In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 11‐3006 & 11‐3018
UNITED STATES OF AMERICA,
Plaintiff‐Appellee,
v.
SAMANTHA JOHNSON and TRACI GRAY,
Defendants‐Appellants.
____________________
Appeals from the United States District Court for the
Western District of Wisconsin.
Nos. 3:11‐cr‐13‐bbc‐2 & 3:11‐cr‐13‐bbc‐1 — Barbara B. Crabb, Judge.
____________________
ARGUED JUNE 1, 2012 — DECIDED SEPTEMBER 6, 2013
____________________
Before FLAUM, ROVNER, and WILLIAMS, Circuit Judges.
WILLIAMS, Circuit Judge. Like many other couples, Traci
Gray and Vince Anderson wanted to buy a home for their
family. With the help of Gray’s friend, Samantha Johnson,
and the assistance of a shady mortgage broker, Gray and
Anderson were able to obtain a loan to finance their home
purchase—albeit with a falsified loan application. Several
years after they bought the home, a jury convicted Gray and
2 Nos. 11‐3006 & 11‐3018
Johnson on charges of mortgage fraud and conspiring to
commit mortgage fraud.
On appeal, Gray and Johnson argue that the government
failed to present sufficient evidence to prove they conspired
to commit mortgage fraud beyond a reasonable doubt. But
we think the jury had enough evidence to conclude that
Gray and Johnson conspired with their mortgage broker to
submit a loan application that included statements they
knew to be false in order to influence the lender’s decision.
Gray and Johnson also contend that the district court abused
its discretion by denying them the opportunity to present
testimony from other borrowers to show their mortgage
broker’s history of duping his clients. Because the broker’s
prior wrongdoing was not very probative of Gray’s and
Johnson’s guilt, the district court acted within its discretion
when it granted the government’s motion in limine to ex‐
clude testimony from other borrowers about the broker’s in‐
teractions with them. We affirm.
I. BACKGROUND
In 2006, Gray, a legal secretary, and Anderson, her boy‐
friend, decided to purchase a $322,000 home in Prairie du
Sac, Wisconsin. They planned to live in the home with their
children, with Anderson paying half the mortgage. Gray
sought financing with the assistance of Brian Bowling, a
mortgage broker who owned a company called Platinum
Concepts. Due to Anderson’s bad credit, however, the couple
did not qualify for financing. Gray then tried to qualify with
her brother, but they too were unsuccessful.
On October 3, Gray’s friend Samantha Johnson sent Gray
an email offering to be her co‐borrower, under the condition
Nos. 11‐3006 & 11‐3018 3
that Gray provide her with a written promise that she would
only be on the loan as a co‐borrower for two years. (Johnson
received a finder’s fee from Shannon Barman, who was the
general contractor, the daughter of the builder/seller, and
Johnson’s childhood friend.) Gray forwarded the email to
Bowling and asked whether Johnson could apply for the
loan with her as a non‐occupant borrower. Bowling, who be‐
lieved the arrangement was feasible, informed Gray that she
could now qualify for a non‐occupant, stated‐income loan.
After reviewing the proposed terms of that loan, however,
Gray decided against applying because the monthly pay‐
ment was too high. Bowling then offered an owner‐occupy,
stated‐income loan for her and Johnson. Although the own‐
er‐occupy loan required Gray and Johnson to obtain a larger
second mortgage to finance their home purchase, they de‐
cided to go ahead and apply anyway. Bowling sent their ap‐
plication to Fremont Investment & Loan, a federally insured
lender who specialized in stated‐income loans, also known
as “liars’ loans” because the lender typically did not verify
the financial information supplied by applicants for such fi‐
nancing. See United States v. Phillips, Nos. 11‐3822 & 11‐3824,
2013 U.S. App. LEXIS 18430, at *4 (7th Cir. Sept. 4, 2013) (en
banc).1
1 A recent en banc decision dealt with another instance of alleged mort‐
gage fraud involving the same dishonest mortgage broker from this case.
