevance of

those questions to a lending decision is why the application asks them and why

Brown thought the answers were important enough to go to the risk of lying

about them and manufacturing fake documents to support the lies.

The evidence supports the verdict.

V.

Brown’s final claim takes issue with the following remarks the

prosecution made during its rebuttal at the end of trial:

It’s not the prosecution, not the agents, not the defense, not even –

not even the judge. You – 12 of you coming together collectively.

A collective decision, decide the truth in this case. What is this case

about. And that’s what trials fundamentally are about. Our

judicial system, it is a search for the truth. That is what a trial is.

There is a dispute about what happened. And so in a civilized way,

this is how we come to decide – 12 members of the community

decide the truth.

The prosecutor then urged the jury to keep its “eye on the ball [and] discover

the truth.” These arguments, Brown maintains, invited the jury to decide the

case based on which version of events was more likely true, thereby diluting

the beyond-a-reasonable-doubt burden.

11

Case: 17-40740 Document: 00514586726 Page: 12 Date Filed: 08/06/2018

No. 17-40740

But the prosecutor’s comments do not raise the same concern as the jury

instruction that was challenged in United States v. Gonzalez-Balderas, 11 F.3d

1218, 1223 (5th Cir. 1994). Even though that comment telling the jury that its

“sole interest is to seek the truth” came from the judge, we found no error

because the statement was made at the end of the charge in the context of

telling the jury it was the judge of the facts as opposed to earlier when the court

repeatedly emphasized the burden of proof. Id. A prosecutor’s comments,

which lack the imprimatur of the neutral judge, so should not be “equate[d]”

with jury instructions. United States v. Harper, 662 F.3d 958, 961 (7th Cir.

2011) (noting that “instructions from the court carry more weight with jurors

than do arguments made by attorneys”). And the prosecutor, like the court in

Gonzalez-Balderas, did not make the statement when discussing the burden of

proof. When that topic came up during the closing, the government repeatedly

and accurately recited its heavy burden. There was no error in telling the jury

it had to “decide the truth,” which after all is what “verdict” means. See 2

ALEXANDER M. BURRILL, A LAW DICTIONARY AND GLOSSARY 584 (New York,

Baker, Voorhis & Co. 2d ed. 1867) (explaining that the term “verdict” comes

from the Latin expression veredictum, which means a “declaration of the

truth”).

***

The judgment is AFFIRMED.

12