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The Eighth Circuit Reverses A Conviction Because The Government Didn’t Show That Bank of America Mortgage Is FDIC Insured

Like many Americans, Meggan Alexander wanted to participate in the dream of home ownership. Like many Americans, Ms. Alexander had lost her job.

Unlike many Americans, Meggan Alexander signed documents at a real estate closing that said she was employed when she wasn’t.

1117134_contract_2.jpgThe government can be a stickler for proper paperwork. Because she signed these documents saying that she was employed when she wasn’t, she was indicted for making a false statement with the intent to influence an FDIC-insured entity.

Fortunately for Ms. Alexander, the government is not always a stickler for its own paperwork, as the Eighth Circuit’s opinion in United States v. Alexander shows.

One of the things the government has to prove in order to convict someone of lying in connection with a loan from an FDIC-insured institution is that the institution that was lied to is FDIC-insured.

This requirement isn’t trivial – without it there is no federal jurisdiction for the crime. It’s not dissimilar to this earlier jurisdictional case arising out of the great state of Iowa.

At trial, the government and Ms. Alexander stipulated that Bank of America is FDIC-insured.

The loan documents, however, showed that the lender was Bank of America N.A.

So, as the Eighth Circuit explained it,

in order to satisfy the jurisdictional element for purposes of section 1014, the government could demonstrate either (1) that Bank of America, N.A. was FDIC insured, or (2) that Bank of America was Bank of America N.A.’s alter ego so that Bank of America’s FDIC-insured status was implicated in the case.

The government didn’t meet the first requirement:

Alexander is correct that there is no evidence in the record to show that–absent a connection to Bank of America–Bank of America, N.A. or Bank of America Mortgage were independently FDIC insured. The only evidence of FDIC insurance was the stipulation signed by Alexander, which failed to include any mention of Bank of America, N.A. or Bank of America Mortgage.

This is presumably because the government thought it had a sufficient stipulation; it didn’t think that anyone would argue that Bank of America is a different entity than Bank of America N.A. or Bank of America Mortgage.

The court of appeals describes the government’s argument on the second point this way:

our review turns to whether there was sufficient evidence to prove that Bank of America, N.A. and Bank of America Mortgage were alter egos of Bank of America so that Bank of America’s FDIC-insured status extended to them. This is familiar territory for the government, as it rested on this “same entity” theory at trial. During their testimony, bank employees and other witnesses involved in the loan process used the terms “Bank of America,” “Bank of America, N.A.,” and “Bank of America Mortgage” interchangeably. Likewise, although the loan application and several other documents in evidence refer to “Bank of America, N.A.” as the lender, other documents, including one of Alexander’s hardship letters, occasionally reference “Bank of America” as the lender. The government insists that all three “Bank of America” titles “refer to the same entity and that was the entity to which defendant made her false statements.” The government asks that the FDIC-insurance stipulation be read broadly to encompass all three “Bank of America” entities.

The Eighth Circuit, though, wasn’t persuaded:

the evidence presented in the instant case does not show how the three different entities are structured or how funds were disbursed. No evidence was offered to show that the mortgage financed by Bank of America, N.A. was actually financed by funds from Bank of America. The witnesses called by the government were low-level employees, none of whom were shown to be qualified to testify about the corporate structure of the different entities. The fact that employees used the terms “Bank of America,” “Bank of America, N.A.,” and “Bank of America Mortgage” interchangeably in their testimony and on internal correspondence does not establish that the entities are one and the same.

And, with that, Ms. Alexander’s conviction for making false statements to the Bank of America N.A. was reversed because there wasn’t evidence that Bank of America N.A. or Bank of America Mortgage were FDIC-insured.

Sadly, Ms. Alexander was convicted on another count involving HUD insurance for the mortgage and there’s no question that HUD is a federal program.

But at least she gets to be resentenced without the FDIC count.

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