See Phillips, 2013 U.S. App. LEXIS 18430, at *2‐4. The appellants in Phillips
challenged the exclusion of testimony regarding statements their broker
made to them concerning the meaning of certain terms in the mortgage
application and the importance that the lender would attach to certain
information in their application. See id. at *9‐13. A majority of this court
found this exclusion to be erroneous. Id. at *21‐22. Gray and Johnson
(continued)
4 Nos. 11‐3006 & 11‐3018
Bowling testified that, at some point prior to the closing,
he had a telephone conversation with both Johnson and
Gray to review the information he supplied in their final
loan application. According to Bowling, he told both women
that they would be listed as occupants of the property, that
their incomes would be inflated, and what the monthly
payment for the loan would be. Bowling did this to avoid
any possibility that Johnson and Gray would be surprised by
the application information or the loan terms and refuse to
go forward with the closing.
Shortly before the closing, Bowling held an in‐person
meeting at his office with Gray, Johnson, builder/seller Dick
Hinrichs, and Barman to review the terms of the proposed
owner‐occupy loan and to discuss the need for a second
mortgage from Hinrichs. Although Hinrichs initially balked
at the second mortgage because its terms required him to
lend more than he expected, he ultimately relented and even
agreed to forgive $32,000 of the $48,000 second mortgage.
The parties signed the second mortgage that evening and
forward‐dated it to November 16, the date of the closing.
Gray, Johnson, Bowling, Hinrichs, Barman, and the clos‐
ing agent all attended the closing. Gray and Johnson ini‐
tialed every page of the final loan application and signed it
in four places, including once above a written notice that it is
have not raised such an argument here. Instead, their appeal challenges
the sufficiency of the evidence to sustain the conspiracy verdict and the
exclusion of extrinsic evidence related to their broker’s prior bad acts in
preparing fraudulent loan documents for other clients. Given the differ‐
ences in the claims raised in each case, we do not rely on Phillips in de‐
ciding this appeal.
Nos. 11‐3006 & 11‐3018 5
a federal crime to knowingly make a false statement on a
loan application. The closing proceeded without incident,
and Gray and Johnson received a $273,700 mortgage from
Fremont and, at least on paper, a $48,300 second mortgage
from the seller.
Gray and Johnson acknowledge that the final loan appli‐
cation which they initialed and signed contained a number
of false statements. Among other untrue assertions, both
Gray and Johnson stated that they: earned a combined
$11,000 per month; would live in the home together as their
primary residence; would make the mortgage payments to‐
gether; and would have a second mortgage with the seller
for $48,300 to cover the difference between the purchase
price of the home and the mortgage they received from
Fremont. In reality, Gray and Johnson had a combined
monthly income of approximately $5,000, Johnson would
not be living in the home or contributing to the mortgage,
and the seller forgave $32,000 of the $48,300 second mort‐
gage before the closing.
Mortgage broker Bowling became the subject of a federal
investigation into his involvement in mortgage fraud. Sen‐
tenced to fifty‐one months’ imprisonment, he agreed to testi‐
fy against Gray, Johnson, and other clients, in hopes of hav‐
ing his sentence reduced. At Gray’s and Johnson’s June 2011
trial, Bowling testified about the scheme to falsify the loan
documents, his discussions with Gray and Johnson regard‐
ing the false information he included in the loan application,
and a meeting where the parties discussed the details of the
scheme. He could not, however, remember the dates of these
interactions.
6 Nos. 11‐3006 & 11‐3018
On cross examination, Bowling admitted to submitting
false loan applications, inflating applicants’ income, exag‐
gerating assets, understating liabilities, falsifying job titles
and employment histories, misrepresenting the sources of
down payments, and engaging in silent second mortgages.
Counsel also impeached Bowling with specific instances of
untruthful conduct including forging signatures on loan
documents.
