Opinion
F068634
03-20-2017
THE PEOPLE, Plaintiff and Appellant, v. LORENZO LOPEZ, JR., et al., Defendants and Respondents.
Kamala D. Harris and Xavier Becerra, Attorneys General, Gerald A. Engler, Chief Assistant Attorney General, Michael P. Farrell, Assistant Attorney General, Catherine Chatman, Michael Canzoneri, and George M. Hendrickson, Deputy Attorneys General, for Plaintiff and Appellant. Hammerschmidt Broughton Law Corporation and Jeffrey Y. Hammerschmidt for Defendant and Respondent Lisa Sanchez. Nuttall & Coleman and Roger T. Nuttall for Defendant and Respondent Carrie Hernandez. Johnny Sanchez, in pro. per., for Defendant and Respondent Johnny Sanchez. David E. Jones for Defendant and Respondent Isaac Ramirez. Antonio R. Alvarez for Defendant and Respondent Rey Zamora. Law Offices of Daniel A. Bacon, Daniel A. Bacon and Angelica I. Ambrose for Defendant and Respondent Asim Ali. Valerie G. Wass, under appointment by the Court of Appeal, for Defendant and Respondent David R. Herrera. Ronald R. Boyer, under appointment by the Court of Appeal, for Defendant and Respondent Albert Gonzales. Athena Shudde, under appointment by the Court of Appeal, for Defendant and Respondent Ryan Garcia. No appearance for Defendants and Respondents Lorenzo Lopez, Jr., and Anthony J. Ramon.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. F10905435)
OPINION
APPEAL from a judgment of the Superior Court of Fresno County. Jonathan B. Conklin, Judge. Kamala D. Harris and Xavier Becerra, Attorneys General, Gerald A. Engler, Chief Assistant Attorney General, Michael P. Farrell, Assistant Attorney General, Catherine Chatman, Michael Canzoneri, and George M. Hendrickson, Deputy Attorneys General, for Plaintiff and Appellant. Hammerschmidt Broughton Law Corporation and Jeffrey Y. Hammerschmidt for Defendant and Respondent Lisa Sanchez. Nuttall & Coleman and Roger T. Nuttall for Defendant and Respondent Carrie Hernandez. Johnny Sanchez, in pro. per., for Defendant and Respondent Johnny Sanchez. David E. Jones for Defendant and Respondent Isaac Ramirez. Antonio R. Alvarez for Defendant and Respondent Rey Zamora. Law Offices of Daniel A. Bacon, Daniel A. Bacon and Angelica I. Ambrose for Defendant and Respondent Asim Ali. Valerie G. Wass, under appointment by the Court of Appeal, for Defendant and Respondent David R. Herrera. Ronald R. Boyer, under appointment by the Court of Appeal, for Defendant and Respondent Albert Gonzales. Athena Shudde, under appointment by the Court of Appeal, for Defendant and Respondent Ryan Garcia. No appearance for Defendants and Respondents Lorenzo Lopez, Jr., and Anthony J. Ramon.
-ooOoo-
INTRODUCTION
On September 16, 2011, the Fresno County District Attorney's Office filed a 140-count indictment against 12 defendants: Lorenzo Lopez, Jr., Lisa Sanchez, David Herrera, Anthony Ramon, Carrie Hernandez, Johnny Sanchez, Asim Ali, Ryan Garcia, Serey Kem, Rey Zamora, Isaac Ramirez, and Albert Gonzales. The indictment alleged defendants illegally obtained loans to purchase and refinance multiple residential properties in Fresno, Clovis, Sanger, and Bakersfield between 2005 and 2006.
Defendants were charged with multiple counts of grand theft (Pen. Code, § 487); forgery by making or attempting to pass a specified deed of trust or grant deed (§ 470, subd. (d)); forgery by false acknowledgement of a specified deed of trust (§ 470, subd. (d)); procuring or offering a false instrument for recording (§ 115, subd. (a)); and identity theft (§ 530.5, subd. (a)). The indictment further alleged two-year sentence enhancements for losses of over $200,000 (§ 12022.6, subd. (a)(2)), and as to each defendant, a pattern of related felony offenses involving fraud or embezzlement in which an aggregate of more than $500,000 was taken (§ 186.11, subd. (a)(2)).
All undefined statutory citations are to the Penal Code unless otherwise indicated.
Arrest warrants for defendants were issued on October 27, 2010. Defendants filed a pretrial motion to dismiss a majority of the counts (excluding counts 125-137) of the indictment on the basis the counts were time-barred by the four-year statute of limitations. Following a pretrial hearing, the trial court agreed all but counts 125 through 137 were time-barred.
On appeal, the Attorney General contends the trial court abused its discretion in concluding the counts were time-barred because: (1) the party who reported two of the fraudulent loans to the district attorney's office (loans 12 and 14b) is not a "discoverer" for purposes of triggering the statute of limitations; (2) assuming the reporting party is a discoverer, there are triable issues of fact as to whether he knew or should have known about the mortgage fraud as to loans 12 and 14b prior to October 27, 2006; (3) alternatively, if the reporting party is not a discoverer, there are triable issues of fact as to whether the district attorney's office knew or should have known about the mortgage fraud as to loans 12 and 14b prior to October 27, 2006; and (4) the undisputed evidence fails to show the reporting party or the district attorney's office knew or should have known about the mortgage fraud as to all other loans prior to October 27, 2006. We reverse the judgment of the trial court.
FACTUAL AND PROCEDURAL HISTORY
Grand Jury Evidence
The following facts are derived from the grand jury proceedings and from the evidentiary hearing on defendants' pretrial motion to dismiss. The transcript of the proceedings before the grand jury was not in evidence before the trial court at the pretrial hearing. Thus, we recount this evidence only for purposes of providing background information. (People v. Lopez (1997) 52 Cal.App.4th 233, 241, fn. 3 (Lopez) [evidence of proceedings before grand jury is not in evidence at pretrial hearing unless parties stipulate to its admission or the testimony is admissible under some exception to rule against hearsay].)
Between 2004 and 2008, Henry Milton was a mortgage broker and owner of Worldwide 1st Mortgage (Worldwide 1st). Milton held a California Finance Lender (CFL) license issued by the Department of Corporations. Milton's license permitted his company to work with CFL-licensed mortgage lenders and to hire unlicensed loan officers to work under his license.
Milton hired branch managers to open and manage multiple branch offices of Worldwide 1st. The branch managers were responsible for the entire operation of their offices, paying the rent and utilities, hiring employees, paying employees, and record keeping. Milton allowed the managers to run their respective offices as they saw fit as long as he did not see any problems.
In August 2005, Milton hired defendant Lorenzo Lopez to open and manage a branch office of Worldwide 1st on Shaw Avenue in Fresno. Milton terminated defendant Lopez in July 2006.
In September 2006, a lender contacted Milton to inform him one of the loans brokered by Worldwide 1st was in first-month payment default and Milton would have to buy the loan. Contracts between Milton and the lenders his company worked with required Milton to buy back any loans that went into first-month payment default.
Milton began to look for the loan file, but discovered it was missing. He was able to obtain a copy of the HUD-1 settlement statement and learned defendants Lopez and David Herrera had each received around $35,000 through escrow for lawn services, which was very unusual.
When escrow closed on a loan brokered by Worldwide 1st, the escrow company would issue a check to Worldwide 1st, which would go to Milton as the broker. Before Milton would issue a commission check to the branch manager, he would conduct a compliance review of every loan file. This included making sure all paperwork was in the file, such as W-2's and 1099's, and verifying there were signatures on all loan documents. If the loan file was complete, Milton would issue the commission check to the branch office minus his $750 broker fee.
Milton did not receive the commission check for the missing loan file. He later discovered the check had been cashed under a bank account opened by defendant Lopez in Milton's company's name. Soon thereafter, Milton filed a complaint with the district attorney's office.
On October 25, 2006, Investigator Amarjeet Gill of the district attorney's real estate fraud unit received a flyer from the chief deputy district attorney overseeing her unit. The flyer contained complaints from residents of the Quail Lake neighborhood of loud parties, houses with dead lawns, heavy traffic through the neighborhood, vacant homes, and homes selling above their value. The chief deputy received the flyer from the sheriff, who had attended a homeowners association meeting.
On October 27, 2006, Gill went to the Quail Lake community and spoke to a few of the residents who lived next to houses with dead lawns. One of the vacant houses belonged to defendant Lopez, who Gill learned worked at Worldwide 1st. That same day, Gill went to Worldwide 1st to speak to Lopez. Gill was told Lopez had been terminated, but she spoke to Milton. When Milton told Gill he had filed a complaint with the district attorney's office, Gill returned to the office to review it.
On November 3, 2006, Gill interviewed Milton and requested Milton furnish loan files processed by Lopez's branch. Following the interview, Gill determined a further investigation should be conducted.
On November 21, 2006, Milton delivered to the district attorney's office between 13 to 16 loan files facilitated by defendant Lopez. At the assessor's office, Gill searched all of the borrowers' names from the loan files to see whether they had purchased multiple properties, and she requested employment information for all of the borrowers from the Employment Development Department.
Gill first heard of defendant Lisa Sanchez on June 26, 2007, when Gill contacted the risk management department of Washington Mutual Bank while checking on two properties purchased by the same person. Gill was told Lisa Sanchez had been the loan officer for one of the loans, and many of Sanchez's loans had gone into default. Gill tried to check on all of the properties she had suspicions about, but stopped when the number of suspicious properties became unmanageable.
On October 27, 2010, arrest warrants were issued for defendants. Loan 1: 10478 East Acacia Avenue, Clovis
a. Purchase—Counts 1 through 10 (American Mortgage)
In the summer of 2005, defendant David Herrera asked Jennifer Fain, the sister of his then-fiancée, to purchase a home for him in her name. Herrera told Fain he would use her credit to purchase the home, similar to a cosigner, and that after six months to a year, she would sign the house over to him. Fain agreed and was promised a portion of the equity in the home in exchange.
