United States v. Bell, No. 20-2679 (7th Cir. 2022)
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Bell, Hernandez, and Rayas, fraudulently promised victims that they could save their homes from foreclosure or lower their mortgage payments. They targeted monolingual Spanish‐speakers. They charged a $5,000-$10,000 "membership fee" and spent the fees on personal expenses. Their fraudulent entity never prevented a foreclosure. More than 60 homeowners joined, losing almost $260,000.
Bell, Hernandez, and Rayas were charged with mail fraud, 18 U.S.C. 1341. Although Bell consistently refused legal representation, the district court assigned an experienced stand-by attorney. On the eve of trial, Bell moved to retain Joyce, who was newly admitted to the Illinois bar, had never tried a case, and had met Bell at the Metropolitan Correctional Center days earlier, at the behest of Eliades, co‐defendant Rayas’s counsel. Later, Eliades and Joyce denied that Eliades asked Joyce to visit Bell. Conflict attorneys from the Federal Public Defender’s Office discussed the situation with Bell and Rayas separately and held a conflict hearing for Hernandez. Rayas and Hernandez chose new attorneys. Bell insisted on Joyce, signing a waiver in which he acknowledged his right to conflict‐free counsel and the potential conflicts associated with Joyce.
Convicted, Bell was sentenced to 150 months’ imprisonment and ordered to pay $259,211 in restitution. The Seventh Circuit affirmed. Bell’s waiver was knowing and voluntary; he has not demonstrated actual or serious potential for conflict that would have obliged the court to disregard his waiver.
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In the United States Court of Appeals For the Seventh Circuit ____________________ No. 20 2679 UNITED STATES OF AMERICA, Plaintiff Appellee, v. MELVIN BELL, Defendant Appellant. ____________________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:13 cr 00949 1 — Virginia M. Kendall, Judge. ____________________ ARGUED OCTOBER 27, 2021 — DECIDED MARCH 11, 2022 ____________________ Before MANION, WOOD, and BRENNAN, Circuit Judges. MANION, Circuit Judge. Melvin Bell and co defendants, Monica Hernandez and Carlos Rayas, fraudulently promised victims that they could save their homes from foreclosure or lower their mortgage payments. To carry out this scheme, they invented Washington National Trust (WNT), which they marketed as a legitimate financial institution bankrolled by 2 No. 20 2679 wealthy Native Americans. Bell was the Director of Trust Op erations, while his associates acted in subordinate positions.1 They targeted Hispanic homeowners, mostly monolin gual Spanish speakers, who were struggling to pay their mortgages or were already in foreclosure proceedings. Her nandez and Rayas falsely represented to victims that WNT would buy their mortgages and prevent their pending fore closures in exchange for a membership fee, generally between $5,000 and $10,000. On joining WNT, homeowners signed membership forms and agreements, and paid some or all the required fees. WNT then mailed these documents to the members or made them available for pick up, along with a welcome letter signed by Bell. After receiving a membership packet, usually by mail, if the member could not pay the full fee at the time of sign up, he or she had to make installment payments. Homeowners also referred new members, from whom WNT sought and re ceived additional fees. In reality, WNT was not a licensed trust and never had the financial resources to buy out a single victim’s mortgage. In stead, Bell and his associates spent the homeowner fees on personal expenses. WNT never once purchased a victim’s mortgage or prevented a foreclosure. All told, over 60 home owners joined WNT and lost almost $260,000. In 2013, a federal grand jury indicted Bell, Hernandez, and Rayas under 18 U.S.C. § 1341 on four counts of mail fraud. 1 Because Bell challenges the sufficiency of the evidence supporting the jury’s verdict, we recount the evidence in the light most favorable to the prosecution. See United States v. Hernandez, 952 F.3d 856, 857 (7th Cir. 2020). No. 20 2679 3 Bell consistently refused legal representation. Despite his ob jection, the district court assigned him an experienced defense attorney to act as stand by counsel. On the eve of trial, Bell moved to retain a recent law school graduate, attorney John Joyce. Since Bell had refused repre sentation for 20 months despite being provided experienced stand by counsel, the district court inquired about this devel opment. In response to the district court’s questioning, Joyce explained that he was newly admitted to the Illinois bar, had never tried a case, and had met Bell at the Metropolitan Cor rectional Center only a few days before. The district court ad vised Bell that choosing the inexperienced Joyce over the ap pointed stand by counsel was a serious mistake. Undeterred, Bell insisted on Joyce. The district court probed Joyce further about his relation ship to Bell. Joyce informed the court that he had met with Bell at the behest of Rosa Eliades, co defendant Rayas’s coun sel. Joyce told Bell during this visit that he was not his attor ney. After the district court sought clarification, Joyce denied that Eliades asked him to visit Bell. (So too did Eliades in a later hearing.) The district court obtained conflict attorneys from the Federal Public Defender’s O ce to discuss this situ ation with Bell and Rayas separately, and later held a conflict hearing for Hernandez.2 The conflict counsel assigned to Bell advised him (1) about his right to conflict free counsel, (2) of the conflict that could arise if Joyce represented him, (3) that waiving conflict free counsel would preclude him from raising it during the trial or 2 The district court determined in Hernandez’s conflict hearing that Eliades had shared information about the case with Hernandez’s counsel. 