United States v. Smith
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Opinion
USCA1 Opinion
UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT FOR THE FIRST CIRCUIT
____________________
No. 94-1326
UNITED STATES,
Appellee,
v.
JAMES K. SMITH,
Defendant, Appellant.
_____________________
No. 94-1327
UNITED STATES,
Appellee,
v.
ROBERT COHEN,
Defendant, Appellant.
____________________
No. 94-1328
UNITED STATES,
Appellee,
v.
AMBROSE DEVANEY,
Defendant, Appellant.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge] ___________________
____________________
Before
Selya, Circuit Judge, _____________
Bownes, Senior Circuit Judge, ____________________
and Stahl, Circuit Judge. _____________
____________________
Charles W. Rankin, with whom Rankin & Sultan, Sheldon Krantz, and _________________ ________________ ______________
Piper & Marbury, were on brief for appellant Robert Cohen; Joseph J. ________________ _________
Balliro, with whom Balliro, Mondano & Balliro, P.C., was on brief for _______ ________________________________
appellant James K. Smith; and Emmanual N. Papanickolas, for appellant ________________________
Ambrose Devaney.
Paul G. Levenson, Assistant United States Attorney, with whom _________________
Donald K. Stern, United States Attorney, and Victor A. Wild, Assistant _______________ ______________
United States Attorney, were on brief for appellee.
____________________
February 10, 1995
____________________
BOWNES, Senior Circuit Judge. After a joint trial, BOWNES, Senior Circuit Judge. ____________________
defendants James Smith, Robert Cohen, and Ambrose Devaney
were convicted of defrauding two federal credit unions and
other related offenses. Although some aspects of the trial
give us pause, we affirm the convictions and sentences.
I. FACTS I. FACTS _____
We review the facts in the light most favorable to
the government. United States v. Ford, 22 F.3d 374, 382 (1st _____________ ____
Cir.), cert. denied, 115 S. Ct. 257 (1994). Between December _____ ______
1985 and March 1991, James Smith, Richard Mangone, Robert
Cohen, and Ambrose Devaney fraudulently obtained tens of
millions of dollars in real estate loans from the Barnstable
Community Federal Credit Union (BCCU) and the Digital
Employees Federal Credit Union (Digital). Smith, a real
estate developer, and Mangone, President of Digital, were co-
founders of BCCU. Robert Cohen was general counsel to both
credit unions. Smith and Mangone controlled much of BCCU's
lending through Lynn Vasapolle, a coconspirator who was
BCCU's manager. Devaney was a real estate developer, the
only defendant who was an outsider to the credit unions.
The loans were used in part to finance the purchase
of commercial real estate on Cape Cod. To circumvent the
credit unions' policies restricting "insider" loans or
limiting maximum borrowing by an individual, Smith, Mangone,
and Devaney formed more than a dozen nominee trusts to create
-3- 3
the impression that the loans were going to many different
borrowers. Cohen, who served as closing attorney for the
credit unions, prepared the trust instruments and closing
binders. He also instructed Vasapolle what documents to
include in her BCCU files.
The conspirators concealed their interest in the
trusts by representing the trustees as putative owners. At
Mangone's direction, Vasapolle prepared false certificates of
beneficial interest on a blank form that Cohen had provided.
There was evidence that in some cases Cohen directly
submitted false certificates to BCCU, while maintaining
parallel sets of genuine and false certificates in his files.
In one case where he served as trustee, Cohen signed a
certificate misrepresenting himself and his wife as the
beneficiaries of the trust.
For their part, Smith and Vasapolle prepared false
financial statements for BCCU showing that the trustees
qualified for the loans. Smith altered the purchase and sale
agreements, sometimes inflating the purchase price by
millions of dollars, in order to obtain larger loans. The
excess loan proceeds were usually deposited in Cohen's client
account, transferred to one of Smith's accounts, and then
distributed to Smith, Mangone, and Devaney.
In the late 1980's, the real estate market on Cape
Cod collapsed. Unable to sell the properties and faced with
-4- 4
mounting debts, Smith, Mangone, and Devaney resorted to a
pyramid scheme. Cohen created new trusts that purported to
buy subdivisions from the old trusts; the sham "sales" were
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USCA1 Opinion
UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT FOR THE FIRST CIRCUIT
____________________
No. 94-1326
UNITED STATES,
Appellee,
v.
JAMES K. SMITH,
Defendant, Appellant.
_____________________
No. 94-1327
UNITED STATES,
Appellee,
v.
ROBERT COHEN,
Defendant, Appellant.
____________________
No. 94-1328
UNITED STATES,
Appellee,
v.
AMBROSE DEVANEY,
Defendant, Appellant.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge] ___________________
____________________
Before
Selya, Circuit Judge, _____________
Bownes, Senior Circuit Judge, ____________________
and Stahl, Circuit Judge. _____________
____________________
Charles W. Rankin, with whom Rankin & Sultan, Sheldon Krantz, and _________________ ________________ ______________
Piper & Marbury, were on brief for appellant Robert Cohen; Joseph J. ________________ _________
Balliro, with whom Balliro, Mondano & Balliro, P.C., was on brief for _______ ________________________________
appellant James K. Smith; and Emmanual N. Papanickolas, for appellant ________________________
Ambrose Devaney.
Paul G. Levenson, Assistant United States Attorney, with whom _________________
Donald K. Stern, United States Attorney, and Victor A. Wild, Assistant _______________ ______________
United States Attorney, were on brief for appellee.
____________________
February 10, 1995
____________________
BOWNES, Senior Circuit Judge. After a joint trial, BOWNES, Senior Circuit Judge. ____________________
defendants James Smith, Robert Cohen, and Ambrose Devaney
were convicted of defrauding two federal credit unions and
other related offenses. Although some aspects of the trial
give us pause, we affirm the convictions and sentences.
I. FACTS I. FACTS _____
We review the facts in the light most favorable to
the government. United States v. Ford, 22 F.3d 374, 382 (1st _____________ ____
Cir.), cert. denied, 115 S. Ct. 257 (1994). Between December _____ ______
1985 and March 1991, James Smith, Richard Mangone, Robert
Cohen, and Ambrose Devaney fraudulently obtained tens of
millions of dollars in real estate loans from the Barnstable
Community Federal Credit Union (BCCU) and the Digital
Employees Federal Credit Union (Digital). Smith, a real
estate developer, and Mangone, President of Digital, were co-
founders of BCCU. Robert Cohen was general counsel to both
credit unions. Smith and Mangone controlled much of BCCU's
lending through Lynn Vasapolle, a coconspirator who was
BCCU's manager. Devaney was a real estate developer, the
only defendant who was an outsider to the credit unions.
The loans were used in part to finance the purchase
of commercial real estate on Cape Cod. To circumvent the
credit unions' policies restricting "insider" loans or
limiting maximum borrowing by an individual, Smith, Mangone,
and Devaney formed more than a dozen nominee trusts to create
-3- 3
the impression that the loans were going to many different
borrowers. Cohen, who served as closing attorney for the
credit unions, prepared the trust instruments and closing
binders. He also instructed Vasapolle what documents to
include in her BCCU files.
The conspirators concealed their interest in the
trusts by representing the trustees as putative owners. At
Mangone's direction, Vasapolle prepared false certificates of
beneficial interest on a blank form that Cohen had provided.
There was evidence that in some cases Cohen directly
submitted false certificates to BCCU, while maintaining
parallel sets of genuine and false certificates in his files.
In one case where he served as trustee, Cohen signed a
certificate misrepresenting himself and his wife as the
beneficiaries of the trust.