Fain gave defendant Herrera her social security number and date of birth. Herrera faxed the third page of a loan application dated September 23, 2005, to Fain, which she signed and returned. Fain did not know the loan application requested a loan in the amount of $513,200, falsely listed her employer as Excel Flooring and her monthly salary as $12,000, and falsely valued her personal property in the amount of $75,000. A second application, requesting a loan in the amount of $128,300, also listed false employment and asset information. Fain signed this document as well. A verification of rent for Fain's home was signed by Lorenzo Lopez.
On September 28, 2005, two deeds of trust recorded, securing loans made by New Century Mortgage Corporation. Fain had not signed either deed, nor did she visit a notary. The loan application stated the interviewer was defendant Isaac Ramirez of American Mortgage and Financial Services. Defendant Lisa Sanchez was the real estate agent for the purchase, and defendant Johnny Sanchez was the notary public.
b. Resale—Counts 11 through 20 (Northpoint)
Defendant Anthony Ramon asked his sister, Sophia Ramon, to use her name and credit to purchase a small home he could fix up and sell for a profit. Sophia gave her brother her personal information to run her credit, believing she would not qualify for a loan given her monthly income. Anthony told Sophia she did not qualify for a loan, but he brought her documents to sign to try to get her qualified through another company.
A loan application, dated June 13, 2006, requested a loan in the amount of $624,000 in Sophia Ramon's name. Sophia would never have agreed to a loan amount of this size because the monthly payments were unaffordable. A second loan application also made in Sophia's name requested a loan in the amount of $156,000. The applications falsely stated Sophia earned over $16,500 a month as an exotic dancer. Sophia denied signing either loan application as completed and never gave anyone permission to sign her name.
On June 23, 2006, two deeds of trust were recorded to secure loans made by Long Beach Mortgage Company. Sophia did not sign these documents. The loan applications stated Lisa Sanchez of Northpoint Mortgage was the interviewer. Loan 2: 1496 Fifth Street, Clovis—Counts 21 and 22 (Worldwide 1st)
On September 28, 2005, defendant Rey Zamora completed two loan applications to finance the purchase of 1496 Fifth Street, Clovis, from defendant Lopez. The first loan application was in the amount of $246,400, and the second was in the amount of $61,600. Both applications falsely stated Zamora earned $7,500 per month. Both deeds of trust recorded on September 30, 2005, securing loans made by Argent Mortgage Co., LLC. Loan 3: 4636 Emerald Peak Drive, Clovis
a. Purchase—Counts 23 and 24 (Worldwide 1st)
On September 28, 2005, defendant Zamora completed two loan applications for the purchase of 4636 Emerald Peak Drive, Clovis. The first loan application was for $463,200, and the second application was for $115,800. Both applications falsely stated Zamora earned $12,500 per month. Deeds of trust recorded on October 5, 2005, securing loans made by Secured Bankers Mortgage Company. The loan applications stated the interviewer was Lawrence Flores of Worldwide 1st, but defendant Zamora told the Federal Bureau of Investigation that defendant Lopez had processed the loan. Zamora purchased the Fifth Street property and the Emerald Peak Drive property within five days of one another.
b. Resale—Counts 25 and 26 (American Mortgage)
On September 29, 2006, defendant Anthony Ramon signed two loan applications to finance the purchase of 4636 Emerald Peak Drive, Clovis, from defendant Zamora. Both applications falsely stated Ramon worked at West Coast Tire and Wheel as a regional sales manager earning $28,689 per month. On October 11, 2006, deeds of trust were recorded to secure loans made by Long Beach Mortgage Company. The applications stated the interviewer was "Eric" of American Mortgage & Finance, Clovis. Loan 4: 2961 Buckingham Avenue, Clovis—Counts 27 and 28 (Worldwide 1st)
On November 29, 2005, defendant Herrera completed two loan applications in the amounts of $320,800 and $80,200 to finance the purchase of 2961 Buckingham Avenue, Clovis from defendant Zamora. The applications listed false employer and income information for defendant Herrera, stating he worked as a regional marketing director and made over $9,000 a month. Herrera was actually working for defendant Lopez at Worldwide 1st. Deeds of trust recorded on November 30, 2005, securing loans made by Decision One Mortgage Company, LLC. The applications stated the interviewer was Lorenzo Lopez as an employee of Henry Milton. Loan 5: 11611 Talladega Court, Bakersfield—Counts 29 through 40 (Worldwide 1st)
In early 2006, defendant Herrera asked his then-fiancée, Regina Silva, to purchase a home in her name so he could rent it out. Two loan applications dated January 26, 2006, were submitted for loans in the amounts of $488,000 and $122,000 for the purchase of 11611 Talladega Court, Bakersfield, in Silva's name. Silva did not hear about the purchase until after it had occurred, when Herrera told her everything was "said and done." Silva had never signed any paperwork, nor had she seen the property.
Both loan applications indicated Silva was employed at West Coast Tire and Wheel as a regional sales manager earning $12,500 per month, she owned real estate valued at $1,220,000, and owned $50,000 in personal property. All of this information was false, and none of the signatures on the applications were Silva's.
On February 3, 2006, deeds of trust were recorded securing loans made by Argent Mortgage Company, LLC. Silva did not sign the deeds of trust and had not given anyone permission to sign her name to the documents. The interviewer for the loan applications was Lorenzo Lopez, and the loan documents were notarized by defendant Johnny Sanchez. Loan 6: 4623 Crestmoor Avenue, Clovis—Counts 41 through 53 (Northpoint)
The indictment states the property is located in Fresno, however, the deeds of trust show the property is located in Clovis.
After the Talladega Court purchase, defendant Herrera asked Silva to purchase another house, 4623 Crestmoor Avenue, Clovis, which was owned by defendant Lopez. Herrera told Silva that Lopez wanted to get the property out of his name so he could purchase another home. Silva refused.
Two loan applications dated February 2, 2006, were submitted requesting loans in the amounts of $624,000 and $156,000 in Silva's name. The applications falsely stated Silva worked at West Coast Tire and Wheel earning $17,000 per month. The applications, which included false employment and income information, were not signed by Silva.
On February 9, 2006, deeds of trust were recorded to secure loans made by Long Beach Mortgage Company. The applications stated Lisa Sanchez of Northpoint Mortgage was the interviewer. Loan 7: 4595 North Outlook Court, Clovis—Counts 54 through 60 (Northpoint)
Defendant Herrera asked Regina Silva to ask her mother, Barbara Mejia, to purchase property at 4595 North Outlook Court in the Quail Lake development in Clovis. Herrera told Silva he had "too much property" in his name to purchase the home. Mejia agreed and gave Silva her identification, but nothing else. Months later, Herrera, defendant Lisa Sanchez, and Silva came to Mejia's home with paperwork for Mejia to sign.
Two loan applications dated March 28, 2006, requested loans in the amounts of $700,000 and $175,000. The applications stated Mejia worked for Worldwide 1st as a loan officer earning $20,000 per month. Mejia actually worked as a recycling coordinator and made $2,000 per month. The applications stated the interviewer was Lisa Sanchez of Northpoint Mortgage.
Deeds of trust were recorded on March 30, 2006, to secure loans made by Long Beach Mortgage Company. The loan documents were notarized by Lisa Sanchez.
By November 2006, Mejia started receiving telephone calls informing her no one was making the mortgage payments on the home. When Mejia and Silva complained to defendant Lisa Sanchez in January 2007, Sanchez told Mejia they should "'start [a] new life.'" Loan 8: 11944 East Griffith Avenue, Sanger—Counts 61 through 65 (Worldwide 1st)
Defendant Asim Ali met defendant Lopez when Lopez was a customer at West Coast Tire and Wheel, which Ali owned. Lopez encouraged Ali to purchase some homes. Lopez told Ali the homes would only be in his name for a short period of time and would be sold at a profit because Lopez already had buyers lined up.
Loan applications for $696,000 and $174,000 dated April 5, 2006, were signed with the name Asim Ali for the purchase of 11944 East Griffith Avenue in Sanger. The applications falsely stated Ali earned $104,333 per month. Ali claimed he gave defendant Lopez his personal information, but not his income information.
On April 12, 2006, deeds of trust were recorded securing loans made by New Century Mortgage Corporation. Ali denied signing the loan applications and the deeds of trust. The applications stated the interviewer was Lorenzo Lopez of Worldwide 1st. Loan 9: 4262 Quail Lake Drive, Clovis—Counts 66 through 71 (Northpoint)
Loan applications were submitted and signed in defendant Ali's name for the purchase of another property, 4262 Quail Lake Drive, Clovis. The first loan application requested $799,200, and the second application requested $199,800. Both applications stated Ali's income was $153,000 per month. Ali told Investigator Gill this income information was false.
On April 14, 2006, deeds of trust were recorded to secure loans made by Long Beach Mortgage Company. Ali walked out of an interview with Investigator Gill without admitting whether he signed the loan applications or deeds of trust. The applications stated the interviewer was Lisa Sanchez of Northpoint Mortgage. Loan 10: 2727 West Bluff Avenue, No. 105, Fresno—Counts 72 and 73 (Northpoint)
Two loan applications dated June 21, 2006 were signed with the name Carrie Hernandez for the purchase of 2727 West Bluff Avenue, No. 105, Fresno. The first loan application was for $508,000, and the second application was for $127,000. The loan applications stated defendant Hernandez earned over $30,000 per month working as an entertainer at a gentleman's club. A verification of rent for the loan was signed by Lisa Sanchez.
On June 30, 2006, deeds of trust were recorded to secure loans made by BNC Mortgage, Inc. Taryn Martin, a loan processor who worked for defendant Lisa Sanchez, testified Sanchez often told her to put information on loan applications that was overstated or obviously false. Martin was listed as the interviewer on the applications. Loan 11: 4748 East Gettysburg Avenue, Fresno—Counts 74 through 89 (Worldwide 1st)
Ramon Agredano's signature was forged on a grant deed that recorded on May 17, 2006, transferring ownership of 4748 East Gettysburg Avenue to defendants Lisa Sanchez and Johnny Sanchez, as husband and wife. Petra Otlica's signatures were forged onto two loan applications dated May 30, 2006, for the purchase of this property from the Sanchezes.
