EFG, a provider of home loans. These aren't the sort of home loans I've ever been familiar with, but are apparently the sort beloved of house flippers with bad credit. They provide what are called "hard money" loans. I am not entirely sure what this means, other than it relates to a particular loan in this case, which was an interest-only loan with a 18.5% interest rate payable in full after a year. Their lawyer was tall, thin, craggy British man who seemed quite personable, and also seemed to be the most comfortable in a courtroom setting. A company representative sat in the spectator seats much of the time, a blow-dried executive type who looked like he came out of central casting for the role.
P Title, a title company. I've heard of these guys. They are one of the bigger ones around here and for all I know may even by involved in my own mortgage. (I am deliberately not checking as I write this.) Their lawyer was a rumpled balding man in his mid-forties, I'd guess, and very much looked the corporate lawyer type. He also seemed a friendly sort, though this may be due to the generally friendly atmosphere at the lawyer's table. His company seemed to be running the exhibit projection system, and so after his tech assistant vanished after the first week, we got to laugh with him about his inferior technical skills. Over the first couple days of testimony, he was helped by a leggy blonde who did more than half of the questioning. She disappeared after the first week. These two probably did the least questioning of any of the parties.
Dr. EB, involved in real estate investment. He was represented by an older black man who while perhaps coming off as a bit on the pompous side, seemed quite comfortable in a courtroom. He shared a surname with the doctor he represented but claimed no relation. Because of the nature of the cases, he or his assistant did quite a bit of the questioning. He was assisted by his son; a bright-eyed thin man with dreads. I'd guess he was in his mid-twenties, and would lay even money on this being his first court appearance. He seemed competent, but I caught nervousness, particularly on one day when his uncle (or father) was not present. The older lawyer seemed to like to push the boundaries a bit in his questioning.
Their client was a heavyset black man, who was trained as a doctor in the field of nephrology (i.e. kidneys.) At the time the case concerned, he was one of two doctors involved in a company working on a new arthritis drug. He spent all of the time he wasn't testifying glowering from the back of the gallery. The man has a mean glower.
JS, a real estate agent. He was represented by a man I can best describe as looking like an older Matthew Perry. He seemed on the ball, and was often calling up objections. His client was an short, plump older balding man who looked the dictionary definition of milquetoast. He spent much of his time near the front of the gallery staring in odd directions. He didn't seem to particularly react to anything that was happening, though there was some note passing to his lawyer.
SN, a contractor. His lawyer looked like a plumper, white haired version of Albert Brooks. He had a tendency to ramble in his questions a bit, and seemed to like to take the Columbo approach to questioning. He must have started with "I'm a little confused" twenty times. His client was a fiftyish large man with an out-of-fashion mustache and general had a confused sort of expression on his face a lot of the time. He liked to spread himself out, the sort who sits with his arms draped over the two adjacent seats most of the time. He would sometimes react to the testimony of others by throwing up his hands in the air. He otherwise spent much of the time staring at the parties with a slightly opened mouth.
TS, a former loan officer for CW, a large lender, recently bought by BA. He was self-representing. He was a large man, with a shaven head, and looked a little like a bouncer who had let himself go. He did little actual questioning though was obviously following the entire proceedings. His table, like the other self-representing party, was to the side, facing the jury.
WH, a plumbing contractor. He was also self-representing, and was the uncle to TS. He looked like he should be holding a "NOBAMA" sign in front of a radio station, though I have no idea if that look represents any truth. He was also shaved bald, with the sort of round face that only ever seems to be on completely bald men. He looked a bit like Locke on "Lost". His questioning was nearly as light as that of TS, though he was a bit more confident about it. Otherwise, he mostly chatted with his cohort or sat back in his chair. When someone said something unbelievable (to him) on the stand, he'd laugh silently and nudge his partner.
The central figure in this case was not present. He certainly should have been, and all the parties above had cases against the man, but were unable to bring him to court. DW was a twenty-something con-man and likely forger who may or may not have also legitimately worked as a loan broker. It is safe to say that it is likely that all the events I will describe are at least partially attributable to him.