4 No. 20 2679 on appeal, and (4) of the dangers that choosing an inexperi enced attorney like Joyce could pose to him. After learning about the potential conflict, Rayas and Hernandez chose new attorneys. But Bell decided to stick with Joyce and thanked the district court for its concern. He subsequently filed a writ ten, signed waiver in which he acknowledged his right to con flict free counsel and the potential conflicts associated with having Joyce represent him. The district court proceeded to try Bell and Hernandez to gether. (Rayas pleaded out.) The government brought forth witnesses to testify about their interactions with WNT person nel and presented correspondence sent from WNT to victims bearing Bell’s signature. In addition, the government submit ted into evidence a fraudulent $100,000 treasury check, which someone had attempted to deposit into Bell’s bank account, to establish that WNT never had su cient funds to purchase mortgages. The jury found Bell guilty of three counts of mail fraud, and the district court sentenced him to 150 months’ im prisonment with a three year term of supervised release to follow and ordered him to pay $259,211 in restitution. Bell ap peals. He first argues that the district court erred by allowing him to proceed with Joyce, who he asserts provided ine ec tive assistance of counsel because of his relationship with Rayas. Bell contends that the district court should have tried harder to convince him to choose a di erent attorney or, fail ing that, just forced him to. A defendant’s Sixth Amendment right to e ective assis tance can be violated when his counsel has a conflict of inter est, but the right to conflict free counsel can be waived. Free man v. Chandler, 645 F.3d 863, 868 (7th Cir. 2011). Generally, No. 20 2679 5 when there is no conflict of interest, the district court must respect the defendant’s choice of counsel. United States v. Turner, 594 F.3d 946, 952 (7th Cir. 2010). On the other hand, the district court may decline to accept a waiver if there is “an actual conflict of interest that seriously undermines counsel’s e ectiveness” or a “serious potential” for such a conflict to arise. Id. at 948. On appeal, it is the defendant’s burden to show that there was an actual or serious potential for conflict. See United States v. Coscia, 4 F.4th 454, 475 (7th Cir. 2021). Generally, a defendant’s waiver is valid when the judge informs him that he has a right to conflict free counsel and ensures that he understands the potential consequences of the conflict. Freeman, 645 F.3d at 868. The district court need only be satisfied that the defendant made an informed decision— not that the decision was a prudent one. United States v. Flores, 5 F.3d 1070, 1078 (7th Cir. 1993). Bell has not shown that there was an actual or potential conflict of interest that seriously undermined Joyce’s e ec tiveness. Essentially, Bell contends that Joyce’s relationship with Rayas might have a ected Joyce’s ability to represent him because Joyce would not have been able to use strategies that might have damaged Rayas’s case, especially if Rayas had decided to work with the government against Bell. How ever, these asserted possibilities are mere conjecture and would apply to any case in which there is joint representa tion.3 See Turner, 594 F.3d at 954. We have held that the mere possibility that one co defendant might work against the 3 The record indicates that Joyce had a relationship of some kind with Rayas, but it is not clear whether it rose to the level of formal representa tion. For purposes of this appeal, we need not resolve that issue. 6 No. 20 2679 other at trial is not su cient to justify overriding the right of preferred counsel. Id. Bell does not provide any particularized assertions that Joyce subordinated his e orts in Bell’s defense to those of Rayas. Generalized speculation does not require a court to invalidate a defendant’s right to choose counsel. Bell attempts to sidestep this analysis. He asserts that the district court should have rejected his waiver because Joyce’s relationship with Rayas rose to the level of a “structural er ror.” This refers to a rare kind of error that so undermines the fairness of a criminal proceeding that it triggers automatic re versal. United States v. Davila, 569 U.S. 597, 611 (2013). Bell cites no authority for the proposition that an actual or poten tial conflict of counsel can constitute a structural error. The caselaw holds to the contrary—structural error can occur when the district court does not allow a defendant to choose “counsel of [his] choice.” Id. And holding that a conflict auto matically gives rise to structural error would render insensi ble the mass of authority that allows defendants to waive con flict free counsel. Simply put, we find no merit in this conten tion. Regarding the validity of the waiver, the district court con scientiously ensured that Bell knew his rights and understood the possible pitfalls of choosing his preferred attorney. Not only did the court attempt to deter Bell from choosing Joyce rather than the experienced court appointed stand by coun sel, it also procured a conflict attorney from the Federal Public Defender’s O ce to advise Bell about his rights and the pos sible consequences of choosing to waive them. Repeatedly and despite the district court’s best e orts, Bell insisted on Joyce. No. 20 2679 7 In sum, the record