For their part, Smith and Vasapolle prepared false
financial statements for BCCU showing that the trustees
qualified for the loans. Smith altered the purchase and sale
agreements, sometimes inflating the purchase price by
millions of dollars, in order to obtain larger loans. The
excess loan proceeds were usually deposited in Cohen's client
account, transferred to one of Smith's accounts, and then
distributed to Smith, Mangone, and Devaney.
In the late 1980's, the real estate market on Cape
Cod collapsed. Unable to sell the properties and faced with
-4- 4
mounting debts, Smith, Mangone, and Devaney resorted to a
pyramid scheme. Cohen created new trusts that purported to
buy subdivisions from the old trusts; the sham "sales" were
in turn financed by new loans from the credit unions. By
March 1991, when BCCU was seized by regulators from the
National Credit Union Administration (NCUA), the outstanding
balance on the Smith-Mangone-Devaney loans had reached forty
to sixty million dollars.
On September 12, 1992, Smith, Mangone, Cohen, and
Devaney were indicted for conspiracy (18 U.S.C. 371) to
commit bank fraud (18 U.S.C. 1344); unlawful receipt of
monies by a credit union officer (18 U.S.C. 1006); and
unlawful monetary transactions (money laundering) (18 U.S.C.
1957). Each defendant was also charged with various
offenses underlying the conspiracy. The case was tried on a
redacted indictment that included a conspiracy count, seven
bank fraud counts, seven parallel unlawful receipt counts
(which concerned Mangone alone), and the money laundering
charges. Vasapolle testified under a plea agreement and
explained the workings of the conspiracy.
Smith and Mangone were convicted on all counts.
Cohen was convicted on all counts except for four money
laundering counts. Devaney was convicted of conspiracy,
three counts of bank fraud and one count of money laundering.
Mangone fled before sentencing. Smith was sentenced to
-5- 5
fifteen years imprisonment and three years supervised
release, and ordered to pay up to twenty million dollars in
restitution. Cohen was sentenced to ten years imprisonment.
Devaney was sentenced to thirty-seven months imprisonment and
three years supervised release, and was ordered to pay up to
ten million dollars in restitution.
II. DISCUSSION II. DISCUSSION __________
These appeals turn largely on whether the
defendants should have been severed for separate trials under
Fed. R. Crim. P. 14. Cohen also argues that certain
evidentiary rulings and jury instructions deprived him of a
fair trial. Devaney argues that various counts of the
indictment were multiplicitous, and that the evidence was
insufficient to support his convictions. Each defendant
challenges his sentence on various grounds.
A. Bruton error A. Bruton error ______
We begin with Smith's claim of error under Bruton ______
v. United States, 391 U.S. 123 (1968) -- the heart of his _____________
argument for severance. Bruton held that, because of the ______
substantial risk that a jury, despite contrary instructions,
will look to a codefendant's incriminating extrajudicial
statement in determining a defendant's guilt, admission of
the codefendant's statement in a joint trial violates the
defendant's right of cross-examination under the
Confrontation Clause of the Sixth Amendment. Id. at 126. As ___
-6- 6
the Court emphasized in Richardson v. Marsh, 481 U.S. 200, __________ _____
208 (1987), Bruton error occurs where the codefendant's ______
statement "'expressly implicate[s]'" the defendant, leaving
no doubt that it would prove "'powerfully incriminating'"
(quoting Bruton, 391 U.S. at 124 n.1, 135). There is no ______
Bruton error if the statement becomes incriminating "only ______
when linked with evidence introduced . . . at trial."
Richardson, 481 U.S. at 208. See United States v. __________ ___ ______________
Limberopoulos, 26 F.3d 245, 253 (1st Cir. 1994) (Bruton _____________ ______
protects against the "powerfully incriminating effect of [a
nontestifying] accomplice pointing the finger directly at
another"; by contrast, "inferential incrimination . . . can
be cured by limiting instructions").
Against this backdrop, we turn to the claimed
Bruton error. The trial began on May 17, 1993. During the ______
government's case, Vasapolle testified that she, Cohen,
Smith, and Mangone met twice after the BCCU takeover to
discuss the possibility of removing or destroying loan
documents from the BCCU's and Cohen's files. Cohen allegedly
agreed to remove some of his documents, but advised his
coconspirators that it would be impossible to purge all of
the files. He also refused to destroy any documents because
to do so would be an obstruction of justice.
On June 28, 1993, the last day of testimony, Cohen
called Professor Richard Huber, an authority on professional
-7- 7
responsibility. Huber testified subject to a limiting
instruction that his testimony "has nothing to do with . . .
Mr. Smith [and] Mr. Devaney." According to Huber, Cohen
called him in late March of 1991 and "indicated that he had a
serious problem with professional responsibility that was
facing him and he would like to have an opportunity to
discuss it." Cohen met with Huber on April 4, 1991. Huber
testified:
Mr. Cohen explained that he had been
involved as a lawyer for a banking
institution . . . . [O]n the 23rd of
March [1991], a former officer of the
bank, a former director of the bank, and
a bank manager came in and spoke to him .
. . concerning activities that involved
them and their work at the bank.
***
[E]ssentially it amounted to the issue
that certain documents had been changed,
the information had been changed, figures
had been changed, data had been changed,
that this had been done after preparation
by Mr. Cohen and after they had been
presumptively completed, as far as he was
concerned, and were in file -- in his
files, the bank files. He indicated that
it was a possibility, though he wasn't
certain, as I can recall this, that there
may have been also forgeries, in terms of
signatures including possibly his own.
But the main thrust . . . was that
documentation which he had prepared and
which was complete and on file, had been
changed by these three people in their
indication to him when they met with him.
Cohen asked "whether he could reveal any of this
information, which had been received from these persons as
-8- 8
clients." Huber advised him that "there was no way in which
he could reveal confidences at that point in time," but that
he could do so "if it was necessary to protect himself, that
is, where he would be charged with crime or where he would be
sued civilly."
After Huber testified, Cohen's codefendants moved
for a mistrial, citing Bruton. The court deferred its ruling ______
until Cohen's next witness had testified. Just before
Cohen's closing argument, the court instructed counsel "[not
to] argue what Cohen said to Huber," because that evidence
would be stricken. The court then stated, "[Y]ou may argue
what Huber said to Cohen." The next day, the court
instructed the jury that Huber's testimony of what Cohen
"said to him about other persons [is] . . . stricken
entirely." Left in evidence was "the fact that Mr. Cohen
went to Huber, the fact that he made disclosures to Mr. Huber
. . . and the testimony of Mr. Huber about what he said to
Mr. Cohen . . . ." As it explained at sidebar, the court
submitted the case to the jury because the Bruton error (if ______
any) occurred during the last day of testimony in a lengthy
trial, and might be mooted by an acquittal. In addition, the
harmfulness of the error would be more apparent in light of
the verdicts.
All of the defendants were convicted, and Smith
moved for a new trial. The district court opined that there
-9- 9
had been an "egregious error" under Bruton. In the court's ______
view, however, the Bruton evidence was "merely cumulative" of ______
the government's case and therefore harmless beyond a
reasonable doubt.
