Opposition to Motion in Limine to Preclude Evidence of Neighbor and HOA Dispute — United States v. Baver (Dkt. 109, D. Utah)

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The government's Opposition to Motion in Limine to Preclude Evidence of Neighbor and HOA Dispute in United States of America v. Allison Marie Baver and Allison Baver Entertainment, LLC, Case No. 2:21-cr-00520-JNP, in the U.S. District Court for the District of Utah, filed May 29, 2023. The United States opposes the defendant's motion to exclude evidence involving her neighbor and homeowners association. It states that her townhome had a lien for failure to pay fees and was scheduled for foreclosure, and that she used PPP loan proceeds to pay the arrears. The government argues that this evidence is intrinsic to the charged offenses or admissible under Rule 404(b), and asks the Court to reserve ruling on the neighbor disputes.

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Case 2:21-cr-00520-JNP Document 109 Filed 05/29/23 PageID.1532 Page 1 of 10




TRINA A. HIGGINS, United States Attorney (#7349)
JENNIFER K. MUYSKENS, Assistant United States Attorney (DC#475353)
JAMIE Z. THOMAS, Assistant United States Attorney (#9420)
Attorneys for the United States of America
Office of the United States Attorney
111 South Main Street, Suite 1800
Salt Lake City, Utah 84111-2176
Telephone: (801) 524-5682

                       IN THE UNITED STATES DISTRICT COURT
                                  DISTRICT OF UTAH

  UNITED STATES OF AMERICA,                     Case No. 2:21-cr-00520-JNP

         Plaintiff,                             OPPOSITION TO MOTION IN LIMINE
                                                TO PRECLUDE EVIDENCE OF
  vs.                                           NEIGHBOR AND HOA DISPUTE

  ALLISON MARIE BAVER, and     District Judge Jill N. Parrish
  ALLISON BAVER ENTERTAINMENT,
  LLC.

         Defendants.


        The United States, by and through undersigned counsel, hereby submits this

response in opposition to the Motion in Limine to Exclude Evidence Involving Neighbor

and Homeowners Association filed by defendant Allison Baver. The townhome property

where the defendant resides had a lien for failure to pay fees, the property was scheduled

for foreclosure, and the defendant used PPP loan proceeds to pay the arrears to prevent

foreclosure. This evidence is relevant and intrinsic to the charged offenses; in the

alternative, the evidence is admissible under Rule 404(b).


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                                   BACKGROUND

      On October 19, 2022, a federal grand jury in the District of Utah returned a 10-count

Second Superseding Indictment charging defendants Allison Marie Baver (“BAVER”) and

her company Allison Baver Entertainment LLC (“ABE”) with eight counts of false

statements designed to influence a bank, one count of Money Laundering, and one count

of Contempt. (ECF No. 47). The trial evidence will show that the defendant made false

statements on loan applications to fraudulently obtain $10 million in emergency economic

funds paid out in forgivable loans through the Paycheck Protection Program (“PPP”),

established by the Coronavirus Aid, Relief, and Economic Security Act of 2020 (“CARES

Act”), Pub. L. 116-136. The PPP—which was administered by the United States Small

Business Administration (“SBA”) and through SBA-approved lenders and processors—

was intended to enable small businesses to continue operating and to keep their U.S.-based

employees on payroll through the COVID-19 crisis.

      The United States intends to offer evidence that BAVER submitted PPP loan

applications that contained false statements to multiple lenders on behalf of ABE. In each

PPP application, BAVER falsely represented that ABE had employees for whom ABE paid

wages on February 15, 2020, and misrepresented the number of ABE’s employees and

average monthly payroll. Ultimately, one of the PPP loan applications was approved, and

ABE obtained a PPP loan in the amount of $10 million from Meridian Bank. That loan was

100% guaranteed by the SBA.


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       Shortly after receiving the $10 million PPP loan, ABE paid two business entities

exclusively controlled by BAVER using funds obtained from the PPP loan. Those two

entities are High Rise Realty LLC (“High Rise Realty”) and Lash Media LLC (“Lash

Media”). According to tax records, High Rise Realty was paid $18,558.00, and Lash Media

was paid $57,589.81 by ABE.

