United States v. Jimenez

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit

1-14-2008

USA v. Jimenez
Precedential or Non-Precedential: Precedential

Docket No. 05-4098

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

Case Nos: 05-4098, 05-4099, 05-4106, 05-4107, 05-4157

UNITED STATES OF AMERICA

v.

FERNANDO JIMENEZ,
Appellant in Case No: 05-4098

UNITED STATES OF AMERICA

v.

ANA MARTELL,
Appellant in Case No: 05-4099

UNITED STATES OF AMERICA

v.

KATHY GIUNTA,
Appellant in Case No: 05-4106
 UNITED STATES OF AMERICA

v.

LUIS NIEVES,
Appellant in Case No: 05-4107

UNITED STATES OF AMERICA

v.

RENE ABREU,
Appellant in Case No: 05-4157

________________________

On Appeal from the United States District Court
for the District of New Jersey
District Court No.: 02-cr-00337
District Judge: The Honorable Joseph A. Greenaway, Jr.
________________________

Argued April 10, 2007

2
 Before: SMITH, NYGAARD, and HANSEN,*
Circuit Judges

(Filed: January 14, 2008)

Counsel:
David W. Fassett, Esq. (argued)
Arseneault Fassett & Mariano, LLP
560 Main Street
Chatham, NJ 07928
Counsel for Appellant Fernando Jimenez

Timothy M. Donohue, Esq.
Arleo & Donohue, L.L.C.
622 Eagle Rock Avenue
Penn Federal Building
West Orange, NJ 07052
Counsel for Appellant Ana Martell

Alain Leibman, Esq.
Stern & Kilcullen
75 Livingston Avenue
Roseland, NJ 07068
Counsel for Appellant Kathy Giunta

*
The Honorable David R. Hansen, Senior Circuit Judge
of the United States Court of Appeals for the Eighth Circuit,
sitting by designation.

3
Brian J. Neary, Esq.
190 Moore Street
Hackensack, NJ 07601
Counsel for Appellant Luis Nieves

Gerald Krovatin, Esq. (argued)
Krovatin & Associates, LLC
744 Broad Street, Suite 1903
Newark, NJ 07102
Counsel for Appellant Rene Abreu

Christopher J. Christie, Esq.
George S. Leone, Esq.
Glenn J. Moramarco, Esq. (argued)
United States Attorney Office
970 Broad Street
Newark, NJ 07102-2535
Counsel for Appellee

________________________

OPINION
________________________

HANSEN, Circuit Judge.

At the conclusion of a three-and-a-half month jury trial,
Fernando Jimenez, Ana Martell, Kathy Giunta, Luis Nieves, and
Rene Abreu were each convicted of one or more counts of a 47-
count superceding indictment stemming from eight related

4
conspiracies involving inter alia mortgage fraud and bank fraud.
The Appellants each appeal their convictions and sentences in
this consolidated appeal. We will affirm.

I. Background

After a jury verdict, we review the facts in the light most
favorable to the verdict. Rene Abreu owned and/or controlled
several companies related to the real estate industry. Mortgage
Pros, Inc. was a mortgage brokerage company that secured
residential and commercial loans from financial institutions for
clients attempting to buy a house or commercial property; Abreu
Real Estate was a realty company; and RLA Homes, Inc.
managed the development, construction, and sale of realty.

Fernando Jimenez and Kathy Giunta worked for
Mortgage Pros as loan processors. Ana Martell was the
bookkeeper for Mortgage Pros as well as for other of Abreu's
companies. Many of Mortgage Pros' customers lacked sufficient
income, assets, or employment history to qualify for a residential
mortgage. When customers failed to qualify for a mortgage,
Martell, at Abreu's direction, fabricated federal tax returns,
inflated the income listed on existing W-2 forms, or provided
false pay stubs for the customer. Martell, Jimenez, and Giunta
each participated in completing false forms needed to qualify the
customer for a mortgage, including Verification of Employment
(VOE) forms, HUD-1 settlement statements, and sales contracts.
Mortgage Pros charged and received a fee, generally paid in

5
cash, in exchange for providing the false documents. The
creation of false documents was common knowledge among the
Mortgage Pros employees, many of whom assisted on occasion
in destroying records at Abreu's direction.

Some of Mortgage Pros' customers, who relied on the
false documentation to obtain a mortgage they could not afford,
eventually defaulted on their mortgages and lost their homes,
resulting in losses to the lenders as well. The indictment charged
Abreu, Martell, Jimenez, and Giunta with conspiring to commit,
and committing, mail fraud for submitting via the mail false loan
applications related to the residential mortgage loan fraud
scheme, which occurred between November 1992 and July
1997. They each were convicted by the jury of the conspiracy
charge. Various members of the conspiracy were charged with
numerous substantive mail fraud counts based on particular loan
files. The jury returned convictions on most of the substantive
counts, but acquitted on some of those counts.

The commercial mortgage fraud conspiracy operated in
a manner similar to the residential mortgage fraud conspiracy
and allegedly involved Abreu, Martell, Giunta, and Luis Nieves,
who was a senior vice-president in the commercial loan
department at Hudson United Bank (HUB). Nieves managed
Abreu's commercial accounts at HUB. Abreu, Martell, and
Giunta submitted commercial loan applications containing false
and forged information for Mortgage Pros' commercial
customers as well as for Abreu's own companies. Nieves

6
approved the commercial loan applications, allegedly acting
with the knowledge that the documentation contained false
information. The jury convicted Abreu, Martell, and Giunta of
the conspiracy and the substantive mail fraud charges related to
the commercial loan conspiracy but acquitted Nieves of those
charges.

The bank fraud conspiracy charge stems from a check
kiting scheme carried on by Abreu and his employees involving
several accounts maintained by Abreu's companies with HUB.
Abreu transferred large amounts of money between his 30
accounts at HUB by writing checks from one account to another.
Nieves, as senior vice-president of the commercial department
at HUB, authorized HUB to cover Abreu's overdrafts, and
routinely allowed Abreu to cover an overdraft in one account
with a check drawn on another HUB account that likewise
lacked sufficient funds to cover the check. Nieves also
approved overdrafts that exceeded the amount he was authorized
to approve. During a one-year period, there were 280 days in
which an overdraft existed in at least one of Abreu's accounts
that exceeded $500,000; on 21 days during that time frame, the
overdraft exceeded $1 million.

HUB's upper management reviewed reports generated by
HUB's computer system that reported any individual account
with a negative balance of at least $5,000 that remained
overdrawn for more than five days. Martell carried out the
check kiting scheme, writing the checks between accounts and

7
ensuring the money moved between accounts in a timely manner
so as to avoid detection on HUB's 5-day overdraft management
report. HUB's executive vice-president learned of the overdrafts
in June 2001, and he contacted Abreu about the $1.3 million
overdraft that existed on June 15, 2001. It took Abreu until July
9, 2001, to repay the full overdraft amount, much of which came
from HUB's actions of applying funds from Abreu-related
accounts to the overdraft balance. The jury found Abreu,
Martell, and Nieves each guilty of the bank fraud conspiracy
charge, which lasted from April 1996 through June 2001.

Abreu, Martell, and Giunta were also charged with
conspiring to structure cash transactions to avoid the bank's
filing of currency transaction reports, required for transactions
of $10,000 or more in cash. Over a five-year period, Abreu
deposited over $2 million in cash in various accounts held at
HUB, with no single deposit exceeding $10,000. Martell and
Giunta also deposited cash into their personal accounts and
wrote corresponding checks to Abreu. All three were convicted
of the conspiracy charge and some of the substantive structuring
charges.

Following the jury verdict, the defendants filed a joint
motion for a judgment of acquittal or, in the alternative, a new
trial. The district court denied both motions.1

1
Other counts involving a money laundering conspiracy,
an extortion conspiracy, and a tax fraud conspiracy were either

8
 Abreu was convicted of 20 counts and was sentenced to
87 months of imprisonment. He raises the following issues on
appeal: 1) the district court's refusal to remove a juror for cause;
2) whether bank fraud premised on check kiting requires the
involvement of more than one bank; 3) jury instructions related
to the check kiting count; 4) the district court's limitations on
cross-examination; 5) whether documentary evidence introduced
against him violated the Confrontation Clause or the Federal
Rules of Evidence; and 6) the reasonableness of his sentence.

Jimenez was charged in only two of the 47 counts in the
superceding indictment and was convicted of both. He was
sentenced to six months of imprisonment. On appeal, he
challenges: 1) the district court's refusal to sever his trial from
the other codefendants; 2) the sufficiency of the evidence to
support the substantive mail fraud count; 3) evidentiary rulings;
4) alleged prosecutorial misconduct; and 5) he joins the
arguments advanced by the other Appellants as applicable to
him, particularly Abreu's juror challenge and the challenge to the
documentary evidence.

Martell was convicted of eleven counts and was
sentenced to 30 months of imprisonment. She joins each of the
issues raised by Abreu and separately appeals the district court's

dismissed by the court or resulted in acquittal following the jury
trial. None of these counts are relevant to this appeal and are
not discussed herein.

9
calculation of her sentence.