In the classic Bruton scenario, Cohen would have ______
made a detailed confession of bank fraud, naming Smith as an
accomplice. The government could not introduce such an
incriminating statement at a joint trial, even against Cohen
alone. In fact, Cohen -- not the government -- offered his
own statement that three unnamed clients came to him and
essentially confessed to bank fraud. The government
emphasizes the self-serving nature of this evidence, while
Smith dwells on the power of a confession offered to one's
own attorney at a time of presumed confidence. To us, these
factors seem more or less a wash. We shall assume without
deciding that the district court correctly found that Bruton ______
error had occurred.1 Cohen's statement could be found to be
____________________
1. The government asks us to hold that the Bruton statement ______
must actually name the defendant. We regard this as an open
question that we need not answer at this time. See ___
Richardson, 481 U.S. at 211 n.5 ("We express no opinion on __________
the admissibility of a confession in which the defendant's
name has been replaced with a symbol or neutral pronoun.");
United States v. Cleveland, 590 F.2d 24, 28 n.4 (1st Cir. _____________ _________
1978) ("A Bruton problem is, of course, not necessarily ______
avoided merely by deleting names."). Cf. United States v. ___ _____________
Limberopoulos, 26 F.3d 245, 253 (1st Cir. 1994) _____________
(codefendant's statements "neither name nor impugn ____________
[defendant] directly") (emphasis added). But see United ___ ___ ______
States v. DiGregorio, 605 F.2d 1184, 1190 (1st Cir.) ("where ______ __________
the confession does not name a codefendant, it may be ___
admitted under Cleveland solely against the confessor"), _________
-10- 10
"powerfully incriminat[ing]" on its face, even without
"inferential incrimination" from other evidence in the case.
Richardson, 481 U.S. at 208. __________
We are nonetheless convinced that any error was
harmless beyond a reasonable doubt. See Harrington v. ___ __________
California, 395 U.S. 250 (1969) (Bruton errors are subject to __________ ______
harmless-error analysis under Chapman v. California, 386 U.S. _______ __________
18 (1967)). The jury convicted all the defendants on the
conspiracy count, and Cohen on most of the substantive
counts. Even if the jury threw the curative instructions to
the wind2 and considered the stricken testimony as evidence
against Smith, the scenario which implicates Bruton, it could ______
not have believed Cohen's claim that the unnamed clients
confessed to him at the close of the conspiracy. No one _________
confesses to a partner in crime. Cf. DiGregorio, 605 F.2d at ___ __________
1190 (finding any error in admitting codefendant's statement
harmless; noting that the defendant was acquitted of the
substantive act of participating in the shooting).
Admittedly, Cohen's statement might tend to
incriminate Smith and Devaney by showing that the co-
conspirators met to discuss damage control. In this sense,
____________________
cert. denied, 444 U.S. 937 (1979). _____ ______
2. We recognize, of course, the strong presumption that
jurors will follow the trial court's limiting instructions.
See, e.g., United States v. Sepulveda, 15 F.3d 1161, 1185 ___ ____ _____________ _________
(1st Cir. 1993), cert. denied, 114 S. Ct. 2714 (1994). _____ ______
-11- 11
however, the statement falls far outside the pale of the
"powerfully incriminating" evidence that produces Bruton ______
errors. Vasapolle had already testified in detail to the
coconspirators' meetings in the wake of the BCCU takeover.
Thus, once Cohen's statement is considered as something other
than an account of the codefendants' confessions, it becomes
merely cumulative of the government's case and could not have
produced Bruton error. See DiGregorio, 605 F.2d at 1190 ______ ___ __________
(fact that a codefendant's admission tended to corroborate
government's case against the defendant is insufficient,
standing alone, to trigger Bruton); United States v. Rawwad, ______ _____________ ______
807 F.2d 294, 296 (1st Cir. 1986) ("[t]he mere fact of
corroboration is not enough to warrant finding a Bruton ______
violation"), cert. denied, 482 U.S. 909 (1987). _____ ______
The right of confrontation ensures that a criminal
defendant can cross-examine his or her accusers. Had Cohen
testified to the confession himself, Smith's cross-
examination of Cohen would have sought to show that no
confession ever occurred. The verdicts suggest that the
jury, if it considered this evidence, found just that. The
jury, even if it disregarded the limiting instructions,
plainly did not believe Cohen's claim that his codefendants
had confessed to him. It is clear, therefore, that any
Bruton error was harmless beyond a reasonable doubt. ______
B. Severance B. Severance
-12- 12
We now consider whether the district court should
have granted a severance based on the alleged prejudice
created by a joint trial. "[A] district court should
grant a severance under Rule 14 only if there is a serious
risk that a joint trial would compromise a specific trial
right of one of the defendants, or prevent the jury from
making a reliable judgment about guilt or innocence." Zafiro ______
v. United States, 113 S. Ct. 933, 938 (1993). The denial of ______________
a motion for severance "'will be overturned only if [the
district court's] wide discretion is plainly abused,'" United ______
States v. O'Bryant, 998 F.2d 21, 25 (1st Cir. 1993) (quoting ______ ________
United States v. Natanel, 938 F.2d 302, 308 (1st Cir. 1991), ______________ _______
cert. denied, 112 S. Ct. 986 (1992)), "'depriv[ing] defendant _____ ______
of a fair trial [and] resulting in a miscarriage of
justice.'" United States v. Tejeda, 974 F.2d 210, 219 (1st _____________ ______
Cir. 1992) (quoting United States v. McLaughlin, 957 F.2d 12, _____________ __________
18 (1st Cir. 1992)).
1. Antagonistic defenses 1. Antagonistic defenses
Smith and Devaney argue that their defenses were
antagonistic to Cohen's. In his opening statement, counsel
for Cohen characterized his client as an innocent third
party, forced by the government to play the role of an
assistant prosecutor. "Mr. Cohen's theory of defense is if __
this [the bank fraud] happened, then he was not part of it."
(Emphasis added.) Counsel also stated that the codefendants
-13- 13
had falsified loan documents; that Smith asked Cohen to
destroy certain files; and that Cohen, stunned by these
revelations, sought the advice of a law professor regarding
his professional responsibility.
Opening statements, of course, are not evidence.
The true level of antagonism between the defenses is measured
by the evidence actually introduced at trial. See United ___ ______
States v. Torres-Maldonado, 14 F.3d 95, 104-05 (1st Cir.), ______ ________________
cert. denied, 115 S. Ct. 193 (1994). Moreover, "mere _____ ______
antagonism of defenses does not require severance." United ______
States v. Yefsky, 994 F.2d 885, 896 (1st Cir. 1993). See ______ ______ ___
United States v. Angiulo, 897 F.2d 1169, 1195 (1st Cir.) ______________ _______
(collecting cases in which we have denied severance despite
"sharply antagonistic defense theories"), cert. denied, 498 _____ ______
U.S. 845 (1990). "[T]he tension between defenses must be so
great that a jury would have to believe one defendant at the
expense of the other." Yefsky, 994 F.2d at 897 (citing ______
United States v. Arruda, 715 F.2d 671, 679 (1st Cir. 1983)). _____________ ______
We recognize that this is not a case of mere
tattling or "finger-pointing" between defendants. Cohen
offered testimony suggesting that Smith (among other
codefendants) had actually confessed to him. For several
reasons, however, Smith has not made the "strong showing of
prejudice," McLaughlin, 957 F.2d at 18, required to obtain a __________
severance.
-14- 14
We emphasize that the key testimony antagonistic to
Smith -- what Cohen allegedly told Huber -- is not part of
this case. That testimony was originally admitted only in
Cohen's case, and only for the fact that Cohen had made
certain assertions to Huber -- not for the truth of those
assertions. We have found the testimony harmless, even if it
may have been wrongly admitted initially. See supra, section ___ _____
II.A. Finally, the district court struck the testimony
altogether. Assuming that some prejudice remained for
purposes of severance, see Zafiro, 113 S. Ct. at 938 (Bruton- ___ ______ ______
related problems "might present a risk of prejudice") _____ ____
(emphasis added), Rule 14 "does not require severance even if
prejudice is shown; rather, it leaves the tailoring of the
relief to be granted, if any, to the district court's sound
discretion." Id. ___
As our Bruton discussion shows, the jury ______
demonstrated by its verdicts that it did not believe Cohen's
"confession" defense, assuming that it improperly considered
it at all. Cf. Zafiro, 113 S. Ct. at 939 (finding ___ ______
convictions supported by the evidence and rejecting claim
that the jury found at least one of the defendants guilty
without regard to whether the government proved its case
beyond a reasonable doubt) and 940 (Stevens, J., concurring)
("in any event, the jury in this case obviously did not
believe Soto and Zafiro, as it convicted both of them.