Deeds of trust recorded on June 14, 2006, securing loans on the property made by Resmae Mortgage Corporation. Otlica's signature was forged onto these documents as well. The loan applications stated the interviewer was Jason Garcia of Worldwide 1st. Loan 12: 4616 Crestmoor Avenue, Clovis—Counts 90 through 93 (Worldwide 1st)
Defendant Anthony Ramon asked his then-girlfriend, Sydney Wheat, for her social security number to see if she had good credit. Ramon told Wheat she had good credit and encouraged her to purchase a home as an investment. The day after Wheat had surgery, she agreed.
Loan applications requesting $612,000 and $153,000 dated June 26, 2006, were signed by Wheat. Both applications stated Wheat worked at West Coast Tire and Wheel and earned $15,000 per month. Both applications lacked a signature, phone number, and a legible name for the interviewer, but the interviewer's employer was listed as Worldwide 1st.
On June 30, 2006, deeds of trust were recorded securing loans made by Resmae Mortgage Corporation. Pursuant to this transaction, defendant Lopez and defendant Herrera each received $37,500 from escrow. During a police search of defendant Lopez's home in May 2008, Investigator Gill found an incomplete loan application signed in Wheat's name and initials in defendant Lopez's bedroom. Loan 13: 744 East Harvard Avenue, Fresno—Counts 94 through 97 (Northpoint)
In 2006, defendant Ryan Garcia suggested his then-girlfriend, Veronica Orrostieta, purchase homes to rent out as an investment. Orrostieta agreed and filled out a loan application herself.
Loan applications dated July 13, 2006, requested loans in the amounts of $251,200 and $62,800 to purchase 744 East Harvard Avenue. Both applications falsely stated Orrostieta worked as a personal trainer earning $6,500 per month. Orrostieta was employed with Minarets Medical Group and earned $1,600 per month, and had stated so on her loan applications.
On July 18, 2006, deeds of trust recorded, securing loans made by Long Beach Mortgage Company. Orrostieta signed loan documents with Taryn Martin, defendant Lisa Sanchez's loan processor, in a parking lot without examining the documents. The loan applications stated the interviewer was Lisa Sanchez of Northpoint Mortgage. Loan 14: 8357 North Barton Avenue, Fresno (Worldwide 1st)
a. Transfers—Counts 108 through 116 (Incomplete Loans)
In 2005, Petra Otlica contacted Jose Montes at Worldwide 1st for the purchase of a home on Verrue Avenue in Fresno. Otlica was told Montes had suffered an accident and was unable to assist her, so the purchase would be facilitated by a sales agent named Rosa Maria. Otlica signed loan documents with Maria.
Otlica had never heard of 8357 North Barton Avenue in Fresno. However, an interspousal deed to transfer this property dated June 28, 2006, was signed in her and her husband's names. Deeds of trust dated July 5, 2006, also purportedly signed by Otlica, were completed and notarized to secure loans on the property by Nations First Lending, Inc. However, the deeds were not recorded.
b. Purchase—Counts 98 through 107
Loan applications dated July 18, 2006, for the purchase of 8357 North Barton Avenue were completed in Sophia Ramon's name. The applications requested loans in the amounts of $420,000 and $105,000. The applications stated Sophia Ramon was a district sales manager for Clovis Auto Sales, she earned $11,500 per month, owned a 2003 BMW 530, and had $50,000 in personal property. All of this information was false.
On July 21, 2006, deeds of trust were recorded to secure loans by Resmae Mortgage Corporation. The HUD-1 settlement statement for this property showed defendant Lopez was paid $35,000 from escrow for "repairs and trash removal." Sophia Ramon did not sign the loan applications or deeds of trust, nor did she authorize anyone to sign these documents on her behalf. Before Sophia Ramon spoke to Investigator Gill in 2009, she did not know this property had been purchased in her name. Loan 15: 11003 East Egret Point, Clovis—Counts 117 and 118 (Northpoint)
Jason Rodriguez, the brother of defendant Garcia, signed loan applications requesting loans in the amounts of $664,000 and $166,000 for the purchase of 11003 East Egret Point in Clovis. Both applications stated Rodriguez worked for Worldwide 1st and he earned $21,000 per month. There is no evidence Rodriguez had ever worked at Worldwide 1st.
On July 21, 2006, deeds of trust with Rodriguez's name were recorded to secure loans made by Long Beach Mortgage Company. The loan applications stated the interviewer was Lisa Sanchez of Northpoint Mortgage. Loan 16: 10602 Duckpoint Way, Clovis—Counts 119 and 120 (Meridian Mortgage)
Loan applications for the purchase of 10602 Duckpoint Way, Clovis were signed by defendant Lopez on August 22, 2006. Both applications stated Lopez earned $15,550 a month working for Clovis Automotive Center, a business owned by his mother and stepfather. A verification of employment was forged in Rosemary Hernandez Lopez's name.
On August 29, 2006, deeds of trust were recorded to secure loans made by Resmae Mortgage Corporation. The applications listed "Roberto C." of Meridian Mortgage and Real Estate Group as the interviewer. Loan 17: 6443 East Inyo Street, Fresno—Counts 121 through 124 (Northpoint)
Defendant Garcia asked his mother, Juana Sanchez, to purchase 6443 East Inyo Street, Fresno as a rental property. Juana Sanchez agreed and signed loan applications requesting loans of $248,000 and $62,000. Both applications falsely stated Juana Sanchez earned $7,500 per month as a dental hygienist. The applications indicated the interviewer was Lisa Sanchez of Northpoint Mortgage.
Deeds of trust were recorded on October 24, 2006, securing loans made by Washington Mutual Bank. Juana Sanchez signed the deeds of trust but she never appeared before a notary. During a search of defendant Lisa Sanchez's home in May 2008, a blank loan application signed by Juana Sanchez was found in Sanchez's office. Loan 18: 6902 Blackhawk Lane, Clovis—Counts 125 through 135)
These counts were not dismissed. Loan 19: 4657 North Emerald Peak Drive, Clovis—Counts 136 through 137)
These counts were not dismissed. Loan 20: 10614 Duckpoint Way, Clovis (Northpoint)
a. Purchase—Counts 138 and 139
Loan applications dated June 30, 2005, requested loans in the amounts of $604,000 and $151,000 for the purchase of 10614 Duckpoint Way in Clovis. The loan applications, both signed by defendant Carrie Hernandez, stated Hernandez was employed as an adult entertainer earning $16,500 per month. The applications stated Lisa Sanchez of Northpoint Mortgage was the interviewer.
On July 8, 2005, deeds of trust signed by Hernandez were recorded to secure loans made by Countrywide Home Loans, Inc.
b. Refinance—Count 140
A loan application signed by defendant Carrie Hernandez and dated April 24, 2006, requested a loan in the amount of $693,600 to refinance 10614 Duckpoint Way, Clovis. The application stated defendant Hernandez worked for City Lights as an entertainer, earning $24,154 per month. Defendant Hernandez allegedly submitted falsified bank account statements to secure the refinance. On April 28, 2006, a deed of trust signed by Carrie Hernandez was recorded to secure a loan made by Long Beach Mortgage Company.
Pretrial Hearing Evidence
Between 2004 and 2008, Henry Milton was a mortgage broker and the sole owner of Worldwide 1st. Milton owned a total of 30 branches of Worldwide 1st. The loan officers working under Milton's CFL license closed between 100 to 120 loans a month.
In September 2006, a lender called Milton and informed him Sophia Ramon's loan was in first-month payment default and Milton would have to buy back the loan. The contracts between Milton and the lenders obligated him to buy back any loan in first-month payment default. This was the first time Milton had been notified of a loan in first-month payment default.
Milton was unable to find the loan file or the commission check for the loan. He obtained copies of the HUD-1 settlement statement and the cashed commission check for the loan. From the HUD-1 form, Milton learned defendant Lopez received approximately $35,000 through escrow for repairs and trash removal. It is unusual for a loan officer to receive this type and amount of money.
Milton also discovered the $8,400 commission check for the loan had been cashed. He went to the bank that cashed the check and learned defendant Lopez had opened an account listed as "Worldwide 1st" and deposited the check into this account. Commission checks for Worldwide 1st were supposed to go to the franchisee, who would then bring the check along with the loan file to Milton.
Milton drove by the subject property and noted it had dead grass and appeared to be unoccupied. He questioned defendant Lopez about the loan, but Lopez claimed one of his loan officers had facilitated a fraudulent loan.
Shortly before October 2, 2006, Sydney Wheat and her mother came into Milton's office. They told Milton Wheat had purchased a couple of houses. Wheat's mother was yelling at Milton about the purchases. Milton reviewed the loan files for Wheat's purchases and noticed defendant Lopez and defendant Herrera each received $37,500 for gardening services through the close of escrow. Wheat told Milton she was supposed to receive approximately $7,000 from the close of escrow to assist with mortgage payments on the home, which Milton found unusual. Milton also discovered Wheat did not work for West Coast Tire and Wheel, the employer listed on her loan application.
On October 2, 2006, Milton filed a complaint with the district attorney's office reporting "False Mortgage Loans, with False Information." Investigator Gill indicated Milton did not attach any documents to the complaint.
On October 25, 2006, Gill received a flyer from the chief deputy district attorney overseeing her unit. The flyer contained complaints from residents of the Quail Lake neighborhood of loud parties, houses with dead lawns, heavy traffic through the neighborhood, and vacant homes. The chief deputy received the flyer from the sheriff, who had attended a homeowners association meeting. Gill was told to "go check out the area, because the homeowner's association were complaining about dead grass and vacant homes."
On October 27, 2006, Gill went to the Quail Lake community and spoke to a resident who lived next to a home with a dead lawn. The resident told Gill the home belonged to defendant Lopez, and that Lopez worked at Worldwide 1st. That same day, Gill went to Worldwide 1st to speak to Lopez but learned he had been terminated. Gill spoke to Milton, who advised her he had filed a complaint about defendant Lopez with the district attorney's office. Gill terminated the interview and returned to her office to review Milton's complaint.