Jury selection took most of a day. We had one jury pool of fifty that was eventually whittled down to a jury of twelve, with two alternates. Five were left in the pool when the jury was chosen. Select was a bit odd because of the multiple parties. At the time, I assumed that there were three groups as the lawyers paired up to do their peremptory challenges. This turned out not to be the case, but from what I saw, this worked mostly because the lawyers had similar views about who to boot. For instance, the lawyers for EFG and P Title worked together even though EFG was suing P Title.)
They tell you that you should not make assumptions as to reasoning, but it was clear to me (and the rest of the jury) that there was a pattern. Younger people tended to get booted. People at the start of their careers tended to get booted. At the end of the day, every single jury member was a property owning professional. (Which, I suppose, is a "jury of their peers" because all parties fit this description.) There were a number of management types, or business types. We had a remote IT consultant, two nurses, an accountant, a financial advisor, a retired former manager of global projects, a retired office manager who used to run the office for a legal firm, at least two project managers and a facilities manager.
There were a couple of semi-outbursts during selection from a pair of women, one longtime unemployed, about "not caring" about "$2 million dollar houses in Lafayette." The judge eventually allowed one to go, but the other was booted by the lawyers, as well as a couple of the more vigorous agreers. There were a number of unwilling unemployed there, and only one made it to the jury as an alternate. He was, however, a former executive. Basically, all the lawyers wanted people who knew roughly about real estate, and people who would give "rich" people a fair shake.
What (seems to have) Happened
I should note that this is complicated, and entirely from memory as we weren't allowed to take our notes home. Keep in mind that many things made no sense at the time, so don't be surprised if this doesn't.
This case is about bad loans. A lot of bad loans. These include bank loans and personal loans, and nearly all of them should not have been made. If I hadn't been absolutely disgusted by the banking industry before, I would be now. There are the legal causes and the ultimate causes. The legal causes are what the trial concerned, but the ultimate causes were a banking industry too free with loans, and people making personal loans with verbal agreements and no collateral.
The case centered on a number of financial transactions concerning a property in the upscale town of Lafayette, CA that I will call "E Drive". This property was a combination of two different lots with oddly drawn lines that were always sold together. The 006 lot was a four acre lot with a view of the Lafayette hills and a six bedroom house. The 007 lot was a half acre ravine that was marked unbuildable by the city of Lafayette. The combination was worth at least $3 million dollars (More later, than less later because of the boom and bust) The 007 lot was considered basically worthless.
What happened is a complete mess. The way it was presented to me was through testimony, one witness at a time, and this was a tremendously poor way to get the information. I will try to tell the story chronologically, though I am unsure that is any better.
In 2004, JS helped a Mr. C buy this property from a Mr. B. In the process, the large bank CW (famous from the banking crisis) provided two loans, each for a $1 short of $1 million dollars. Something went very wrong in this transaction. The lots were sold in separate transactions rather than together. The 006 lot, the large one with the house and the view, was sold for a dollar while the unbuildable ravine sold for the bulk of the funds. Crucially, CW ended up with that title to the worthless 007 lot as collateral for the $2 million dollars it was lending. Both lots were owned by Mr. C, but the loan was tied to the worthless one.
During this transaction, DW did most of the leg work, talking to the title company (P Title), the lender, and pretty much everyone else involved. The two title officers involved were given $2,000 cash gifts after the transaction went through. (Unbelievably to me, their own general council called the gifts appropriate.)
CW was not a part of this case, and from what I gather, this transaction was the subject of an entirely different lawsuit which I learned after the trial went in CW's favor.