-15- 15
Accordingly, there is no basis . . . for concluding that the
the[ir] testimony . . . prejudiced their codefendants.").
Moreover, if the jury in fact followed the limiting
instructions, there was simply no significant evidence that
was antagonistic to Smith. It in no way appears that the
jury "unjustifiably infer[red]" -- from the alleged
antagonism alone -- that both Smith and Cohen were guilty.
United States v. Talavera, 668 F.2d 625, 630 (1st Cir.), _____________ ________
cert. denied, 456 U.S. 978 (1982). _____ ______
In sum, Smith, the only appellant arguably
incriminated by Huber's testimony about what Cohen said to
him, failed to demonstrate strong prejudice from the joint
trial on the basis of Bruton and the antagonistic defenses. ______
His and Devaney's parallel arguments for severance must
therefore be rejected.
2. Codefendant testimony 2. Codefendant testimony
Cohen argues that the joint trial deprived him of
Smith's exculpatory testimony. In support of Cohen's
pretrial motion for severance, Smith furnished two affidavits
representing that, if he were tried first, he would testify
on Cohen's behalf at a later trial.
To obtain a severance on the basis of a
codefendant's testimony, the defendant must demonstrate: (1)
a bona fide need for the testimony; (2) the substance of the
testimony; (3) its exculpatory nature and effect; and (4)
-16- 16
that the codefendant will in fact testify if the cases are
severed. United States v. Drougas, 748 F.2d 8, 19 (1st Cir. _____________ _______
1984). We shall refer to these as the "first-tier" Drougas _______
factors. Upon such a showing, the district court should (1)
examine the significance of the testimony in relation to the
defendant's theory of defense; (2) consider whether the
testimony would be subject to substantial, damaging
impeachment; (3) assess the counter arguments of judicial
economy; and (4) give weight to the timeliness of the motion.
Id. These are "second-tier" Drougas factors. ___ _______
The district court found that Cohen had satisfied
the first tier of criteria under Drougas.3 It denied the _______
motion for severance, however, because Smith's proffered
testimony was "more circumstantially than directly"
exculpatory. The court also weighed two other factors --
____________________
3. If the offer to testify is conditioned on the order of
the separate trials, there is an open question whether the
codefendant's availability meets Drougas' first-tier _______
requirements. We note, however, that several of our sister
circuits have ruled that an offer to testify, conditioned on
one defendant being tried before the other, fails to satisfy
the elements of a prima facie case for severance. See, e.g., ___ ____
United States v. Washington, 969 F.2d 1073, 1080 (D.C. Cir. ______________ __________
1992), cert. denied, 113 S. Ct. 1287 (1993); United States v. _____ ______ _____________
Blanco, 844 F.2d 344, 352-53 (6th Cir.), cert. denied, 486 ______ _____ ______
U.S. 1046 (1988); United States v. Haro-Espinosa, 619 F.2d ______________ _____________
789, 793 (9th Cir. 1979); United States v. Becker, 585 F.2d _____________ ______
703, 706 (4th Cir. 1978), cert. denied, 439 U.S. 1080 (1979). _____ ______
Here, the district court found that Cohen had satisfied this
requirement, notwithstanding Smith's conditional proffer.
Because the court correctly denied severance on the basis of
second-tier Drougas factors, see infra, we need not consider _______ ___ _____
whether such a conditional proffer necessarily fails the
Drougas test. _______
-17- 17
concerns for judicial economy in a lengthy conspiracy trial,
and the fact that Cohen himself could testify to some of the
issues raised by Smith. It decided that these factors
militated against severance.
The district court relied primarily upon factors
specifically authorized by Drougas. Judicial economy is _______
obviously not dispositive, but it is important in a lengthy
conspiracy trial. Most tellingly, the district court found
that under the second tier of Drougas factors, Smith's _______
artfully-worded affidavits were not significant when
considered in relation to Cohen's theory of defense. Smith
averred that there was "no agreement . . . wherein Cohen
agreed to provide documentation" to the credit unions "that
he knew was prepared in such a way so as to conceal . . . the
true recipients" of the loans. This adds little to Cohen's
plea of not guilty. To be "significan[t] in relation to the
defendant's theory of defense," Drougas, 748 F.2d at 19, the _______
codefendant's proffer has to do more than assert ultimate
facts. Cf. United States v. Ford, 870 F.2d 729, 732 (D.C. ___ ______________ ____
Cir. 1989) (conclusory statements did not meet burden of
establishing the exculpatory "nature and effect" of the
codefendant's testimony). It should furnish facts that could
significantly advance the theory of defense. With its first- _____________________
hand exposure to the case, the trial court is in the best
-18- 18
position to make this assessment. See O'Bryant, 998 F.2d at ___ ________
25.
Cohen argues that it was an abuse of discretion for
the district court to consider his ability to testify to the
issues raised by the Smith affidavits. First, his own
testimony would necessarily seem self-serving; second, a
defendant's right not to testify might be infringed if his
ability to testify is given significant weight by a court
performing a Drougas analysis. We assume that the _______
defendant's ability to testify is an improper factor under
Drougas. The district court, however, was primarily _______
dissatisfied with Smith's proffer. See infra. Because ___ _____
severance could have been denied on that basis alone, we do
not think the court accorded "significant weight" to an
improper factor. United States v. Gallo, 20 F.3d 7, 14 (1st _____________ _____
Cir. 1994) (quoting United States v. Roberts, 978 F.2d 17, 21 _____________ _______
(1st Cir. 1992)).
Smith's affidavits were admittedly not without
exculpatory value. The second affidavit stated that "Robert
Cohen sent closing packages to Lynn Vasapolle . . . which
included copies of the Certificate of Beneficial Interest in
which the names of some of the co-defendants were included" ____
(emphasis added). Vasapolle allegedly informed Cohen in or
about 1989 that BCCU would no longer require such
certificates to be included in the closing packages.
-19- 19
Finally, Smith averred that "despite the instructions from
Cohen[,] Vasapolle would alter and remove files from BCCU."
As the following colloquy shows, however, even the most
promising portions of Smith's affidavits offer less than
meets the eye:
Court: I understand that that's a _____
significant part of [Cohen's] defense.
Counsel: Yes, it is, your Honor. _______
Court: That the closing packages were _____
all sent in an appropriate form.
Counsel: Exactly. _______
Court: And after they left Mr. Cohen's _____
hands, this witness and other
conspirators altered them. I have been
looking in these affidavits for support
for that proposition. And while there is
some circumstantial evidence that is
consistent with that proposition, nowhere _______
does Mr. Smith say that. Paragraph 3 [of _______________________
the second affidavit] doesn't say it,
especially if we're talking [about] the
period once the investigation [of BCCU]
started.
(Emphasis added.)
We think that the district court's on-the-spot
assessment of severability was beyond reproach. We recognize
that there were "very real arguments" in favor of severance,
such that in the exercise of its discretion, the court could _____
have ordered separate trials. The very closeness of the
question, however, convinces us that there was no abuse of
discretion.
-20- 20
Finally, Devaney argues that severance should have
been granted because he wished to call Cohen as a witness to
show that he relied in good faith upon the advice of counsel.
This argument was not made to the district court and,
therefore, has been waived. United States v. Zannino, 895 _____________ _______
F.2d 1, 17 (1st Cir.), cert. denied, 494 U.S. 1082 (1990). _____ ______
We note that Devaney's initial motion for severance argued
that Cohen's anticipated testimony would be antagonistic, not ____________
exculpatory.
