Ronald Brvenik, Prince Frederick, MD, a real estate appraiser licensed in the state of Maryland, was charged in 2003, along with 9 others, for allegedly providing false appraisals in an illegal flipping scheme. The charges against Brvenik were dismissed before trial. Brvenik then moved to obtain an order against the Government for attorneys fees incurred in his defense. The Court denied Brvenik‘s motion.
According to the Memorandum Opinon, Brvenik operated an appraisal business R & M Appraisal Service (R & M). Pursuant to its Maryland mortgage fraud initiative, the FBI began investigating John Bryant for his potential role in a Prince George’s County, Maryland “house flipping” scheme. The FBI discovered that the appraisals prepared by Brvenik for homes that Bryant “flipped” contained false information about the condition of the property and false statements as to the current owner of the property.
In April 2001, the Grand Jury began taking testimony from investigators about the house flipping scheme. The Grand Jury heard testimony regarding Bryant‘s general scheme, the importance of accurate appraisals, and the role that Brvenik‘s allegedly false appraisals played in the scheme. On January 5, 2003, the Grand Jury returned an indictment against Petitioner and nine co-defendants for their roles in the Bryant “flipping” scheme. On July 28, 2004, the Grand Jury returned a superseding indictment against Brvenik and the co-defendants.
As previously reported by Mortgage Fraud Blog, Bryant and 7 of his codefendants, ultimately pled guilty. In support of Bryant‘s guilty plea, he admitted to knowingly conspiring with Brvenik to defraud mortgage lenders and financial institutions. Bryant also admitted that he secured the assistance of Petitioner, who completed false and fraudulent appraisals that were relied upon by HUD and other conventional lenders. While preparing for trial, the Government began questioning Bryant‘s credibility as a witness because his testimony contradicted evidence obtained by the FBI. Although the Government had documentary evidence supporting Brvenik‘s involvement in the “flipping” scheme, the Government elected to dismiss the case after attempting to exercise a plea agreement with Brvenik because it doubted its ability to prove Brvenik‘s guilt beyond a reasonable doubt. Brvenik commenced an action on December 28, 2004, in the United States District Court of Maryland. Specifically, Brvenik argued that he is entitled to reimbursement by the Government for attorneys’ fees and reasonable expenses relating to defending the criminal charges against him. Furthermore, Brvenik alleged that the Government’s prosecution of him was vexatious, frivolous, or in bad faith because the Government knew that it did not have a case against Petitioner, but continued to pursue prosecution in an effort to coerce him to plead guilty.
The Court agreed with the Government that a distinction existed between the failure to prove guilt beyond reasonable doubt and the reasonableness of a prosecution. Brvenik‘s Hyde Amendment application rested on that distinction. Brvenik argued that the prosecution was unreasonable, but the facts showed that it was well within the Government’s discretion to dismiss the charges against Brvenik once the Government doubted its ability to prove guilt beyond a reasonable doubt. Brvenik‘s different view of the facts in the case did not make the Government’s prosecution of him vexatious, frivolous, or in bad faith. Prosecutors are allowed to evaluate and reevaluate the evidence and strength of that evidence in making their decisions to charge a defendant and whether or not to continue a prosecution. The Hyde Amendment was not designed to provide a remedy for a criminal defendant who is dismissed from a prosecution simply because the Government’s evidence was weakened. Such an interpretation of the Hyde Amendment would certainly have a chilling effect on the Government in making its prosecutorial decisions. The Court concluded that Brvenik failed to show the egregious and malicious prosecutorial conduct required to recover under the Hyde Amendment. As such, his petition was denied.