Giunta was convicted of twelve counts. She was
sentenced to 24 months of imprisonment and ordered to pay
$499,563.27 in restitution to several banks. On appeal, she joins
Abreu's arguments related to the district court's refusal to strike
a juror for cause and the Confrontation Clause and evidentiary
issues related to the documentary evidence. She also appeals
her sentence.

Nieves was convicted of one count of conspiracy to
commit bank fraud. He was sentenced to 40 months of
imprisonment and fined $10,000. On appeal, he joins Abreu's
arguments related to: the district court's refusal to strike a juror
for cause; whether the conduct involved violated the bank fraud
statute; the jury instructions related to the bank fraud count;
Confrontation Clause and evidentiary rulings; and the
limitations imposed on cross-examination. He also appeals his
sentence as unreasonable.

II. Common Challenges on Appeal

A. Refusal to Strike a Juror for Cause

The Appellants each challenge the district court's refusal
to strike a prospective juror for cause. On the fourth day of jury
selection, Jimenez's attorney brought to the district court's
attention an "incident" that had occurred earlier that morning in

10
the women's restroom, in which Juror 14 exhibited what
Jimenez's attorney believed to be an aggressive attitude toward
her about who was next in line. During the subsequent voir dire
of Juror 14, she was asked about inconsistent answers that she
had given on her juror questionnaire regarding the presumption
of innocence. Upon further questioning by the district court, the
court was satisfied that Juror 14 would correctly hold the
Government to its burden of proof and consider the defendants
innocent until that burden was met. The court refused the
defendants' request to strike Juror 14 for cause. The defendants
ultimately used one of their peremptory strikes to dismiss Juror
14 and used all of their peremptory strikes on remaining jurors.

We review the district court's decision concerning
whether to seat a juror for an abuse of discretion. See United
States v. Lopez, 271 F.3d 472, 489 (3d Cir. 2001), cert. denied,
535 U.S. 908 (2002). "Determining whether a prospective juror
can render a fair verdict lies peculiarly within a trial judge's
province. . . . Therefore, the trial court's resolution of such
questions is entitled, even on direct appeal, to special
deference." United States v. Murray, 103 F.3d 310, 323 (3d Cir.
1997) (internal marks and citations omitted). The district court
questioned the juror extensively about her understanding of the
burden of proof and the presumption of innocence and
ultimately allowed the defense attorneys to conduct voir dire
concerning the bathroom incident, despite the district court's
conclusion that the incident was inconsequential.

11
 Given the deference afforded the district court, we cannot
say that the district court abused its discretion in refusing to
strike Juror 14 for cause. Further, the defendants were granted
four extra peremptory strikes than those provided under Federal
Rule of Criminal Procedure 24(b), they had two strikes
remaining after they used one to strike Juror 14, and they have
offered no evidence that the jury that was ultimately seated was
biased. Even if Juror 14 should have been excused for cause,
the defendants suffered no Rule violation or Due Process
violation. See United States v. Martinez-Salazar, 528 U.S. 304,
307 (2000) ("[I]f the defendant elects to cure [the district court's
error in refusing to dismiss a juror for cause] by exercising a
peremptory challenge, and is subsequently convicted by a jury
on which no biased juror sat, he has not been deprived of any
rule-based or constitutional right."); United States v. Powell, 226
F.3d 1181, 1186 (10th Cir. 2000) (holding that the defendant
suffered no rule or due process violation as to a particular
prospective juror that should have been excused for cause where
defendant used his last peremptory strike to remove that juror),
cert. denied, 531 U.S. 1166 (2001).

B. Bank Fraud Conviction

Abreu, Martell, and Nieves, the three appellants
convicted of conspiring to commit bank fraud under count 14 of
the superceding indictment, challenge the district court's denial
of their motion for a judgment of acquittal on the 18 U.S.C.
§ 1344 conviction, contending that a check kiting scheme

12
necessarily requires kiting between at least two banks. A
motion for judgment of acquittal should be denied if, after
viewing the evidence in the light most favorable to the
prosecution, any rational trier of fact could have found the
essential elements of the crime beyond a reasonable doubt.
United States v. Brodie, 403 F.3d 123, 133 (3d Cir. 2005). We
review the district court's denial of the motion de novo. Id.

Section 1344(1) makes criminal the "knowing[]
execut[ion of], or [the] attempt[] to execute, a scheme or artifice
to defraud a financial institution." There is no dispute that
check kiting, that is, "[t]he illegal practice of writing a check
against a bank account with insufficient funds to cover the
check, in the hope that the funds from a previously deposited
check will reach the account before the bank debits the amount
of the outstanding check," Black's Law Dictionary 231 (7th ed.
1999), violates the bank fraud statute, see, e.g., United States v.
Geevers, 226 F.3d 186 (3d Cir. 2000). The issue we address
today is essentially a legal question: whether a check kiting
scheme involving only one bank, where the defendant moves
funds between various accounts at that institution, violates the
bank fraud statute.

We agree with the defendants that this case does not
involve a "typical" check kiting scheme, which generally
involves moving funds between two or more banks, allowing the
account holder to play the float. But § 1344 does not
criminalize only typical check kiting schemes. The statute is

13
broad and includes any scheme to defraud a federally insured
financial institution. See United States v. Leahy, 445 F.3d 634,
646 (3d Cir. 2006) ("The purpose of the bank fraud statute is to
protect the financial integrity of [banking] institutions . . . [and]
to fill gaps existing in federal jurisdiction over frauds in which
the victims are financial institutions that are federally created,
controlled or insured." (internal marks and citation omitted)).
We focus then on whether the defendants' actions in this case
amounted to a scheme to defraud a financial institution.

"[W]here the bank is a direct target of the deceptive
conduct or scheme, § 1344 is satisfied by proof of a specific
intent to defraud the bank plus fraudulent conduct (e.g.,
misrepresentations) which creates an actual loss or a risk of
loss." Id. The fraudulent nature of a typical check kiting
scheme has been described as thus:

By depositing in one account checks drawn on
other insufficiently funded accounts, the offender
in a check-kiting scheme tricks two or more banks
into inflating account balances and honoring bad
checks. In effect, the offender writes himself a
series of unauthorized, unsecured, and
interest-free "loans," which may or may not be
repaid. His actions put the banks at risk for the
amount of the insufficient funds and deprive the
banks of their assets by placing the unauthorized
funds at the disposal of the check kiter.

14
United States v. Flowers, 55 F.3d 218, 219 n.1 (6th Cir.), cert.
denied, 516 U.S. 901 (1995); see also United States v. Shaffer,
35 F.3d 110, 114 (3d Cir. 1994) (describing a check kiting
scheme as "the borrowing of funds without authorization from
the bank").

The fact that the scheme here involved various accounts
at only one bank does not change the fraudulent nature of the
scheme. Abreu controlled approximately 30 commercial
accounts at HUB, and Martell, at Abreu's direction, maintained
an elaborate system of writing large checks between the various
accounts to cover overdrafts, thereby creating an overdraft in the
account upon which the check was written, and in effect taking
an unauthorized loan from HUB. Martell structured the
transactions to avoid the bank's system for tracking substantial
overdrafts and the resulting reports that were reviewed by upper
management. Nieves contributed to the scheme by knowingly
approving the overdrafts against bank policy.

The fact that the scheme involved only one bank does not
take it out of the bank fraud statute, as long as the elements of
bank fraud are satisfied. We agree with the Seventh Circuit that
"[w]hile a 'traditional' check kiting scheme may involve multiple
banks, § 1344(1) does not simply ban traditional check kiting.
Instead, the statute prohibits any recognizable scheme formed
with the intent to defraud." United States v. Norton, 108 F.3d
133, 135 (7th Cir.) (internal marks and citations omitted)
(affirming a bank fraud conviction where the perpetrator of a

15
check kiting scheme used an unrelated ATM machine to deposit
checks into a single account), cert. denied, 522 U.S. 816 (1997);
see also United States v. Swanson, 360 F.3d 1155, 1163 (10th
Cir. 2004) (affirming a bank fraud conviction involving eleven
accounts at a single bank); United States v. Yarmoluk, 993 F.
Supp. 206, 209 (S.D.N.Y. 1998) (denying motion to withdraw
a guilty plea where check kiting between five linked accounts in
one bank provided the factual basis to support a bank fraud
conviction), aff'd by 172 F.3d 39 (2d Cir. 1999) (unpublished).

The Government must also establish that the defendants'
actions put the bank at a risk for loss. Courts consistently
analogize check kiting to theft rather than to a fraudulently
granted loan. "The offender in a fraudulently induced loan
transaction at least asked the bank to provide the funds and gave
some kind of security in return." Flowers, 55 F.3d at 221; see
also United States v. Frydenlund, 990 F.2d 822, 826 (5th Cir.)
("The bank . . . voluntarily places a limit on its risk when it lends
money, but it is at the mercy of the check kiter for the amount of
loss he may cause."), cert. denied, 510 U.S. 868, 928 (1993).
HUB was at risk that the substantially overdrawn balance on any
particular day would not be recovered. See Swanson, 360 F.3d
at 1164 ("Mr. Swanson's conduct put the bank at a risk of loss
equal to the sum of his bank accounts' overdrafts each day . . .
."). The fact that HUB charged overdraft fees and interest on
overdrawn balances does not change the risk of loss. See United
States v. Stone, 954 F.2d 1187, 1193 (6th Cir. 1992) ("OCB's

16
assessment of a service charge did not in any sense confer a
right upon [the defendant] to engage in the otherwise illegal
activity of check kiting."); United States v. McKinney, 822 F.2d
946, 949 (10th Cir. 1987) ("[The bank] was unquestionably a
victim of the scheme despite the fact that interest may have been
paid on the uncollected funds.").