C. Reputation evidence C. Reputation evidence
Cohen challenges the district court's ruling that
he could not elicit evidence of his reputation for
truthfulness and veracity until he had taken the stand.
Irene Petri, a paralegal and secretary for Cohen's law firm,
was called as a witness by both the government and Cohen.
Cross-examining Petri during the government's case, counsel
for Cohen asked whether she had formed an opinion about
Cohen's reputation for truthfulness and veracity. The
district court sustained the government's objection and
instructed counsel to "[m]ove on." At sidebar, the court
explained:
Mr. Zalkind, first, I don't take kindly
to your trying to get reputation evidence
from this witness before your fellow's
testified. His reputation's not at issue
here, he has to take the stand before his
reputation for truth and veracity is at
issue.
-21- 21
Cohen never took the stand. He made no attempt to revisit
the issue when he called Petri as a defense witness, and he
called none of the character witnesses on his trial list. In
fact, he failed to raise the issue in several post-trial
motions for new trial and acquittal. Seven months after the
trial and on the eve of sentencing, Cohen moved for release
pending appeal and raised the issue for the first time.
The government concedes that even if a criminal
defendant does not testify, evidence of his truthfulness and
veracity may be admitted where such character traits are
"pertinent" to the case. See Fed. R. Evid. 404(a)(1); United ___ ______
States v. Lilly, 983 F.2d 300, 306 (1st Cir. 1992). But the ______ _____
erroneous ruling did not, as Cohen claims, "place[] an entire
facet of the defense off-limits." Even before the government
rested, the court openly questioned its prior ruling that
Cohen should take the stand before recalling Petri to testify
to statements he had made in her presence. "Suppose Mr.
Cohen doesn't testify . . . . I'm hesitant to condition
things on his testifying. He has an absolute right not to
testify." True, the district court did not refer
specifically to reputation testimony; but under these
circumstances, the challenged ruling must be considered
provisional, not final.
In its order denying Cohen's motion for release
pending appeal, the district court found the erroneous ruling
-22- 22
harmless in light of "the ability of defense counsel to
return to the issue and proffer such evidence afresh." We
agree with this assessment. Counsel should have attempted to
offer reputation evidence, either through Petri, whom he
recalled, or the other character witnesses. Cf. United ___ ______
States v. Holmquist, 36 F.3d 154, 162-66 (1st Cir. 1994) ______ _________
(exclusion of evidence pursuant to a provisional in limine _________
pretrial order may be challenged on appeal only if the party
unsuccessfully attempted to offer such evidence in accordance
with the terms specified in the order); Earle v. Benoit, 850 _____ ______
F.2d 836, 847 (1st Cir. 1988) (preliminary ruling such as a
ruling in limine does not excuse failure to make an offer of _________
proof). In short, Cohen abandoned the issue at trial.
-23- 23
D. The striking of Huber's direct testimony D. The striking of Huber's direct testimony
As counsel for Cohen was about to make his closing
argument, the district court made the following ruling:
"[T]hose things which Huber testified that Cohen said to him
. . . I'm striking that out so don't argue what Cohen said to
Huber. You may argue what Huber said to Cohen." Cohen
claims that he would have taken the stand had he known that
his statements to Huber would be stricken; the ruling thus
deprived him of his right to testify in his own defense.
We are not persuaded. The striking of Huber's
testimony may have upset his trial strategy, but it did not
render Cohen less able to testify. Cohen never moved to
reopen the evidence so that he could take the stand. Under
these circumstances, we see no deprivation of the right to
testify in one's own defense.
Before the conclusion of closing arguments, Cohen
filed an affidavit stating that he "would have chosen to
testify" had he known that his testimony was necessary for
the admission of Huber's entire testimony. In his reply
brief, Cohen argues that his affidavit was the "functional
equivalent" of a motion to reopen evidence, assuming such a
motion was required, and that the district court should have
inquired whether Cohen wished to testify. Nothing in the
affidavit or in counsel's arguments to the district court,
however, suggested that Cohen still wished to take the stand.
-24- 24
Cohen also argues that the stricken portion of
Huber's testimony was admissible for the fact that it was
made and for his state of mind, not for the truth of anything
asserted. Any error in this evidentiary ruling was harmless.
The jury was instructed that it could consider "the fact that
Mr. Cohen went to Huber, the fact that he made disclosures to
Mr. Huber . . . and the testimony of Mr. Huber about what he
said to Mr. Cohen . . . ." The jury had heard from Vasapolle
that the codefendants made several disclosures during their
post-takeover meeting that apparently took Cohen by surprise.
In light of Huber's admitted testimony that Cohen could not
yet "reveal . . . this information, which had been received
from these three persons as clients," the jury could have
reconstructed the apparent purpose of Cohen's consultation.
There was an adequate evidentiary basis for the jury to infer
Cohen's then-existing state of mind, even assuming that the
stricken part of Huber's testimony was admissible for that
purpose. Indeed, counsel for Cohen argued this point in his
closing as if the stricken testimony were still in evidence:
This is a case of a lawyer who has now
heard his clients admitting to crimes.
What does he do next? What's his state
of mind? . . . .
[H]e then went to the . . . professor.
And after having this long conversation
with him, the professor told him you
cannot disclose this information until
such a time comes when maybe you may have
to.
-25- 25
The court's ruling striking the testimony of what
Cohen said to Huber may not have come at an ideal time; but
Huber's testimony seemed to catch everyone -- even counsel
for Cohen -- by surprise.4 We conclude that the court's
effort to control the fallout from its Bruton ruling did not ______
unduly prejudice Cohen's right to present his defense.
E. Multiplicity of charges E. Multiplicity of charges
Devaney argues that the indictment was
multiplicitous in various ways. His first claim, that Count
1 (conspiracy) was multiplicitous with all of the substantive
counts, ignores the principle that "conspiracy to commit an
offense and the subsequent commission of that crime normally
do not merge into a single punishable act." Iannelli v. ________
United States, 420 U.S. 770, 777 (1975). _____________
We think the other claims of multiplicity are
similarly unfounded. The bank fraud counts (Counts 2-6) were
not multiplicitous with each other, even though they relate
to a single scheme to defraud, because separate trusts,
trustees, properties, and sums of money were involved. Each
loan transaction was a separate execution of the fraudulent
scheme. United States v. Brandon, 17 F.3d 409, 421 n.8 (1st _____________ _______
Cir.), cert. denied, 115 S. Ct. 80 (1994). _____ ______
____________________
4. Counsel for Cohen: "Frankly, I never prepared the
professor. I just said let's have your best memory. I saw
him out here for about ten minutes and that was it. What he
remembered was, quite frankly, pretty astonishing to me, he
has an excellent memory."
-26- 26
The money laundering counts were not multiplicitous
with the bank fraud counts. Bank fraud and money laundering
do not constitute a single offense within the meaning of the
test of Blockburger v. United States, 284 U.S. 299 (1932). ___________ _____________
Money laundering (technically, an unlawful "monetary
transaction") is defined as knowingly engaging "in a monetary
transaction in criminally derived property . . . ." 18
U.S.C. 1957. There is no requirement that the defendant
must have committed the crime (here, the bank fraud) from
which the property was "derived." In fact, Congress
"intended money laundering to be a separate crime distinct
from the underlying offense that generated the money." United ______
States v. LeBlanc, 24 F.3d 340, 346 (1st Cir.), cert. denied, ______ _______ _____ ______
115 S. Ct. 250 (1994).
Finally, the four money laundering counts were not
multiplicitous of each other merely because they flow from a
single transaction that took place in a single day. The time
period is of no moment. Each count charges a discrete
"transfer . . . of funds" to a distinct payee "by, through,
or to a financial institution" within the meaning of the
statute. 18 U.S.C. 1957(f)(1).
