Hearing on new trial in huge mortgage fraud case opens
Defense lawyers took their opening shots in federal court Wednesday in their bid to get a new trial for a once high-profile couple convicted in the largest mortgage fraud case in Nevada.
Former real estate broker Eve Mazzarella and her ex-husband, Steven Grimm, a former mortgage broker, have alleged that federal agents conducted an unlawful search of Mazzarella's business and failed to provide the defendants with key evidence before their 2011 trial.
Among the first witnesses Wednesday were David Mark and Kimberly Brown, who testified that they secretly brought thousands of pages of documents they had copied at Mazzarella's real estate company while they worked there to FBI and Internal Revenue Service agents in November 2007.
Several months later, federal agents raided the company, making public the sweeping investigation into the multimillion-dollar mortgage fraud scheme.
Defense lawyers John Cline and Alina Shell contend the defense was never informed before the trial that Mark and Brown, who once were engaged, had turned over the documents, and that denied the defendants a fair trial.
Both Mark and Brown testified Wednesday that they copied documents at the direction of the agents. Defense lawyers contend that amounted to an unlawful search that violated the Fourth Amendment rights of the defendants.
Cline and Shell also have alleged that prosecutors failed to inform the defense that Brown, who testified at the trial of Mazzarella and Grimm, had been given immunity from prosecution, denying the lawyers an opportunity to cross-examine her about it on the witness stand.
Federal prosecutors have argued in court papers that they presented overwhelming evidence of the guilt of the two defendants during the 10-week trial, and the information that wasn't provided to the defense would not have undermined their convictions.
Prosecutors ended up charging Mark separately in the massive case after they accused him of violating his immunity agreement. He stood trial and was convicted in April 2013.
But the 9th U.S. Circuit Court of Appeals overturned his conviction in July. The panel concluded the federal judge who presided over his case relied on a "scant record" and "inaccurate information" from prosecutors about the immunity breach when he refused to dismiss Mark's indictment.
A federal jury in Las Vegas had found Mazzarella and Grimm guilty in December 2011 of orchestrating the mortgage fraud scheme, which prosecutors said caused banks to lose more than $52 million from 2003 to 2008
The scheme was described as the largest uncovered in Nevada. Lending institutions made more than $107 million worth of mortgage loans on 227 properties in the Las Vegas area, and most of the properties wound up in foreclosure, federal prosecutors said.
Grimm was sentenced to 25 years in prison and Mazzarella 14 years, but both were released under orders from the 9th Circuit while their appeals are being heard.
The hearing continues Thursday in the courtroom of U.S. District Judge James Mahan.
Contact Jeff German at jgerman@reviewjournal.com or 702-380-8135. Find him on Twitter: @JGermanRJ
