Appeals panel orders hearing for broker convicted of mortgage fraud

Convicted former real estate broker Eve Mazzarella will get a hearing in federal court to determine whether the government conducted an unlawful search of her business and failed to provide her with the evidence before her 2011 trial.

The hearing should examine the possibility that Mazzarella was convicted in a $52 million mortgage fraud scheme with tainted government evidence, a San Francisco federal appeals panel said on Monday.

The star witness of the hearing, which is to take place before Senior U.S. District Judge Roger Hunt, will be a former Mazzarella employee who secretly provided federal agents with thousands of pages of documents from Mazzarella’s office during the FBI-led mortgage fraud investigation.

Mazzarella, 37, and her lawyers didn’t learn about the employee’s dealings with agents until the dealings surfaced in a related mortgage fraud trial after Mazzarella was convicted.

The 9th U.S. Circuit Court of Appeals panel also wrote in its decision that the hearing should look at whether federal prosecutors failed to provide Mazzarella with evidence of dealings with other government witnesses that could have benefited her defense.

“Those charged with a crime deserve a fair shake from government prosecutors,” the appeals panel said in its 21-page decision. “The prosecutors’ duty is not to gain conviction at any cost but rather to help ensure that justice is done.”

The panel said Hunt should determine whether the failed government disclosures and the suppression of unlawfully obtained evidence is enough to set aside Mazzarella’s convictions.

Hunt had refused to grant Mazzarella a hearing on those issues before he denied her requests for a new trial.

In February 2014 the 9th Circuit ordered Mazzarella temporarily released from federal prison, saying her lawyers raised a “substantial question of law or fact” that could result in her conviction being overturned.

After a lengthy trial in Hunt’s courtroom, a federal jury found Mazzarella and her ex-husband, former mortgage broker Steven Grimm, guilty in December 2011 of orchestrating the mortgage fraud scheme, which prosecutors said caused banks to lose more than $52 million between 2003 and 2008.

At the time prosecutors said the scheme was the largest uncovered in Nevada. The lending institutions made more than $107 million worth of mortgage loans on 227 properties in the Las Vegas area.

Two years ago, Hunt sentenced Grimm to 25 years in prison and Mazzarella to 14 years behind bars.

Contact reporter Jeff German at jgerman@reviewjournal.com or 702-380-8135. Follow him on Twitter @JGermanRJ.