                FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


UNITED STATES OF AMERICA,                No. 14-10004
                Plaintiff-Appellee,
                                           D.C. No.
                v.                      2:11-cr-00217-
                                         LDG-CWH-1
NICHOLAS LINDSEY,
             Defendant-Appellant.         OPINION


     Appeal from the United States District Court
              for the District of Nevada
   Lloyd D. George, Senior District Judge, Presiding

        Argued and Submitted March 18, 2016
              San Francisco, California

                 Filed June 28, 2016

      Before: John T. Noonan, Ronald M. Gould,
      and Michelle T. Friedland, Circuit Judges.

               Opinion by Judge Gould
2                  UNITED STATES V. LINDSEY

                           SUMMARY*


                          Criminal Law

    Affirming the defendant’s convictions in a mortgage
fraud case, the panel held that lender negligence in verifying
loan application information, or even intentional disregard of
the information, is not a defense to fraud, and so evidence of
such negligence or intentional disregard is inadmissible as a
defense against charges of mortgage fraud.

    The panel further held that, when a lender requests
specific information in its loan applications, that information
is objectively material as a matter of law, regardless of the
lenders’ policies or practices with respect to use of that
information.


                            COUNSEL

William H. Gamage, Gamage & Gamage, Las Vegas,
Nevada, for Defendant-Appellant.

Peter S. Levitt (argued), Assistant United States Attorney;
Elizabeth O. White, Appellate Chief; Daniel G. Bogden,
United States Attorney; United States Attorney’s Office, Las
Vegas, Nevada; for Plaintiff-Appellee.




  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                    UNITED STATES V. LINDSEY                             3

                              OPINION

GOULD, Circuit Judge:

    We address the admissibility of certain evidence in
mortgage fraud cases. We affirm the convictions, rejecting
appellant’s contentions that evidence was improperly
excluded and that he was denied the ability to present a
defense. In a separate memorandum disposition filed
concurrently, we reject other challenges to the convictions
and some challenges to the sentence.

    Nicholas Lindsey, a former mortgage loan officer and real
estate broker, appeals his convictions and sentence for nine
counts of wire fraud and one count of aggravated theft. For
several years, Lindsey was involved in a complex mortgage
fraud scheme that involved convincing individuals to “buy”
residential properties in exchange for financial assistance. In
some cases, Lindsey built up these individuals’ credit ratings
and deposited money into their bank accounts in order to
fraudulently secure mortgages. He also submitted falsified
loan documents to lenders in order to make the individuals
appear more creditworthy, including falsely stating the
applicants’ earned income. The properties secured through
this scheme were destined for foreclosure, creating large
losses for financial institutions1 while Lindsey benefitted



 1
   As reflected in the Presentence Report and as testimony at sentencing
indicated, the loans and/or properties at issue in this case appear to have
been purchased from the original lender by a second financial institution.
Thus the victims in this case—at least for the purposes of restitution—is
the second financial institution that suffered losses at the time of
foreclosure, not the original lenders.
4                UNITED STATES V. LINDSEY

financially from commissions, rent payments, and diverted
escrow monies.

    Lindsey was charged with wire fraud under 18 U.S.C.
§ 1343, which requires the government to prove that the
defendant made “material” fraudulent representations, i.e.,
representations that had “a natural tendency to influence, or
[were] capable of influencing” the decisions of the lenders
who made the loans. United States v. Gaudin, 515 U.S. 506,
509 (1995) (quoting Kungys v. United States, 485 U.S. 759,
770 (1988)); Neder v. United States, 527 U.S. 1, 16 (1999).
At his trial, the district court precluded Lindsey from
presenting evidence of lenders’ practices and policies. He
appeals his convictions on the ground that he was denied his
constitutional right to present a defense. We have jurisdiction
under 18 U.S.C. § 3742(a) and 28 U.S.C. § 1291, and we hold
that lender negligence in verifying loan application
information, or even intentional disregard of the information,
is not a defense to fraud, and so evidence of such negligence
or intentional disregard is inadmissible as a defense against
charges of mortgage fraud. We further hold that, when a
lender requests specific information in its loan applications,
that information is objectively material as a matter of law,
regardless of the lenders’ policies or practices with respect to
use of that information.