The government called several other witnesses, including
Anderson, Hinrichs, the general contractor, and the closing
agent. Anderson testified that Johnson did not live at the
home or contribute to the mortgage and that the plan was to
have her on the loan for two years until he could improve his
credit score. The closing agent testified that with Gray and
Johnson she would have followed her standard practice at
closing, which is to review each document with the buyer,
provide a brief overview, and allow the buyers time to read
the document if they so choose.
Neither Gray nor Johnson testified. They called a few
witnesses, including two former loan officers who worked
for Bowling and who testified that he was not a truthful per‐
son by reputation or in their personal opinion.
The jury convicted Gray and Johnson on both counts,
and the court sentenced Gray to two months’ imprisonment
and Johnson to one day of confinement. The court also or‐
dered both women to pay $66,377 in restitution. Gray and
Johnson appeal, challenging the sufficiency of the evidence
for the conspiracy count and the district court’s decision to
exclude extrinsic evidence of Bowling’s history of duping
innocent borrowers.
Nos. 11‐3006 & 11‐3018 7
II. ANALYSIS
A. Sufficient Evidence to Support Gray’s and Johnson’s
Conspiracy Convictions
Gray and Johnson first argue that the evidence before the
jury was insufficient to sustain a conviction on the conspira‐
cy count. A defendant challenging a jury verdict must
demonstrate that no reasonable jury could have reached the
same verdict. United States v. Farris, 532 F.3d 615, 618 (7th Cir.
2008). We will “overturn a conviction based on insufficient
evidence only if the record is devoid of evidence from which
a reasonable jury could find guilt beyond a reasonable
doubt.” United States v. Hills, 618 F.3d 619, 637 (7th Cir. 2010).
Under 18 U.S.C. § 1014, it is a crime to “knowingly
make[] any false statement or report … for the purpose of
influencing in any way the action of” a federally insured in‐
stitution. To satisfy its burden of showing that the appellants
engaged in a conspiracy to violate § 1014, the government
must prove that (1) the conspiracy charged in the indictment
existed; (2) each defendant knowingly became a member of
the conspiracy with an intention to further the conspiracy;
and (3) a member of the conspiracy committed an overt act
in furtherance of the conspiracy. United States v. Lee, 558 F.3d
638, 645 (7th Cir. 2009).
The government’s evidence was sufficient to support the
jury’s verdict. First, Bowling’s testimony that he brokered the
loan at issue, that he reviewed the false statements he made
in the final loan application with Gray and Johnson prior to
8 Nos. 11‐3006 & 11‐3018
the closing, and that Gray and Johnson agreed to those falsi‐
ties to obtain the desired loan strongly support the existence
of the conspiracy to knowingly make false representations to
influence the lender’s decision. The government also pre‐
sented evidence that both Gray and Johnson knowingly par‐
ticipated in the conspiracy. Bowling testified that he, Gray,
Johnson, and Hinrichs met before the closing to discuss the
terms of the owner‐occupy loan and the second mortgage
from Hinrichs. He also testified that Gray turned down the
non‐occupant borrower loan (in favor of the owner‐occupant
loan) because the monthly payments were too high. In addi‐
tion to Bowling’s testimony, the government introduced the
October 3 email from Johnson to Gray in which Johnson of‐
fered to be on the loan for two years and which Gray then
forwarded to Bowling. The government also offered into ev‐
idence the final loan application, which included the false
statements and Gray’s and Johnson’s initials and signatures.
Finally, the government proved overt acts in furtherance of
the conspiracy with the October 3 email and the signed and
submitted false loan application. A reasonable jury could
have found Gray and Johnson guilty of conspiracy based on
this evidence.
On appeal, Gray and Johnson contend that they never
reviewed the falsified loan application and that Bowling’s
testimony to the contrary is not credible. Without that testi‐
mony, Gray and Johnson argue, the government’s evidence
of conspiracy is insufficient. This argument is unpersuasive.