Meanwhile, TS, who I mentioned above as a loan officer for CW, had fallen into DW's Ponzi scheme loan con. (Note: I have no idea if TS was involved in the above sale but suspect he was.) TS had known CW for years, and during this time, was constantly loaning DW money. It started out small, with loans of $5,000, $10,000 but by the midpoint of the last decade, was involving sums in the six figure range. At the beginning, DW was reliably paying these loans off. These loans were secured by, at best, scrawled handwriting or verbal agreement, and had loan shark rates. For instance, one loan was "Borrow $250k, repay $450k in one year". Note that these terms were always dictated by the borrower, DW. Loans were generally to be paid not directly to DW, but often to others, like his wife, an employee or even a stranger (to the lender.) Money coming back was generally not paid by DW himself, but by strangers (to the lender.)
It's pretty clear to me what was going on here. DW was borrowing to pay off older debts, and skimming off the top. At the time, he was passing himself off as a loan broker, with two companies and a mid-sized office in Lafayette. He may well have been doing legitimate transactions as well, as he clearly knew the business. At some point, he seems to have learned that owing people money gave him a certain amount of control over these people. Clearly he used promises of large interest returns to pull people in. He would tell people he owed that he had a "deal going", and if it went through, the debtor would get part of the proceeds. For instance, nearly all of JS's involvement was driven by a loan he made to DW of $200,000, for which he hoped to get $300,000 back.
Now what makes this fascinating is this: Where was a loan officer getting money to make $100,000 personal loans? He presented himself as having "done very well", but admitted that he was also using home equity loans. When everything fell apart, he lost his house.
Fast forward to 2006. Mr C was a general contractor, and had purchased the house in a partnership with DW in order to flip it. Mr C would do the house remodel, DW would handle the financials. Unfortunately, Mr C became ill, and was unable to do this, and so began to shop the house around. (This partnership was apparently just verbal.) They enlisted JS to sell the house, and DW brought in a long time friend, Dr EB.
Dr. EB had met DW when DW was a teenager, and considered him a go-getter and a success story. He was a kid who'd risen up out of the streets of Oakland, parlaying an internship in a real estate company into a career earning more money than most of us can hope. In the meantime, Dr. EB had founded a company called F with a fellow doctor. F was intended to research an osteo-arthiritis drug that (he claimed) would actually reduce and/or cure this disease. The company held a number of patents, and required cash to fund the FDA required trials. From what I gather, it was often short of funds. Dr. EB contacted his friend DW, who expressed interest at being an investor. Since F was a private company, this required him being a "qualified investor" which, in addition to other requirements, required assets of at least $1,000,000. DW apparently met this test.
DW was taken in as CFO, put in charge of soliciting investors, and given 1/3rd interest in the company in exchange of $500,000 (of which only ~$300,000 was ever actually paid.) At the time, this company's theoretical worth was $24,000,000. The discrepancy was not explained. Dr. EB describes DW as singularly unsuccessful at actually getting investors. He in fact said DW brought no money in, though there's evidence that TS at least once gave the company $200,000.
Back to the property: Dr. EB agrees to buy E Drive, in much the same way that Mr. C did. DW would do the legwork. Dr. EB would find contractors, fix the house up, and sell it. To do this, they needed financing, which they got from EFG. Very crucially, Mr. C and DW represented the property as free and clear of loans using the title to the 006 lot, which indeed, showed no liens. Remember that the 007 lot had a nearly $2,000,000 lien on it from CW. The transaction went through, and thus this property, now owned by EB, had two separate banks thinking they owned title. Dr. EB claims to have been entirely unaware of the CW loan. This happened in November of 2006. Oddly, Dr. EB claims to have put no money down despite the paperwork clearly states that it required $400,000. Apparently DW got this down somehow. This is an example of how frustratingly clueless many of the witnesses were about huge sums of money.
Backing up a bit, TS introduced his uncle WH to DW to help bring him into the loan deals. Seems DW now needed money for this company, F, he was involved in. There was a meeting between DW and Dr. EB on one side, and TS and WH on the other. There are two different accounts of this meeting.