shows that Bell’s waiver was knowing and voluntary, and he has not demonstrated an actual or se rious potential for conflict that would have obliged the district court to disregard his waiver. Accordingly, Bell cannot now argue that Joyce’s counsel was ine ective because of a con flict. See Coscia, 4 F.4th at 475. Bell next contends that the district court erred by allowing the government to introduce as evidence a $100,000 fraudu lent check that someone attempted to deposit into his bank account as the scheme was unravelling. He asserts that the fraudulent check was inadmissible propensity evidence. In other words, the government wanted to suggest to the jury that, because Bell passed fraudulent checks, he probably com mitted mail fraud too. Although Federal Rule of Evidence 404 bars the introduc tion of evidence to show a person’s propensity to act a certain way, this rule “does not apply to direct evidence of the crime charged.” United States v. Ferrell, 816 F.3d 433, 443 (7th Cir. 2015). In the fraud context, evidence can be direct when ad mitted as proof of an overall scheme. United States v. Lanas, 324 F.3d 894, 901 (7th Cir. 2003). We review the district court’s evidentiary rulings for abuse of discretion and will only re verse a ruling if there was no rational basis for it. United States v. Gorman, 613 F.3d 711, 717 (7th Cir. 2010). Here, the government introduced the fraudulent check to show that Bell and his co defendant falsely represented to homeowners that WNT could purchase mortgages despite knowing that WNT did not have the resources to do so. This evidence countered Bell and Hernandez’s argument that WNT was a legitimate financial entity. The district court found that the fraudulent check tended to show that Bell and 8 No. 20 2679 Hernandez were deceiving homeowners when they repre sented that WNT could purchase mortgages outright. Given the evidence that the fraudulent check for $100,000 briefly ap peared in Bell’s account around the time that he needed to make good on WNT’s many false representations, we cannot say that the district court abused its discretion in admitting the check as direct evidence of a scheme to defraud. Bell also challenges the su ciency of the evidence sup porting the verdict. Because he did not move for a judgment of acquittal at the close of the government’s case, we review for plain error. See United States v. Lundberg, 990 F.3d 1087, 1095 (7th Cir. 2021). Under this standard, reversal is war ranted only “if the record is devoid of evidence pointing to guilt.” Id. Bell o ers two reasons why the evidence was insu cient to support the verdict. He argues that the membership pack ets mailed to victims did not advance the scheme to defraud and that the evidence didn’t show that he knew about the scheme or that it involved the use of the mails. We essentially rejected Bell’s first contention in co defend ant Hernandez’s appeal, United States v. Hernandez, 952 F.3d 856 (7th Cir. 2020). There, Hernandez also argued that the scheme to defraud did not depend on the mailings. To the contrary, we held that a reasonable jury could find that the mailings contributed to the success of the scheme because cer tain victims submitted payments to WNT after receiving the membership packets in the mail. Id. at 860. “Because the mail ings repeated the fraudulent promises and lent credibility to the legitimacy of [WNT],” we determined that the jury could reasonably “conclude that they helped Hernandez conceal the No. 20 2679 9 fraudulent scheme.” Id. This reasoning applies with equal force to Bell’s case. His second argument fares no better. Although his co de fendants were the ones who met with victims in person, the evidence showed that Bell controlled the scheme. A WNT em ployee testified that Bell was in charge of WNT, and the mem bership packets mailed to victims bore Bell’s signature as Di rector of Trust Operations; a jury could conclude from this in formation that Bell could foresee the use of the mails to ad vance the scheme. Further, Bell used the homeowner fees on personal expenses and never once purchased a mortgage or prevented a foreclosure. Additionally, a fraudulent check for $100,000 was deposited into Bell’s account, from which a jury could infer that he knew that WNT did not have the financial resources to carry out its purported mission. And, in response to state regulators informing him that he operated an unli censed trust, he continued to recruit homeowners and collect fees. This record is hardly devoid of evidence pointing to guilt. Finally, Bell contends that the district court erred by con structively amending the indictment via jury instructions. Constructive amendment occurs when a district court ex pands the possible bases of conviction beyond those charged by the grand jury. United States v. Trennel, 290 F.3d 881, 888 (7th Cir. 2002). But we need not get into the specifics of his contentions. When defense counsel a rmatively approves proposed jury instructions, a defendant waives his right to challenge them on appeal. United States v. Natale, 719 F.3d 719, 730 (7th Cir. 2013). That’s what happened here. The district court re cited the instructions that it intended to give the jury 10 No. 20 2679 regarding the charge of mail fraud and asked defense counsel if he had any objection. Joyce responded, “No, we don’t have a problem with that, your Honor.” Assertions of this sort are enough to constitute waiver. Id. (collecting cases). Conse quently, Bell cannot make this argument here. Having reviewed the record and the arguments in the briefs, we AFFIRM the district court’s judgment.
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