In a related argument, the defendants argue that they
could not have defrauded HUB because the bank was aware of
the numerous and sizable overdrafts and consented to them.
However, it "is not a defense to the charge that [an account
holder] colluded with [a bank officer] to commit bank fraud. 'It
is the financial institution itself-not its officers or agents-that is
the victim of the fraud [§ 1344] proscribes.'" United States v.
Waldroop, 431 F.3d 736, 742 (10th Cir. 2005) (quoting United
States v. Saks, 964 F.2d 1514, 1518-19 (5th Cir. 1992)). See
also United States v. Rackley, 986 F.2d 1357, 1361 (10th Cir.)
("Defendant confuses the notion of defrauding a federally
insured bank with the idea of defrauding its owner or directors.
. . . Thus, even if [a bank officer] knew the true nature of the
loan transactions, the institutions could nevertheless be
defrauded."), cert. denied, 510 U.S. 860 (1993).

The evidence revealed that Martell meticulously moved
funds between the numerous accounts to avoid detection on the
five-day overdraft report, which was reviewed by the Bank's
upper management. If the bank had approved of the overdrafts,
there would have been no need to move the funds to avoid the

17
five-day report. Thomas Shara, Senior Loan Officer and
Executive Vice President, testified that he was unaware of the
activity in the Abreu-related accounts, and he immediately
halted the scheme and confronted Abreu when he learned of it.
Further, Nieves exceeded his authority as vice-president of
commercial lending by approving overdrafts greater in amount
than he was authorized to approve. This evidence sufficiently
supports the jury's conclusion that the scheme was intended to
defraud the bank despite Nieves' dual role of involvement in and
knowledge of the scheme and his position as a bank officer.

C. Bank Fraud Jury Instructions

Abreu, Martell, and Nieves also challenge the district
court's jury instructions on the bank fraud charge, which they
allege limited the jury's ability to consider their defenses of good
faith and lack of specific intent. "We exercise plenary review in
determining whether the jury instructions stated the proper legal
standard. We review the refusal to give a particular instruction
or the wording of instructions for abuse of discretion." Leahy,
445 F.3d at 642 (internal marks and citations omitted). In so
doing, "we consider the totality of the instructions and not a
particular sentence or paragraph in isolation." Id. (internal
marks omitted).

The Appellants do not challenge their ability at trial to
admit evidence about HUB employees' knowledge of the
overdrafts, the substantial fees earned by HUB on the

18
overdrafted accounts, and Abreu's repayment of the overdrawn
balance when he was confronted about the scheme in June 2001.
They argue, however, that the district court's jury instructions
effectively instructed the jury that this evidence was irrelevant,
denying them a meaningful opportunity to present their defenses
of acquiescence, receipt of fees, and repayment of the overdraft
as they related to the complete defense of good faith.

Read as a whole, the jury instructions did not deny the
defendants their requested defense of good faith, but accurately
reflected the law and appropriately informed the jury of the
relevance of the evidence. The district court explicitly told the
jury that good faith was a complete defense to bank fraud
because good faith negated the element of intent to defraud
required for a bank fraud conviction (Appellant Abreu's App. at
1165-66), and that the Government bore the burden of proving
beyond a reasonable doubt that the defendants acted with the
requisite intent to defraud, negating a good faith defense (id. at
1167). The court further instructed the jury that "even if a bank
officer or employee may have known the true nature of the
questioned transaction, that is not a defense to bank fraud.
Rather, the question is whether the financial institution itself,
not its officers or agents, was defrauded." (Id. at 1170.) As
noted above, this is a correct statement of the law. See
Waldroop, 431 F.3d at 742. Taken together with the instruction
that "[i]n determining whether or not the prosecution has proven
that a defendant acted with the specific intent required by the
mail and bank fraud counts, the jury must consider all of the

19
evidence received in the case bearing on a defendant's state of
mind" (Appellant Abreu's App. at 1166), the instructions
allowed the jury to consider the bank officials' knowledge and
acquiescence in determining whether the defendants intended to
defraud HUB, while properly instructing the jury that the
defendants' intent to defraud must target the bank, not the
individual bank officers.

The court also properly instructed the jury that repayment
of the overdrafted balances could be considered in determining
whether the defendants acted with an intent to defraud or
whether they acted in good faith, focusing on the intent of the
defendants at the time of the actions alleged to be fraudulent.
The court's instruction that "[a]ctual repayment to the bank may
negate an intent to defraud the bank only if coupled with other
evidence that likewise negates an intent to defraud" (id. at 1170)
correctly states the law and appropriately focuses the jurors'
attention on the defendants' intent at the time of the charged
conduct. See United States v. Abboud, 438 F.3d 554, 594 (6th
Cir.) ("[T]he fact that Defendants repaid the kited amount after
detection does not reduce their culpability."), cert. denied, 127
S. Ct. 446 (2006).

Likewise, the court properly instructed the jury that fees
and interest charged by the bank on the overdrafts do not negate
a defendant's intent to defraud, which is the focus of a bank
fraud charge. See id. at 593 ("[T]he imposition of a service fee
[does] not amount to an authorization of check kiting."). Bank

20
fraud requires only that the defendants put the bank at a risk of
loss, not that the bank actually suffers a loss. See United States
v. Khorozian, 333 F.3d 498, 505 & n.6 (3d Cir.) ("That [the
bank] never actually suffered harm is also immaterial to [the
defendant's] defense. Section 1344 only requires that the bank
be placed at risk of loss."), cert. denied, 540 U.S. 968 (2003).
This instruction, coupled with the instructions on knowledge and
intent to defraud, allowed the defendants to argue that they
believed their actions were authorized from the fact that they
paid the overdraft fees and therefore lacked the requisite intent
to defraud. The fact that the jury did not buy into their argument
does not make the instructions erroneous.

D. Limitations on Cross-Examination of Government
Witness

Abreu, Martell, and Nieves next challenge the district
court's limitation of their attempts to cross-examine a HUB
employee concerning a consent agreement that HUB entered
into with the FDIC in an unrelated matter. We review the denial
of the Appellants' Sixth Amendment challenge for an abuse of
discretion. United States v. Williams, 464 F.3d 443, 448 (3d Cir.
2006). While the Confrontation Clause guarantees a criminal
defendant the right to confront witnesses on cross-examination,
"a district court retains 'wide latitude insofar as the
Confrontation Clause is concerned to impose reasonable limits
on such cross-examination based on concerns about . . .
harassment, prejudice, confusion of the issues, the witness'

21
safety, or interrogation that is repetitive or only marginally
relevant.'" United States v. Tykarsky, 446 F.3d 458, 475 (3d Cir.
2006) (quoting United States v. Mussare, 405 F.3d 161, 169 (3d
Cir. 2005), cert. denied, 126 S. Ct. 1432 (2006), some internal
marks omitted).

Through the cross-examination of Ms. Brown, a
regulatory compliance officer for HUB called by the
Government to testify primarily as a records custodian, the
Appellants sought to show that HUB had a motive to cooperate
with the Government in the Abreu investigation because HUB
was being investigated by the state district attorney in another
totally unrelated matter. The district court did not abuse its
discretion in limiting the cross-examination of Ms. Brown. The
unrelated investigation occurred years after the investigation of
the actions at issue here with which HUB cooperated, and Ms.
Brown testified that she had little knowledge of the other
investigation. The marginal relevance and the risk of delay and
confusion created by a mini-trial to explain the evidence support
the district court's decision to limit the cross-examination. See
Fed. R. Evid. 403 ("[R]elevant[] evidence may be excluded if its
probative value is substantially outweighed by the danger of
unfair prejudice [or] confusion of the issues, . . . or by
considerations of undue delay . . . ."); United States v. Ellis, 156
F.3d 493, 498 (3d Cir. 1998) (finding no abuse of discretion
where district court limited cross-examination of agent whose
direct testimony was limited to authenticating tape recordings
despite defendant's claim that witness had bias to avoid criminal

22
prosecution).

E. Confrontation Clause Challenge to Documentary
Evidence

The Confrontation Clause prohibits the "admission of
testimonial statements of a witness who did not appear at trial
unless he was unavailable to testify, and the defendant had had
a prior opportunity for cross-examination." Crawford v.
Washington, 541 U.S. 36, 53-54 (2004). It is not enough that
the evidence falls within a hearsay exception for it to be
admissible in a criminal trial; if the evidence is testimonial, it
must also comply with the Confrontation Clause's requirements
of unavailability and a prior opportunity for cross-examination.
Id. at 51 ("[E]x parte examinations might sometimes be
admissible under modern hearsay rules, but the Framers
certainly would not have condoned them."). On the other hand,
nontestimonial statements do not violate the Confrontation
Clause and are admissible as long as "they are subject to a firmly
rooted hearsay exception or bear an adequate indicia of
reliability." Albrecht v. Horn, 485 F.3d 103, 134 (3d Cir. 2007)
(noting that Ohio v. Roberts, 448 U.S. 56 (1980), continues to
control nontestimonial statements after Crawford).