Dr. EB described WH as a "patient" and described the meeting as a house call. While on the stand, he briefly involved patient confidentiality. (Mostly torpedoed as his patient was happy to describe the discussion.) According to him, he prescribed some medications and when on his way.
WH describes this as a meeting to present the company F to him, as he was to loan money to help fund drug trials. He was given a prospectus, and when he mentioned that he himself had osteo-arthritis, was given pills in plain, unmarked bottles to try. (Dr. EB pretty much admitted to giving out non-FDA approved drugs.) Shortly thereafter, WH loaned a large some of money to DW, in the name of the company F. At this point, TS had also loaned a lot of money to DW in the name of F.
Meanwhile…a sidelight that occurred right about now which sheds some light on DW, but is not directly tied to this case. There was this guy, KT, who became friendly with DW through TS. KT was a bagger at a grocery store at the time, but wanted to do better for himself. One thing he did have going for him was a good credit rating. DW convinced him that he should make some money off this. KT, in return for "use" of his credit rating, would get a cash payment. At a local Starbucks, checks were provided and documents were signed. Documents that KT did not pay much attention to. (KT was obviously quite naive here.) He goes upon his merry way until suddenly CW is calling him, asking why he hasn't made any payments on his new houses.
Turns out he'd "bought" two houses, one a rental property in SF, another in a high-class suburb. KT lived in a downscale suburb in a far cheaper house. After long confusing battles with the bank it (apparently) got mostly straightened out, but with a hit to his credit rating. How many of the documents he signed were real and how many were forged is an open question. Apparently his credit application had him as a corporation executive earning $500,000/year. (As opposed to the solid five figure salary he was earning as a bagger.) He called DW who strung him along with takes of "paperwork errors" for months before he finally called the bank and eventually got it straightened out.
Meanwhile, TS and WH are getting antsy about their money. WH was out $600,000, and TS nearly as much. At this point, we have a meeting at a bank that has been described in two different ways:
According to Dr. EB, DW called him, scared of what TS and WH would do to him and wanted EB to come with on a trip to the bank. This he did, and the four of them entered a bank. DW went up to the teller, came back sad, and explained that there was no money. At this point, WH put his hand on DW's neck and said "first your wife, then your children and then you". All parties then left, with EB convinced that WH was a killer.
According to TS and WH, DW called them, saying he'd have the money. WH said "You better not be wasting my time again", frustrated with the many other times money had not come through. DW and EB met them at the bank. This surprised neither, as they thought of them as partners. DW then fails to get money. WH then leans in, puts a hand on DW's shoulder and says "I oughta beat your ass for wasting my time". All then leave.
Back to the house. Dr. EB had purchased E drive in January, unaware that CW thought it had a lien. Now things start to get confusing and complicated. TS and WH were pressing DW for their money back. JS, the real estate agent, had also loaned him $200,000, and was expecting $300,000 back. DW started to put together another deal, bringing in SN, the other party who I haven't mentioned, a house flipper. DW and JS showed him the property and, according to NS, offered to sell it to him. The plan being that they would provide him title for $500,000. He would then borrow against the house for $1,800,000, and in turn loan this to them. EB was listed on title, of course, but DW described himself as the "real owner" and stated that EB was merely a straw buyer. DW also states that they own the house "free and clear" with a forged preliminary title report as proof despite there being not one, but two different banks both thinking they have the sole lien.
SN duly gave them $500,000 and they duly presented him with the title in January of 2007, a mere two months after Dr. EB purchased the property. This document, though recorded, was a forgery. It was notarized by an employee of DW named LB. It would soon become clear that anything notarized by LB in this case was an agreed upon forgery.
TS and WH want their money. SN agrees to give DW this $500,000 advance on the $1.8 million loan, and agrees to make two checks out to TS and WH. SN claims that these checks were to go to JS, who will hold them until the loan actually goes through. Everyone else claims that these checks were both advances. Regardless, JS forwards these two checks to TS and WH. The checks, written on SN's credit line, bounce.
