                                                                            FILED
                           NOT FOR PUBLICATION
                                                                             JUN 22 2017
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                           U.S. COURT OF APPEALS


                            FOR THE NINTH CIRCUIT


UNITED STATES OF AMERICA,                        No.   15-10554

              Plaintiff-Appellee,                D.C. No.
                                                 2:11-cr-00468-TLN-3
 v.

ERIK HERMANN GREEN,                              MEMORANDUM*

              Defendant-Appellant.


                    Appeal from the United States District Court
                       for the Eastern District of California
                     Troy L. Nunley, District Judge, Presiding

                        Argued and Submitted June 14, 2017
                             San Francisco, California

Before: SCHROEDER and N.R. SMITH, Circuit Judges, and PIERSOL,** District
Judge.

      Defendant Erik Green appeals his conviction and sentence for five counts of

wire fraud involving a mortgage lending scheme. We have jurisdiction under 28

U.S.C. § 1291. We vacate the judgment of conviction and remand to the district

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
              The Honorable Lawrence L. Piersol, United States District Judge for
the District of South Dakota, sitting by designation.
court for further proceedings, which may include a new trial. See United States v.

Haischer, 780 F.3d 1277, 1284 (9th Cir. 2015).

      1.     The exclusion of Green’s expert testimony denied Green his right to

present a complete defense. See United States v. Lindsey, 850 F.3d 1009, 1016–18

(9th Cir. 2017). The government was required to prove that Green’s allegedly false

statements in loan documents were “material.” See id. at 1013. Materiality is an

objective standard, meaning a victim’s negligence or “intentional disregard of

relevant information is not a defense.” Id. at 1015–16. Therefore, the district court

did not abuse its discretion by excluding the proffered evidence of the lending

behavior of Green’s particular lender.

      However, Green was entitled to present expert testimony concerning “the

lending standards generally applied in the mortgage industry.”1 Id. at 1016; see

also Universal Health Servs., Inc. v. U.S. ex rel. Escobar, 136 S. Ct. 1989,

2003–04 (2016). In his pretrial motion to allow expert testimony, Green argued to

the district court that the jury could only evaluate materiality properly “by

understanding the [mortgage lending] industry” during the period of his alleged

conduct. Therefore, Green sought “to present evidence, through [his] expert . . . of



      1
       We acknowledge that the district court did not have the benefit of our
opinion in Lindsey when it ruled on Green’s motion.
                                           2
the state of the mortgage industry” at that time.

      For example, Green’s proffer of the expert’s testimony expressed that the

competition in the lending industry in the mid-2000s led lenders to lower their

standards for issuing loans. The proffered testimony explained that, although

underwriting standards were still in place, they were largely a facade to which the

lenders would make substantial exceptions in order to issue more loans. Lenders

were making these loans even when it was apparent that the borrower had poor

credit or was not accurately reporting his or her income. Green was entitled to

present this and other testimony about the standards generally applied in the

lending industry at the time, and the district court abused its discretion in not

allowing such testimony to the extent permitted by Lindsey.

      This error denied Green “a meaningful opportunity to present a complete

defense,” because (1) materiality was an essential element of wire fraud, (2) his

main defense to materiality was that mortgage industry lenders at the time of his

alleged fraud were only interested in closing on loans and would issue loans

regardless of borrower qualifications, and (3) the expert’s testimony was

essentially Green’s only evidence to prove these industry practices. See Haischer,

780 F.3d at 1284 (citation omitted). As the government has offered no argument

that this error was harmless, it has waived the issue. See United States v.


                                           3
Murguia-Rodriguez, 815 F.3d 566, 572 (9th Cir. 2016).

      2.     The district court would abuse its discretion if, on remand, it gave an

instruction that allowed the jury to convict Green of wire fraud, based on a theory

of material omission, without also instructing the jury that it must first find Green

had a duty to disclose the information. See United States v. Shields, 844 F.3d 819,

822–23 (9th Cir. 2016). At oral argument, Green conceded his other challenge to

the jury instructions, in light of Lindsey.

      “Because we set aside the judgment of conviction, we do not reach the other

issues that [Green] raised in this appeal.” Haischer, 780 F.3d at 1284.

      VACATED and REMANDED.




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