Abreu, Martell, Jimenez, and Giunta claim that the
admission of documentary evidence related to the residential and
commercial loan fraud counts violated the Confrontation Clause.
The residential loan fraud charges involved thirty loans, and the

23
commercial loan fraud charges involved ten loans. The
Government introduced documentary evidence related to each
of the loans, including bank statements and either tax returns or
IRS tax abstracts for each borrower. Only six borrowers
testified in person at the trial related to their loan files. Of the
forty loans involved in the two conspiracies, the Government
introduced no testimony from any witness with regard to ten of
those loans and relied solely on bank records and tax returns to
make its case.

The Appellants challenge the admission of two types of
documentary records as violating their Confrontation Clause
rights: (1) declarations by records custodians used to
authenticate bank statements of individual borrowers, and (2)
transcripts of IRS records or certified copies of tax returns of
individual borrowers obtained from the IRS. They do not
challenge the Mortgage Pros loan files themselves, which were
introduced through a live witness.

1. Declarations of Records Custodians

The Government introduced bank statements from
various banks which held accounts for individuals who used
Mortgage Pros' services to obtain a mortgage. The Government
used the bank statements to demonstrate that the borrower's loan
application contained false information. The bank statements
were introduced as business records of the relevant bank under
Federal Rule of Evidence 803(6) and were authenticated with

24
sworn declarations under Rule 902(11). The Appellants do not
challenge the information contained in the bank statements as
hearsay, agreeing that the bank statements themselves are not
testimonial and fall within the business records exception, but
challenge only "the testimonial statements in the certifications
used to lay the foundation for their admission." (Abreu Br. at
88.) They claim that Rule 902(11) violates the Sixth
Amendment's Confrontation Clause as applied to criminal
defendants who do not have a chance to cross-examine the
certification declarant under Crawford.

Business records are admissible as an exception to the
hearsay rules if the records were "made at or near the time by .
. . a person with knowledge, if kept in the ordinary course of a
regularly conducted business activity, and if it was the regular
practice of that business activity to make" the records. Fed. R.
Evid. 803(6). The custodians of the bank statements did not
testify in person that the bank statements met the prerequisites
for admission as a business record under Rule 803(6), but
instead submitted affidavits attesting that these prerequisites
were met as allowed by Rule 902(11).

We need not determine today whether the declarations
admitted under Rule 902(11) to authenticate the bank statements
at issue here under Rule 803(6) are "testimony" and therefore
subject to the Confrontation Clause under Crawford.2 Even

2
The Seventh Circuit has answered this question in the
negative. See United States v. Ellis, 460 F.3d 920, 927 (7th Cir.
2006) (holding that a Rule 902(11) certification of medical
records was not testimonial, noting that the court did "not find
as controlling the fact that a certification of authenticity under

25
assuming, without deciding, that the Rule 902(11) declarations
are testimonial and subject to the Confrontation Clause, their
admission in this case for the purpose of authenticating the bank
statements was harmless.

The erroneous admission of testimonial hearsay in
violation of the Confrontation Clause is "'simply an error in the
trial process itself' . . . [that] we may affirm if the error was
harmless." United States v. Hinton, 423 F.3d 355, 361-62 (3d
Cir. 2005) (applying harmless error analysis to a Confrontation
Clause challenge); see United States v. Lore, 430 F.3d 190, 209
(3d Cir. 2005) (considering whether an error was harmless
beyond a reasonable doubt). "An evidentiary error is harmless
only if it is highly probable that the improperly admitted
evidence did not contribute to the jury's judgment of
conviction." United States v. Lopez, 340 F.3d 169, 177 (3d Cir.
2003) (internal quotation and marks omitted). The Supreme
Court has directed us to consider numerous factors in assessing
whether the erroneous admission of testimonial evidence in
violation of the Confrontation Clause was harmless to the
defendant, including the importance of the testimony to the
Government's case, the cumulative nature of the evidence, the
existence of corroborating evidence, the extent of cross-
examination allowed in the case, and the strength of the
Government's case as a whole. See Delaware v. Van Arsdall,
475 U.S. 673, 684 (1986).

Each Rule 902(11) declaration covered numerous

902(11) is made in anticipation of litigation. What is compelling
is that Crawford expressly identified business records as
nontestimonial evidence.").

26
business records of a particular bank, including both loan files
and bank statements. Importantly, Appellants do not contest
now, nor did they contest at trial, the validity of any of the
statements contained in the Rule 902(11) declarations as related
to the underlying bank statements that are the subject of this
appeal. The defendants originally objected to the Rule 902(11)
declarations as they related to the loan files, asserting that the
loan files included documents from third-party sources outside
of the knowledge of the bank document custodian. When the
objections were made at trial, however, the defendants were
primarily concerned with their inability to cross-examine the
borrowers, not the document custodians. To the extent they
sought to cross-examine a document custodian, it was for
purposes of asking whether the custodian had verified the
authenticity of signatures on loan documents with the purported
author. At no time did the defendants ever challenge the
declarations as they related to the bank statements.

As they pertained to the bank statements, the declarations
merely stated that the bank statements were made at or near the
time of the occurrence of the matters contained in the bank
statements by someone with knowledge of the matters, that the
bank statements were kept in the course of the regularly
conducted activity of the bank, that they were made as a regular
practice of the bank, and that any duplicates were accurate
copies of the originals. (See, e.g., Appellant Abreu's App. at
1878.) The defendants do not challenge now, nor did they
contest at trial, the accuracy of these statements as related to the
bank statements. The declaration that the bank statements were
kept in the ordinary course of the banks' businesses did not add
to the Government's case against the defendants for submitting
false loan applications. It was the information contained in the

27
bank statements themselves, which is not contested on appeal,
that the Government relied upon to make its case. The
authenticity of the bank statements has never been challenged,3
and the admission of the statements contained in the Rule
902(11) Certifications as related to the bank statements simply
had no effect on the verdict. Cf. United States v. Reifler, 446
F.3d 65, 87 (2d Cir. 2006) (holding the admission of plea
allocutions of codefendants to be harmless against a Crawford
challenge where the Government did not emphasize the
allocutions, which were used only as corroboration for other
evidence showing the existence of an enterprise in a RICO
case); Government of Virgin Islands v. Joseph, 964 F.2d 1380,
1389 (3d Cir. 1992) (holding that the erroneous admission of a
hearsay statement that identified the defendant as the shooter
was harmless where the defendant never contested that he shot
the gun, but claimed only that he shot in self-defense). Any
Crawford violation in admitting the Rule 902(11) declarations
for purposes of authenticating the bank statements was harmless
beyond a reasonable doubt.

2. Tax Returns and Tax Abstracts

The Appellants also challenge the abstracts and the tax
returns that were obtained from the IRS and were admitted
under Rule 803(8) as public records. The Appellants allege that
the tax abstracts, as well as their self-authenticating attestations,
contained testimonial hearsay subject to the Confrontation

3
"Abreu is not challenging the authenticity of the business
records on appeal; rather, he is challenging the admission of the
Rule 902(11) Certifications as violating his Sixth Amendment
rights." (Abreu's Reply Br. at 22.)

28
Clause. The Appellants further claim that the tax returns
obtained from the IRS are not public records under Rule 803(8).
Finally, they claim that admitting the tax abstracts and the tax
returns, which they characterize as containing testimonial
hearsay from the borrowers, also violated the Confrontation
Clause.

