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United States v. Gross

United States District Court, E.D. Michigan, Southern Division

April 17, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
ROBERT A. GROSS, Defendant, In re ALEC LANG, Moving Party.

          OPINION AND ORDER DENYING ALEC LANG'S MOTION FOR RECOGNITION AS CRIME VICTIM

          DAVID M. LAWSON, UNITED STATES DISTRICT JUDGE

         On December 7, 2917, Robert Gross, an attorney, pleaded guilty to one count of wire fraud. He admitted to executing a scheme to dupe at least four individuals, some of whom were his clients, into paying over money to two confederates identified by the government only as “Person A” and “Person B.” Gross will be sentenced soon and his victims will be seeking restitution. Alec Lang has filed a motion contending that he also is a victim of Gross's fraudulent scheme. Lang believes that he should be included among those who are entitled to restitution for losses caused by Gross's criminal conduct. The government and Gross disagree, and after hearing Lang's presentation at a hearing, so does the Court. Lang alleges that he invested money with “Person A” and “Person B” at Gross's behest, but he has not identified any misrepresentation Gross made to him, or shown that he was swept up in the scheme that comprises the count of conviction. Lang's motion will be denied.

         I.

         Gross was charged in a single-count information with committing wire fraud by “ma[king] false representations to numerous creditors so as to secure funds from those creditors for the benefit of PERSON A and PERSON B.” The scheme, as charged, involved a wire transfer of $125, 000 “from a bank account belonging to Victim D.A. to a bank account belonging to PERSON A and PERSON B.”

         The plea agreement Gross signed described specific misrepresentations made to victims “S.G., ” “E.H., ” “G.G., ” and “D.A.” In August 2013, Gross induced S.G. to loan Person A and Person B $1.7 million. Gross says that he falsely told S.G. that his loan would be “fully secured” and that it would be repaid “in a matter of days.” When the loan was not repaid, Gross told S.G. that more funds would need to be loaned to preserve the investment, or the original funds would be lost. Gross secured a series of additional loans from S.G. by similar representations over several years, eventually amounting to more than $2.6 million.

         In June 2016, during a trip to Las Vegas, Gross told another of his clients, D.A., that funds loaned would be used to invest in a medical marijuana business, although he knew that the funds would not be invested in any such business. D.A. advanced $125, 000 in funds through Gross, which Person B then used to obtain a gambling marker (a credit line extended by a casino for a customer to use for gambling). During the same trip, Gross told his client E.H. that funds he loaned would be used to pay off equipment liens that would allow for the sale of a business and return of the funds. E.H. advanced $125, 000 through Gross, which Person B then used to obtain another gambling marker at the Caesar's Palace casino.

         The plea agreement also recites that in March 2016, Gross prepared certain fraudulent documents such as a deed to a condominium owned by victim G.G., whose signature was forged by Person B. The condominium was used as collateral for a loan by Person A and Person B. Gross also notarized false financial statements relating to Persons A and B, and notarized documents with forged signatures purporting to transfer interests in life insurance policies from Person A or Person B, which neither of them had any right to transfer. The plea agreement states that the fraudulent documents were used to obtain other loans for Person A or Person B, but it does not recite any particular facts about the amounts or the identity of the lenders.

         Movant Alec Lang submitted an affidavit in which he attested that, between March and May of 2016, he was Gross's client, Gross was his attorney, that he loaned more than $1.6 million to Person A and Person B via deals brokered by Gross, and that he has received only around $100, 000 in repayments on those loans. Lang attested that he made the loans “to allow [Person A and Person B] to invest in so called ‘viatical settlements, '” and that the loans were made by him “based upon the misrepresentations and false promises made by Defendant Robert. A. Gross.”

         But Lang did not attest to any specific facts about what “misrepresentations” or “false promises” by Gross induced him to make the loans, and his lawyer was unable to identify any at the motion hearing. However, in his brief in support of the motion Lang described the purported misrepresentations as follows:

The Defendant [Gross] sought to obtain multiple loans from Lang. Defendant falsely represented that the loan proceeds were to be used to participate in legitimate investments regarding viatical settlements. After the first few loans, Defendant explained that the two alleged investors, [Person A and Person B], needed to “clear markers” in Las Vegas to release additional moneys for the same investment purposes. Further, Defendant stated that without Lang's additional loans, the investors would not be able to make the viatical settlement investments, and the original loans would be left unpaid. In reliance [on] Defendant's misrepresentations, Alec Lang loaned additional funds. If Defendant had not made materially false representations, Lang would not have loaned any funds, let alone the initial three loans prior to learning of the “markers.”

Mot. [2] at 6 (Pg ID 16).

         The government submitted with its opposition to the motion a report of a Homeland Security interview with Lang that was conducted during the investigation, which further illuminates the nature of the loan deals, as described by Lang during the interview. Because the government relied heavily on Lang's statement when it decided that Lang was not a victim of the conduct for which Gross is prosecuted, it is quoted at length:

Mr. Lang stated that Robert Gross was his attorney. When Lang was asked if he invested money with Gross he stated he had invested money with him “somewhat directly with him somewhat directly with [the] other two gentlemen that I did meet, and Mr. Lang stated that he understood the investment involved life settlements where actual insurance policies were bought early from someone who is dying. Lang stated that he understood that a lot of times there are premiums due and the extra cash was to pay the premiums. Lang stated that he was told it was a short term “hard money loan” for about a month which he could expect about 10 percent back on his money. Lang stated that the different investments he made with them had different time frames and interest rates expected for his pay outs. Lang said that he has some that are at 20 percent.
Lang stated that “Rob” Gross told him that Homeland Security stopped them at the airport coming back from Vegas. Lang stated that [REDACTED] had a marker at the Wynn casino that [he] needed to pay down before the ...

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