SN initially tries to go to the Alameda branch of P Title to make the loan go through, but they reject him after some of the people there decide that something fishy is going on with the rapid resale. (The close report gives "BAD PEOPLE" as the reason for canceling the transaction.) SN and co then try through the Lake Tahoe branch. There is some communication between the two branches, and the Tahoe branch is told to insist on an "In-house notary". This does not happen.)
Later, somebody tries to start a loan with another title company, one that Dr. EB works with. NS claims no knowledge of this. Dr. EB happens to call them the day escrow is going to close and cancels the transaction, claiming it is without his knowledge. (His call, he claims, is a coincidence.)
Even so, SN initially can't get the loan and is forced to kick in another property as collateral. He gets a partner of his in the ownership of a Reno commercial building to give up his interest and uses this. He then gets the loan and starts paying out. This loan is for "property development and cash out". Turns out only about $25,000 actually goes into fixing up the property. $500,000 goes to SN, repayment for what he put up front. The rest is complicated.
Soon thereafter, Dr. EB is "surfing the net", looking up the titles to his properties. While doing so, he noticed that he was no longer on title. Upon noticing this, rather than calling the bank, the title company, or anyone official, he called DW. Now it gets really muddled. Communication starts between SN and EB through the agency of DW and JS. SN states that he owns the house and proposes an agreement for a loan at the instigation of DW.
EB eventually contacts SN directly, and a meeting occurs with EB, SN and the agent, JS, but not the infamous DW. At one point, Dr EB sends a nasty letter through the agent, JS, to SN mentioning the existing $2.4 million loan that he knows about, and says he "will not be extorted" by SN's claims of title. SN claims to have never seen the note. During this meeting, SN repeatedly asserts ownership, and proposes a loan agreement. EB repeatedly states that he owns the house. EB and JS will claim that JS says at one point "I am not acting as an agent here". SN denies this. EB eventually agrees to some sort of loan transaction in exchange for getting the title back in his name.
In the meantime, SN and DW work on a "Joint Venture Agreement" with EB. How much input EB has into this depends on who is testifying. The agreement goes like this:
* SN will borrow $1.8 million against the property and give it to EB.
* EB will make all loan payments instead of SN.
* EB will pay SN 20% interest.
* EB will regain title to the house.
Supposedly, this money is mostly earmarked for the company F, at least according the SN. The agent, JS, thinks that this will include $350,000 for him, repayment of the loan that he made to DW, plus a $50,000 referral fee. Everybody else ignores this point, and JS will get nothing.
There is a meeting at a restaurant in which checks are exchanged, proceeds from the $1,800,000 loan. Present are SN, Dr. EB, WH and TS. According to SN, he is told to make out a $300,000 check to TS, a $410,000 check to WH, and a $162,000 check to Dr. EB (The actual owner of the property.) Dr. EB tells a different story. He says that SN refused to give the money to Dr. EB, and insisted on the checks being written this way. Regardless, Dr. EB allows the transaction to go like this because he fears for the life of "DW's four little children", who he feels WH threatened. Dr. EB makes no mention of these threats in this meeting. SN hands the checks directly to WH and TS, who feel that that these are "making good" on the bounced checks, in repayment of DW's debts. On the other hand, SN thinks these two are doctors at Dr. EB's company who need the money for drug trials. The meeting ends.
The day after the meeting, Dr. EB and TS make contact. (Remember that TS is associated with WH, who supposedly threatened the four little children.) Apparently, Dr. EB thought the money going to TS was for TS to help refinance E drive, so that he can get out of the $2.4 million loan, and so everyone will be happy. TS had sent Dr. EB a letter on official CW letterhead proposing this, and asking for $450,000. Dr. EB thought this was for "a downpayment and closing costs". (Note that no one could produce this letter.) Because the check had been short, he provides TS another $150,000. (Note that neither of these checks were to CW the entity, but were personal checks directly to TS.)