                               I

    Lindsey worked for Clear Mortgage, Inc. in Nevada as a
mortgage loan officer and team leader for a mortgage group.
During his employment with Clear Mortgage, Lindsey
recruited straw buyers for Las Vegas real estate, and, in the
process, made false statements in loan applications. In one
illustrative example presented at trial, Lindsey recruited
                UNITED STATES V. LINDSEY                    5

Madelon Bridges, a woman living in Louisiana with only fifty
dollars to her name, to “purchase” Villa Del Mar, a house in
Las Vegas worth $720,000. Lindsey flew Bridges to Las
Vegas and promised to pay off her debt and give her $10,000
in exchange for acting as a straw buyer. Bridges gave
Lindsey her personal identification information, including her
social security number and fingerprints, and Lindsey paid off
her debt and transferred money into her bank account.
Lindsey also had Bridges sign a loan application that falsely
represented, inter alia, that she intended to live at the
property she was applying for a loan to purchase, paid $3,300
a month in rent, was gainfully employed, and had a sizeable
bank account. After she was approved for the loan, Lindsey
used Bridges’s personal information to apply for another loan
and purchase another home in her name without her
knowledge. When Lindsey did not make mortgage payments
as promised, Villa Del Mar went into foreclosure, negatively
affecting Bridges’s credit rating and causing losses to the
lender. Lindsey perpetrated similar frauds with five straw
buyers—including his sister—on nine home loans, and eight
different properties. From this scheme, Lindsey profited by
receiving significant commissions, rent payments, and
diverted escrow monies.

    Lindsey was arrested and indicted on nine counts of wire
fraud under 18 U.S.C. § 1343 and one count of aggravated
identity theft under 18 U.S.C. § 1028A. Before trial, the
government suspected that Lindsey was planning to defend
himself by claiming that the lenders were at fault for failing
to verify the information in the fraudulent loan applications.
The government filed a motion in limine to prevent Lindsey
from introducing evidence of lender negligence. The district
court declined to rule on the issue, concluding that a final
6                   UNITED STATES V. LINDSEY

ruling “would be more appropriately made in the context of
the development of the evidence at trial.”

    At trial, the district court warned Lindsey’s attorney to
“stay away” from the issue of lender negligence in his
opening statement. When defense counsel described 2006 to
2007 as “a wild time” of mortgage lending and attempted to
describe the types of loans at issue as “stated income” and
“no income, no assets,”2 the district court sustained the
government’s objections and warned counsel again to “stay
away” from the issue of lender negligence. The district court
subsequently told the parties that it was “inclined” to exclude
evidence of lender negligence from the rest of trial.

     During trial, Lindsey’s counsel questioned a witness
about previous bad loans that her employer, a lender, had
provided. The government objected. The question was
stricken during a sidebar in which the prosecutor informed
the district court that it had already ruled on the issue of
lender negligence, and he argued that defense counsel’s
question was irrelevant. The district court sustained the
objection, striking the question from the record.

   The jury convicted Lindsey of all counts. The district
court sentenced Lindsey to consecutive sentences of 108
months for wire fraud and 24 months for identity theft, for a


    2
     During opening statements, Lindsey’s counsel urged that a “stated
income” loan “means that the lender will rely on the borrower to state
their income and state their assets,” and that a “no income, no assets” loan
means “the lender did not appear to know about the income or assets on
that particular loan.” On appeal, Lindsey describes “the stated/no doc loan
type as a loan that banks offered [] which allowed applicants to provide no
back up documentation for their income and assets.”
                 UNITED STATES V. LINDSEY                      7

total of 132 months. The court also imposed $2,286,911 in
restitution. Lindsey timely appealed.

                               II

    To convict a defendant of wire fraud, the jury must find
beyond a reasonable doubt: “(1) the existence of a scheme to
defraud; (2) the use of wire, radio, or television to further the
scheme; and (3) a specific intent to defraud.” United States
v. Jinian, 725 F.3d 954, 960 (9th Cir. 2013). In order to
prove a “scheme to defraud,” the jury must find that the
defendant employed “material falsehoods.” Neder, 527 U.S.
at 20. “In general, a false statement is material if it has ‘a
natural tendency to influence, or [is] capable of influencing,
the decision of the decisionmaking body to which it was
addressed.’” Id. at 16 (alteration in the original) (quoting
Gaudin, 515 U.S. at 509).

