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United States v. Mazzarella

United States Court of Appeals, Ninth Circuit

April 20, 2015

UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
EVE MAZZARELLA, Defendant-Appellant

Argued and Submitted, San Francisco, California November 17, 2014.

Page 533

Appeal from the United States District Court for the District of Nevada. D.C. No. 2:08-cr-00064-RLH-GWF-2, D.C. No. 2:08-cr-00064-RLH-GWF-2, D.C. No. 2:08-cr-00064-RLH-GWF-2. Roger L. Hunt, Senior District Judge, Presiding.

SUMMARY[*]

Criminal Law

The panel vacated the district court's orders denying the defendant's motions for a new trial, and remanded for further proceedings, in a case in which the defendant was convicted of twelve felony counts related to a complex mortgage fraud scheme.

After her conviction, the defendant filed two motions for a new trial, contending that the government withheld material exculpatory evidence in violation of Brady v. Maryland and violated her right to be free from unreasonable searches under the Fourth Amendment. The defendant requested discovery and an evidentiary hearing on these issues.

The panel held that based on the record before the district court, the court erred in concluding that the defendant's rights under Brady and the Fourth Amendment had not been violated.

The panel held that the defendant has not shown prejudice based solely on the Brady disclosures, first revealed after her trial and sentencing. But the panel remanded the Brady issues for the district court to reconsider them on an open record, in conjunction with the additional disclosure with which the defendant sought to augment the record on appeal, the Fourth Amendment issue, and any further impeachment or exculpatory evidence that comes to light from discovery.

The panel held that the district court erred in concluding on the record before it that an employee's copying of documents from the defendant's real estate and investment offices was not a search implicating the Fourth Amendment. The panel wrote that more discovery is required to determine whether an unlawful search occurred and whether there were evidentiary fruits of an unlawful search. The panel wrote that after making these determinations on remand, the district court should consider again the cumulative effect of the impeachment evidence it considered before, and the additional impeachment evidence that the defendant sought to place before this court. The panel wrote that this material must be considered together with any evidence that should have been excluded from trial under the Fourth Amendment to determine whether any of the defendant's convictions must be vacated and a new trial granted.

The panel also held that the district court abused its discretion in denying the defendant's requests for an evidentiary hearing and for discovery. The panel wrote that more findings, which will require reasonable discovery and an evidentiary hearing, are needed to resolve whether there was an immunity agreement in place for a prosecution witness, and whether there was an unlawful search that resulted in tainted evidence being used at trial. The panel wrote that the district court should also consider an additional disclosure with which the defendant sought to supplement the record before this court. The panel rejected the defendant's argument that the district court should have imposed the very detailed discovery guidelines from a 2010 Department of Justice memorandum to federal prosecutors.

The panel addressed other issues in a concurrently filed memorandum disposition.

John D. Cline (argued), Law Office of John D. Cline, San Francisco, California; Mark H. Allenbaugh, Law Offices of Mark H. Allenbaugh, Cleveland, Ohio, for Defendant-Appellant.

Daniel G. Bogden, United States Attorney, Elizabeth O. White, Appellate Chief, Peter S. Levitt (argued), Assistant United States Attorney, Las Vegas, Nevada, for Plaintiff-Appellee.

Before: Ronald M. Gould, Paul J. Watford, and Michelle T. Friedland, Circuit Judges.

OPINION

Page 534

GOULD, Circuit Judge:

Eve Mazzarella was convicted of twelve felony counts related to a complex mortgage fraud scheme. After her conviction, Mazzarella filed two motions for a new trial, contending that the government had withheld material exculpatory evidence in violation of Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), and had violated her right to be free from unreasonable searches under the Fourth Amendment. Mazzarella requested discovery and an evidentiary hearing on these issues. The district court denied both motions, and Mazzarella's appeal from those orders is before us.[1] We have jurisdiction

Page 535

under 28 U.S.C. § 1291. We hold that based on the record before the district court, the court erred in concluding that Mazzarella's rights under Brady and the Fourth Amendment had not been violated. We also hold that the district court abused its discretion in denying Mazzarella's request for an evidentiary hearing and for discovery. We vacate the district court's orders and remand.

I

Mazzarella, a real estate agent and principal of Distinctive Real Estate & Investments (" DREI" ), was accused of conspiring with Steven Grimm, Melissa Beecroft, and others to defraud federally insured banks and private citizens. The scheme involved recruiting straw buyers with excellent credit histories to acquire full or nearly full financing to purchase homes. The straw buyers' loan applications contained materially false statements related to their income, assets, employment, and intent to use the home as a primary residence.

The homes to be purchased by the straw buyers were offered for sale at distressed prices below fair market value, but the mortgages and the purchase offers were for fair market value. The difference between the two figures was paid at closing to business entities controlled by Mazzarella and her co-defendants. The government calls these payments " third party disbursements." The government charged that defendants created numerous limited liability companies (" LLCs" ) and caused straw buyers to transfer their interest in the purchased properties to the LLCs in exchange for a fee. Defendants controlled the bank accounts for those entities and eventually defaulted on mortgage ...


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