       High Rise Realty was initially registered in the State of Utah in May 2014; it was

last registered in 2017 and its registration expired on June 24, 2020. Lash Media was

initially registered in the State of Utah in December 2011; it was last registered in 2016,

and its registration expired in 2018. BAVER was listed as the registered agent for both

entities. In filings with the SBA, BAVER identified herself as the 100% owner of both

entities.

       High Rise Realty is the entity that purportedly holds the townhome property where

BAVER resides in Utah. At the time ABE received its $10 million PPP loan, High Rise

Realty was in arrears on its homeowner association (“HOA”) obligations for the townhome

and had been in arrears for more than two years. In addition, the HOA held a lien on the

townhome property. In April 2020, just one month before ABE received the $10 million

PPP loan, BAVER was informed that the HOA intended to foreclose on its lien on the

townhome property. After ABE received its PPP loan, High Rise Realty received a

substantial sum of money from an unidentified bank account controlled by ABE. Tax forms

filed by ABE reflect a total payment to High Rise Realty in excess of $18,000. The arrears


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owed to the HOA was then paid by High Rise Realty (in June 2020), thereby preventing

the planned foreclosure action. Notably, neither the payment to High Rise Realty nor the

$57,589.81 payment to Lash Media are listed in the itemized payroll expenditures BAVER

submitted as part of her PPP loan applications.

                                           ARGUMENT

        Evidence of how the defendants actually spent the PPP loan proceeds is relevant to

their intent in making the false statements to obtain the loan. ABE’s payment to High Rise

Realty and the use of PPP loan proceeds to pay the outstanding HOA dues to prevent

foreclosure of BAVER’s home is circumstantial evidence of BAVER’s state of mind at the

time she submitted the loan applications.

        In addition, the payment to High Rise Realty was made from an unidentified bank

account used or controlled by ABE. BAVER and ABE’s refusal to comply with court

orders to provide information about all bank accounts used or controlled by ABE

constitutes evidence of the defendants’ intent to conceal evidence of how the PPP loan was

spent, which is admissible as consciousness of guilt for the section 1014 offenses, and to

establish the mens rea for the charged contempt. 1


1
  The defendant’s motion in limine also seeks to exclude evidence of her disputes with her neighbors, to
include videos that show the defendant recording her neighbor’s residence and making certain statements.
The United States does not intend to admit this evidence in its case-in-chief. However, the United States
reserves the right to seek admission of this evidence should the defendant open the door to the admission
of this evidence. See, e.g., United States v. Chavez, 229 F.3d 946, 952 (10th Cir. 2000) (“It is widely
recognized that a party who raises a subject in an opening statement ‘opens the door’ to admission of
evidence on that same subject by the opposing party.”); United States v. Ugalde-Aguilera, 554 Fed. App’x
728 (10th Cir. Feb. 7, 2014) (“A defendant cannot seek to exclude as irrelevant testimony regarding prior
similar acts after opening the door for the government.”).
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       I.     The Charged Offenses

       Defendants are charged with multiple counts of False Statements to a Bank, in

violation of 18 U.S.C. § 1014; one count of Money Laundering, in violation of 18 U.S.C.

§ 1957; and one count of Contempt, in violation of 18 U.S.C. § 401(3).

       To prove a violation of 18 U.S.C. § 1014 (False Statements to a Bank), the United

States must prove each of the following elements beyond reasonable doubt: (1) the bank

was federally insured; (2) the defendant made a false statement to the bank; (3) the

defendant knew the statement was false when she made it; and (4) the defendant intended

to influence the actions of the bank in connection with PPP loan applications.

       To prove a violation of 18 U.S.C. § 401(3) (Contempt), the United States must prove

each of the following elements beyond reasonable doubt: (1) The court entered a

reasonably specific order; (2) the defendant had actual knowledge of the court order; (3)

the defendant disobeyed or disregarded the order; and (4) the defendant acted willfully in

disobeying or disregarding the court order.