We first address the argument that the district court
violated Crawford by admitting Form 2866, the certifications
from the IRS used to authenticate the tax abstracts,4 also referred
to as transcripts, without complying with the Confrontation
Clause. IRS Form 2866 was used to provide the certification
necessary to qualify the IRS abstracts for the self-authentication
rules of Rule 803(8) and Rule 902(4). In Form 2866, an IRS
agent attests that the attached transcript is a true and complete
transcript of the records contained in that office for a particular
taxpayer for a particular period of time. It is unclear from the
record whether the defendants raised a proper Crawford
objection to the Form 2866 Certifications themselves. 5 Even if

4
The abstracts obtained from the IRS were on Form 4340,
Certificate of Assessments, Payments and Other Matters, which
is a computer generated form that reflects the taxes assessed to
and paid by the taxpayer in a particular year.
5
At trial, the defendants objected to admitting the IRS
transcripts and tax returns based on their inability to cross-
examine the borrowers to which the tax abstracts or returns
referred or to cross-examine Mortgage Pros employees who had
testified before the documents were offered into evidence.
(Abreu's App. at 587-88.) These objections did not preserve a
Crawford issue related to the certifications themselves. The
only objection based on Crawford in response to attempts to

29
properly preserved, our analysis of the Crawford issue related to
the certifications used to authenticate the tax abstracts is similar
to our previous analysis related to the Rule 902(11) declarations.
The only potential testimonial hearsay contained in the Form
2866 certifications involved statements by an IRS employee that
the abstracts were the complete records of the IRS for the
referenced individual and time period. Assuming without
deciding that the Form 2866 certifications contained testimonial
hearsay,6 their admission without affording the defendants an
opportunity to cross-examine the IRS employee making the
statement was harmless. There was no challenge to the
statements contained in the Form 2866 certifications, and the
Appellants do not contest the veracity of those statements now.
The specific facts contained in the certification–that the attached
abstracts were the complete records of the IRS–had no effect on
the jury's verdict, and any erroneous admission of the Form 2866
certifications was harmless beyond a reasonable doubt. See
United States v. Iskander, 407 F.3d 232, 240 (4th Cir. 2005)
("[A Confrontation Clause] error is harmless when the error did
not substantially sway or substantially influence the [jury's

admit the Form 2866 Certifications, Form 4340 transcripts, or
tax returns received from the IRS was an objection referencing
a recent Law Journal article about the impact of Crawford on
business records and raising "the possibility that these records
may not be admissible with simply putting tax returns in based
on Crawford." (Appellant Abreu's App. at 588.)
6
Cf. United States v. Weiland, 420 F.3d 1062, 1077 (9th
Cir. 2005) (holding that "a routine certification by the custodian
of a domestic public record . . . and a routine attestation to
authority and signature . . . are not testimonial in nature" for
purposes of Crawford), cert. denied, 547 U.S. 1114 (2006).

30
verdict]." (internal quotations omitted)).

The Appellants' remaining challenges to the tax abstracts
and the tax returns all fail because the abstracts and the returns
are not hearsay at all, nor did they contain imbedded hearsay,
because they were not offered for the truth of the matters
asserted therein. See Fed. R. Evid. 801(c). The Government
offered the information from the IRS, either in the form of a
certified copy of the borrower's tax return as filed with the IRS
or the transcript of the IRS's records of the borrower's return, for
purposes of establishing that the tax return copies submitted
with the loan applications were fabricated because they differed
from the tax returns actually filed with the IRS. The
Government established the misrepresentation element of the
fraud counts by asking the jury to compare the "true" tax returns
as filed, which were established by the returns or abstracts
received from the IRS, with the copies of tax returns contained
in the loan files. (See Abreu's Reply Br. at 16 (highlighting in
the record where the Government asserted that the returns were
"the true returns").) The tax returns were "true" in the sense
that they were the returns that were actually filed with the IRS.
There is a distinct and critical difference between the "true
returns" and the borrower's "true income." The Government did
not use the tax returns for the truth of the matter asserted in the
tax returns or the abstracts, namely the taxpayer's "true income,"
but only to establish that the tax returns contained in the loan
files and submitted to the lenders were not the same as the
returns actually filed with the IRS. It mattered not what the
specific amount of income reflected in either return was, only
that the tax returns submitted with the loan applications were not
copies of the actual tax returns submitted to the IRS.

31
 Nonhearsay use of evidence as a means of demonstrating
a discrepancy does not implicate the Confrontation Clause. In
Tennessee v. Street, the defendant claimed that his confession to
a murder was coerced by the sheriff, who allegedly read to the
defendant an accomplice's previous confession and ordered the
defendant to confess in a similar manner. 471 U.S. 409, 411-12
(1985). The Government introduced the accomplice's out-of-
court statement for purposes of showing discrepancies between
the two confessions in an attempt to discredit the defendant's
claim that his confession was coerced. The Supreme Court
reversed the Tennessee Court of Criminal Appeals' finding of a
Confrontation Clause violation because "[t]he nonhearsay
aspect of [the accomplice's] confession-not to prove what
happened at the murder scene but to prove what happened when
respondent confessed-raise[d] no Confrontation Clause
concerns." Id. at 414.

Similarly, the actual truthfulness of what the tax returns
as filed and the abstracts said was irrelevant to the jury's
determination of whether the Appellants made false
representations to the lenders by providing them with fabricated
tax returns; the relevant point was that the copies of the tax
returns used to support the loan applications were fabricated.
Introduction of the tax returns as actually filed and the tax
abstracts for this nonhearsay purpose did not raise Confrontation
Clause concerns. See Crawford, 541 U.S. at 60 n.9 ("The
[Confrontation] Clause . . . does not bar the use of testimonial
statements for purposes other than establishing the truth of the
matter asserted." (citing Street, 471 U.S. at 414)); Lore, 430
F.3d at 209 ("[T]estimonial statements are admissible without
prior cross-examination if they are not offered for their truth.").

32
 III. Jimenez's Separate Non-Sentencing Issues

A. Sufficiency of the Evidence

Jimenez challenges the sufficiency of the evidence to
support his mail fraud conviction on Count 4 related to a loan
referred to as the Diaz loan. We review de novo the district
court's denial of Jimenez's motion for acquittal based on a lack
of evidence. Our review is nonetheless deferential to the jury
verdict, and Jimenez faces a heavy burden, as "we must . . .
consider the evidence in the light most favorable to the verdict
and ask whether a reasonable jury could have found that the
contested elements were proven beyond a reasonable doubt."
United States v. Hull, 456 F.3d 133, 141 (3d Cir. 2006) (internal
marks omitted), cert. denied, 127 S. Ct. 2877 (2007).
"Appellate reversal on the grounds of insufficient evidence
should be confined to cases where the failure of the prosecution
is clear." United States v. Carr, 25 F.3d 1194, 1201 (3d Cir.)
(internal marks omitted), cert. denied, 513 U.S. 939, 1086
(1994).

The elements of mail fraud under 18 U.S.C. § 1341
include: "(1) a scheme to defraud; (2) use of the mails to further
that scheme; and (3) fraudulent intent." United States v. Pharis,
298 F.3d 228, 234 (3d Cir. 2002). While individual mailings
may constitute separate substantive mail fraud counts, they need
not be separate schemes. See United States v. Massey, 48 F.3d
1560, 1566-67 (10th Cir.), cert. denied, 515 U.S. 1167 (1995).
A mailing can support a substantive mail fraud conviction even
if the mailing itself is not fraudulent as long as it furthers the
fraudulent scheme. See Schmuck v. United States, 489 U.S. 705,
715 (1989) ("The relevant question at all times is whether the

33
mailing is part of the execution of the scheme as conceived by
the perpetrator at the time.").

Jimenez was a loan processor at Mortgage Pros. He
claims that the evidence admitted at trial was insufficient to
establish that the loan application for Pedro and Aida Diaz that
was mailed to the financial institution that approved the loan for
them was fraudulent. The only evidence at trial specific to the
Diaz loan was (1) the loan file itself, which consisted of
documentation submitted to the bank for approval–a loan
application, two Verification of Employment (VOE) forms, a
W-2 form, a pay stub, and a tax return; and (2) an IRS certified
tax return for the Diazes for the 1994 tax year. The VOE dated
February 25, 2004, and signed by Fernando Jimenez as the loan
processor, stated that Pedro Diaz was employed by Paperworld
Services, Inc. as a general manager and had earned $8,750
through February 25, 1994. The VOE form indicated that his
probability of continued employment was "good." The VOE
was purportedly completed by Peter Perez as vice president of
Paperworld Services, Inc. The Diazes' certified tax return for
1994 listed two different employers for Pedro but did not
include any income in 1994 from Paperworld Services. There
was ample evidence at trial that Jimenez was integrally involved
in the overall fraud conspiracy to provide fraudulent documents,
including falsified VOE forms and W-2 forms, to enable
Mortgage Pros' customers to obtain residential mortgages.
Given this background evidence of the scheme, the discrepancy
between the Diazes' certified tax return and the VOE forms
relied upon by the lender to make the loan was sufficient
evidence from which the jury could find that the documents
related to the Diaz loan furthered the residential mortgage fraud
scheme.

34
B. Misjoinder

Jimenez next claims that the district court erred in joining
his claims with the other defendants under Federal Rule of
Criminal Procedure 8(b). The district court denied Jimenez's
motions to sever based on both Rule 8(b) and on Rule 14.7 The
appeal of a denial of a Rule 8 motion is a claim of legal error,
which we review de novo. See United States v. Eufrasio, 935
F.2d 553, 567 (3d Cir.), cert. denied, 502 U.S. 925 (1991). "If
we determine that counts were improperly joined, we must
undertake a harmless error analysis to see if prejudice resulted.
Our inquiry into whether offenses or defendants were properly
joined focuses upon the indictment, not upon the proof that was
subsequently produced at trial." United States v. Irizarry, 341
F.3d 273, 287 (3d Cir. 2003) (internal citation omitted), cert.
denied, 540 U.S. 1140 (2004).

