People v. Caraga

PRESIDING JUSTICE MASON delivered the judgment of the court, with opinion.

Appeal from the Circuit Court of Cook County, Illinois. No. 12 CR 14068 The Honorable Lawrence E. Flood, Judge Presiding. PRESIDING JUSTICE MASON delivered the judgment of the court, with opinion.
Justices Pucinski and Hyman concurred in the judgment and opinion.

OPINION

¶ 1 Defendant Michael Caraga—along with co-defendants Bogdan Bozic, Nicholas Prittis, Jimmy Pililimis, and Artan Kollcaku—participated in an organized scheme to commit mortgage fraud. In this scheme, a straw buyer would obtain a mortgage to buy property sold by Pililimis; the loan proceeds would be split primarily among the straw buyer, Prittis, and Bozic; and the buyer would later default on the loan. As part of the scheme, Caraga prepared the loan application for the straw buyer, using fraudulent income documentation provided by the straw buyer and Bozic. Unbeknownst to Caraga, Bozic, Prittis, and Kollcaku, the straw buyer in the transaction involved in this case was an undercover federal agent, and this transaction was part of a sting operation in which Pililimis was a cooperating witness in the federal investigation. ¶ 2 Following a bench trial, the trial court found Caraga guilty of (i) loan fraud (720 ILCS 5/17-10.6(d) (West 2012)), (ii) financial institution fraud (id. § 17-10.6(c)(2)), (iii) attempted theft (id. §§ 8-4(a), 16-1(a)(1)), (iv) wire fraud (id. § 17-24(b)(2)), and (v) forgery (id. § 17-3(a)(2)). The trial court merged all other counts into the loan fraud count and sentenced Caraga to two years probation and 200 hours of community service. Caraga appeals his convictions asserting that (i) his co-conspirators' statements should have been inadmissible as hearsay because the State failed to prove that he agreed to participate in the conspiracy, (ii) the evidence was insufficient to establish his participation in the conspiracy, and (iii) evidence of other crimes should have been excluded. Finding no error, we affirm.

Caraga was tried separately, and codefendants are not parties to this appeal. We adopt the parties' spelling of codefendants' names.

¶ 3 I. BACKGROUND

¶ 4 The Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) is responsible for investigating fraud and abuse in connection with HUD programs, including mortgage fraud involving Federal Housing Authority (FHA) loans. An FHA loan is a mortgage loan guaranteed by HUD. To receive an FHA insured loan, the borrower must (i) reside in the property as a primary residence, (ii) provide a 3.5% down payment, and (iii) obtain homeowner's hazard insurance. An FHA loan may only be obtained for an individual's primary residence and not for investment properties, such as a vacation home or a second home. ¶ 5 Mortgage fraud occurs when an individual intentionally provides false documentation or materially misrepresents information on a loan application in order to obtain a loan. Mortgage fraud may involve a straw buyer, i.e., an individual with good credit who allows another to use his or her name and personal details (income, employment history, credit) to buy property and obtain a mortgage, but who does not intend to live in the property. Documents may also be falsified for straw buyers, such as creating employment history and exaggerating employment income, to obtain a larger loan. Mortgage fraud schemes involving straw buyers are illegal. checked in response to the following question: "Do you intend to occupy the property as your primary residence?" During the meeting, Caraga leaned slightly forward and lowered his voice as he began to talk about the residency requirement. In particular, Caraga stated:

"Now another thing uhm—just to let you know. I uh—you know with your previous guys, okay. I know they're not technically living in there, okay. But as far as the mortgage statement 'cause it comes to the house—*** Yeah, 'cause (inaudible) one of my clients did an address change—that freakin' *** Fu**in' next thing you know I got GMAC and my bank—they're calling me. *** Okay hey—what's going on? I thought he was living in this property. *** Yeah, uh—this address is 5800 South Bishop. Uh—just to let you know because they'll come and make me buy the loan back. *** And then we'll get problems. *** I'm not spending 300,000 dollars. *** So don't change the address—at all period, okay?"