F. The sufficiency of evidence F. The sufficiency of evidence
Devaney argues that the district court in effect
acquitted him on Count 1 (conspiracy) when it made an
evidentiary finding under Fed. R. Evid. 801(d)(2)(E) and
-27- 27
United States v. Petrozziello, 548 F.2d 20 (1st Cir. 1977), _____________ ____________
that certain alleged coconspirator statements were not
admissible against Devaney because the court did not "find by
a fair preponderance of the evidence that Mr. Devaney is a
co-conspirator in the overarching or big or continuing
conspiracy . . . ." Petrozziello rulings are not findings on ____________
whether the evidence is sufficient for a count to go to the
jury. See United States v. Pitocchelli, 830 F.2d 401, 403 ___ _____________ ___________
(1st Cir. 1987) (district court properly excluded
coconspirator's hearsay statements while refraining from
disturbing jury finding of conspiracy). The district court
plainly held that there was sufficient evidence for the
conspiracy charge against Devaney to go to the jury.5
Devaney argues that there was insufficient evidence
to support his conviction on Count 1 (conspiracy), Counts 5-7
(bank fraud), and Count 19 (money laundering). In making
this argument, he bears "the heavy burden of demonstrating
that no reasonable jury could have found [him] guilty beyond
a reasonable doubt." United States v. Innamorati, 996 F.2d _____________ __________
456, 469 (1st Cir.), cert. denied, 114 S. Ct. 409 (1993). We _____ ______
review the evidence in the light most favorable to the
____________________
5. Because Devaney was never, as he claims, "functional[ly]
. . . acquitt[ed]" of the conspiracy count, we need not
address his claims of double jeopardy and collateral
estoppel, or his contention that the Petrozziello ruling ____________
compelled a directed verdict of acquittal on the substantive
counts of bank fraud.
-28- 28
government, "drawing all plausible inferences in its favor
and resolving all credibility determinations in line with the
jury's verdict." Id. ___
1. The overarching conspiracy 1. The overarching conspiracy
The evidence against Devaney tended to show the
following. Devaney owned a one-third interest along with
Smith and Mangone in eleven of the trusts that had received
"participation" loans.6 He also owned a one-third interest
in some of the trusts that were involved in sham "rollover"
sales. In all, Devaney received nearly one million dollars
in excess proceeds from the fraudulent loans.
Devaney, the only outsider to the credit unions,
was valuable to the conspiracy precisely because he was an
outsider. Devaney's role in the conspiracy can be summarized
as follows: he (1) identified the target properties and
negotiated for their purchase by Mangone, Smith, and himself;
(2) falsely represented that he and his wife were the sole
owners of trusts that were jointly owned by Smith and
Mangone; (3) signed purchase and sale agreements with
inflated purchase prices that were submitted to BCCU; (4)
recruited putative borrowers, and signed indemnification
agreements assuring them that they would not be liable for
loans; (5) concealed from Digital's loan officer the fact
____________________
6. Participation loans were loans administered by BCCU and
largely funded by Digital, the "participating" institution.
These loans ranged from $1,200,000 to over $4,000,000.
-29- 29
that Mangone, president of Digital, was a beneficiary of one
of the trusts; and (6) signed a purchase and sale agreement
as the purported buyer in a rollover sale from one trust to
another. From this evidence, the jury reasonably found that
Devaney provided the "front" for the grand conspiracy.
2. Bank fraud 2. Bank fraud
In light of the district court's Petrozziello ____________
finding, Devaney argues that certain (unspecified) statements
and acts of his alleged coconspirators should have been
excluded from the case against him, leaving insufficient
evidence to support his conviction of bank fraud. This
argument is made in so perfunctory a manner that it must be
deemed abandoned. Zannino, 895 F.2d at 17. Devaney makes no _______
effort to isolate any evidence erroneously admitted against
him, or to show that the district court's limiting
instructions were somehow inadequate.
Devaney argues that he made no material
misrepresentation under 18 U.S.C. 1344(2) because neither
credit union had a written policy requiring the disclosure of
trust beneficiaries.7 We agree that 1344(2) requires a
____________________
7. 18 U.S.C. 1344 provides: "Whoever knowingly executes,
or attempts to execute, a scheme or artifice --
(1) to defraud a financial institution; or
(2) to obtain . . . moneys . . . [from] a financial
institution, by means of false or fraudulent pretenses,
representations, or promises; [shall be guilty of an offense
against the United States]." Although we have held that
-30- 30
material misrepresentation. See, e.g., United States v. ___ ____ ______________
Davis, 989 F.2d 244, 247 (7th Cir. 1993); United States v. _____ _____________
Sayan, 968 F.2d 55, 61 n.7 (D.C. Cir. 1992). Devaney _____
nonetheless misses the forest for the trees. It is
inconceivable that the inflated loans would have been issued
had the credit unions known, not only the identity of the
true owners of the trusts (the only misrepresentation Devaney
addresses), but also the true purchase price of the
properties, and the fact that one of the loans for which
Devaney was convicted was used to finance a sham "rollover"
sale between two of his trusts. There was sufficient
evidence to show that Devaney "made false statements or
misrepresentations to obtain money" from the credit unions.
Brandon, 17 F.3d at 424 (explaining 18 U.S.C. 1344(2)). _______
3. Money laundering 3. Money laundering
Devaney argues that the evidence did not show that
he knowingly engaged in a monetary transaction involving
criminally derived funds, i.e., the proceeds from the ____
fraudulent loan to the Curtis Village Realty Trust II. He
claims that the loan proceeds at issue came from an earlier,
legitimate loan to the Curtis Village trust -- not from the
fraudulent BCCU loan.
____________________
1344(1) does not require a material misrepresentation, United ______
States v. Fontana, 948 F.2d 796, 802 (1st Cir. 1991), the ______ _______
district court did not so instruct the jury, and we do not
rely upon 1344(1) here.
-31- 31
We have already upheld Devaney's conviction on the
parallel count of bank fraud, see supra, and we now reject ___ _____
Devaney's argument of mistaken identity. The government's
financial auditor traced the proceeds from the BCCU loan to a
$100,000 check payable to Devaney. Thus, the jury reasonably
found that Devaney had received funds that were "criminally
derived." 18 U.S.C. 1957(a). The jury also reasonably
inferred that Devaney "knowingly" received his share of the
fraudulent loan. Id. ___
G. Waiver of motion for mistrial G. Waiver of motion for mistrial
Devaney asserts that he was denied due process
because the district court held two conferences on his motion
for mistrial in his absence and accepted his waiver of
possible mistrial despite telltale signs that the waiver was
not intelligent, voluntary, and knowing.
As a threshold matter, we doubt that the Due
Process Clause prohibits counsel from waiving a pending _______
motion for mistrial on behalf of an absent defendant.
Devaney waived, not a mistrial ruling in hand, but one in the
bush. Moreover, the record does not show whether Devaney was
in fact absent from the courtroom when counsel entered the
waiver, or whether he made an informed decision after full
consultation with counsel. Devaney's extra-record
allegations are more properly made to the district court as
part of a claim of ineffective assistance of counsel. We see
-32- 32
no due process violation in the district court's acceptance
of the waiver.
-33- 33
H. Ineffective assistance of counsel H. Ineffective assistance of counsel
Lacking a sufficiently developed record with
respect to the waiver of mistrial, as well as trial counsel's
alleged conflict of interest, we think that Devaney's claim
of ineffective assistance should first be raised in the
district court. See United States v. Daniels, 3 F.3d 25, 26- ___ _____________ _______
27 (1st Cir. 1993).