Joint trials of defendants named in a single indictment are
favored because they "conserve state funds, diminish
inconvenience to witnesses and public authorities, and avoid
delays in bringing those accused of crime to trial." United
States v. Lane, 474 U.S. 438, 449 (1986) (internal marks
omitted). Nonetheless, joinder of defendants under Rule 8(b) is
a stricter standard than joinder of counts against a single
defendant under Rule 8(a). It is not enough that defendants are
involved in offenses of the same or similar character; there must

7
Jimenez does not appeal the denial of his motion under
Federal Rule of Criminal Procedure 14, which allows a district
court to sever properly joined defendants and order a separate
trial where a consolidated trial appears to prejudice the
defendant.

35
exist a transactional nexus in that the defendants must have
participated in "the same act or transaction, or in the same series
of acts or transactions," Fed. R. Crim. P. 8(b), before joinder of
defendants in a multiple-defendant trial is proper, Irizarry, 341
F.3d at 287 n.4. See also Eufrasio, 935 F.2d at 570 & n.20
(describing Rule 8(b) joinder of defendants as a "less permissive
standard" than Rule 8(a) joinder of claims).

Whether Jimenez was properly joined under Rule 8(b) is
a close question in this case. Jimenez was one of nine
individuals named in a 47-count indictment, in which he was
charged in only two counts: the residential loan mail fraud
conspiracy count and one substantive mail fraud count. The
indictment charged eight separate conspiracies, and each had
some elements in common with the others. Although the
Government may be able to link each of the conspiracies
together one to another in a linear chain, it does not necessarily
follow that all counts involved "the same series of acts or
transactions." Fed. R. Crim. P. 8(b). Nonetheless, we need not
decide whether Jimenez was improperly joined because even if
he was, the error was harmless.

An error is harmless if it "does not affect substantial
rights" of the defendant. Fed. R. Crim. P. 52(a). "[A]n error
involving misjoinder 'affects substantial rights' and requires
reversal only if the misjoinder results in actual prejudice because
it 'had substantial and injurious effect or influence in
determining the jury's verdict.'" Lane, 474 U.S. at 449 (quoting
Kotteakos v. United States, 328 U.S. 750, 776 (1946)).

A review of the record reveals that there was
overwhelming evidence that Jimenez was involved in the

36
residential loan mail fraud conspiracy. Two Mortgage Pros
employees testified that they each personally witnessed Jimenez
calculate false information and falsify documents when he
processed loans. One testified that Jimenez used the "light box"
to forge signatures on loan documents. They each testified that
Jimenez expressed remorse over his involvement with the
fraudulent activity before he quit working at Mortgage Pros
because he planned to go to law school. Sanchez, a codefendant
who pleaded guilty prior to trial, testified that upon Jimenez's
request, he prepared false bank statements for Jimenez to use
with loan applications Jimenez processed. A borrower testified
that Jimenez explained to him how he could help him refinance
his mortgage after he was rejected by his current bank by
inflating his income, and that Jimenez provided a false W-2 and
a false pay stub with inflated income figures in exchange for
$500 in cash that the borrower paid directly to Jimenez.
Documentary evidence showed Jimenez as the loan processor
for loan applications containing false information.

We also note that the district court explicitly instructed
the jury to consider each defendant and each count separately,
specifically instructing the jury that particular evidence did not
apply to Jimenez. The jury's verdict reflects that the jury was
able to compartmentalize the evidence as to each defendant and
each count as evidenced by the jury's acquittal on some counts
and convictions on others. The limiting instructions, coupled
with the "overwhelming evidence of guilt shown here, . . .
satisfie[s us] that the claimed error was harmless." Lane, 474
U.S. at 450; see also id. at 450-51 n.13 (discussing the use of
limiting instructions and noting that "overwhelming evidence"
in this context requires a higher threshold than that needed to
foreclose a sufficiency of the evidence claim).

37
C. Admission of Rebuttal Evidence

We also must reject Jimenez's claim that the district court
abused its discretion in allowing the Government to introduce
evidence about a particular loan file for the first time on rebuttal
that purportedly went beyond the scope of Jimenez's defense
case. Jimenez does not contend that the evidence was
inadmissible in and of itself under the Rules of Evidence or that
it could not have been admitted during the Government's case in
chief. "Even though the testimony could or should have been
offered as part of the government's case in chief, the trial court's
decision to allow it as rebuttal is not reviewable in the absence
of gross abuse of discretion." United States v. Chrzanowski, 502
F.2d 573, 576 (3d Cir. 1974). "[I]t was clearly within the trial
court's discretion to allow evidence of other [similar fraudulent
acts] committed by appellants in order to rebut evidence
discrediting the government's account of the crime . . . ." Id.
We see no abuse of discretion, let alone the gross abuse the
cases require.

D. Prosecutorial Misconduct

Finally, Jimenez appeals the district court's denial of his
motion for a mistrial based on prosecutorial misconduct
stemming from the Government's questioning of a defense
investigator during which the Government suggested that the
witness, as well as Jimenez's counsel, violated ethical rules by
approaching a prosecution witness known to be represented by
counsel. The district court found the Government's questioning
to constitute a personal attack on Jimenez's counsel and, after a
lengthy discussion with all of the parties, directed Government
counsel to make a statement to the jury apologizing for any

38
suggestion that either Jimenez's counsel or the investigator
violated an ethical rule. In fact, the district court dictated the
actual words to be used in the apology, which were approved by
the defense counsel collectively. The district court also struck,
at the request of the defense counsel, the line of questioning the
Government counsel had been posing to the investigator about
her attempts to interview the witness.

Although the district court's action was not in keeping
with our later suggestion as to how such matters should be
handled, see United States v. Korey, 472 F.3d 89, 97 (3d Cir.
2007), the district court's careful composition of the agreed upon
statement dampens our concerns, prevented the government
counsel from making the kind of self aggrandizing speech we
found objectionable in Korey, and helped cure the improper line
of questioning. In any event, after a careful review, we cannot
say that the district court abused its discretion in denying
Jimenez's motion for a mistrial. See United States v. Young, 470
U.S. 1, 11 (1985) ("[A] criminal conviction is not to be lightly
overturned on the basis of a prosecutor's comments standing
alone, for the statements or conduct must be viewed in context;
only by so doing can it be determined whether the prosecutor's
conduct affected the fairness of the trial."); United States v.
Zehrbach, 47 F.3d 1252, 1267 (3d Cir.) (holding that the district
court's curative instructions cured the Government's "truly
improper and unfortunate" comments), cert. denied, 514 U.S.
1067 (1995).8

8
Judge Smith concurs in this opinion in its entirety, but
offers this footnote in lieu of a separate concurrence:

Our conclusion that the district court did not abuse its

39
 IV. Sentencing Issues

A. Abreu's Sentencing Challenge

Abreu challenges the district court's application of the
Sentencing Guidelines that ultimately resulted in his 87-month
sentence. After United States v. Booker, 543 U.S. 220 (2005),
we "continue to review factual findings relevant to the
Guidelines for clear error and to exercise plenary review over a
district court's interpretation of the Guidelines." United States
v. Grier, 475 F.3d 556, 570 (3d Cir.) (en banc), cert. denied,
2007 WL 1539300 (Oct. 1, 2007). "A finding is clearly

discretion by denying the motion for a mistrial by no means
suggests that I approve of the practice employed here. An
apology offered by counsel to the jury before it has rendered its
verdict is problematic regardless of who authored the text of the
apology, and regardless of whether the apology is meant to
address either the attorney’s own shortcomings or to erase a
suggestion that opposing counsel acted inappropriately during
the pendency of the case. I take this opportunity to reiterate
Korey’s admonition that “district courts would be well advised
to avoid such issues by restricting attorneys to a simple ‘I’m
sorry’-even one that is delivered after the verdict is rendered-
when responding to questionable conduct.” 472 F.3d at 97. In
the event a post-verdict apology may be inadequate to address
aspersions cast upon opposing counsel, as occurred in this case,
I believe that serious consideration should be given by the
district court to addressing the issue directly with the jury.

40
erroneous when, although there is evidence to support it, the
reviewing body on the entire evidence is left with the definite
and firm conviction that a mistake has been committed." Id.
(internal marks omitted). If the district court makes clearly
erroneous factual findings in determining the applicable
Guidelines range, the resulting sentence will generally be
unreasonable and a remand will be required unless either the
doctrines of plain error or harmless error apply to preserve the
imposed sentence. See id.

The district court grouped all of Abreu's counts of
conviction and started with a base offense level of 6, USSG §
2F1.1(a) (Nov. 2000),9 added 13 levels based on the total loss
amount from all of the conspiracies, USSG § 2F1.1(b)(1)(N),
added 2 levels for more than minimal planning, USSG §
2F1.1(b)(2), added 4 levels for Abreu's role in the offense,
USSG § 3B1.1(a), and added 2 levels for abuse of a position of
trust, USSG § 3B1.3, for a total offense level of 27.

On appeal, Abreu challenges the amount of the loss from
the Carvajal commercial loan based on the value of the property
pledged to secure the loan. "In fraudulent loan application cases
. . ., the loss is the actual loss to the victim (or if the loss has not
yet come about, the expected loss)." USSG § 2F1.1, comment.
(n.8(b)). At the time of sentencing, the loan had been in default
for over five years, HUB had charged off a balance of $165,000
on the loan, the borrower had filed bankruptcy and the collateral
was tied up in that proceeding, and HUB's priority on the

9
Unless otherwise indicated, all citations to the U.S.
Sentencing Guidelines Manual are to the 2000 version used by
the district court at sentencing.