To tie up that lose end before going on: TS does absolutely nothing. Dr. EB eventually complains to CW. TS is put on "indefinite leave" shortly thereafter for "using company letterhead for unofficial business". Note that he coincidentally starts complaining to CW around the time that CW's fraud department starts sniffing around about the $2,000,000 loan put on the worthless property.
Around this time, a number of lunchtime meetings between SN and EB. How many depends on who is testifying. Either 10-15 (SN) or 3-5 (EB) between the middle of February and the end of February. No one really makes clear about what is discussed except the above Joint Venture Agreement. DW is not present at any of these as SN has decided he doesn't want to deal with him at all as it is clear that EB is the "real owner".
Dr. EB goes to the office of SN's lawyer to sign the "Joint Venture Agreement" mentioned above. He claims feeling extorted, and having no choice. The lawyer testifies that he made no statement as to being under duress. He makes one change to the contract, reducing a payment to SN from $300,000 to $150,000. Both men initial this part of the contract. During the same meeting, Dr. EB signs a document affirming that the forged document transferring title from him to SN is valid. Great hay is made about the fact that he insisted on changing the wording saying that he "authorized" this to wording saying that he will "authorize" this. Dr. EB claims that he signed this document affirming SN's valid title because he was told that it was the only way he'd get title back. (I am just stating things as I heard them. Yes, many of these things make no sense.)
Shortly after this, SN is given what he takes to be a title. It will turn out to be forged.
Around this time, WH receives a quitclaim title to the house. It will also turn out to be forged.
About this time, CW's fraud department figures out that it is lending $2,000,000 secured against an unbuildable vacant lot. The shit begins to hit the fan. Dr. EB, upon finding this out, immediately stops paying his EFG mortgage. He also never pays anything to SN, who is holding the bag on his own loan.
SN vainly attempts to keep up with the $17,000 mortgage to this other bank (confusingly named EBC.) Headed for foreclosure, he tries sell the house. He and JS find a wealthy buyer, but they have to clear things up with EBC so that the deal can go through. They ask for $400,000 and two properties as collateral. He gives them the $400,000, but his partners won't go for the collateral deal. He asks EBC for his $400,000 back, and they basically say "Yeah, right" and keep it. SN is now suing EBC for this. (Fortunately, that is not not part of these case.)
At this point, JS and others have to disclose all the financial doings concerning the house. This scares the wealthy buyer off. EBC forecloses on the house.
At some point after this, the company F goes under. I do not know why as this was not part of the case itself.
When we eventually got the case, we found out who was actually suing who, or, at least, the questions that weren't reserved for the judge. Some of the parties had elected for non-jury trials. (Particularly P Title, who was being sued by everyone, and the two self-representers.)
- EFG was suing SN for conspiracy to slander title. That is, while not necessarily the one who produced the forged documents that cost them the loan, that he knew about it as it was going on. This depended entirely on the forged reconveyance of title, which is what cost EFG the loan proceeds.
- Dr. EB was suing SN for fraud and conspiracy to defraud. That is, both for directly attempting to cheat EB and also for aiding others. This was based on SN allegedly knowing about forged documents and contracts meant to defraud without telling EB, and for misrepresenting his ownership of the title.
- SN was countersuing EB for the same two things, for fraud and conspiracy to defraud. This was based on the same things as above, that EB knew about the forgeries and bad loans and didn't tell SN. SN also sued EB for breach of contract. (This contract being the "Joint Venture Agreement".)
- SN was suing JS for not acting properly as a real estate agent. That is, because JS was acting as SN's agent when he was really acting in the best interest of other parties.
This was not a normal trial. Normally, you have a plaintiff, who goes first, calling witnesses. Then you have a defendant, who calls witnesses. For each witness, the one who called the witness asks first, then the opposing lawyer. In this case, there were seven parties and many of them wanted to call the same witnesses. So, for example, EFG, despite not being truly the central party, called most of the witnesses, including the three main parties, EB, SN and JS. Then, each lawyer would question down the table and it would then come around until they were all satisfied.