    The element of materiality is evaluated under an objective
test, in which the Court must examine “the intrinsic
capabilities of the false statement itself, rather than the
possibility of the actual attainment of its end.” United States
v. Peterson, 538 F.3d 1064, 1072 (9th Cir. 2008) (quoting
United States v. Facchini, 832 F.2d 1159, 1162 (9th Cir.
1987)). To be material, “the statement need have only the
propensity or capacity to influence or affect [the lender’s]
decision. Materiality, therefore, is not measured by effect or
magnitude.” Facchini, 832 F.2d at 1162 (citations omitted).
In sum, “the government does not have to prove actual
reliance upon the defendant’s misrepresentations” to satisfy
the element of materiality. Neder, 527 U.S. at 25 (quoting
United States v. Stewart, 872 F.2d 957, 960 (10th Cir. 1989)).
8               UNITED STATES V. LINDSEY

    Lindsey contends that the district court erred by
preventing him from presenting evidence about the “stated
income/no doc” loans, thus barring him “from challenging the
materiality of false statements on a loan type that invites the
applicant to state their income without justification or
support.” According to Lindsey, this prevented him from
presenting a complete defense, a right that is constitutionally
protected. See Crane v. Kentucky, 476 U.S. 683, 690 (1986)
(“[T]he Constitution guarantees criminal defendants a
meaningful opportunity to present a complete defense.”)
(internal citations and quotation marks omitted). We review
a district court’s decision to preclude a defendant’s proffered
defense de novo. See United States v. Ibarra-Pino, 657 F.3d
1000, 1003 (9th Cir. 2011); United States v. Forrester,
616 F.3d 929, 934 (9th Cir. 2010).

    Whether trial courts may admit evidence of a lender’s
decision-making process—including evidence that lenders
have been careless in approving undeserving loans, or even
intentional in disregarding relevant information—is an issue
that has been debated in this Circuit’s lower courts. See
United States v. Kuzmenko, No. 2:11-CR-0210 JAM, 2014
WL 7140640, at *6 n.5 (E.D. Cal. Dec. 12, 2014) (collecting
cases and noting that “[w]hether, and to what extent, a jury
must know about the lenders’ decision-making process in a
mortgage fraud prosecution would appear to be an issue over
which reasonable minds might disagree”). We understand the
desire to see lenders shoulder responsibility for their role in
the mortgage crisis of the last decade. See Nevada v. Bank of
Am. Corp., 672 F.3d 661, 670–71 (9th Cir. 2012) (“The
Center for Responsible Lending estimates that from 2009 to
2012, foreclosures on neighboring homes will result in lost
home equity in nearly one million homes across Nevada,
amounting to total lost home equity of $54.5 billion. The city
                   UNITED STATES V. LINDSEY                            9

of Las Vegas has the second highest foreclosure rate in the
nation. Considering the devastating effect of the foreclosure
crisis on Nevada, it is unsurprising that the Attorney General
would exercise her statutory right to” prosecute deceptive
trade practices by mortgage lenders) (footnotes omitted).
However, that does not mean that lenders can be victimized3
by intentional fraudulent conduct with impunity merely
because the lenders were negligent, or even because the
lenders intentionally disregarded the information in a loan
application. Two wrongs do not make a right, and a lender’s
negligence, or even intentional disregard, cannot excuse
another’s criminal fraud.

     Several of our sister circuits have held that a fraud
victim’s negligence is not a defense to criminal charges under
the federal fraud statutes. See United States v. Colton,
231 F.3d 890, 903 (4th Cir. 2000) (“The susceptibility of the
victim of the fraud, in this case a financial institution, is
irrelevant to the analysis: If a scheme to defraud has been or
is intended to be devised, it makes no difference whether the
persons the schemers intended to defraud are gullible or
skeptical, dull or bright.”) (internal citations and quotation
marks omitted); see also United States v. Svete, 556 F.3d
1157, 1165 (11th Cir. 2009) (en banc) (“A perpetrator of
fraud is no less guilty of fraud because his victim is also
guilty of negligence.”); United States v. Allen, 201 F.3d 163,
167 (2d Cir. 2000) (per curiam) (“The victim’s negligence in


 3
   We use the words “victimized” and “victim” in this context to describe
the original lenders, while acknowledging that the entities that actually
lost money in this scheme at the time of foreclosure—the victims in this
case for the purposes of restitution—were actually those financial
institutions that purchased the loan and/or collateral from the original
lenders.
10               UNITED STATES V. LINDSEY

permitting a crime to take place does not excuse the
defendant from culpability for [the] substantive offense.”);
United States v. Coyle, 63 F.3d 1239, 1244 (3d Cir. 1995)
(“The negligence of the victim in failing to discover a
fraudulent scheme is not a defense to criminal conduct.”);
United States v. Kreimer, 609 F.2d 126, 132 (5th Cir. 1980)
(“The victim’s negligence is not a defense to criminal
conduct.”).