¶ 18 Regarding the 3.5% down payment, Caraga confirmed with Rodriguez that he would be using gift money for the down payment. Caraga instructed Rodriguez to sign the loan authorization, but not date it, because Caraga would date it later. Caraga later dated the loan authorization using the wrong date. Joseph Messina, Vista Financial's owner, was listed as the loan originator on Rodriguez's loan application, and the completed loan application was transmitted electronically to PMAC Lending, which later approved the loan. ¶ 19 As the closing approached, Bozic explained the transaction in greater detail to Rodriguez, telling him that he would have an attorney at the closing because everything needed to be professional and clean. Bozic told Rodriguez that he, Pililimis, and another guy would split $35,000 from this transaction, and "15% goes to the guy at the bank who helped, like Mike, for a without a license. But the State argued that the evidence was relevant to establish Caraga's background in the mortgage industry and what Caraga did in his position at Vista Financial. In overruling the objection, the trial court explained that whether Caraga was licensed was relevant background information, and he would only consider it for that purpose. ¶ 31 The trial court found Caraga guilty on all five counts and, as noted, sentenced him to two years probation and 200 hours of community service. After the trial court denied Caraga's posttrial motions for reconsideration and for a new trial raising primarily insufficiency of the evidence claims, he timely appealed.

The $270,019 total loan amount consists of $265,375 of principal ($275,000 purchase price minus the required 3.5% down payment of $9625) plus private mortgage insurance of $4644.

The parties stipulated that Moaeyad Ghazi Ahmad and Michael Caraga are the same individual. --------

¶ 32 II. ANALYSIS ¶ 33 A. Participation in the Conspiracy

¶ 34 Caraga first claims that the trial court abused its discretion when it admitted into evidence hearsay testimony of his co-conspirators because (i) the State failed to prove that he agreed to participate in the conspiracy and (ii) the statements were made before his alleged involvement in the conspiracy. ¶ 35 The State acknowledges that Caraga preserved his objection to the admissibility of this evidence for our review, but asserts that the issue of whether Caraga agreed to participate in the conspiracy has been forfeited because Caraga failed to raise this claim in the trial court. But even if the State is technically correct, because Caraga's participation in the conspiracy was integral to determining whether the hearsay statements fall under the coconspirator exception, we elect to review this issue. 1550 MP Road LLC v. Teamsters Local Union No. 700, 2017 IL App (1st) 153300, ¶ 15 (forfeiture is a limitation on the parties, not the court). ¶ 36 The parties agree that we review a trial court's ruling regarding the admissibility of evidence using the highly deferential abuse of discretion standard. People v. Peterson, 2017 IL that they were made before his involvement in the conspiracy: (i) Pililimis admitting his involvement in a prior mortgage fraud transaction, which lead to this undercover operation, (ii) Bozic informing Rodriguez that Pililimis would be paid, but cut out going forward, and (iii) Bozic's statement to Rodriguez that it was not necessary for him to contact the new banker. Caraga does not challenge the coconspirators' statements made after Caraga agreed to participate in the scheme and given our conclusion that the State proved Caraga's participation in the conspiracy, those statements clearly fall under the coconspirator's hearsay exception.

Contrary to Caraga's claim, coconspirator statements made outside of a defendant's presence or before the defendant agrees to participate in the illicit transaction are admissible under the co-conspirator's exception. See People v. Davis, 46 Ill. 2d 554, 557-58 (1970) (conversation regarding the potential purchase of narcotics prior to the defendant's arrival at the scene was admissible under the co-conspirator exception); People v. Lake, 297 Ill. App. 3d 454, 461-62 (1998) (coconspirator statements made before the defendant arrived at the scene and without his knowledge of the conversation or events preceding it were admissible under the co-conspirator exception). Moreover, the challenged coconspirator statements were made in furtherance of and during the pendency of the conspiracy. Likewise, Pililimis's statements to SA Chavez, admitting his participation in another mortgage fraud transaction, were properly admitted because the statements explained SA Chavez's later course of conduct of investigating the transaction involving Pililimis and Prittis, which is not hearsay. People v. Sangster, 2014 IL App (1st) 113457, ¶ 76. For that same reason, we disagree with Caraga that Pililimis's involvement in this conspiracy should have been entirely excluded. Pililimis was a key player in the mortgage scheme, and his conduct and interactions with the other co-conspirators further developed and were a necessary component of the conspiracy. Consequently, the trial court did not abuse its discretion by admitting the challenged hearsay statements under the co-conspirator exception.

