United States v. Kay Ellison

• Court: Court of Appeals for the Third Circuit
• Decided: February 12, 2020
• Docket: 18-3683
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _____________

Nos. 18-3683 and 19-1173 _____________

UNITED STATES OF AMERICA

v.

KAY ELLISON, Appellant in No. 18-3683 _______________

JUDY TULL, Appellant in No. 19-1173 _______________

On Appeal from the United States District Court for the District of New Jersey (D.C. No. 2-15-cr-00622) District Judge: Honorable Susan D. Wigenton ______________

Submitted Under Third Circuit LAR 34.1(a) January 22, 2020

Before: AMBRO, MATEY, and FUENTES, Circuit Judges.

(Opinion Filed: February 12, 2020) _______________

OPINION* _______________

MATEY, Circuit Judge.

A jury convicted Kay Ellison and Judy Tull for violating the federal wire fraud,

bank fraud, and conspiracy statutes. They challenge those verdicts with claims of

prosecutorial misconduct and insufficient evidence, as well as violations of their right

against self-incrimination. And they attack their sentences as unfair. But we find no error,

and will affirm.

I. BACKGROUND

Ellison and Tull co-founded a charter airline called Southern Sky Air & Tours d/b/a

“Myrtle Beach Direct Air & Tours” (“Direct Air”), where they served as managing

partners. Both were indicted for their role in a scheme to violate Department of

Transportation (“DOT”) regulations. The regulations require airlines to deposit customer

payments into an escrow account and prohibit airlines from withdrawing those funds until

the completion of the associated flights. 14 C.F.R. pt. 380. But rather than wait for the

money, Ellison and Tull inflated the number of passengers on the flights with “dummy”

listings. This allowed Defendants to send similarly inflated withdrawal requests to the

bank. And to conceal this scheme, Defendants falsified the company’s profit and loss

statements. After discovering these acts, the Government charged both Tull and Ellison

* This disposition is not an opinion of the full Court and, pursuant to I.O.P. 5.7, does not constitute binding precedent. 2 with conspiracy to commit wire fraud and bank fraud in violation of 18 U.S.C. § 1349

(Count 1), wire fraud in violation of 18 U.S.C. §§ 1343 and 2 (Counts 2–5), and bank fraud

in violation of 18 U.S.C. §§ 1344 and 2 (Counts 6–8). After trial, a jury found them both

guilty on all counts. And along the way, Direct Air filed for bankruptcy.

Defendants then filed motions for acquittal or a new trial, all of which the District

Court denied. So in preparation for sentencing, Ellison asked both the Government and the

bankruptcy trustee for various documents she thought relevant to her arguments. Both

eventually complied. But when Ellison received the trustee’s production, she found

documents she had sought earlier in the case, documents the Government claimed had been

destroyed. That discovery prompted Defendants to file motions seeking both a new trial or

a change to the loss calculation and enhancements in the Pre-Sentencing Report. The

District Court denied those requests and sentenced both Ellison and Tull to ninety-four

months’ imprisonment and five years of supervised release, below the range suggested by

the United States Sentencing Guidelines. These timely appeals followed.1

II. DISCUSSION

We consider each error claimed by Ellison and Tull and, finding none have merit,

we will affirm the District Court’s rulings.

A. There Was No Suppression of Favorable Material Evidence

Defendants argue that violations of Brady v. Maryland require us to set aside their

convictions. 373 U.S. 83 (1963). To prevail, they must show that favorable material

1 The District Court had jurisdiction under 18 U.S.C. § 3231. We have jurisdiction under 18 U.S.C. § 3742(a) and 28 U.S.C. § 1291. 3 evidence was “suppressed by the prosecution.” United States v. Reyeros, 537 F.3d 270, 281

(3d Cir. 2008). Materiality requires “a reasonable probability that, had the evidence been

disclosed to the defense, the result of the proceeding would have been different.” Id. Their

claims fall into two categories: 1) documents related to Direct Air’s bankruptcy proceeding

held by the trustee; and 2) documents the Government erroneously claimed were

destroyed.2 But neither set of documents would have likely affected the convictions.

First, Defendants highlight a handful of documents they argue could have been used

to impeach “the Government’s key witness, [Robert] Keilman.” (Ellison Opening Br. at

18.) Keilman was Direct Air’s Chief Financial Officer who pleaded guilty to conspiring

with Ellison and Tull to commit wire fraud and then testified against them. Though some

documents could have been used to attack his testimony, Defendants overstate the

Government’s reliance on Keilman. While the District Court opined that “Keilman’s

testimony . . . provides a sufficient basis upon which a rational juror could find beyond a

reasonable doubt that Defendants conspired to commit bank and wire fraud,” it also relied

on at least two other witnesses. (App. at 21.) And those witnesses also “indicated that Tull

and Ellison were engaged in activities designed to hide Direct Air’s financial condition and

improperly move money out of the escrow account.” (App. at 21 n.7.) As the contested

documents provide no meaningful grounds to challenge the testimony of these other

2 Tull also argues that if there were no Brady violations, then she has an ineffective assistance claim against her counsel for not finding this evidence. But it is not “plain from the record” that her counsel acted unreasonably, so she must raise that claim in a collateral attack. United States v. Headley, 923 F.2d 1079, 1084 (3d Cir. 1991). 4 witnesses, there is ample inculpatory evidence and thus little likelihood a jury would have

reached a different result.