Between October 27 and November 3, 2006, Gill returned to the Quail Lake development and collected additional addresses of homes with dead lawns, searched the property history of those homes, and obtained deeds of trust and grant deeds for the homes. There were approximately 13 or 14 homes Gill began investigating. During this period of time, Gill stated Milton furnished two loan files for Sydney Wheat (loan 12), an escrow file for Sophia Ramon (loan 14b), and a spreadsheet of loans facilitated by defendant Lopez.
On November 3, 2006, Gill interviewed Milton and requested Milton furnish loan files from Lopez's branch. Gill told Milton other loans from properties in the Quail Lake community were going into default.
According to Gill, neither Milton's complaint nor the information she learned about Quail Lake prior to October 27, 2006, led her to suspect that a crime had occurred. Gill described Milton's complaint as a "head scratcher," because there were no supporting documents to show what the alleged fraud was or whether any fraud had occurred at all. Gill explained the district attorney's office receives many complaints alleging fraud, particularly where an individual has lost money. Until she had documentation to support Milton's complaint, Gill did not know whether the case was a civil or criminal matter.
DISCUSSION
I. Standard of Review
"[I]n order to hold a defendant over for trial the People bear the burden of producing evidence (either before the grand jury or at the preliminary hearing) which demonstrates that there is probable cause to believe that the prosecution is not barred by the statute of limitations." (People v. Zamora (1976) 18 Cal.3d 538, 565, fn. 26 (Zamora); see Parnell v. Superior Court (1981) 119 Cal.App.3d 392, 406.)
A defendant may raise a statute of limitations claim in a pretrial motion, but the trial court may decide the issue as a matter of law only if the facts are undisputed. (People v. Le (2000) 82 Cal.App.4th 1352, 1361.) In other words, the pretrial motion "is the functional equivalent of a motion for summary judgment in the civil context." (Lopez, supra, 52 Cal.App.4th at p. 251.) "Although the prosecution bears the ultimate burden at trial, in a pretrial motion to dismiss the accusatory pleading, the defendant is seeking the extraordinary relief of dismissal without trial and consequently bears the burden of establishing his entitlement to that relief." (Ibid.) The defendant is entitled to prevail only if there is no triable issue on the question. "If the evidence is in conflict on the question or if defendant simply fails to establish that the statute has run as a matter of law, then the motion should be denied" and the question put to the finder of fact. (Ibid.) Thus, as with a motion for summary judgment, this question is a matter of law we review independently.
II. Statute of Limitations
Defendants were charged with grand theft of personal property (§ 487, subd. (a)), forgery by making or attempting to pass a specified false deed of trust or grant deed (§ 470, subd. (d)), forgery by false acknowledgement of a specified deed of trust (§ 470, subd. (d)), procuring or offering a false instrument for recording (§ 115, subd. (a)); and identity theft (§ 530.5, subd. (a)). The parties agree the statute of limitations for these offenses commences "within four years after discovery of the commission of the offense, or within four years after the completion of the offense, whichever is later." (§ 801.5; see § 803 [listing offenses subject to § 801.5].) Prosecution must therefore commence within four years of the later date.
"[P]rosecution for an offense is commenced when ... [¶] ... [¶] (d) An arrest warrant or bench warrant is issued." (§ 804, subd. (d).) Here, arrest warrants for defendants were issued on October 27, 2010. If, as a matter of law, any of the challenged offenses were or in the exercise of reasonable diligence should have been discovered prior to October 27, 2006, they are time-barred.
III. Milton Was Not a Discoverer of the Charged Offenses Related to Loans 12 and 14b
The trial court initially concluded Milton was a direct victim of the counts underlying the superseding indictment and, as a result, his discovery of the offenses related to loans 12 (counts 90-93) and 14b (counts 98-107) triggered the statute of limitations. The Attorney General contends the trial court erred in concluding as much because the lenders and the victims of identity theft were the direct victims of the mortgage fraud, not Milton. According to the Attorney General, Milton was not a direct victim of the charged offenses, he did not have a legal duty to represent the victims, nor did the evidence show Milton had a legal duty to report and investigate suspected crimes on the victims' behalf. We agree, and conclude Milton does not qualify as a discoverer.
Loans 12 and 14b refer to the properties numbered 12 (Sydney Wheat's loan) and 14b (Sophia Ramon's loan) under the factual and procedural history of this case. Although Milton only initially reported these two loans to the district attorney's office, the trial court treated all loans as an extension of these loans because they served as the basis of the superseding indictment. We address whether such an extension was proper under part V, post.
A. Who is a Discoverer?
"California appears to be one of only five of at least twenty-one states with a tolling statute related to discovery which fails to designate the specific persons who qualify as 'discoverers.'" (People v. Kronemyer (1987) 189 Cal.App.3d 314, 331, fn. 7 (Kronemyer).) As such, in determining who may qualify as a discoverer for purposes of reporting crimes within section 803, we consult relevant case authority.
In Kronemyer, supra, 189 Cal.App.3d 314, the Court of Appeal confronted the issue of who qualified as a discoverer for purposes of the commencement of the statute of limitations for criminal offenses under former section 800, subdivision (c). There, the defendant was convicted of grand theft of property entrusted to him as the attorney and conservator for an affluent elderly man, the victim. (Kronemyer, supra, at p. 325.) The defendant challenged his convictions, claiming the discoverers of his crimes were aware of facts sufficient to alert them of the crimes more than three years before the indictment was filed, rendering the offenses time-barred under the applicable statutory period. (Id. at p. 330.) The alleged discoverers included a friend of the victim and the victim's niece-in-law, both beneficiaries under the victim's will. (Id. at pp. 325, 330, 332.)
The Court of Appeal rejected the defendant's assertion that either individual qualified as a discoverer. (Kronemyer, supra, 189 Cal.App.3d at p. 330.) The court explained:
"[T]he statute is not designed to influence persons who are not otherwise motivated to report suspicious conduct to do so. It is to prevent persons directly affected by the crime or those persons who have a legal duty to investigate and timely prosecute criminal activities from denying a suspected criminal a speedy trial." (Id. at p. 332.)
Because the only person who had the legal duty to act on behalf of the victim was the defendant, as the victim's conservator, the court held neither of the beneficiaries qualified as discoverers. (Kronemyer, supra, 189 Cal.App.3d at p. 332.) The court explained: "We do not believe fairness and common sense require a class of 'discoverers' to include all members of the general public, neighbors, residuary beneficiaries or nieces-in-law of victims who fail to investigate or advise law enforcement officials of mere suspicions of wrongdoing." (Id. at p. 333.) Instead, the benefits of the discovery statute "should extend no further than those persons who are direct victims, persons having a legal duty to report and investigate crime, and those persons who are clothed with a status imposed by law as guardian, conservator or equivalent, in the absence of express statutory direction." (Id. at pp. 334-335.)
In Lopez, the Court of Appeal considered who qualified as a direct victim for purposes of commencing the statute of limitations for section 803 offenses. (Lopez, supra, 52 Cal.App.4th at p. 238.) Lopez, employed with the Department of Health Services (DHS), illegally submitted an application for start-up funds for a health clinic. (Id. at p. 242.) He was charged with misappropriation of public funds and perjury in the execution of official documents relating to public funds. (Id. at p. 239.) Lopez moved to dismiss the indictment, alleging the DHS knew or should have known of his crimes in 1989, rendering the offenses time-barred. (Id. at pp. 240, 248.)
The DHS was an institutional victim. Because an institutional victim cannot speak for itself, someone within the chain of command must be designated as the victim to determine whether the DHS had actual notice or may be charged with having notice of the wrongdoing. (Lopez, supra, 52 Cal.App.4th at p. 246.) The court held in cases involving financial crimes against a business or a governmental entity, "a victim for purposes of the discovery provisions ... is a public employee occupying a supervisorial position who has the responsibility to oversee the fiscal affairs of the governmental entity and thus has a legal duty to report a suspected crime to law enforcement authorities." (Id. at pp. 247-248.) Because the division chief of the DHS was imbued with such a responsibility, the Court of Appeal held he was the direct victim. (Id. at p. 248.) Lopez failed to carry his burden of showing the division chief knew or should have known of the crimes, and as a result, the trial court's order dismissing the indictment on the ground of the statute of limitations was reversed. (Id. at pp. 251-252.)
The so-called Lopez rule includes institutional victims in both the public and private sector. (People v. Wong (2010) 186 Cal.App.4th 1433, 1445 (Wong) ["[i]n our view, precedent establishes that the rule of Lopez applies to public and private victims"].) Thus, where the direct victim of a crime is a business entity, the individual who may be charged with discovery of a section 803 offense is an employee occupying a supervisory position charged with the responsibility of overseeing the fiscal affairs of the institutional victim. (Lopez, supra, 52 Cal.App.4th at pp. 247-248.)
B. Analysis
According to the Attorney General, the lenders are the victims of defendants' alleged fraud, not Milton. The fact that Milton occupied a supervisorial position at Worldwide 1st did not make him or his company "any more or less a victim." Defendants contend Milton was a direct victim because he was the victim of two uncharged offenses in connection with loan 14b: identity theft and the theft of his commission check. Defendants further contend Milton was a direct victim because he was financially responsible for all first-month payment defaults, and Milton forfeited his CFL license and declared bankruptcy as a result of his contractual obligation.
For purposes of triggering the statute of limitations under section 801.5, those who are classified as discoverers include: (1) the direct victim of the crime; (2) someone with a legal duty to represent the direct victim, such as a guardian, conservator, or the equivalent; and (3) an individual who has a legal duty to report and investigate crime. (Kronemyer, supra, 189 Cal.App.3d at pp. 334-335.) Neither legal authority nor the undisputed evidence supports the conclusion Milton falls within this class.
1. Milton is Not a Direct Victim of the Charged Offenses
The trial court concluded although Milton was not named in the indictment, "[t]hat [did] not alter Milton's status as a 'direct victim' of the defendants' fraud ...." Based on this conclusion, and the fact Milton was "in a supervisorial position, [and] was the owner of Worldwide 1st," he was charged with discovery of the mortgage fraud.