¶ 51 B. Accountability

¶ 52 Caraga next claims that the evidence was insufficient to convict him of loan fraud, financial institution fraud, and attempted theft on a theory of accountability because there was no evidence that he had any intent to aid and abet the conspirators in the mortgage fraud scheme. ¶ 53 A defendant is legally accountable for the conduct of another if "either before or during the commission of an offense, and with the intent to promote or facilitate that commission, he or she solicits, aids, abets, agrees, or attempts to aid that other person in the planning or commission of the offense." (Emphasis added.) 720 ILCS 5/5-2(c) (West 2012); People v. Dennis, 181 Ill. 2d 87, 96 (1998). To establish the requisite intent, the State must demonstrate that either (i) the defendant shared the principal's criminal intent or (ii) there was a common criminal design among the co-defendants. People v. Fernandez, 2014 IL 115527, ¶ 13. Here, the common-design element is relevant. ¶ 54 Under the common-design rule, if "two or more persons engage in a common criminal design or agreement, any acts in the furtherance of that common design committed by one party are considered to be the acts of all parties to the design or agreement and all are equally responsible for the consequences of the further acts." People v. Cooper, 194 Ill. 2d 419, 434-35 (2000). Proof of the common purpose or design need not be supported by words of agreement, but may be inferred from the circumstances surrounding the commission of an act by a group. People v. Perez, 189 Ill. 2d 254, 266 (2000); In re W.C., 167 Ill. 2d 307, 338 (1995). Evidence that a defendant voluntarily attached himself to a group bent on illegal acts with knowledge of the criminal design supports an inference that the group shared the common purpose and will ¶ 62 An individual commits forgery when he or she intends to defraud and knowingly issues or delivers a document knowing it to have been forged or altered. 720 ILCS 5/17-3(a)(2) (West 2012). An individual commits wire fraud when he or she transmits or causes to be transmitted any writing for the purposes of obtaining money or property by false pretenses, representations, or promises. Id. § 17-24(b)(2). ¶ 63 We find no merit in Caraga's claims. Although the record does not establish that Caraga actually uploaded the loan application into the PMAC system, it is undisputed that he intended the completed application to be reviewed and ultimately submitted to PMAC electronically. Caraga offers no purpose for completing the application other than to submit it to PMAC for approval and eventual approval of the loan. Caraga necessarily knew the application included false information because the box specifying that the loan originator met with the buyer face-to-face was checked, but Messina, who was listed as the loan originator, never met with Rodriguez. Because Caraga did not have a loan originator's license, he could not complete the application, and it can be reasonably inferred that either he intentionally checked the box regarding Messina's in-person meeting with Rodriguez knowing that it was false or he forged Messina's signature on the application. Consequently, Caraga's convictions for forgery and wire fraud were supported by evidence beyond a reasonable doubt.

¶ 64 C. Other Bad Acts

¶ 65 Finally, Caraga claims that the trial court abused its discretion in admitting evidence of certain other crimes: (i) that he was not a licensed mortgage broker in this transaction and (ii) that he had acted as the mortgage broker in three or four prior transactions that involved straw buyers. Caraga contends that whether he was a licensed mortgage broker was irrelevant to determining whether he knowingly participated in the mortgage fraud and that the State used the other crimes to show his propensity to engage in fraudulent transactions. ¶ 66 The State contends that Caraga has forfeited review of this issue because he only vaguely referred to the erroneous admission of other crimes evidence in his posttrial motions. Although Caraga did not label his argument as pertaining to other-crimes evidence, construing his posttrial motions broadly, we find that Caraga sufficiently preserved the claim regarding his lack of a loan originator's license, but has forfeited review as it relates to the three or four prior transactions that also involved a straw buyer. In particular, Caraga argued in his posttrial motions that:

"[Belinda Pinella] testified that Mr. Caraga was not licensed as a loan originator in April through July 2012. As stated during my objection to her testimony at trial, this information is irrelevant to the charges at hand. Mr. Caraga was not criminally charged with allegedly performing the duties of a loan originator when he was not licensed to do so. This allegation does not show in any way that Mr. Caraga knew the loan application was fraudulent."

Caraga's pleading and his objection at trial were sufficient to preserve his claim that evidence regarding his lack of a loan originator license should have been excluded. In contrast, Caraga only refers to the prior sham transactions in passing in his posttrial motions, i.e., "Caraga alludes to co-defendant Bogdan Bozic's 'previous guys' and knowing they are not technically living there" and Prittis "did not know if Mr. Caraga had knowledge that those previous deals were shams." Because Caraga did not develop in any manner his argument that evidence relating to the prior transactions involving straw buyers should have been excluded, he has forfeited our review of that claim. Moreover, Caraga has not argued plain error on appeal, and we will not independently engage in such an analysis on his behalf as a basis to review his forfeited claim. not outweigh the probative value of the evidence necessary to demonstrate his knowledge and intent to submit a fraudulent loan application. Consequently, the court did not abuse its discretion by admitting into evidence Caraga's lack of a current loan origination license for purposes of demonstrating knowledge and intent.

¶ 70 III. CONCLUSION

¶ 71 For the foregoing reasons, we affirm Caraga's convictions for (i) loan fraud, (ii) financial institution fraud, (iii) attempted theft, (iv) wire fraud, and (v) forgery. ¶ 72 Affirmed.