The biggest issue was repetition, as each lawyer would want to put his own spin on the questions. The last guy in line got hammered by the judge a number of times for repeating questions others had asked. There were also jarring changes in direction, as lawyers would often have wildly different interests. For instance, EFG questions SN endlessly on the stand about what he knew and when he knew it. P Title would then be all about where he got the title reports. JS's lawyer would then be concerned about whether SN had been told that JS was acting as an agent. Fortunately, the judge was a stickler about time, and kept things roughly on track.
It was very different from previous experiences, where the judges seemed to like to break things at breaking points. This judge had no qualms about stopping things right at 4:15 and making the questioning resume the next day, even if things were "nearly done". Breaks and lunches were prompt. He even went so far as to force breaks in the middle of the closing statements of two of the lawyers.
Closing statements themselves took nearly a day, as there weren't just two, but seven. (Though the two self-representers gave only minimal ones.)
The jury got the trial at 3 pm. This gave us only an hour and a half at most that day and nothing much got done. As soon as the door closed, the room exploded in conversation. There was just a huge amount of stuff in this case, and you had 12 people who had had no opportunities to say a word for two weeks. None of this was "deliberations". It was more on the order of "do you believe that guy!?" The basic feeling for the entire jury was that pretty much all the parties suffered from greed, idiocy and ethical lapses. There was little positive to say about any of the parties except for EFG.
After at least a half hour of this, we settled down to pick a foreperson. A number of people nominated one woman, who had managed a team of lawyers, but at the last minute, a guy popped up at the other end and volunteered. She let him have it. He stated he wanted to do it because he wanted to "keep things on track". (He was clearly some sort of managerial type.) Unfortunately, he wasn't able to actually do this that well. I suspect the woman would have been better at it. Ironically, those two ended up being somewhat the spokespeople when there was agreement.
It was a very strong-willed jury. People were very friendly outside the case, and people were very good at putting aside differences on breaks, but inside, people got loud. The conversation nearly always dissolved into cross-talking and just getting to voting was often difficult. It wasn't so much a matter of anger as everyone wanting to get their two cents in at the same time. There was also a strong tendency for the table to break into sub-conversations. Worse, the nature of the case made it very easy to get off track as the discussion of one party's actions would necessarily lead to some other aspect. More than once, the group would realize it had spent ten minutes talking about something other than the particular charge under discussion.
In general, the jury broke into two groups, based on feelings about SN's culpability. The smaller group (which included the foreman) felt that he was guilty, and that was it, even if it was hard to find a smoking gun. They didn't so much want to find in favor of Dr. EB, as the jury unanimously felt that he was guilty, but they objected to give him anything in his countersuit. They felt that they would be rewarding him for being a snake.
The other side, of which I was a part, felt that there was no real evidence that he knew of the conspiracies against Dr. EB (though there likely was one) or of the slander against EFG. Instead, we felt that he was a shark who scented money, and went for it, basically ignoring any red flags along the way. And, in my view, there really was no concrete evidence, and there were instances where he seemed to work to confirm things were right when they appeared wrong. For instance, when told that there was a prior loan which would have scotched the deal, he called P Title to confirm that there was no lien. (Unfortunately, P Title told him the wrong thing.)
There were 2-3 waverers, so we ended up with a number of 8-4 votes. Three people never changed their opinion. Fortunately, in a civil trial, only 9 have to agree. If it had required unanimity, it would have been a mistrial.
One of the hardest parts was figuring the damages in the two places where we found they were due. One huge problem is that most of the parties were very bad at actually describing what the exact damages were. People were extremely vague. For instance, SN wanted damages for payments he made in the property that was eventually disclosed. He testified that it was "about $17,000 per payment" and that he "though he made around 5-7 payments." Advice to future lawyers: If you want damages, then list exactly what you think you deserve, and back it up with things like canceled checks, not vague testimony.