I. Jury instructions I. Jury instructions
Cohen challenges the jury instructions on various
grounds.
1. Duty to disclose 1. Duty to disclose
Cohen argues that the district court erred in
instructing the jury that "failure to disclose a material
fact may . . . constitute a false or fraudulent
misrepresentation" under 18 U.S.C. 1344 if the defendant
was under "a general professional or specific contractual
duty to make the disclosure," knew that the disclosure had to
be made, and failed to make the disclosure with the specific
intent to defraud.
In United States v. Cassiere, 4 F.3d 1006, 1022-23 _____________ ________
(1st Cir. 1993), we approved a virtually identical
instruction regarding duty to disclose. Cohen argues that
the instruction was erroneous in this case because there was
no evidence regarding an attorney's duty of disclosure, and
because the jury may have confused Cohen's efforts to protect
-34- 34
the confidence of his clients with acts of fraudulent
misrepresentation.
These objections, which are unique to Cohen's
defense, were not preserved below. We therefore review the
instruction only for plain error. See Fed. R. Crim. P. 30 ___
(grounds for objection to charge must be stated distinctly);
United States v. O'Connor, 28 F.3d 218, 220-21 (1st Cir. ______________ ________
1994).
The instruction regarding duty to disclose was not
plainly erroneous, if it was erroneous at all. Cohen
surmises that the jury "punished" him for withholding
privileged client information from federal regulators. A
more plausible explanation of the verdict, one that does not
presume jury confusion, is that Cohen was convicted on the
evidence of his affirmative misrepresentations.
2. Fraudulent intent 2. Fraudulent intent
In United States v. Gens, 493 F.2d 216, 222 (1st _____________ ____
Cir. 1974), which involved willful misapplication of funds by
a bank officer under 18 U.S.C. 656, we held that "where the
named debtor is both financially capable and fully
understands that it is his responsibility to repay, a loan to
him cannot -- absent other circumstances -- properly be ____________________________
characterized as [illegal], even if bank officials know he
will turn over the proceeds to a third party" (emphasis
added). Invoking Gens in the bank fraud context, Cohen ____
-35- 35
argues that the district court erred in not giving a proposed
instruction that would have required proof that --
the trustee who made the representation
and who signed individually as the
borrower or guarantor on the loan did not
believe that the credit union could look
to him for payment of any deficiency on
the loan, and the particular defendant
you are considering was responsible for
giving the trustee that belief.
The trustee's belief, and the defendant's assurances of non-
liability, would certainly constitute evidence of bank fraud;
such evidence, however, is not an element of the offense.
See United States v. Brennan, 994 F.2d 918, 924 n.14 (1st ___ _____________ _______
Cir. 1993) (explaining Gens; absence of evidence of ____
assurances to the named debtor would not mandate reversal
under misapplication statute). The district court did not
err in refusing to give the requested instruction. Moreover,
"other circumstances," including the dual sets of
certificates of beneficial interest found in Cohen's files,
support the jury finding of fraudulent intent. Gens, 493 ____
F.2d at 222.
3. Willful blindness 3. Willful blindness
Cohen argues that the district court should have
corrected the prosecutor's closing argument regarding his
willful blindness. During the March 23, 1991 meeting at
Cohen's office, Vasapolle asked how she could explain the
fake trustee financial statements in BCCU's files. Cohen,
who was unaware of these statements, became upset and said,
-36- 36
"I don't think I want to hear this." Cohen then "got up and
left and took a walk." In his closing, the prosecutor argued
that Cohen's conduct illustrated his willful blindness.
Cohen made an objection, but only after the prosecutor had
moved on to a more general illustration.
Even if the objection was preserved, we see no
error in permitting the argument of willful blindness.
Vasapolle testified that during the same meeting, Cohen
explained that "the only thing he [Cohen] could do" to
protect the conspirators "would be to take the certificate of
beneficial interests out of the file . . . . And he did
agree to take them out." The jury could have inferred from
this evidence that Cohen pledged to do his part to conceal
the conspiracy, and then deliberately walked out to avoid
hearing the plans of his coconspirators.
4. Trust provisions 4. Trust provisions
The district court instructed the jury that under
Massachusetts law, there is nothing inherently wrong or
improper about using nominee trusts to buy and sell real
estate:
A trust is a legal instrument. Its terms
are intended to govern the conduct of the
participants. To violate these terms
isn't a crime. Civil liability may
attach, but it's not a crime. But you
may consider any evidence of violating or
ignoring the terms of a trust as bearing
on the intent of the person you're
considering with respect to the crimes
charged.
-37- 37
Cohen argues that the district court erred by
refusing to instruct the jury that "a written contract could
be changed any time by the parties orally." The district
court also rejected a requested instruction that "oral
changes in [trust] membership are permissible."
We see no error in this decision. Even assuming
that beneficial interests in a real estate nominee trust can
be orally conveyed, the district court's instruction is not
contrary: a legitimate oral modification of a trust is not
evidence that the defendants "violat[ed] or ignor[ed] the
terms of a trust." At any rate, there was no evidence of any
oral modification, and the district court was not required to
give a proposed instruction merely because it would have been
more favorable to the defendant.
5. Reasonable doubt and presumption of innocence 5. Reasonable doubt and presumption of innocence
Invoking the Supreme Court's recent decision in
Victor v. Nebraska, 114 S. Ct. 1239 (1994), Cohen argues that ______ ________
the district court should have explained the concept of
reasonable doubt to the jury. Victor is consistent with our ______
holding in United States v. Olmstead, 832 F.2d 642, 646 (1st _____________ ________
Cir. 1987), cert. denied, 486 U.S. 1009 (1988), that district _____ ______
courts need not define the concept of reasonable doubt so
long as the phrase is not buried as an aside. See United ___ ______
States v. Neal, 36 F.3d 1190, 1202-04 (1st Cir. 1994) ______ ____
(reviewing recent Supreme Court decisions). The Constitution
-38- 38
"neither prohibits trial courts from defining reasonable
doubt nor requires them to do so as a matter of course."
Victor, 114 S. Ct. at 1243 (citations omitted). ______
Cohen also argues that the district court erred by
refusing to reinstruct the jury on the presumption of
innocence at the end of the case. Although the closing
instruction on presumed innocence could have been more
explicit, the totality of the instructions assures us that
the jury did not "retire[] to deliberate less than fully
aware of the presumption of innocence." United States v. Van _____________ ___
Helden, 920 F.2d 99, 102 (1st Cir. 1990) (quoting United ______ ______
States v. Ruppel, 666 F.2d 261, 274-75 (5th Cir.), cert. ______ ______ _____
denied, 458 U.S. 1107 (1982)). The district court repeatedly ______
stated that the government bore the burden of proving its
case beyond a reasonable doubt; gave a forceful opening
instruction on the presumption of innocence; reminded the
jury at the end of the case that each of the defendants
"started the trial presumed innocent"; and admonished the
jury that to treat the indictment as evidence against the
accused would be to "violate your oath as jurors."
J. Cumulative error J. Cumulative error
Cohen argues that the cumulative impact of his
assigned errors requires reversal, even if the individual
errors do not. Because we have found no abuse of discretion
in the denial of Cohen's motion for severance, and harmless
-39- 39
error, if error at all, only in the striking of Huber's
direct testimony, the argument of cumulative error fails.
See Brandon, 17 F.3d at 456 (rejecting similar argument where ___ _______
review of trial proceedings as a whole revealed no "pervasive
unfairness or any error or combination of errors that
deprived defendants of due process").