Although the trial court noted Milton discovered the fraud because of the stolen commission check and unauthorized use of his company's information, it is unclear whether the court relied on these uncharged offenses in concluding Milton was a direct victim or whether the court found Milton was a direct victim because of his supervisory position, as the Attorney General contends.
Defendants contend Milton was a direct victim because he was the victim of two uncharged offenses allegedly committed by defendant Lopez, and he was responsible for buying back all mortgage loans in first-month payment default. The Attorney General contends, and we agree, Milton was not a direct victim of the mortgage fraud on either of these grounds.
a. The Theft of the Commission Check and Unauthorized Use of Milton's Identity Did Not Render Him a Direct Victim of the Mortgage Fraud
Milton's company's identity was used for purposes of stealing a commission check addressed to Worldwide 1st. The Attorney General asserts that while Milton was a direct victim of these offenses, this did not make Milton a direct victim of the mortgage fraud. We agree.
The theft of the commission check and the use of Milton's company's identifying information occurred on July 26, 2006, and July 27, 2006, following the close of escrow on the Barton Avenue property and defendant Lopez's termination from Worldwide 1st. We fail to see how Milton's discovery of these offenses commences the statute of limitations as to the mortgage fraud. It is unclear whether these offenses are related to the mortgage fraud scheme or whether they were crimes of opportunity.
Defendant Hernandez contends People v. Bell (1996) 45 Cal.App.4th 1030 (Bell) supports the conclusion the theft of Milton's commission check and the use of his identity were merely aspects of the mortgage fraud scheme. As a result, she asserts Milton's discovery of these dismissed offenses put him on notice of the mortgage fraud. Even assuming these uncharged crimes were part and parcel of the mortgage fraud, Bell does not stand for the proposition that the discovery of one aspect of a crime means discovery of all other aspects of the crime necessarily occurs on the same date.
Section 803, subdivision (b) provides, "No time during which prosecution of the same person for the same conduct is pending in a court of this state is a part of a limitation of time prescribed in this chapter." (Italics added.) Section 803, subdivision (b) was intended to ensure "if a pending proceeding is dismissed for a technical defect, the running of the statute of limitations will not bar reprosecution." (Recommendation Relating to Statutes of Limitation for Felonies (Jan. 1984) 17 Cal. Law Revision Com. Rep. (1984) p. 315, fn. 22.) Thus, the filing of an information or issuance of an arrest warrant, for example, tolls the limitation period with respect to charges relating to the same conduct that later are added by amended information. This does not mean the same date of discovery applies to all offenses.
In Bell, supra, 45 Cal.App.4th 1030, charges of forgery and false filings were held to be based upon the same conduct as the defendant's rent skimming scheme because "the forgery and false filings were merely aspects of [the] rent skimming scheme." (Id. at p. 1064.) The court further held the statute of limitations for forgery and false filings, which are both section 803 offenses, were tolled when prosecution against the defendant commenced for charges based on the same conduct. (Bell, at p. 1064; § 804, subd. (c).) As such, the date of discovery of the forgery and false filings did not matter, as long as the crimes occurred after June 4, 1989—within three years of the applicable statute of limitations—the offenses were not time-barred. (Bell, at p. 1064.)
Here, defendants do not contend the issuance of the arrest warrants tolled the statute of limitations as to some but not all counts. They assert Milton's discovery of the unauthorized use of his company's information and the theft of his commission check triggered the statute of limitations for all offenses related to loans 12 and 14b. However, the undisputed evidence does not show whether these offenses are even related to the mortgage fraud such that they were part and parcel of it. Even assuming the crimes against Milton were part of the mortgage fraud, Bell does not support the conclusion that the same date of discovery applies to all offenses.
Relying on People v. Soni (2005) 134 Cal.App.4th 1510 (Soni), defendant Zamora contends a victim of identity theft may be a discoverer for purposes of section 803. While this is true, Soni does not support the conclusion that Milton, indisputably a victim of identity theft, is also a victim of mortgage fraud.
In Soni, the defendant was convicted of 19 counts arising from various dishonest real estate transactions and loan applications. (Soni, supra, 134 Cal.App.4th at p. 1512.) On appeal, the defendant challenged her convictions for filing false documents, a section 803, subdivision (c) offense, claiming these convictions were not discovered within the statutory period. (Soni, supra, at p. 1512.) The discoverer was the victim of identity theft, who investigated financial discrepancies on her credit report for several months prior to reporting the crime to law enforcement authorities. (Id. at p. 1518.) During her investigation into the unauthorized use of her identity, the victim discovered a mortgage was obtained in her name (the false filings charges). (Id. at p. 1513.) The Court of Appeal held the false filings charges were not time-barred because the jury could reasonably infer discovery of these crimes occurred on the date the victim reported the crimes to law enforcement. (Id. at p. 1518.)
Here, the Attorney General does not dispute Milton is a victim of identity theft. He contends the fact Milton was a victim of identity theft and the fact his commission check was stolen does not commence the statute of limitations as to the mortgage fraud-related offenses—the grand theft, forgery, and false filings charges. We agree. Even assuming these uncharged crimes were part and parcel of the mortgage fraud, this did not make Milton a direct victim of the mortgage fraud.
Defendant Herrera suggests the prosecutor elected to omit charges related to the unauthorized use of Milton's identity and the theft of his commission check from the amended indictment in an attempt to avoid the bar on the statute of limitations. He does not direct us to evidence supporting his assertion the prosecutor engaged in gamesmanship in an effort to defeat the running of the statute of limitations.
In addressing the grand jury, the prosecutor explained the counts relevant to the theft of Milton's commission check and the unauthorized use of his identity were taken out of the indictment because the district attorney's office realized these charges were beyond the statute of limitations. This does not suggest the prosecutor attempted to circumvent the running of the statute of limitations as to the mortgage fraud.
Defendants do not direct us to any persuasive legal authority from which we may reasonably conclude Milton's discovery of the theft of his commission check and the unauthorized use of his identity made him a direct victim of all crimes connected to loans 12 and 14b. We conclude Milton was not a direct victim of the mortgage fraud on this basis.
b. Milton's Contractual Obligation to Buy Back All Loans in First-Month Payment Default Did Not Make Him the Owner of the Stolen Property or the Person Directly Injured by the Mortgage Fraud
Defendants contend Milton was a direct victim of all offenses relevant to loans 12 and 14b because he had to buy back all loans in first-month payment default. The Attorney General asserts Milton's contractual obligation to buy back all loans in first-month default makes him an indirect rather than a direct victim of the fraud. Although the issue is very close, we are not persuaded Milton was a direct victim of the mortgage fraud. Milton was undoubtedly affected by the mortgage fraud because of his contractual obligation, however, we are persuaded the direct victims of the mortgage fraud are the lenders and the individuals whose identities were used to perpetrate the mortgage fraud.
Defendants' assertion that Milton is the direct victim of the mortgage fraud takes for granted the direct economic losses suffered by the lenders and the victims of identity theft. It was the lenders whose money defendants sought to and eventually did acquire through the fraudulent loan applications and false employment verifications, and it was the use of Sophia Ramon's identity, among others, which enabled defendants to accomplish this objective.
Defendant Gonzales claims Milton's obligation to buy back all loans in first-month payment default contractually obligated him to be the lender. However, Milton did not actually buy back any of the default loans. While the contract imposed the risk of a first-month payment default on Milton, Milton never actually assumed any of the resulting losses from the defaulted loans.
Defendants contend Milton was directly injured by the mortgage fraud because he surrendered his CFL license and filed for bankruptcy in part because of his contractual obligation to buy back the defaulted loans. Milton testified he filed for bankruptcy because of the defaulted loans "among many other [reasons]." Although he felt he surrendered his CFL license because of the fraudulent loans, he also explained he was about to get audited because of the housing market crash. We do not find it coincidental that Milton surrendered his CFL license during the same period of time the housing market started to decline in 2006 and 2007. Unlike the identity theft victims and mortgage lenders who suffered measurable and direct injuries as a result of the mortgage fraud, we are unable to conclude Milton was injured in a similar manner.
Nonetheless, given the substantial financial consequences associated with repurchasing even one of these loans, we do not view defendants' argument as unreasonable. In our view, Milton comes far closer to the definition of a direct victim than the beneficiaries in Kronemyer. Kronemyer explained, "While a duty to exercise reasonable diligence in looking after one's own affairs may justify a policy that direct victims do so to uncover evidence of criminal wrongdoing, there is no policy reason to impose such a duty on third persons in order to benefit criminals who are actively engaged in concealing evidence of their crimes." (Kronemyer, supra, 189 Cal.App.3d at p. 334.) Arguably, Milton's obligation to look after his own affairs justifies characterizing him as a direct victim.
However, if we were to expand the definition of a direct victim to anyone financially affected by fraud, directly or indirectly, it is unclear what the limits of this class would be. Must the victim prove substantial economic harm to qualify as a direct victim? With respect to the instant matter, should Milton's discovery of fraud render discovery by the lenders, by the victims of identity theft, or by law enforcement authorities moot when, ultimately, he did not assume financial responsibility for the fraudulent loans? Given these questions, we believe expanding the definition of who is a direct victim under section 801.5 is a task more appropriately reserved for the Legislature. We see no reason why Milton's discovery of the fraud should prevail over the discovery by law enforcement authorities, or the lenders and the victims of identity theft.
The Attorney General contends the restitution statutes demonstrate Milton was an indirect victim rather than a direct victim of the mortgage fraud. Under the restitution statutes, if a defendant commits fraud with the objective of defrauding an insurance company, the direct victim of the crime is the insurance company. (People v. Saint-Amans (2005) 131 Cal.App.4th 1076, 1085.) Similarly, a bank covering the cost of forged checks or fraudulent withdrawals has been held to be a direct victim. (People v. Bartell (2009) 170 Cal.App.4th 1258, 1262.) However, the same cannot be said where a third party insures a victim against a loss, and then subsequently compensates the victim as a result of that loss. For example, an insurer who indemnifies an auto theft against a loss is not a direct victim of a car theft; the owner of the vehicle is the direct victim. (People v. Birkett (1999) 21 Cal.4th 226, 245-247.) While the insurer suffers economic loss as a result of the crime, the insurer was not the object of the crime. (Id. at p. 233.)