SN and Dr. EB both asked for damages for "emotional distress". This caused much mirth in the jury room. In my mind, unless you can show therapist bills, there's no question.
- First, we found that EFG had not proved its case. It certainly had a case against DW, P Title, and probably Dr. EB, but given that SN came in so late, and that there was no firm evidence that he even knew about the forged reconveyance, the burden of proof hadn't been met. This was a relatively easy decision for the jury to make, though there were two holdouts. (Basically two of the three "SN is guilty period" people.)
- Second, we found that Dr. EB had been part of a conspiracy to defraud SN. This was a bit amusing, though, because in the course of the thing, SN ended up monetarily ahead. So we found Dr. EB liable but also found that there were no damages.
- Third, we found that Dr. EB had breached his contract. We did find damages here. Basically, in the contract, SN was due some money at the start, and some money later. (Interest, mostly, as he was charging Dr. EB 20% interest for the loan.) He got the initial money, but not the later money, hence he made a profit in general. However, since Dr. EB breached the contract, causing him to lose a property, he had extra damages. This ended up being a lot less than he probably wanted, as a sharp eyed jury discovered a document in evidence (but not presented in court) that showed that there was only $12,000 equity in the property he owned 1/4 of but wanted full payment for. After lots of math (and helped by one juror, who was some sort of an accountant) we came up with a number. Only one juror abstained, because she didn't feel she could award anything without hard evidence. This was in general very hard, because no one liked SN, and many didn't want to "reward" him at all. They eventually broke down because the contract was explicit.
- Fourth, we found that SN did not defraud Dr. EB. This was the hardest one, with hours of 8-4 votes. The tide was broken when the foreman realized that he didn't see any actual damages. He was one of the four. A quick vote showed that everyone agreed that even if there was conspiracy there were no actual damages (since a lot of money went to DW, acting in EB's name, and so very potentially to EB's company) and so it seemed silly to deadlock. This was helped by the fact that EB claimed to have gotten no money, but we saw from a ledger that at least one $200,000 check from TS when directly to his company the day after TS was paid the same amount from loan proceeds.
- Finally, we found for JS, in his defense against SN. Initially, it looked like we'd easily find that he was acting as an agent, but two things reversed the tide. The first was the testimony of an expert about what is required to act as an agent. (Basically, to actually go through with a sale or purchase.) This caused a little wavering. But then it was pointed out that in the middle of the deal, SN cut JS out of the loop. This changed most people's mind immediately, as if he was cut out, he wasn't an agent being relied on. Interestingly, this decision hinged on the statements of an expert that the entire jury thought was appallingly bad on the stand. More than one juror said they felt him to be a "waste of money" until we realized that everything hinged on his one statement about what was required to be "acting as a real estate agent."
Chatting with the lawyers after the trial, we learned a few more things. P Title was defending itself against basically everybody in cases that were not yet decided. The instigator of all this, DW, is currently in jail facing 30 fraud counts, and is amazingly involved as a witness in a "murder for hire" case also involving bad real estate deals. LB, the crooked notary, is not getting sued because she's basically pled the fifth on everything and "is a young single mother". (I.e. has no money to sue for.)
The big bank, CW, apparently sued and won the property, which according to zillow.com sold for less than $600,000. (Though zillow is obviously still confused about lot lines, so that may be the vacant ravine.)
None of the lawyers are done with this case. Just our part is complete. The amount of legal damage done by actions on one property in a three year period is unbelievable.
I found it fascinating seeing the change in attitude of the lawyers. Two of the lawyers, for EB and JS, frankly admitted having no idea whether their client was in the conspiracies or not. The lawyer for EB seemed not at all bothered at essentially losing both his cases. (The the lawyer for EFG was plainly irritated though polite.)
What I learned
- Check documents.
- Don't sign documents if you don't agree with them.
- Don't loan money without official collateral.
- Don't listen to smooth talkers.
- Don't lend money to people who owe you money already.
- If anything seems wrong, contact the damn bank.
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