    In United States v. Ciccone, we rejected the defendant’s
argument that the government was required to prove that the
defendant’s fraud was calculated to defraud persons of
ordinary prudence and comprehension. 219 F.3d 1078, 1083
(9th Cir. 2000). We held that “the wire-fraud statute protects
the naive as well as the worldly-wise . . . . the lack of guile on
the part of those solicited may itself point with persuasion to
the fraudulent character of the artifice.” Id. (internal
quotation marks omitted) (quoting United States v. Hanley,
190 F.3d 1017, 1023 (9th Cir. 1999), superceded on other
grounds by statute). Although Ciccone discussed the
elements of wire fraud, not permissible defenses, its
reasoning is also persuasive here. We join several of our
sister circuits in holding that a victim’s negligence is not a
defense to wire fraud. Evidence of lender negligence is thus
not admissible as a defense to mortgage fraud.

    Lindsey maintains on appeal that he did not seek to
introduce evidence of lender negligence at trial, but rather
“evidence of the materiality of falsehoods that may have
appeared on loan applications.” Without saying so explicitly,
Lindsey may be arguing in substance that he wanted to
introduce evidence that the banks were willing to approve the
loans regardless of the information included in the application
                UNITED STATES V. LINDSEY                    11

forms. This implies something more than lender negligence,
and approaches intentionality.

    But the conduct of the lender cannot provide an effective
defense based on alleged lack of materiality. Materiality is an
objective test “not measured by effect or magnitude,”
Facchini, 832 F.2d at 1162, but rather by “the intrinsic
capabilities of the false statement itself,” Peterson, 538 F.3d
at 1072 (quoting Facchini, 832 F.2d at 1162). We have
previously held that “misrepresentation may be material
without inducing any actual reliance. What is important is
the intent of the person making the statement that it be in
furtherance of some fraudulent purpose.” United States v.
Blixt, 548 F.3d 882, 889 (9th Cir. 2008) (quoting United
States v. Halbert, 640 F.2d 1000, 1009 (9th Cir. 1981) (per
curiam)).

    In determining whether a false statement is material,
courts must ask the question whether the statement
objectively had a natural tendency to influence, or was
capable of influencing, a lender to approve a loan. See
Facchini, 832 F.2d at 1162; see also United States v.
Reynolds, 189 F.3d 521, 525 (7th Cir. 1999) (“Evidence that
the bank would not have relied on [the defendant’s]
representations, and instead would have made an exception
for him, does not establish that the representations were
immaterial . . . . the proper inquiry addresses not the
defendant’s ability to influence, but rather the nature of the
statements made.”). The First Circuit recently created a
bright-line approach on this issue that we conclude is
persuasive, and we follow it here. In United States v.
Appolon, a mortgage fraud case, the defendant argued that the
government failed to present evidence regarding the lender’s
loan evaluation process, and thus could not satisfy the
12              UNITED STATES V. LINDSEY

materiality element of wire fraud. 715 F.3d 362, 368 (1st Cir.
2013). The First Circuit explained that the loan application
had specifically requested information regarding the
applicant’s income, assets, and intent to reside in the
property, and held that “[t]he fact that [the lender’s] loan
application explicitly sought this information from the
applicant indicates that [the straw buyer’s] responses were
capable of influencing its decision.” Id.; see also United
States v. Prieto, 812 F.3d 6, 14 (1st Cir. 2016) (“Even in the
face of anecdotal evidence that, at the time, residential
mortgage lenders were devoting scant resources to the
verification of applicants’ income levels, it is nevertheless
fair to presume that a loan applicant’s stated income level and
plans for using the property in question would have a ‘natural
tendency’ to influence a lender’s decision. Why else, after
all, did the lender demand the information and Prieto take the
risk of providing false information?” (internal citations
omitted)).

    We adopt the First Circuit’s bright-line test, and hold, as
a matter of law, that when a lender requests specific
information in its loan applications, false responses to those
specific requests are objectively material for purposes of
proving fraud. Applying this test to Lindsey’s case, the
district court properly excluded evidence that the lenders
were allegedly negligent or intentional in disregarding
Lindsey’s fraudulent representations when approving loan
applications. This subjective evidence had no bearing on the
objective materiality inquiry. The government introduced
evidence that the lenders specifically requested information
about, inter alia, employment, income, and assets, and that
               UNITED STATES V. LINDSEY                 13

Lindsey provided false information with the intent to
fraudulently secure loans. We affirm Lindsey’s convictions.

   AFFIRMED.
