Home Banking & Finance Judge rules no separate trials for Terra Foundation fraud defendants

Judge rules no separate trials for Terra Foundation fraud defendants

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A federal judge has rejected requests for separate trials in the Terra Foundation mortgage fraud case by criminal co-defendants who want nothing to do with one another.

Terra foundationDistrict Judge Nelson S. Roman characterized one of the arguments for severing the defendants as a kind of “finger-pointing” that numerous courts have rejected.

The defendants – Bruce Lewis, Jacqueline Graham, Anthony Vigna, Rocco Cermele and Paula Guadagno – were arrested two years ago and accused of conspiracy to commit mail fraud.

They operated or worked for the Terra Foundation, an unregistered Valhalla company that purportedly targeted homeowners who were having difficulties paying their mortgages. They allegedly claimed they could eliminate mortgage debt for a fee.

The Terra Foundation filed nearly 60 false mortgage discharge papers with county clerks in New York and Connecticut, according to the prosecution, making it appear as if $33 million in loans had been satisfied.

Terra Foundation encouraged the homeowners to take out new mortgages, secured by the same homes, leaving clients with debts on both the old and the new loans.

The defendants have asked to be tried separately. They argue that their defenses are mutually antagonistic and that overwhelming evidence against one defendant will spill over and taint their cases.

Lewis, for instance, has suggested that Vigna and Graham duped him and that he relied on their advice. But Vigna claims that he had no criminal intent when he provided legal services to Lewis that may have furthered the criminal scheme.

Vigna and Graham both argue that the evidence against Lewis is overwhelming and the evidence against them pales in comparison.

The U.S. Supreme Court has expressed a preference for joint trials, Roman said in his Nov. 29 opinion, to promote economy and efficiency. Defendants are not entitled to severance merely because they may have a better chance of acquittal in separate trials.

The fact that a defendant played a lesser role in an alleged scheme also does not require severance, he stated, because jurors can be instructed that the government must prove distinct acts by each defendant.

Roman also ruled against the defendants on several other pretrial motions.

Lewis asked the court to dismiss his indictment, based on “pre-indictment delay.” He argued that at least seven witnesses have died, one has dementia and five have “moved on.”

Roman ruled that Lewis has not shown how testimony from those witnesses would have helped him. The indictment was filed within the statute of limitations and Lewis failed to show that any delay was the result of a bad-faith effort by the government.

Lewis also questioned the validity of a search warrant. To be entitled to a hearing, Roman stated, a defendant must show that a statement in the search warrant affidavit was intentionally false or made with reckless disregard for the truth. Lewis, he said, provided no such “counter-narrative of the facts.”

Graham asked the court to order the prosecution to disclose the identities of confidential informants. But disclosure of confidential informants is not required unless their testimony is material to the defense, Roman stated, citing a Second Circuit Court of Appeals ruling. He found that Graham has not shown how their testimony mattered.

Graham asked the court to block the prosecution from using evidence of prior convictions, uncharged crimes, bad acts and lawsuits to impeach her credibility. Roman noted that prior convictions may be used if they are an element of the crime. For now, the government has not indicated that it plans to use such evidence, but if it does a hearing will be held to weigh the value of the evidence against the potential harm.

Graham asked for a bill of particulars, describing the where, when and with whom of the alleged crimes. She is not entitled at this point, Roman stated, for a preview of the government’s evidence.

Graham asked for a witness list, exculpatory material and co-conspirator statements. But the prosecution has already provided the necessary information at this point, Roman said, so there is no dispute to resolve.

Roman did grant one portion of her request. He directed the prosecution to disclose the general nature of other crimes or acts that it intends to introduce at trial, “to permit defense counsel to contest its admissibility.”

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