There is no evidence the definition of a direct victim under the restitution statutes (§ 1202.4) was intended to inform on the definition of a direct victim for purposes of the discovery of section 803 offenses. At least one Court of Appeal has rejected the argument that a victim entitled to restitution is also a direct victim under section 801.5. (See People v. Moore (2009) 176 Cal.App.4th 687, 695, fn. 4 (Moore) [rejecting defendant's assertion third-party disbursing contractor qualified as sole or official victim of defendant's theft because contractor was entitled to restitution].) Similar to Moore, our independent search failed to yield any authority for such a proposition.
Our holding is based not on the restitution statutes or cases, but on the conclusion Milton was not the "'owner' of [the] stolen property, or the person 'directly injured,' by [the mortgage] fraud." (Moore, supra, 176 Cal.App.4th at p. 694, citing Lopez, supra, 52 Cal.App.4th at p. 246, italics added.) We conclude, as a matter of law, Milton is not a direct victim of the mortgage fraud.
2. Milton Did Not Have a Legal Duty to Represent the Direct Victims
"For purposes of determining whether a particular person's discovery of facts will be deemed to trigger the running of the statute of limitations," the criminal discovery statutes include "'those persons who are clothed with a status imposed by law [such as a victim's] guardian, conservator or equivalent ....'" (Moore, supra, 176 Cal.App.4th at pp. 692-693.) Defendants make no argument Milton had a legal duty to represent the direct victims.
3. There Is Insufficient Evidence to Conclude Milton Had a Legal Duty to Investigate and Report Suspected Crimes
In concluding Milton was a direct victim, the trial court explained Milton "was not only in a supervisorial position, he was the owner of Worldwide 1st." Defendants contend Milton had a legal duty to report suspected crimes to law enforcement authorities because his position made him responsible for the independent contractors who worked under his license, and his CFL license required him to ensure "state requirements were being met." The Attorney General contends although Milton was the owner of Worldwide 1st and he was responsible for ensuring his loan files were in compliance, this was insufficient to conclude he had a legal duty to report and investigate suspected crimes.
Neither the legal authority defendants direct us to nor the undisputed evidence supports the conclusion Milton had a legal duty to investigate and report suspected crimes to law enforcement authorities. We conclude Milton was not a discoverer of the mortgage fraud on this basis.
The discoverers in Lopez and Wong were held to have a legal duty to report suspected crimes to law enforcement authorities because the victims were business or governmental entities, and the designated reporters were the employees of those entities. (Lopez, supra, 52 Cal.App.4th at p. 248; Wong, supra, 186 Cal.App.4th at pp. 1445-1446.) Because an institutional victim cannot speak for itself, someone must be designated as the direct victim for purposes of determining whether the entity knew or should have known of the wrongdoing. (Lopez, supra, at p. 246; Wong, supra, at p. 1445.) A supervisor charged with the responsibility of overseeing the fiscal affairs of the entity has both the motive and ability to detect fraud or theft committed against the entity. (Lopez, at p. 246.) Thus, an individual occupying a supervisory position is charged with the responsibility of reporting crimes to law enforcement authorities.
Here, although Milton is the owner and sole shareholder of Worldwide 1st, he is not an employee of any of the lenders victimized by defendants' alleged criminal activities. Nor does the evidence show he was responsible for overseeing the fiscal affairs of the lenders or investigating fraud on their behalf. Rather, Milton's duty extended to a compliance review of each file brokered by Worldwide 1st, a requirement by the Department of Corporations as a condition of his CFL license.
Milton's review consisted only of ensuring all required paperwork was included within the loan file and not in investigating loan files for possible fraud. To the extent some of the mortgage fraud was apparent from the HUD-1 settlement statement, specifically, the payout of substantial fees to defendants Lopez and Herrera through the close of escrow, there is no evidence Milton was obligated to review the HUD-1 form for such discrepancies. He testified the payouts on the HUD-1 "[are] not something I would look at." "If the lender says [a payout] is okay, [Milton did not] know what the escrow officer put in the file to allow that to happen." Thus, evidence adduced at the pretrial hearing showed Milton's obligation extended only to ensuring the HUD-1 form and other relevant documents were included within the loan file.
While Milton's compliance review and his position made it likely he could discover some crimes—particularly fraudulently obtained loans in first-month payment default—the inquiry is not whether Milton was likely or motivated to discover any crimes, but whether he had a legal duty to investigate suspected crimes and report them to law enforcement authorities. Assuming Milton had a duty to report discrepancies or irregularities in his loan files to the Department of Corporations, defendants present no argument as to whether the Department of Corporations is a law enforcement authority within the meaning of the discovery statute.
In Moore, the County of Los Angeles Department of Public Social Services (DPSS) contracted with Crystal Stairs, a nonprofit child development agency, to help distribute funds to childcare providers. (Moore, supra, 176 Cal.App.4th at p. 690.) The defendant and his sister applied for childcare funds, falsely reporting the defendant was caring for his sister's children. (Id. at pp. 690-691.) Crystal Stairs referred its suspicions of fraud to a DPSS welfare investigator. (Id. at p. 691.)
The Court of Appeal held the victim of Moore's crimes was DPSS, not Crystal Stairs. (Moore, supra, 176 Cal.App.4th at p. 695.) Crystal Stairs was not directly injured by the fraud Moore perpetrated because it did not lose any money that it owned. (Id. at p. 694.) It was merely a third-party disbursing contractor. Further, Moore failed to show either Crystal Stairs or any of its employees had responsibility over DPSS's fiscal affairs, or had a legal duty to report a suspected crime to law enforcement authorities. (Id. at p. 695.) Instead, the evidence showed Crystal Stairs was contractually obligated to report suspected fraud to the DPSS. (Ibid.)
Here, similar to Moore, defendants failed to show Milton had a responsibility to review his company's loan files for indications of fraud on behalf of the lenders. Nor did defendants show Milton had a legal duty to report suspected fraud to law enforcement authorities. Because this evidence was simply not adduced at the pretrial hearing, we are unable to conclude Milton had a legal duty to investigate and report suspected crimes to law enforcement authorities.
Defendant Herrera contends such a legal duty arose because Milton was a fiduciary of the borrowers. "A mortgage loan broker owes a fiduciary duty of the 'highest good faith toward his principal' and 'is "charged with the duty of fullest disclosure of all material facts concerning the transaction that might affect the principal's decision."'" (Barry v. Raskov (1991) 232 Cal.App.3d 447, 455; see Fin. Code, § 4979.5, subd. (a) ["A person who provides brokerage services to a borrower in a covered loan transaction ... is the fiduciary of the consumer"].) Defendant Zamora makes a related argument by asserting Milton was responsible for the independent contractors who worked under his broker's license.
Whether Milton was responsible for the fraud committed by his loan officers and whether he had a legal duty to investigate and report suspected crimes to authorities are two distinct issues. Although defendant Hernandez raises a compelling argument, we are not directed to any legal authority or evidence from which we may infer Milton was obligated to investigate and report suspected crimes to law enforcement authorities. Assuming Milton's duty to the lenders or to the victims of identity theft required him to report suspected crimes by his independent contractors, it is unclear whether such a duty would require him to report to the victims, to the Department of Corporations, or to the district attorney's office.
Defendant Ali contends Kronemyer may be read to suggest discovery may be made by persons with either a legal duty, "or a strong motivation that is the equivalent of such a duty." (Italics omitted.) That is not what Kronemyer states. According to Kronemyer, "the statute is not designed to influence persons who are not otherwise motivated to report suspicious conduct to do so. It is to prevent persons directly affected by the crime or those persons who have a legal duty to investigate and timely prosecute criminal activities from denying a suspected criminal a speedy trial." (Kronemyer, supra, 189 Cal.App.3d at p. 332.) As such, the discovery statute "extend[s] no further than those persons who are direct victims, persons having a legal duty to report and investigate crime, and those persons who are clothed with a status imposed by law as guardian, conservator or equivalent." (Kronemyer, supra, at pp. 334-335.) We are not persuaded Milton comes within this class. IV. There Are Triable Issues of Fact as to Whether the District Attorney's Office Discovered or Reasonably Should Have Discovered the Fraud Connected to Loans 12 and 14b Prior to October 27, 2006
In part III, ante, we concluded Milton was not a discoverer for purposes of commencing the statute of limitations as to the charged offenses connected to loans 12 and 14b. We now turn to when the district attorney's office discovered or should have discovered these offenses. The parties do not dispute the district attorney's office is an entity charged with a legal duty to investigate suspected crimes and is, therefore, a discoverer under section 801.5. What the parties do not agree upon is when the district attorney's office discovered or should have discovered the mortgage fraud.
To the extent evidence adduced at the grand jury proceedings appears to show some of the victims of identity theft knew or should have known about the identity theft prior to October 27, 2006, nothing shall preclude defendants from asserting the victims' discoveries rendered some of the identity theft counts time-barred.
The trial court concluded that even if Milton were not a direct victim, the district attorney's office had sufficient notice of the mortgage fraud no later than October 2, 2006, the date Milton filed his complaint. The court explained the consumer complaint Milton filed made Investigator Gill "'suspicious of potential real estate fraud.'" The court further noted, "the Deputy District Attorney appearing at the motion to dismiss admitted that the complaint form 'provides reasonable notice of facts to make—to rise to the level of becoming suspicious of fraud.'" On this basis, the court held the crimes subject to the superseding indictment were, or should have been, discovered by the district attorney's office on October 2, 2006, and as a result, "the arrest warrant should have been filed no later than October 2, 2010."
Defendants contend Milton's complaint to the district attorney's office and the flyer about mortgage fraud occurring in the Quail Lake community put Gill on notice of the mortgage fraud no later than October 25, 2006. The Attorney General contends the district attorney's office knew or should have known of the fraud sometime after October 27, 2006, when Gill possessed Milton's complaint form, supporting loan documents, and reliable information the statements within the loan documents were materially false.