41
collateral was subordinate to another lender and to the
bankruptcy trustee. The district court reduced the loss amount
by the proceeds that HUB had received from the bankruptcy
trustee by the time of sentencing, which was approximately
$27,000, but it refused to reduce the loss amount further for any
potential future recovery from the sale of the pledged real estate
because of the speculative nature of any recovery.

"We have plenary review over the district court's refusal
to give the defendants the claimed credits [for the collateral], but
we review the court's factual findings for clear error." United
States v. Sharma, 190 F.3d 220, 229 (3d Cir. 1999) (internal
citations omitted). The Government bears the burden of
establishing, by a preponderance of the evidence, the amount of
the loss for purposes of the sentencing enhancement. See
United States v. Napier, 273 F.3d 276, 279 (3d Cir. 2001), cert.
denied, 535 U.S. 1066 (2002). Although the burden of
persuasion remains with the Government, once the Government
makes out a prima facie case of the loss amount, the burden of
production shifts to the defendant to provide evidence that the
Government's evidence is incomplete or inaccurate. Geevers,
226 F.3d at 193. The Government established a loss of
$138,000,10 before considering interest and costs, as of the time
of the sentencing hearing. Given the conflicting evidence
concerning the value of the collateral, HUB's subordinate
position in collecting on the collateral, and the uncertainty of
collecting from the bankruptcy proceeding that had been
ongoing for several years, the district court did not clearly err in

10
The loss consisted of the $165,000 principal balance
charged off by the bank less the $27,000 received from the
Bankruptcy trustee.

42
determining that HUB suffered a loss of approximately
$138,000 as of the time of the sentencing hearing. See USSG §
2F1.1, comment. (n.9) ("The court need only make a reasonable
estimate of the loss, given the available information."); Napier,
273 F.3d at 279-80 (finding no clear error where the parties
submitted conflicting evidence and the district court found the
Government's more reliable).

Abreu also challenges the inclusion of $132,000 of
bargained-for interest related to the defaulted residential loans
in the total loss amount, relying on a 2001 change in the
Sentencing Guidelines commentary excluding "[i]nterest of any
kind" from the loss calculation. See USSG § 2B1.1, comment.
(n.2(D)(I)) (Nov. 2001);11 USSG App. C. (Vol. II), Amendment
617, at 182-83 (Nov. 2003). Prior to that amendment, this court
included bargained-for interest in calculating the loss in bank
fraud cases. See Sharma, 190 F.3d at 228 ("We read
Application Note 8 [of USSG § 2F1.1] as requiring the
exclusion of opportunity-cost interest, but not bargained-for
interest, from the valuation of the victim's loss.").

Sentencing courts generally apply the Guidelines in effect
at the time of sentencing unless those Guidelines would expose
the defendant to a sentence higher than the Guidelines in effect
at the time of the crime, raising Ex Post Facto concerns. See
USSG § 1B1.11(a), (b)(1); United States v. Brennan, 326 F.3d
176, 197 (3d Cir.), cert. denied, 540 U.S. 898 (2003). The
district court used the 2000 Guidelines, in effect when the

11
The 2001 amendment also consolidated the fraud
guidelines previously contained in USSG § 2F1.1 into the theft
and embezzlement guidelines contained in USSG § 2B1.1.

43
crimes were completed in June 2001, to calculate Abreu's
sentence because amendments to the 2001 Guidelines
significantly increased the enhancements related to the amount
of the loss. Although the district court must use the entirety of
the Guidelines Manual in effect, it nonetheless considers
subsequent amendments to the Guidelines when the
amendments are clarifying rather than substantive. USSG §
1B1.11(b)(2). The district court refused to consider the 2001
amendment excluding all interest from the loss calculation under
USSG § 2B1.1, concluding that the amendment was substantive
because it changed existing law under Third Circuit precedent.
Abreu disagrees, relying on United States v. Morgan, 376 F.3d
1002 (9th Cir. 2004), which held that the amendment to
Application Note 2(D) was a clarifying amendment because the
prior definition was ambiguous and the amendment "resolve[d]
a circuit conflict between two equally reasonable interpretations
of the loss definition," id. at 1013-14.

We decline to decide whether the 2001 amendment was
a clarification or a substantive change, because any error from
including the interest in the loss determination was harmless.
See United States v. Lennon, 372 F.3d 535, 541-42 (3d Cir.
2004) (declining to address as harmless a claimed error that,
when corrected, would have resulted in the same sentencing
range). Excluding the $132,051 in interest from the total loss of
$2,729,192 would have resulted in the same 13-level
enhancement for losses between $2.5 million and $5 million.
Including the interest in the total loss calculation therefore did
not affect Abreu's sentence and does not warrant a remand.

The fact that the interest is included in the restitution
order is irrelevant to determining the loss amount for purposes

44
of USSG § 2F1.1, as restitution is determined under USSG §
5E1.1 (to which the application notes of § 2B1.1 do not apply),
requiring the court to "enter a restitution order for the full
amount of the victim's loss, if such order is authorized under . .
. [18 U.S.C.] § 3663A." USSG § 5E1.1(a)(1). The "full amount
of the victim's loss," particularly when the victim is a financial
institution, includes bargained for interest and finance charges.
See Morgan, 376 F.3d at 1014 (including interest in a restitution
order even though it was excluded for purposes of calculating
loss for purposes of USSG § 2F1.1); Government of Virgin
Islands v. Davis, 43 F.3d 41, 47 (3d Cir. 1994) (allowing
prejudgment interest on restitution order "to effect full
compensation" for the victim's actual loss), cert. denied, 515
U.S. 1123 (1995); United States v. Smith, 944 F.2d 618, 626 (9th
Cir. 1991) ("Foregone interest is one aspect of the victim
[bank]'s actual loss, and thus may be part of the victim's
compensation."), cert. denied, 503 U.S. 951 (1992). The district
court therefore properly included the interest in the restitution
order, and any error in including interest in the loss calculation
for purposes of determining Abreu's advisory Guidelines range
was harmless.

We summarily reject Abreu's claim that the district court
should not have included in the loss calculation that portion of
the defaulted residential mortgage loans covered by insurance
proceeds. Receipt of insurance proceeds merely shifts the loss,
it does not reduce it as would the recovery of property pledged
to secure a loan. The loss to the insurance company is therefore
a direct loss that was properly included within the loss
calculations. See United States v. Castellano, 349 F.3d 483, 484
(7th Cir. 2003) ("[A] collateral source of recovery does not
eliminate but just shifts the loss. If the buyers had purchased

45
insurance to protect themselves from fraud, their receipt of
indemnity would not have absolved the wrongdoers."); United
States v. Alegria, 192 F.3d 179, 191 (1st Cir. 1999)
("[I]nsurance simply shifts the loss to another victim (the
insurance company), so it is irrelevant [that the insurer rather
than the victim suffered the loss] in calculating the amount of
loss for sentencing purposes.").

We likewise reject Abreu's argument that the losses on
the residential loans should not include the defaulted loan
balances because the Government failed to establish a nexus
between the fraudulent loan documents and the defaults. "[I]t
is not appropriate to reduce the amount of the loss, as computed
under the Guidelines, in order to reflect other causes of the loss
which were beyond the defendant's control. An intervening
force that increases a fraud-related loss will not decrease the loss
valuation but will only provide possible grounds for a downward
departure." United States v. Neadle, 72 F.3d 1104, 1110 (3d
Cir. 1995) (internal citations omitted), amended by 79 F.3d 14
(3d Cir.), cert. denied, 519 U.S. 895 (1996); see also USSG §
2F1.1, comment. (n. 8(b)) (explaining that a loss from a
defaulted loan caused by an unforeseen event is included in the
loss amount, although it may provide a basis for a downward
departure). Abreu does not claim that the district court should
have granted a departure based on the intervening circumstances
that caused the individual borrowers to default. The district
court appropriately included the defaulted loan balances in
calculating the loss.

The district court properly calculated the loss from the
check kiting scheme based on the net balance in the Abreu-
related HUB accounts at the time the crime was detected. See

46
Shaffer, 35 F.3d at 114 ("[C]heck kiting crimes, because of their
particular nature, are crimes where the district court must
calculate the victim's actual loss as it exists at the time the
offense is detected rather than as it exists at the time of
sentencing."). The district court did not clearly err, based on the
evidence submitted at trial, in determining the appropriate date
of detection or the amount of the offsets used by the Bank to
partially cover the overdrafts.

Abreu was convicted of conspiring to structure
transactions as well as nine substantive structuring counts. The
jury acquitted him of five substantive structuring counts. On
appeal, Abreu argues that the district court violated his Fifth
Amendment right to Due Process by considering the acquitted
counts as relevant conduct in assessing the total loss from the
structuring offenses. The court en banc recently addressed the
issue of whether the Due Process Clause requires that facts
relevant to sentencing enhancements, particularly facts related
to a separate offense for which charges were ultimately dropped,
must be proved beyond a reasonable doubt. See Grier, 475 F.3d
at 561. We held that because "[f]acts relevant to application of
the Guidelines-whether or not they constitute a 'separate
offense'- . . . inform the district court's discretion without
limiting its authority," reliance on those facts does "not
implicate the rights to a jury trial and proof beyond a reasonable
doubt." Id. at 567-68.

