Federal jurors who faulted the courtroom demeanor of one defendant and the competency of an expert witness returned guilty verdicts Thursday against three people in a lengthy trial involving multimillion-dollar mortgage fraud.
Former mortgage broker Steve Grimm, 48, and former real estate broker Eve Mazzarella, 34, who are going through a divorce, recruited straw buyers to secure 227 homes valued at more than $107 million, federal prosecutors said. Also found guilty was former Las Vegas mortgage broker Melissa Beecroft, 32, former owner of Secured Mortgage Services.
With the defendants' knowledge -- and in many cases their help -- most of the scores of straw buyers Grimm and Mazzarella recruited from 2003 to 2008 lied to lenders about their income and assets, their intent to live in the homes purchased and their ability to afford the mortgages. The actual loss to banks is about $24 million.
After two days of deliberation, jurors found Grimm guilty on 14 counts, including bank fraud, mail fraud, wire fraud and conspiracy.
Mazzarella was found guilty on 12 counts, including bank fraud, mail fraud, wire fraud and conspiracy.
Beecroft was found guilty of three mail fraud charges, one count of wire fraud and one count of conspiracy.
"It was a landslide," juror David Weel, 64, said.
Mazzarella closed her eyes and took several deep breaths as the verdict was read. Grimm stood stoically while Beecroft broke down in the arms of her attorney, Larry Semenza.
And while Grimm was solemn as the verdict was read, jurors told the Review-Journal he spent much of the nearly 10-week trial wearing what they perceived to be a smirk.
"Steve had a grin on his face the whole time," juror Sarra Murray, 34, said.
"We wanted to take it off," Weel added.
"It was like he didn't have a care in the world," Murray said. "I thought he had something up his sleeve."
Both said the jury took its job "very seriously" in going over the 31 collective charges the three defendants faced, but in the end, there was no doubt about their guilt.
When the housing market collapsed in 2007, Grimm and Mazzarella quit making payments and allowed the homes in question to go into foreclosure. The banks then went after the straw buyers. The fraud was exposed after two employees of Grimm and Mazzarella went to the FBI in 2008.
The credit rating of straw buyers was ruined. They had been paid between $2,500 and $5,000 for participating.
Grimm and Mazzarella set up scores of limited liability corporations, usually in the name of the straw buyer, to hide millions of dollars.
"Pretty much a slam dunk on Steve and Eve," Murray said.
Murray had a "twinge" of suspicion regarding Beecroft's guilt, but her concern never reached the level of reasonable doubt that would warrant a not guilty verdict, she said.
"My twinge was resolved when we went over the evidence again during deliberations," Murray said.
The most effective witness for the prosecution was defense witness Curtis Novy, a paid expert on mortgage fraud, jurors said. Novy appeared to avoid giving direct answers to questions, including queries about his fees, they said.
"Mr. Novy was the self-proclaimed expert for the defense," Murray said. "He was an idiot. He helped the prosecution more than any prosecution witness. When he testified, Steve's attorney (William Carrico, assistant federal public defender) just put his head down. You could tell he was not happy."
"He was the joke of the whole trial," Weel said of Novy.
"He was the king of idiots," juror Donald Estes, 41, said. "Mr. Pugh said he was the prosecution's best witness, and he was."
Assistant U.S. Attorney Brian Pugh was the chief prosecutor for the government.
While jurors said they considered Novy a bumbling witness for the defense, it was the defendants' co-conspirators who testified for the government that sealed the defendants' fate.
"Skip Young played an intricate role, in my mind," juror Lisa Otto, 27, said. "He was very candid. He admitted they committed fraud and forged papers, and he was extremely remorseful."
Young was a loan officer for one of Grimm's mortgage companies.
During closing arguments on Tuesday, defense attorneys said freewheeling lenders eager to make loans -- and money -- set the stage for wide-scale mortgage fraud, but jurors didn't agree with that argument.
"They duped the banks," Estes said. "This is the main reason why honest people have a hard time getting refinanced." While some jurors agreed title offices "turned a blind eye" and lenders employed "loose lending practices," they said the defendants took advantage of a booming housing market.
Said Murray: "Like Mr. Pugh said, just because the vault is open doesn't mean you can just reach in and take money."
Senior U.S. District Judge Roger Hunt set a March 23 sentencing date for each defendant. They remain free on bail pending sentencing.
Prosecutors will seek to obtain the defendants' assets in a future forfeiture hearing, but it is unlikely to yield much, Pugh said.
In the past three years, about 190 people have been charged with mortgage fraud, according to Nevada U.S. Attorney Daniel Bogden, who said in a statement: "The U.S. attorney's office has made the prosecution of mortgage fraud crime a priority, and continues to work closely with its partners on the Southern Nevada Mortgage Fraud Task Force to aggressively investigate and prosecute these cases."