The evidence appears to support the conclusion the district attorney's office did not know of or suspect fraud until sometime between October 27, 2006, and November 3, 2006. At this point, Gill had Milton's complaint and loan documents to support the complaint, providing details of the alleged fraud. However, because Gill's testimony as to whether the complaint alone was sufficient to make her suspicious of fraud is susceptible to opposing inferences, this conclusion rests upon triable issues of fact.
To the extent defendants assert the district attorney's office should have, through the exercise of reasonable diligence, discovered the mortgage fraud prior to October 27, 2006, because investigators had Milton's complaint several weeks prior to this date, this conclusion also rests on triable issues of fact. We are unable to conclude, as a matter of law, that Milton's complaint should have put the district attorney's office on inquiry notice of any criminal activity. To the extent defendants contend the mortgage fraud should nonetheless have been discovered prior to October 27, 2006, because the district attorney's office has a general duty to follow up on citizen complaints, a mere three-week delay does not support the conclusion the district attorney's office failed to exercise reasonable diligence as a matter of law.
Thus, whether the mortgage fraud connected to loans 12 and 14b was, or through the exercise of reasonable diligence should have been discovered prior to October 27, 2006, is a matter that must be submitted to the jury. We therefore reverse the counts in connection with loans 12 and 14b, that is, counts 90 through 93, and 98 through 107.
A. Milton's Complaint
Following his investigation into Sydney Wheat's and Sophia Ramon's loans, Milton filed a complaint with the district attorney's office on October 2, 2006, reporting "False Mortgage Loans, with False Information." The body of the complaint states the following:
"Real Brief I had a Net Branch of my Company The Man[ager's] Name was Lorenzo Lopez He claim[ed] it was one of his Loan officer[s] that did the loan which was a Fraud loan however I notice on the Hud-1 He receive[d] quite a bit [of] money this happen on a couple of loans now After talking to the buyer it was suppose to give them money which he did
not Now these Loan[s] are in 1st payment defaults I would like to go in Deeper with you so please give me a call."
The complaint form did not provide any further details. The complaint contains the following advisement: "To help explain the details of your complaint, YOU MUST SUPPLY PHOTOCOPIES OF THOSE DOCUMENTS RELATED TO YOUR COMPLAINT. (Include: contracts, warranties, cancelled checks, repair orders, photographs, letters, etc.)" According to Investigator Gill, Milton did not attach any supporting documents to his complaint.
B. The Quail Lake Flyer
On October 25, 2006, Gill received a flyer from the chief district attorney overseeing her unit. The flyer stated, "Have you heard about the Real Estate fraud in our own Quail Lake neighborhood?"
The flyer asked residents whether they had noticed any of the following:
"...some neighbors getting more $$ than their asking price for there [sic] home?
"...homes that sold but no one moves in?
"...vacant homes with dried up landscape?
"...all night parties with all night traffic?
"It's called House Flipping! And it's illegal!
"What can you do?
"1. Report suspected fraud to the FBI @flippingfrenzy.com and our local sheriff['s] department.
"2. Inform your neighbors that selling their homes at an inflated price is illegal and hurts the rest of the community.
"3. Report any unusual activity to the Sheriff's department."
Two days later, Gill went to the Quail Lake community and spoke to residents who lived next to homes with dead lawns. One of these houses belonged to defendant Lopez, who Gill learned worked at Worldwide 1st. When Gill went to Worldwide 1st to speak to defendant Lopez, she learned Lopez had been terminated. Gill spoke to Milton, who told her he had filed a complaint with her office. Gill terminated the interview and went back to her office to review the complaint.
C. Analysis
The trial court concluded Milton's complaint was sufficient to make the district attorney's office "aware that a criminal act had occurred" and "[u]pon receipt of that form on October 2, 2006, and exercising due diligence, the crimes that were the subject of th[e] superseding indictment were, or should have been, discovered by the district attorney's office on that date." Defendants agree with the trial court's conclusion.
The Attorney General contends Milton's complaint was insufficient to put the district attorney's office on inquiry notice of the fraud as to loans 12 and 14b. Without supporting documentation or further details, the Attorney General asserts Milton's complaint amounted only to vague allegations of fraud. The Attorney General further contends the trial court erred in finding the statute of limitations commenced upon inquiry notice without determining whether a reasonably diligent investigation had thereafter been conducted. We agree that Milton's complaint was not sufficient to put the district attorney's office on inquiry notice. As a result, we need not reach the Attorney General's second argument.
1. When "Discovery" Occurs
The four-year statute of limitations under section 801.5 begins to run upon "the discovery of [the] offense." (§ 801.5.) "'[D]iscovery' is not synonymous with actual knowledge." (Zamora, supra, 18 Cal.3d at pp. 561-562, citing Bainbridge v. Stoner (1940) 16 Cal.2d 423, 430.) According to Zamora, "'The statute commences to run ... after one has knowledge of facts sufficient to make a reasonably prudent person suspicious of fraud, thus putting him on inquiry.'" (Zamora, supra, at p. 562.) "The crucial determination is whether law enforcement authorities or the victim had actual notice of circumstances sufficient to make them suspicious of [criminal activity] thereby leading them to make inquiries which might have revealed the [criminal activity]." (Id. at p. 571.) Under Civil Code section 19, "Every person who has actual notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact, has constructive notice of the fact itself in all cases in which, by prosecuting such inquiry, he might have learned such fact."
"Discovery" under section 801.5 includes the same requirement of reasonable diligence as is required under Code of Civil Procedure section 338. (Zamora, supra, 18 Cal.3d at p. 562, fn. 23.) Pursuant to Code of Civil Procedure section 338, subdivision (d), there is a three-year statute of limitations for "[a]n action for relief on the ground of fraud or mistake. The cause of action in that case is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake." Cases construing Code of Civil Procedure section 338, former subdivision 4 have held the plaintiff must plead facts showing he or she "was not negligent in failing to make the discovery sooner and that he [or she] had no actual or presumptive knowledge of facts sufficient to put him [or her] on inquiry." (Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412, 437 (Hobart).)
Absent a duty of inquiry, that is, knowledge of facts sufficient to make a reasonably prudent person suspicious of fraud, there is no general duty to discover whether an individual has been defrauded. (Hobart, supra, 26 Cal.2d at p. 437.) Once the duty of inquiry arises, however, the plaintiff has a duty to conduct a reasonable investigation, and he or she may be "'charged with knowledge of the information that would have been revealed by such an investigation.'" (Doe v. Roman Catholic Bishop of Sacramento (2010) 189 Cal.App.4th 1423, 1431.) "It follows that plaintiff is not barred because the means of discovery were available at an earlier date provided he has shown that he was not put on inquiry by any circumstances known to him or his agents at any time prior to the commencement of the [statutory] period." (Hobart, supra, at p. 439, see Samuels v. Mix (1999) 22 Cal.4th 1, 10, 14, fn. 3.)
2. Whether Milton's Complaint Placed the District Attorney's Office On Inquiry Notice and Whether the Fraud as to Loans 12 and 14b Should Have Been Discovered Prior to October 27 , 2006 , Involves Triable Issues of Fact
The trial court concluded Milton's complaint put the district attorney's office on inquiry notice, not only as to the fraud connected to loans 12 and 14b, but as to all fraudulent loans serving as the basis of the counts charged in the superseding indictment. As a result, the court held the district attorney's office knew or should have known of the fraudulent mortgage loans on October 2, 2006, the date Milton filed his complaint with the district attorney's office. Not only was this holding based on unsupported conclusions, it rested upon triable issues of fact.
The undisputed evidence does not support the conclusion Milton's complaint put the district attorney's office on inquiry notice. A citizen's complaint alleging criminal activity is not a hallmark of a crime. Milton's vague complaint is no exception. The complaint itself did not allege any details from which a reasonably prudent person would be suspicious of fraud. Nonetheless, the trial court concluded the undisputed evidence showed the complaint actually put the district attorney's office on inquiry notice of the mortgage fraud. First, the trial court explained, "While Gill clarified that she did not suspect ... fraud until she actually read the complaint on October 27, 2006, her testimony establishes that the form itself was sufficient to put her office on notice of the suspected fraud." Second, the trial court noted, "the Deputy District Attorney appearing at the motion to dismiss admitted that the complaint form 'provides reasonable notice of facts to make—to rise to the level of becoming suspicious of fraud.'" We are not persuaded the record supports either of these conclusions.
First, during the pretrial hearing, defense counsel asked Investigator Gill, "That complaint made you suspicious of potential real estate fraud, did it not?" Gill responded affirmatively. However, when questioned further about her suspicions, Gill clarified the complaint alone did not make her suspicious, but the complaint in addition to "[Milton's] supporting documentation[], because this was just a complaint. We get a lot of complaints." Gill further explained she would have "followed up for supporting documents," and agreed, "it would have been the beginning of the investigation." Defense counsel asked, "But it is enough suspicion to commence an investigation?" Gill agreed.
Defendants interpret this statement to mean Gill acknowledged the complaint alone was sufficient to make her suspicious of mortgage fraud. The Attorney General contends Gill's testimony meant Gill would have followed up on the complaint "because it was a citizen complaint which made potentially serious allegations." (Italics omitted.)
We find defendants' interpretation questionable given Gill's statements indicating after she read the complaint on October 27th, "[she] wasn't particularly suspicious of anything." Gill also stated when individuals have lost money of any sort, it is common for them to allege fraud in a consumer complaint. Further, the prosecutor asked Gill directly, "So your testimony is that when you looked at the consumer complaint form of October 2nd, 2006, you had insufficient information to suspect whether or not criminal activity was occurring?" Gill responded, "Yes." However, because opposing inferences may be drawn from Gill's testimony, whether the complaint alone was sufficient to put the district attorney's office on inquiry notice of mortgage fraud is a triable issue of fact.
We are also unable to conclude, as a matter of law, that Milton's complaint by itself should have put the district attorney's office on inquiry notice. According to Gill, Milton did not provide supporting documentation for his complaint until sometime between October 27 and November 3, 2006. Sometime between these dates, it appears Milton furnished the loan files for Sydney Wheat's and Sophia Ramon's loans and a compiled spreadsheet of all loans closed by defendant Lopez. Milton testified he provided documents to Gill with his complaint, but he could not remember exactly when he had furnished these supporting documents.