K. Sentences K. Sentences
1. Aggravating role 1. Aggravating role
Cohen argues that the district court clearly erred
in finding that he was a supervisor or manager of extensive
criminal activity. See U.S.S.G. 3B1.1(b). In United ___ ______
States v. Ovalle-Marquez, 36 F.3d 212, 225 (1st Cir. 1994), ______ ______________
cert. denied, 1995 WL 21668, we noted that a defendant "is a _____ ______
manager or supervisor where he 'exercised some degree of
control over others involved in the commission of the crime
or he [was] responsible for organizing others for the purpose
of carrying out the crime'" (quoting United States v. Fuller, _____________ ______
897 F.2d 1217, 1220 (1st Cir. 1990)). To warrant the three-
level adjustment under 3B1.1(b), "the defendant . . . must
have 'organize[d] at least one [other] criminally responsible
individual.'" United States v. Dietz, 950 F.2d 50, 53 (1st _____________ _____
Cir. 1991) (dictum) (quoting United States v. DeCicco, 899 _____________ _______
F.2d 1531, 1537 (7th Cir. 1990) (internal citation omitted)).
The district court found that Cohen had "organized"
Vasapolle. Vasapolle testified that Cohen instructed her
-40- 40
regarding the mechanics of the participation loans -- for
example, what documents to include in the BCCU files, and
what checks to issue following a closing. These acts, which
Cohen calls "ministerial," were not illegal per se, but they ______
were performed under Cohen's instruction by someone who was
unquestionably a knowing participant in the crime. Bank
fraud by nature rests upon ministerial acts. The district
court's finding that Cohen "organized" Vasapolle was not
clearly erroneous.
We feel compelled to make one clarification. The
prosecutor seriously distorted the record during the
sentencing hearing when he suggested that Cohen told
Vasapolle to "get [the blank certificates of beneficial
interest] signed." Vasapolle testified that she was
instructed by Mangone to obtain a short form certificate of
beneficial interest from Cohen. Mangone -- not Cohen --
asked her to fill out the certificates with the names of the
trustees and their spouses. Before the prosecutor made his ______
misrepresentation, however, the district court had already
found Cohen to be a manager or supervisor. The court also
properly rejected the government's recommendation of a four-
level adjustment for an "organizer or leader," based on
evidence that Mangone had the greater control over Vasapolle.
2. Ex post facto clause 2. Ex post facto clause _____________
-41- 41
Cohen argues that the district court violated the
ex post facto clause of the Constitution by imposing a four- ______________
level enhancement under U.S.S.G. 2F1.1(b)(6)(A) for conduct
jeopardizing the safety and soundness of a financial
institution. "Barring any ex post facto problem, a defendant _____________
is to be punished according to the guidelines in effect at
the time of sentencing." United States v. Harotunian, 920 ______________ __________
F.2d 1040, 1041-42 (1st Cir. 1990).
Section 2F1.1(b)(6)(A) took effect on November 1,
1990, after all of the loans described in the indictment had
closed. The conspiracy to defraud charged in Count 1,
however, allegedly extended into March 1991; and the district
court found that Cohen's "criminal conduct" -- meaning the
charged conduct of which he was convicted -- "continued well
after the enactment of these guidelines." See United States ___ _____________
v. Bennett, 37 F.3d 687, 699 (1st Cir. 1994) (distinguishing _______
charged conduct from relevant conduct for ex post facto ______________
purposes). There was evidence that in early 1991, Cohen
actively misled BCCU regarding the status of the New
Adventures Realty Trust loan. Because the offense of
conviction continued after November 1, 1990, the district
court did not violate the ex post facto clause by applying ______________
2F1.1(b)(6)(A). See United States v. Arboleda, 929 F.2d 858, ___ _____________ ________
870-71 (1st Cir. 1991).
-42- 42
Cohen argues that the relevant question is not when
his offense of conviction ended, but whether any of his
criminal acts after November 1, 1990 substantially
jeopardized the safety and soundness of a financial
institution. Assuming that Cohen has correctly framed the
question, we think the four-level enhancement was still
proper. By trying to throw BCCU and federal regulators off
the scent, Cohen substantially jeopardized their ability to
detect and recoup bad loans that BCCU had already made.
3. Double counting 3. Double counting
Cohen argues that the district court engaged in
improper "double counting" under the guidelines when it made
upward adjustments for more than minimal planning (two
levels), supervisory role (three levels), abuse of position
of trust (two levels), jeopardizing the soundness of a
financial institution (four levels), and the amount of loss
(fifteen levels). "[I]n the sentencing context double
counting is not rare -- and the practice is often perfectly
proper." United States v. Pierro, 32 F.3d 611, 622 (1st Cir. _____________ ______
1994), cert. denied, 63 U.S.L.W. 3539 (1995). Cohen makes no _____ ______
effort to show that double counting in fact occurred, or that
either "an explicit prohibition against double counting []or
a compelling basis for implying such a prohibition exists" in
his case. United States v. Lilly, 13 F.3d 15, 19 (1st Cir. _____________ _____
1994) (noting that "several [guideline] factors may draw upon
-43- 43
the same nucleus of operative facts while nonetheless
responding to discrete concerns"). Accordingly, we deem the
argument waived. Zannino, 895 F.2d at 17. _______
-44- 44
4. Obstruction of justice 4. Obstruction of justice
Smith argues that the district court erred in
making a two-level adjustment for obstruction of justice
under U.S.S.G. 3C1.1. The court based its decision on
Smith's destruction of certain documents. According to
Vasapolle, Smith stated that "he was going to burn [his
closing books] in his fireplace." The government also
recovered two pages from a document that Smith had thrown
away, including the face page of a purchase and sale
agreement on which the price had been changed with correction
fluid. On these facts, the district court's finding that
Smith in fact intentionally destroyed documents was not
clearly erroneous.
Smith also argues that the documents he discarded
were merely copies of other documents already obtained by the
government, and therefore immaterial to his case. Smith
overlooks the purchase and sale agreement, which is unique,
material evidence of his participation in the bank fraud.
See U.S.S.G. 3C1.1, comment. (n.5) (evidence is material if ___
it "would tend to influence or affect the issue under
determination").
5. Downward departure 5. Downward departure
Smith argues that the district court should have
considered a downward departure based on, among other things,
the multiple causes of the monetary loss ascribed to him.
-45- 45
Smith makes no claim that the district court mistakenly
believed it lacked the authority to depart downward. We
therefore have no jurisdiction to review its refusal to do
so. United States v. Hernandez, 995 F.2d 307, 314 (1st _____________ _________
Cir.), cert. denied, 114 S. Ct. 407 (1993). _____ ______
6. Restitution 6. Restitution
Devaney argues that the district court abused its
discretion when it ordered him to pay restitution "not to
exceed ten million dollars." The district court was required
to consider the financial resources of the defendant and his
earning ability, among other factors. See 18 U.S.C. ___
3664(a); United States v. Springer, 28 F.3d 236, 239 (1st ______________ ________
Cir. 1994).
In his allocution, Devaney attested to his past
success as a developer of million-dollar properties. This
implies substantial (if now diminished) earning ability.
Although the court found that Devaney "doesn't have any
money," it noted that Devaney had "ke[pt] his ill-gotten
gains." Significantly, the exact amount and schedule of
restitution were left open by the district court. In framing
a flexible order that can respond to Devaney's changing
financial status, the district court did not abuse its
considerable discretion. See United States v. Lombardi, 5 ___ _____________ ________
F.3d 568, 573 (1st Cir. 1993).
-46- 46
III. CONCLUSION III. CONCLUSION __________
The defendants' convictions and sentences are
Affirmed. Affirmed. _________
-47- 47
United States v. Smith, (1st Cir. 1995).
United States v. Smith (United States v. Smith) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.
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