FILED
NOT FOR PUBLICATION
JUN 22 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 15-10554
Plaintiff-Appellee, D.C. No.
2:11-cr-00468-TLN-3
v.
ERIK HERMANN GREEN, MEMORANDUM*
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of California
Troy L. Nunley, District Judge, Presiding
Argued and Submitted June 14, 2017
San Francisco, California
Before: SCHROEDER and N.R. SMITH, Circuit Judges, and PIERSOL,** District
Judge.
Defendant Erik Green appeals his conviction and sentence for five counts of
wire fraud involving a mortgage lending scheme. We have jurisdiction under 28
U.S.C. § 1291. We vacate the judgment of conviction and remand to the district
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Lawrence L. Piersol, United States District Judge for
the District of South Dakota, sitting by designation.
court for further proceedings, which may include a new trial. See United States v.
Haischer, 780 F.3d 1277, 1284 (9th Cir. 2015).
1. The exclusion of Green’s expert testimony denied Green his right to
present a complete defense. See United States v. Lindsey, 850 F.3d 1009, 1016–18
(9th Cir. 2017). The government was required to prove that Green’s allegedly false
statements in loan documents were “material.” See id. at 1013. Materiality is an
objective standard, meaning a victim’s negligence or “intentional disregard of
relevant information is not a defense.” Id. at 1015–16. Therefore, the district court
did not abuse its discretion by excluding the proffered evidence of the lending
behavior of Green’s particular lender.
However, Green was entitled to present expert testimony concerning “the
lending standards generally applied in the mortgage industry.”1 Id. at 1016; see
also Universal Health Servs., Inc. v. U.S. ex rel. Escobar, 136 S. Ct. 1989,
2003–04 (2016). In his pretrial motion to allow expert testimony, Green argued to
the district court that the jury could only evaluate materiality properly “by
understanding the [mortgage lending] industry” during the period of his alleged
conduct. Therefore, Green sought “to present evidence, through [his] expert . . . of
1
We acknowledge that the district court did not have the benefit of our
opinion in Lindsey when it ruled on Green’s motion.
2
the state of the mortgage industry” at that time.
For example, Green’s proffer of the expert’s testimony expressed that the
competition in the lending industry in the mid-2000s led lenders to lower their
standards for issuing loans. The proffered testimony explained that, although
underwriting standards were still in place, they were largely a facade to which the
lenders would make substantial exceptions in order to issue more loans. Lenders
were making these loans even when it was apparent that the borrower had poor
credit or was not accurately reporting his or her income. Green was entitled to
present this and other testimony about the standards generally applied in the
lending industry at the time, and the district court abused its discretion in not
allowing such testimony to the extent permitted by Lindsey.
This error denied Green “a meaningful opportunity to present a complete
defense,” because (1) materiality was an essential element of wire fraud, (2) his
main defense to materiality was that mortgage industry lenders at the time of his
alleged fraud were only interested in closing on loans and would issue loans
regardless of borrower qualifications, and (3) the expert’s testimony was
essentially Green’s only evidence to prove these industry practices. See Haischer,
780 F.3d at 1284 (citation omitted). As the government has offered no argument
that this error was harmless, it has waived the issue. See United States v.
3
Murguia-Rodriguez, 815 F.3d 566, 572 (9th Cir. 2016).
2. The district court would abuse its discretion if, on remand, it gave an
instruction that allowed the jury to convict Green of wire fraud, based on a theory
of material omission, without also instructing the jury that it must first find Green
had a duty to disclose the information. See United States v. Shields, 844 F.3d 819,
822–23 (9th Cir. 2016). At oral argument, Green conceded his other challenge to
the jury instructions, in light of Lindsey.
“Because we set aside the judgment of conviction, we do not reach the other
issues that [Green] raised in this appeal.” Haischer, 780 F.3d at 1284.
VACATED and REMANDED.
4