To the extent the jury credited Bowling’s testimony, we
will only set that credibility determination aside if the testi‐
mony is “exceedingly improbable.” United States v. Smith,
576 F.3d 681, 687 (7th Cir. 2009) (internal quotation marks
Nos. 11‐3006 & 11‐3018 9
and citations omitted). Exceedingly improbable testimony is
that which is “internally inconsistent or implausible on its
face.” United States v. Cardona‐Rivera, 904 F.2d 1149, 1152 (7th
Cir. 1990).
Gray and Johnson repeatedly characterize Bowling’s tes‐
timony as “internally inconsistent.” This characterization is
inaccurate. A fairer representation of Bowling’s testimony
would be “imprecise.” For example, Bowling admitted that
he could not recall the dates of a key meeting and phone
conversations with Gray and Johnson. But he consistently
testified that the meeting and phone calls occurred, and
Gray and Johnson presented no evidence to the contrary.
Bowling’s inability to recall dates does not make his testimo‐
ny internally inconsistent.
Gray and Johnson also argue that Bowling’s testimony is
improbable because the government failed to introduce evi‐
dence confirming the phone calls between Bowling and the
Defendants. According to their reasoning, since the govern‐
ment did not introduce evidence corroborating the phone
calls, they must not have happened. But the jury was not re‐
quired to make the same leap in logic.
Key documents and other witnesses corroborated many
portions of Bowling’s testimony as to Gray’s and Johnson’s
involvement in the conspiracy. The most important piece of
evidence was the loan application containing numerous false
statements which Gray and Johnson initialed and signed in
the presence of Bowling and others at the closing. The Octo‐
ber 3 email showed the terms of the actual agreement be‐
tween Gray and Johnson in writing. And Gray’s boyfriend
testified that Johnson did not live with the couple and that
they planned to replace Johnson on the loan within two
10 Nos. 11‐3006 & 11‐3018
years. Both Hinrichs and Barman testified that they met with
Gray, Johnson, and Bowling at Bowling’s office shortly be‐
fore the closing to discuss the loan and the second mortgage
from Hinrichs. Furthermore, the evidence before the jury
showed that Gray and her boyfriend found the home, that
Gray recruited other potential co‐borrowers, and that John‐
son reached out to Gray and received a finder’s fee.
Gray and Johnson emphasize Bowling’s lack of credibil‐
ity, pointing specifically to his admission of illegal activity.
The jury was aware of Bowling’s fraud and dishonesty, and
defense counsel impeached him on specific instances of un‐
truthful conduct. That the jury credited his testimony in
spite of his history is not grounds for overturning the jury’s
verdict. See, e.g., United States v. Wilson, 31 F.3d 510, 514 (7th
Cir. 1994) (holding that evidence will not be considered in‐
credible as a matter of law even if “totally uncorroborated
and comes from an admitted liar, convicted felon, large‐scale
drug dealing, paid government informant”).
B. Excluding Extrinsic Evidence of Bowling’s Dealings
with Other Borrowers Was Not an Abuse of Discre‐
tion
Before trial, the government filed a motion in limine to
preclude Gray and Johnson from introducing extrinsic evi‐
dence that Bowling prepared false loan applications for oth‐
er borrowers who were not aware that he was doing so. The
court granted the motion, explaining that Gray and Johnson
could cross‐examine Bowling about his prior bad acts and
whether he duped other borrowers but under Federal Rule
of Evidence 608(b), they could not prove those prior bad acts
with extrinsic evidence—namely, the testimony of borrowers
duped by Bowling. The district court also rejected Gray’s
Nos. 11‐3006 & 11‐3018 11
and Johnson’s argument that such testimony would be ad‐
missible under Rule 404(b). Gray and Johnson challenge that
decision, arguing that the court’s refusal to allow them to in‐
troduce evidence of Bowling’s past dealings with unsuspect‐
ing borrowers prevented them from negating one of the key
elements of the government’s case: that they knowingly par‐
ticipated in the conspiracy.