The same is true of acquitted conduct. See United States
v. Faust, 456 F.3d 1342, 1348 (11th Cir.) (affirming sentence
based in part on acquitted conduct in the face of a Due Process
challenge), cert. denied, 127 S. Ct. 615 (2006). The counts of
conviction determined Abreu's statutory sentencing exposure,

47
and the district court was free to consider relevant conduct,
including conduct resulting in acquittal, that was proved by a
preponderance of the evidence in determining Abreu's sentence
within the original statutory sentencing range. We therefore
reject Abreu's Due Process challenge to use of acquitted conduct
in determining his sentence. Abreu does not contend that the
Government failed to establish by a preponderance of the
evidence that the losses from the acquitted counts were relevant
to the convicted counts, and we thus reject his challenge on this
ground.

Abreu argues that his 87-month sentence (imposed at the
top of his 70-87-month advisory Guidelines range as determined
by the district court) is per se unreasonable because of the errors
of law he asserts the district court made in arriving at his
advisory Guidelines sentencing range. We have examined
above each of his Guidelines-based arguments and found them
to be wanting. Accordingly, we also reject his argument that his
resulting sentence is per se unreasonable. He makes no
argument that his 87-month sentence is otherwise unreasonable
when tested against the 18 U.S.C. § 3553(a) factors, and our
independent review of the record discloses nothing that would
render his sentence as imposed unreasonable after Booker.

B. Martell's Sentencing Issues

To the extent that Martell joins Abreu's sentencing issues,
we incorporate our discussion of those issues here and deny
Martell's challenges for the same reasons. We declined to rule
on Abreu's claim that the district court should have considered
the 2001 Amendment to USSG § 2B1.1 regarding inclusion of
interest in the loss calculation because it would not have made

48
a difference in Abreu's sentence and was therefore harmless.
The same is true for Martell, to whom the district court assigned
the same loss amount.

Separately, Martell claims that the district court should
not have attributed the full amount of the structuring conspiracy
to her, arguing that, like Ms. Giunta, she should have been held
responsible only for those counts on which she was convicted.
The Guidelines direct the district court to consider as relevant
conduct "all reasonably foreseeable acts and omissions of others
in furtherance of the jointly undertaken criminal activity" when
sentencing a defendant involved in a conspiracy. USSG §
1B1.3(a)(1)(B). The trial evidence revealed that as the
bookkeeper of several of Abreu's businesses, Martell was
intimately involved in the financial activities of the businesses.
The district court's conclusion that Martell was "at the hub of the
Abreu enterprises" (Appellee's Suppl. App. at 216) was not
clearly erroneous and supports its determination that the total
amount of the structuring counts was reasonably foreseeable to
Martell. See United States v. Himler, 355 F.3d 735, 740 (3d Cir.
2004) (standard of review); United States v. Gricco, 277 F.3d
339, 356 (3d Cir. 2002) (attributing loss arising from the total
amount of money stolen by all of the participants to individual
defendant).

C. Giunta's Sentencing Issues

As we did with Martell, we incorporate our discussion of
the sentencing issues raised by Abreu here, and we reject
Giunta's challenges that are based on the same arguments. As
for the issue of including interest in the loss calculation upon
which we declined to reach the merits based on the harmless

49
error doctrine, the doctrine applies to Giunta as well. The
district court calculated the loss amount attributable to Giunta at
$769,913, resulting in an upward adjustment of 10 levels for
losses between $500,000 and $800,000, such that any error
related to including the interest of $132,051in the total loss
amount would have been harmless to Giunta.

Giunta separately argues that her role in the mortgage
fraud conspiracies was not a proximate cause of the losses to the
financial institutions, and that the intervening roles played by the
closing attorney and the financial institution's own lending
officers who granted the loans preclude a finding that she caused
a loss in the residential loan mail fraud conspiracy to support an
increase in her base offense level based on the amount of the
residential loan fraud losses. In determining the loss amount for
the fraud convictions under USSG § 2F1.1, the district court
appropriately considered the losses that derived from the
foreseeable acts of others in furtherance of the fraudulent
scheme. See USSG § 1B1.3(a)(1)(B). It was certainly
foreseeable to Giunta that others involved in the scheme,
including the closing attorney, would submit fraudulent
documents to the lending institutions. That the loan officers
approved the loans based on a number of documents, more than
one of which was fraudulent, does not remove Giunta's efforts
from a position of proximately causing the loss that was
ultimately suffered when the borrowers defaulted on the loans.
See United States v. Rennert, 374 F.3d 206, 215 (3d Cir. 2004)
(affirming attribution of entire conspiracy loss to individual
defendant), vacated in part on other grounds and remanded by
544 U.S. 958 (2005); United States v. Duliga, 204 F.3d 97,
100-01 (3d Cir.) (same), cert. denied, 530 U.S. 1222 (2000); see
also Neadle, 72 F.3d at 1110 ("[I]t is not appropriate to reduce

50
the amount of the loss, as computed under the Guidelines, in
order to reflect other causes of the loss which were beyond the
defendant's control.").

Having concluded that the district court calculated the
correct Guidelines range of 21 to 27 months, Giunta offers no
arguments that her 24-month sentence was otherwise
unreasonable under 18 U.S.C. § 3553(a). We therefore affirm
her sentence.

D. Nieves' Sentencing Issues

For the same reasons discussed in relation to Abreu's
appeal, we reject Nieves' challenge to the loss amount attributed
to the check kiting scheme.

Although Nieves does not otherwise challenge the district
court's calculation of his applicable advisory Guidelines range,
he claims that the district court improperly considered the
remaining § 3553(a) factors in determining his ultimate sentence
of 40 months. The district court chose a sentence below the
middle of the applicable advisory Guidelines range of 37-46
months. We review the district court's ultimate sentence for
reasonableness, which requires us to ensure that the district
court gave "meaningful consideration" to the sentencing factors
set out in § 3553(a). United States v. Cooper, 437 F.3d 324, 329
(3d Cir. 2006). If the district court gives due consideration to
those factors, we give deference to its discretion in choosing the
ultimate sentence. Our review is accordingly limited to
determining "'whether the district judge imposed the sentence he
or she did for reasons that are logical and consistent with the
factors set forth in section 3553(a).'" Id. at 330 (quoting United

51
States v. Williams, 425 F.3d 478, 481 (7th Cir. 2005), cert.
denied, 126 S. Ct. 1182 (2006)). Because Nieves' sentence is
within the Guidelines range, it is less likely that it is
unreasonable. Id. at 331; see also Rita v. United States, 127 S.
Ct. 2456, 2463 (2007) (noting that "by the time an appeals court
is considering a within-Guidelines sentence on review, both the
sentencing judge and the Sentencing Commission will have
reached the same conclusion as to the proper sentence in the
particular case," which "increases the likelihood that the
sentence is a reasonable one").

The district court discussed the § 3553(a) factors and
considered the issues raised by Nieves, namely his prior service
in the military and his strong family ties. Ultimately, however,
the district court was led to its sentencing decision by the length
of the conspiracy, the position of trust held by Mr. Nieves as a
senior bank officer, and the seriousness of the offense based on
the banking industry's reliance on officials in Nieves' position to
maintain the integrity of the banking system. These are all
proper factors to consider, see § 3553(a)(1), (2)(A), and are
supported by the record.

Nieves relies on the sentence received by the defendant
in United States v. Ranum, 353 F. Supp. 2d 984 (E.D. Wis.
2005), to argue that his sentence results in an unwarranted
sentencing disparity. See § 3553(a)(6). Ranum, a commercial
loan officer who exceeded his lending authority and caused over
one million dollars in actual losses to his bank when a client's
business failed, faced the same sentencing range as Nieves but
received a sentence of one year and one day. That Nieves can
find another case where a defendant charged with a somewhat
similar crime and facing the same advisory sentencing range

52
received a sentence outside of the applicable sentencing range
does not make Nieves' within-Guidelines sentence unreasonable.
If that were the law, any sentence outside of the Guidelines
range would set precedent for all future similarly convicted
defendants. This is not, and cannot be, the law. Although a
similar sentence might also be reasonable here, that does not
make Nieves' sentence unreasonable. Reasonableness is a
range, and our job is to ensure that the district court properly
exercised its discretion by imposing a sentence within the range
of reasonableness that is logically based upon, and consistent
with, the § 3553(a) factors. See United States v. Charles, 467
F.3d 828, 833-34 & n.7 (3d Cir. 2006) ("[W]e will tolerate
statutory sentencing disparities so long as a judge demonstrates
that he or she viewed the Guidelines as advisory and reasonably
exercised his or her discretion after applying the three-step
sentencing process."), cert. denied, 127 S. Ct. 1505 (2007). The
district court did so in this case, and we cannot say the resulting
sentence is unreasonable.

We will affirm each of the Appellants' convictions and
their sentences.

53