United States v. Grasso

A district court can charge a defendant with multiple charges by imposing Pinkerton liability, but must ensure that the multiple charges does not create a merger issue by certifying that the statutes do not penalize the same type of behavior; referral fees may be viewed as “proceeds” of loan and bank fraud.

Kyle Grasso was convicted for “money laundering, bank fraud, loan fraud, and conspiracy to commit loan and bank fraud” originating from a scheme to defraud mortgage lenders. Grasso, a real estate agent recruited for the scheme, owned an ownership interest in Cal Title, a subsidiary of Prudential California Realty (“Prudential”). Grasso ensured home sellers kept the listing price confidential, listed inflated prices on the Multiple Listing Service (“MLS”), and obtained title insurance and escrow documents through Cal Title, one with the true price and one with the inflated price. When Cal Title was used, commissions would be paid through Prudential to Grasso and were called “referral fees.” Grasso argued that the district court erred in denying his motion for acquittal because the evidence was insufficient to support a guilty verdict on all counts. The Ninth Circuit affirmed all convictions, holding that the government provided sufficient evidence to allow a rational trier of fact to find the essential elements of each conviction and that Grasso knew that his false statements would ultimately influence a federally insured bank, imposing liability under Pinkerton v. United States. Grasso manipulated MLS prices, and as an experienced appraiser, he knew that the false appraisals were being used to obtain financing. The panel also concluded that “proceeds” meant “gross receipts,” and thus the money laundering convictions did not raise a merger problem with the loan or bank fraud convictions because the statutes criminalize different types of behavior. Additionally, including money laundering did not threaten a radical increase in the statutory maximum sentence for the underlying offense. Accordingly, the panel concluded that the referral fees could be viewed as “proceeds” of the loan and bank fraud and rejected Grasso’s argument that the money laundering charges were based on “separate and distinct” activity. AFFIRMED.