“We review a district court’s decision to admit or exclude
evidence for abuse of discretion.” United States v. Boros, 668
F.3d 901, 907 (7th Cir. 2012). Federal Rule of Evidence 404(b)
generally prohibits “[e]vidence of a crime, wrong, or other
act … to prove a person’s character in order to show that on
a particular occasion the person acted in accordance with the
character.” That rule allows such evidence in limited situa‐
tions, namely to prove “motive, opportunity, intent, prepara‐
tion, plan, knowledge, identity, absence of mistake, or lack of
accident.” Fed. R. Evid. 404(b)(2).
A defendant can “introduce evidence of a government
witness’s prior bad acts if that evidence tends to negate the
defendant’s guilt.” United States v. Sanders, 708 F.3d 976, 992
(7th Cir. 2013). When a defendant seeks to admit this “non‐
defendant” or “reverse” 404(b) evidence, “a district court
should balance the evidence’s probative value under Rule
401 against considerations such as prejudice, undue waste of
time[,] and confusion of the issues under Rule 403.” United
States v. Reed, 259 F.3d 631, 634 (7th Cir. 2001); see also United
States v. Seals, 419 F.3d 600, 606 (7th Cir. 2005). We have not‐
ed that in most cases “the only serious objection to [reverse
404(b)] evidence is that its probative value is slight, as it may
just amount to pointing a finger at someone else who, hav‐
ing a criminal record, might have committed the crime the
12 Nos. 11‐3006 & 11‐3018
defendant is accused of committing.” United States v. Murray,
474 F.3d 938, 939 (7th Cir. 2007).
The district court did not abuse its discretion in exclud‐
ing extrinsic evidence of Bowling’s prior instances of falsify‐
ing loan documents without the applicants’ knowledge. The
probative value of the reverse 404(b) evidence here was
slight. Whether Bowling had a pattern and practice of pre‐
paring fraudulent loan applications that defrauded both
lenders and borrowers was not the issue in this trial. The dis‐
trict court acted within its discretion when it determined
that allowing extrinsic evidence to prove Bowling’s prior bad
acts would distract jurors from the issue at hand—whether
Gray and Johnson knew that the documents they initialed
and signed contained false statements. See United States v.
Alayeto, 628 F.3d 917, 922 (7th Cir. 2010) (affirming exclusion
of reverse 404(b) evidence in light of “danger that the jurors
would be distracted from the central issue in the case—
[defendant]’s intent—by prolonged discussions of [accom‐
plice]’s post‐arrest activities”). Even if Bowling had a history
of duping borrowers, Gray and Johnson still could have will‐
ingly conspired with him to submit their falsified applica‐
tion. Their knowledge—not his history—was what the jury
needed to determine. See, e.g., id. (affirming trial court’s ex‐
clusion of instances in which accomplice convinced other
drug mules to transport drugs when “contested evidence
may have demonstrated [accomplice’s] intent to deliver the
narcotics, but it would not have been significantly probative
of [defendant]’s intent”).
Furthermore, the district court was within its discretion
in excluding this extrinsic evidence because Bowling’s testi‐
mony made the jury well aware of his capacity for defraud‐
Nos. 11‐3006 & 11‐3018 13
ing others without their knowledge. On cross‐examination,
Bowling admitted to committing a number of acts of mort‐
gage fraud over the years, including falsifying income val‐
ues, forging signatures, and mischaracterizing the occupan‐
cy status of applicants. Although Bowling never testified
that he did these things without the applicants’ knowledge,
the jury was still aware that Bowling had previously made
material misrepresentations to lenders and the lenders had
no idea Bowling lied to them. In light of the jury’s awareness
of Bowling’s nature as a serial fraudster, the extrinsic evi‐
dence Gray and Johnson sought to introduce would have
added little to the jury’s understanding of Bowling’s in‐
volvement in the mortgage fraud conspiracy.
III. CONCLUSION
For the reasons set forth above, we AFFIRM the judg‐
ment of the district court.