       II.    The proposed evidence is intrinsic to the section 1014 charges

       Under Federal Rule of Evidence 401, evidence is “relevant” if “it has any tendency

to make a fact more or less probable than it would be without the evidence” and if the fact

is “of consequence in determining the action.” Evidence of how the defendants spent the

loan fraud proceeds is relevant under Fed. R. Evid. 401 because the use of the PPP loan

funds to pay BAVER’s outstanding HOA dues has a tendency to make it more probable


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Case 2:21-cr-00520-JNP Document 109 Filed 05/29/23 PageID.1537 Page 6 of 10




that the loan applications were submitted by BAVER with knowledge that the statements

of how the funds would be used were false and submitted with criminal intent. In United

States v. Taylor, 832 F.2d 1187 (10th Cir. 1987), the Tenth Circuit noted that often,

“fraudulent intent is not su[s]ceptible of proof by direct evidence”, finding that defendant’s

“use of the funds . . . for personal expenses and his other business ventures is probative of

the existence of a fraudulent scheme.” Id. at 1194.

       In United States v. Irving, the Tenth Circuit Court of Appeals explained “that [o]ther

act evidence is intrinsic—and thus not subject to Rule 404(b)—when the evidence of the

other act and the evidence of the crime charged are inextricably intertwined or both acts

are part of a single criminal episode or the other acts were necessary preliminaries to the

crime charged.” United States v. Irving, 665 F.3d 1184, 1212 (10th Cir. 2011) (internal

quotations and citations omitted). See also United States v. United States v. Arney, 248

F.3d 984, 992 (10th Cir. 2001) (discussing Rule 404(b) as not applying to intrinsic

evidence).

       Here, the spending of the PPP loan proceeds is inextricably intertwined with the

false statements in the loan applications because the defendants submitted detailed

information about how the loan proceeds would be spent as part of the loan applications.

Shortly after receiving the PPP loan, the defendants made payments to High Rise Realty

and Lash Media, which is inconsistent with the defendants’ prior statements in the loan

applications. Shortly thereafter, BAVER used the loan proceeds paid to High Rise Realty


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Case 2:21-cr-00520-JNP Document 109 Filed 05/29/23 PageID.1538 Page 7 of 10




to pay the outstanding HOA dues to avoid foreclosure of her residence. These actions

occurred within weeks of submitting the false applications and receiving the loan. The

HOA evidence is intertwined, both in time and in substance, with the statements made by

the defendants in the loan applications. As such, this evidence is intrinsic to the section

1014 offenses and should not be excluded.

       III.   The proposed evidence is admissible to prove motive, knowledge, and intent
              under 404(b)

       Rule 404(b) provides another avenue for the admissibility of this highly probative

evidence. Rule 404(b) provides that other act evidence is admissible to prove motive,

opportunity, intent, preparation, plan, knowledge, identity, absence of mistake, or lack

of accident.” Fed. R. Evid. 404(b).

       Here, the defendants’ use of PPP loan proceeds to pay her outstanding HOA dues

is evidence of the Defendant’s motive, intent, and knowledge in making the false

statements to the banks. As part of the loan applications, the defendants itemized ABE’s

“payroll.” High Rise Realty is not included in the itemization. Further, the payment of

HOA dues for BAVER’s personal residence is not an authorized use of PPP loan

proceeds. These actions were taken within weeks of the defendants’ submission of the

loan applications. They are highly probative of BAVER’s intent, knowledge, and motive

in seeking a $10 million PPP loan for a business that had never paid wages to any

employee.




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       In addition, the use of PPP loan proceeds to pay the HOA dues provides motive

and intent evidence as it relates to the charged contempt. The defendants are charged

with refusing to comply with Court orders to disclose bank accounts used or controlled

by ABE. The United States is required to prove that the defendants willfully failed to

comply with the Court order. The use of PPP loan proceeds to pay the outstanding HOA

dues would have been exposed if the defendants complied with the court order. Their

concealment of this evidence, despite a court order, is evidence of consciousness of guilt.

Consciousness of guilt evidence may be relevant to motive, intent, plan, or knowledge.