B. No Prosecutorial Misconduct Occurred

Defendants argue that the District Court abused its discretion in denying a new trial

based on alleged prosecutorial misconduct. See United States v. Liburd, 607 F.3d 339, 342

(3d Cir. 2010). Prosecutorial misconduct violates due process where it has “so infected the

trial with unfairness as to make the resulting conviction a denial of due process in light of

the entire proceeding.” Id. at 344. Defendants base their claim on “name-calling” during

the trial, a serious allegation lacking serious support. They note the prosecutors used

variations of the words “lie” and “steal” hundreds of times at trial. Indeed, they did. But

that is not name-calling; it is “fair comment on the evidence adduced at trial” and not “an

inflammatory expression of a prosecutor’s personal belief.” United States v. Reilly, 33 F.3d

1396, 1421 (3d Cir. 1994). The District Court properly found there was no prosecutorial

misconduct, and for that reason did not abuse its discretion in denying a new trial.

C. There Is Sufficient Evidence to Find Wire and Bank Fraud

Defendants allege that the jury verdicts regarding wire and bank fraud should be

overturned for lack of evidence. See United States v. Coleman, 811 F.2d 804, 807 (3d Cir.

1987). Their argument is straightforward: the Government cannot distinguish the

improperly withdrawn monies from those validly taken out of escrow. And as a result, they

conclude, it cannot prove which withdrawals violated DOT regulations.

But the elements of all three charged offenses center on whether there was a scheme

to defraud through false representations. Here, the evidence established that the escrow 5 release requests hinged on inflated passenger rosters. It also shows that Defendants were

aware of the growing deficiency in the escrow account, and they took active steps to

conceal Direct Air’s financial condition. A rational jury could find that this shows that the

escrow requests were part of a scheme to defraud, as those requests triggered the improper

release of at least some funds. That is enough for both bank and wire fraud. See United

States v. Mercado, 610 F.3d 841, 845 (3d Cir. 2010) (When reviewing a denied motion for

acquittal, “we view the evidence in the light most favorable to the prosecution and sustain

the verdict unless it is clear that no rational trier of fact could have found the essential

elements of the crime beyond a reasonable doubt”).

D. No Forced Self-Incrimination Through Reciprocal Discovery

Ellison argues her Fifth Amendment right against self-incrimination was violated

when the District Court refused to amend its Discovery Order. She notes that, under Federal

Rule of Criminal Procedure 16, the Government only enjoys the right to pretrial discovery

from a criminal defendant if a defendant first asks for discovery. But here, Paragraph 1(h)

of the District Court’s Order explained that “[a] defendant who receives discovery pursuant

to this Order shall be deemed to have requested such disclosure for the purpose of

triggering defendant’s reciprocal discovery obligations.” (App. at 42.) This meant that

Ellison had to provide reciprocal discovery after the Government’s production, and without

her prior request.

But there is no violation of the Fifth Amendment right against self-incrimination

without some actual self-incrimination. The Discovery Order only required the Defendants

to produce items they “intend[ed] to use . . . in [their] case-in-chief at trial.” Fed. R. Crim. 6 P. 16(b)(1)(A)(ii). As Ellison would have used this evidence at trial regardless of the Order,

all it did was “accelerate the timing of [the] disclosure.” Williams v. Florida, 399 U.S. 78,

85 (1970). So the Order did not cause any self-incrimination and did not violate the Fifth

Amendment.

E. Loss Calculation and Sentence

1. Ellison

Ellison argues a hearing was needed to resolve factual disputes about the amount of

loss resulting from the scheme. An evidentiary hearing may be used to resolve fact

questions affecting the “fashioning of an appropriate sentence.” United States v. Cifuentes,

863 F.2d 1149, 1155 (3d Cir. 1988). But here the District Court relied on the Government’s

expert to calculate the loss. And at trial Ellison declined her chance to challenge the expert

in court. Ellison had ample opportunity to explain her challenges to the expert’s report.

Thus, she was provided an “adequate opportunity to present relevant information.” U.S.

Sentencing Guidelines Manual § 6A1.3 cmt. (U.S. Sentencing Comm’n 2018). Under these

facts, the District Court did not abuse its discretion when proceeding without a loss

calculation hearing. See United States v. Houston, 217 F.3d 1204, 1206–07 (9th Cir. 2000);

cf. United States v. Styer, 573 F.3d 151, 153–54 (3d Cir. 2009).

Ellison also contends that the District Court’s loss calculation relied on a separate

scheme not proved at trial. But loss calculations properly include all “reasonably

foreseeable pecuniary harm that resulted from the offense.” U.S. Sentencing Guidelines

Manual § 2B1.1 cmt. n.3(A)(i) (U.S. Sentencing Comm’n 2018). It was relevant conduct

because it was “part of the same . . . common scheme or plan as the offense of conviction,” 7 and thus reasonably foreseeable harm.3 Id. § 1B1.3(a)(2). That factual finding can be

overturned only for clear error. See United States v. Napier, 273 F.3d 276, 278 (3d Cir.

2001). Here, the District Court did not clearly err in its loss calculation in finding the two

schemes formed a common plan.

2. Tull

Tull argues that an enhancement for abuse-of-trust was erroneously applied. Tull

was at least a former CEO of Direct Air and a high-ranking partner. She held a position of

trust, which she used to falsify reports and request withdrawals. There was no error in

applying the enhancement. See U.S. Sentencing Guidelines Manual § 3B1.3 (U.S.

Sentencing Comm’n 2018).4

III. CONCLUSION

For these reasons, we will affirm the District Court.

3 The separate “double-dipping scheme” involved withdrawing voucher funds from the escrow account twice. (App. at 1446.) 4 Nor, as Tull argues, is her sentence unreasonable for her age. The District Court considered the factors specified in 18 U.S.C. § 3553, including Tull’s history, characteristics, offenses, and victims, before departing downward from the Guidelines. 8