In our view, the date Gill received the loan documents supporting Milton's complaint is critical because these documents supplied the district attorney's office with details of the fraud alleged in Milton's complaint. Gill indicated supporting documents enable her to determine whether a consumer complaint is a civil or a criminal case. Without the loan documents, or some kind of information to supplement Milton's vague complaint, it is unclear how Gill could reasonably suspect a loss had occurred by virtue of a criminal agency. (Kronemyer, supra, 189 Cal.App.3d at p. 334 ["'discovery' calls for awareness of the crime, not merely the loss"].)
Second, although the trial court concluded the deputy district attorney appearing at the hearing on the motion to dismiss admitted the complaint "'provides reasonable notice of facts to make—to rise to the level of becoming suspicious of fraud,'" the record refutes this conclusion. The relevant portion of the prosecutor's argument is as follows:
"Now, it was Investigator Gill's testimony that she was not aware of that complaint form until October 27th of 2006. While—if, in fact, the complaint form was filed on October 2nd, 2006, that provides reasonable notice of facts to make—to rise to the level of becoming suspicious of fraud. It doesn't matter when the DA's Office actually looked at that complaint, and the People can see that. However, it is the People's contention, when you look at that consumer complaint form as Exhibit K shows, there are insufficient facts to make it rise to the level of a reasonably prudent person becomes suspicious of fraud."
The prosecutor's comments make clear she was not conceding the complaint itself was sufficient to put the district attorney's office on inquiry notice. The prosecutor emphasized the two-page complaint, without supporting documents, amounted to no more than a mere allegation of fraud. According to the prosecutor, "the mere allegation of fraud or criminal activity does not rise to the level of providing facts to make a person suspicious of fraud." Thus, the deputy district attorney did not concede Milton's complaint alone was sufficient to put the district attorney's office on inquiry notice.
From the record, it appears the district attorney's office did not have actual or inquiry notice of the mortgage fraud until sometime between October 27, 2006, and November 3, 2006. Sometime between October 27 and November 3, Gill observed houses with dead lawns in the Quail Lake community, and she began procuring property histories for these homes. She also stated she received loan files supporting Milton's complaint. Nonetheless, what Gill knew or should have known prior to October 27, 2006, is a matter for the jury to decide. "[W]hen the facts are susceptible to opposing inferences, whether 'a party has notice of "circumstances sufficient to put a prudent man upon inquiry as to a particular fact," and whether "by prosecuting such inquiry, he might have learned such fact" (Civ. Code, § 19), are themselves questions of fact ....'" (Hobart, supra, 26 Cal.2d at p. 440.)
The time when the statute of limitations commences to run is an intensely factual determination and, at a minimum, requires an evaluation of when the discoverer acquired knowledge of facts "'"sufficient to make a reasonably prudent person suspicious of fraud, thus putting him on inquiry."'" (Lopez, supra, 52 Cal.App.4th at p. 246.) Courts have generally concluded the issue of when the victim or law enforcement either actually learned of a defendant's fraud, or, alternatively, when through the exercise of reasonable diligence the victim or law enforcement could have discovered the fraud, presents questions for the jury to decide. (People v. Petronella (2013) 218 Cal.App.4th 945, 956; Zamora, supra, 18 Cal.3d at p. 562 ["Once the court determines that the facts stated in the pleadings are sufficient and do not show, as a matter of law, that in the exercise of reasonable diligence the plaintiff could have discovered the fraud at an earlier time then the reasonable diligence question becomes an issue for the trier of fact."].)
Defendant Lisa Sanchez contends the flyer received by the district attorney's office on October 25th was sufficient to put the district attorney's office on inquiry notice. Not only did the flyer fail to allege any facts, none of the circumstances it described are per se illegal. The flyer alleged mortgage fraud was occurring based on (1) homes selling above their asking price, (2) unoccupied homes, (3) homes with dead lawns, and (4) all-night parties with all-night traffic. As Gill explained, none of these activities are illegal. We are persuaded that none of the activities described in the Quail Lake flyer should have put the district attorney's office on inquiry notice as a matter of law.
Nor does the record support the conclusion the flyer actually put the district attorney's office on inquiry notice. Gill testified she went to the Quail Lake community not because she suspected fraud but because the chief of her division told her to. Because she would have to report back to her supervisor explaining what she did to try to resolve the problem, Gill knew she would have to do more than just drive by some of the homes. This evidence suggests Gill was following up on the flyer out of due diligence, rather than investigating because she actually suspected mortgage fraud.
Defendant Gonzales contends the fact the complaint alleged a couple of loans went into first-month payment default was a sufficient indication fraud had likely occurred. While the evidence showed it was unusual for a loan to go into first-month payment default, the evidence did not show this was necessarily an indication of mortgage fraud. Milton's complaint, which alleged he had loans "in 1st payment Default[]," was insufficient to put the district attorney's office, or a reasonable investigator, on notice of mortgage fraud or any crimes for that matter.
Defendant Gonzales contends the lender's discovery of the loans in first-payment default also triggered the statute of limitations. While the lenders of the defaulted loans were victims of the mortgage fraud, no evidence was presented to show whether these lenders suspected criminal activity as a result of the first-month payment defaults. Since there are reasons why a loan might go into default—such as a financial catastrophe—that do not necessarily implicate criminal activity, a first-month payment default alone does not compel the conclusion the lender should have been placed on inquiry notice. Moreover, no evidence was presented to show whether a supervisor with the responsibility of overseeing the fiscal affairs of the lender was notified of the first-month payment defaults. (Wong, supra, 186 Cal.App.4th at p. 1445.)
To the extent the district attorney's office has a general duty to exercise reasonable diligence in following up on citizen complaints, we are unable to conclude the mortgage fraud should, in the exercise of reasonable diligence, have been discovered prior to October 27, 2006. In our view, a mere three-week delay between the submission of Milton's complaint and the district attorney office's followup on the complaint was not a delay significant enough to suggest a lack of diligence. (Cf. Zamora, supra, 18 Cal.3d at p. 565 [circumstances underlying alleged 1972 discovery of grand thefts committed four years prior indicated investigators should have discovered crimes sooner had they pursued more vigorous inquiry].) "It is only where the party defrauded should plainly have discovered the fraud except for his own inexcusable inattention that he will be charged with a discovery in advance of actual knowledge on his part." (Victor Oil Co. v. Drum (1920) 184 Cal. 226, 241.) This issue must therefore be submitted to the jury. (Zamora, supra, at p. 562 ["Once the court determines that the facts ... are sufficient and do not show, as a matter of law, that in the exercise of reasonable diligence the [discoverer] could have discovered the fraud at an earlier time then the reasonable diligence question becomes an issue for the trier of fact"].)
We are unable to conclude the district attorney's office knew or should have known of the mortgage fraud connected to loans 12 and 14b prior to October 27, 2006. Because this determination ultimately rests on triable issues of fact, which are exclusively reserved for the jury to decide, we reverse counts 90 through 93 and 98 through 107. V. We Are Unable to Conclude the Offenses Based on Loans Other than 12 and 14b Were Discovered or Should Have Been Discovered Before October 27, 2006
In his final claim on appeal, the Attorney General contends the trial court erred in treating loans on 16 properties as extensions of the loans on two properties. The trial court concluded the two loans (loans 12 and 14b) "serve[d] as the essence of the superseding indictment," and Milton's "complaint form was the genesis of [the] superseding indictment." The Attorney General contends there was insufficient evidence to show the district attorney's office discovered or should have discovered the offenses based on loans other than 12 and 14b prior to October 27th.
We agree with the Attorney General. While there is evidence the district attorney's office suspected fraud as to 13 or 14 properties within the Quail Lake community, the evidence shows this suspicion was developed sometime between October 27 and November 3. There is no evidence the district attorney's office was on inquiry notice as to fraud arising from these loans prior to October 27. A majority of the fraudulent loans did not even originate from Worldwide 1st, and the undisputed evidence failed to show defendant Lopez was involved in every loan.
Based on the grand jury evidence, eleven loans originated from Northpoint Mortgage, three originated from American Mortgage and Financial Services, one from Meridian Mortgage, and nine originated from Worldwide 1st. Although this evidence was not made part of defendants' motion to dismiss, the pretrial hearing evidence failed to show all loans originated from Worldwide 1st. The trial court held the district attorney's office was or should have been put on notice of defendants' fraud as to all loans (except loans 18 and 19), because "[t]he fraudulent loans that form the structure of [the] indictment all originated from Worldwide First Mortgage. Many defendants were employed by, or had contact with, Worldwide First Mortgage." --------
Although defendant Lopez was charged in connection with many of the fraudulent loans, defendants failed to adduce any evidence to support the conclusion the district attorney's office was or should have been on inquiry notice as to the fraud connected to any loans based on Milton's October 2 complaint. What was known to the district attorney's office from the complaint alone does not justify imputing knowledge of all of the fraudulent loans to the district attorney's office as of the date Milton filed his complaint. Contrary to defendants' assertions, the complaint did not contain facts from which the district attorney's office should have inferred a broad pattern of real estate fraud had occurred, or that any crime had occurred for that matter.
Even assuming the district attorney's office should have been on inquiry notice, the only circumstances suggesting a lack of reasonable diligence by investigators was a three-week delay between the filing of Milton's complaint and Gill's followup with Milton on his complaint. It is one thing to conclude the facts constituting the mortgage fraud as to loans 12 and 14b could, in the exercise of reasonable diligence, have been discovered prior to October 27, 2006, but it simply defies logic to conclude the fraud arising from all of the other loans could or should have been discovered prior to this date. Even for the most diligent investigator, this was simply an impossible task.
We conclude the undisputed evidence fails to show the district attorney's office knew or should have known about the fraud as to loans other than 12 and 14b prior to October 27, 2006. We therefore reverse all remaining counts.
DISPOSITION
The judgment is reversed and remanded for further proceedings.
/s/_________
PEÑA, J. WE CONCUR: /s/_________
GOMES, Acting P.J. /s/_________
DETJEN, J.