United States v. Esparsen, 930 F.2d 1461, 1476 n.16 (10th Cir. 1991), quoted in United

States v. Swan, 494 Fed. App’x 838, 842 (10th Cir. 2012). See also United States v.

Strickland, 509 F.2d 273, 276 (5th Cir. 1974) (“Concealment and falsification may reveal

a consciousness of guilt and so help to carry the prosecutor’s burden.”). Here, the

evidence of consciousness of guilt as it relates to the unidentified ABE bank accounts is

relevant to the defendants’ willfulness and motive in refusing to comply with the court’s

orders about those accounts.

       “Rule 404(b) is considered to be an inclusive rule, admitting all evidence of other

crimes or acts except that which tends to prove only criminal disposition.” United States v.

Tan, 254 F.3d 1204, 1208 (10th Cir.2001) (emphasis in original) (quotations omitted). The

Tenth Circuit adopted a four-part inquiry regarding the admission of evidence pursuant to

Rule 404(b): “(1) whether the evidence is offered for a proper purpose, (2) its relevancy,


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Case 2:21-cr-00520-JNP Document 109 Filed 05/29/23 PageID.1540 Page 9 of 10




(3) that the probative value of the evidence is not substantially outweighed by its prejudicial

effect, and (4) a limiting instruction is given if the defendant so requests.” United States v.

Cardinas Garcia, 596 F.3d 788, 797 (10th Cir. 2010) (citations and quotations omitted).

        Here, the payment to High Rise Realty and use of PPP loan proceeds to pay

 BAVER’s outstanding HOA dues satisfies the Cardinas-Garcia inquiry: 1) the evidence

 is being offered for a proper purpose – that is, it is evidence of the defendants’ motive,

 knowledge, and intent both in making the false statements to obtain the PPP loan and in

 refusing to comply with court orders to identify bank accounts used or controlled by

 ABE; 2) it is directly relevant to central questions in this case: did the defendants

 knowingly make false statements to induce the bank to approve the PPP loan, and did

 the defendants willfully refuse to comply with a court order; and 3) the probative value

 is not substantially outweighed by the potential for unfair prejudice.

        Evidence is unfairly prejudicial “if it makes a conviction more likely because it

 provokes an emotional response in the jury or otherwise tends to affect adversely the

 jury’s attitude toward the defendant wholly apart from its judgment as to his guilt or

 innocence of the crime charged.” United States v. Rodriguez, 192 F.3d 946, 951 (10th

 Cir. 1999) (internal quotations and citations omitted). If the evidence does “not involve

 conduct any more sensational or disturbing than the crimes with which [the defendant]

 was charged,” the Rule 403 balancing test “undeniably weighs in favor of admitting the

 evidence.” United States v. Boyd, 53 F.3d 631, 637 (4th Cir.1995). The use of the loan


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 proceeds to pay outstanding HOA dues is far less sensational or disturbing than the

 defendants’ successful efforts to obtain a $10 million PPP loan for a business that had

 no paid employees prior to the pandemic.

                                     CONCLUSION

       Evidence that the townhome property where the defendant resides had a lien for

failure to pay HOA fees, that the property was scheduled for foreclosure, and that the

defendant used PPP loan proceeds to pay the arrears to prevent foreclosure is admissible

as intrinsic evidence of the charged offenses. It is also admissible under Rule 404(b) to

establish motive, intent, and knowledge for the charged offenses of False Statements to a

Bank, and Contempt. Accordingly, the defendant’s motion in limine should be denied as

this evidence. In addition, the Court should reserve ruling on the remainder of the

defendant’s motion as to her disputes with her neighbors, with the understanding that the

United States will inform the Court and counsel if it believes that the defense has opened

the door to the admission of this evidence.

       DATED this 29th day of May 2023.

                                              Respectfully Submitted,

                                              TRINA A. HIGGINS
                                              United States Attorney

                                              /s/ Jennifer K. Muyskens
                                              JENNIFER K. MUYSKENS
                                              JAMIE Z. THOMAS
                                              Assistant United States Attorneys



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