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United States v. Grote

United States v. Grote

United States Court of Appeals for the Second Circuit

June 12, 2019, Argued; June 2, 2020, Decided

Docket No. 18-181(L), 18-184(CON), 18-1802

Opinion

 [*108]  LEVAL, Circuit Judge:

Defendants Scott Tucker and Timothy Muir appeal their criminal convictions after a five-week jury trial in the U.S. District Court for the Southern District of  [*109]  New York (P. Kevin Castel, J.) on fourteen counts of racketeering, conspiracy, and fraud offenses arising out of the Defendants' operation of an illegal payday lending scheme. The evidence showed that from about 1997 to 2013, the Defendants lent money at interest rates far in excess of those permitted under the laws of New York and other states in which their borrowers resided, and deceived borrowers as to the terms of the loans.

 [**3] The indictment included three counts of conducting an enterprise's affairs through the collection of unlawful usurious debt, in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) (Counts 2-4); one count of conspiracy to do the same, in violation of 18 U.S.C. § 1962(d) (Count 1); one count of wire fraud and one count of wire fraud conspiracy, in violation of 18 U.S.C. §§ 1343, 1349 (Counts 5-6); three counts of money laundering and conspiracy to launder money, in violation of 18 U.S.C. § 1956(a)(1)(A)(i), -(a)(1)(B)(i), -(h) (Counts 7-9); and five counts of making false statements in disclosures required by the Truth in Lending Act (TILA), in violation of 15 U.S.C. § 1611 (Counts 10-14). The Defendants were convicted on all counts.

At trial, the parties agreed—as they do now—that the requisite mental state for the RICO counts was willfulness. The Defendants defended primarily on the ground that, because the lending business was operated by Native American tribes (the "Tribes"), the loans were not subject to state usury laws, and that even if the loans were unlawful, Defendants had a good faith belief that they were lawful by virtue of the tribal involvement, so that their conduct was not "willful."

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961 F.3d 105 *; 2020 U.S. App. LEXIS 17330 **; 2020 WL 2843880

UNITED STATES OF AMERICA, Appellee, v. CRYSTAL GROTE, AKA CRYSTAL CRAM, AKA CRYSTAL CRAM-GROTE, AKA CRYSTAL STUBBS, Defendant, and TIMOTHY MUIR, SCOTT TUCKER, Defendants-Appellants.

Subsequent History: US Supreme Court certiorari denied by Tucker v. United States, 141 S. Ct. 1445, 209 L. Ed. 2d 160, 2021 U.S. LEXIS 1077, 2021 WL 666770 (U.S., Feb. 22, 2021)

US Supreme Court certiorari denied by Muir v. United States, 2021 U.S. LEXIS 4253 (U.S., Oct. 4, 2021)

Prior History: Timothy Muir and Scott Tucker appeal from a judgment of conviction entered after a jury trial in the United States District Court for the Southern District of New York (P. Kevin Castel, J.) on fourteen counts including collection of unlawful usurious debt, and conspiracy to do so, wire fraud, and money laundering, arising out of Defendants' operation of a payday lending business. The defense was primarily that the lending business was not subject to state usury laws because it was conducted by Native American tribes and was therefore protected by tribal sovereign immunity. Defendants' primary contention on appeal is that the district court erred in instructing the jury that willfulness—which the parties agreed was the required state of mind for a charge of lending at unlawful usurious rates—can be satisfied merely by the defendants' knowledge of the interest rates charged, even if they believed the lending was lawful. Because defendants made no objection following the charge as generally required by Fed. R. Crim. P. 30, and there was no basis to conclude that objection would have been futile, the plain error standard of Fed. R Crim. P. 52 [**1]  applies. We conclude the error, if any, was not plain error. We also find no abuse [**2]  of discretion in the district court's denial of Tucker's application for a stay of the forfeiture order against him..

United States v. Tucker, 2017 U.S. Dist. LEXIS 134265 (S.D.N.Y., Mar. 1, 2017)

Disposition: AFFIRMED.

CORE TERMS

loans, Tribes, Counts, borrowers, Defendants', district court, tribal, lending, interest rate, willfulness, payday, convictions, plain error, collection, predicated, lender, renewal, conspiracy, employees, forfeiture order, unenforceable, automatic, portfolios, lending business, willfully, state of mind, circumstances, forfeited, charges, sovereign immunity

Criminal Law & Procedure, Standards of Review, Plain Error, Jury Instructions, De Novo Review, Trials, Jury Instructions, Objections, Burdens of Proof, Definition of Plain Error, Racketeering, Racketeer Influenced & Corrupt Organizations Act, Elements, Banking Law, Banking & Finance, National Banks, Usury Litigation, Real Property Law, Financing, Mortgages & Other Security Instruments, Usury, Abuse of Discretion, Evidence, Evidence, Testimony, Expert Witnesses, Criminal Proceedings, Admissibility, Ultimate Issue, Substantial Evidence, Sufficiency of Evidence, Sentencing, Forfeitures, Proceedings, Stays, Appeals, Abuse of Discretion