RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 United States v. Wagner No. 03-4313 ELECTRONIC CITATION: 2004 FED App. 0311P (6th Cir.) File Name: 04a0311p.06 _________________ COUNSEL UNITED STATES COURT OF APPEALS ARGUED: Harland M. Britz, BRITZ & ZEMMELMAN, FOR THE SIXTH CIRCUIT Toledo, Ohio, for Appellant. Thomas A. Karol, ASSISTANT _________________ UNITED STATES ATTORNEY, Toledo, Ohio, for Appellee. ON BRIEF: Harland M. Britz, BRITZ & ZEMMELMAN, UNITED STATES OF AMERICA , X Toledo, Ohio, for Appellant. Thomas A. Karol, ASSISTANT Plaintiff-Appellee, - UNITED STATES ATTORNEY, Toledo, Ohio, for Appellee. - - No. 03-4313 _________________ v. - > OPINION , _________________ HARRY HERBERT WAGNER , - JR., - KAREN NELSON MOORE, Circuit Judge. Defendant- Defendant-Appellant. - Appellant Harry Herbert Wagner, Jr. (“Wagner”), a real-estate - developer in northern Ohio, appeals his conviction for N fraudulently concealing property from a bankruptcy trustee in Appeal from the United States District Court violation of 18 U.S.C. § 152(1) and filing a false document in for the Northern District of Ohio at Toledo. a bankruptcy proceeding in violation of 18 U.S.C. § 157(2). No. 02-00803—James G. Carr, District Judge. Wagner was indicted in November 2002 after allegedly making false statements to the United States Bankruptcy Argued: June 9, 2004 Court for the Northern District of Ohio during a Chapter 7 conversion hearing and changing the locks on several Decided and Filed: September 13, 2004 properties belonging to his estate, which the trustee was attempting to sell. A jury convicted Wagner in April 2003, Before: BOGGS and MOORE, Circuit Judges; QUIST, and the United States District Court for the Northern District District Judge.* of Ohio sentenced Wagner to six months’ imprisonment. On appeal, Wagner challenges his conviction, arguing that he did not “conceal” property by changing the locks and that he did not commit bankruptcy fraud because any falsifications he may have made did not deceive the bankruptcy court. Additionally, Wagner asserts that he was deprived of his constitutional right to the effective assistance of counsel and that the district court erred by not permitting expert evidence * regarding Wagner’s alleged hearing problems. Because there The Honorable Gordon J. Quist, United States District Judge for the W estern District of Michigan, sitting by designation.
1 No. 03-4313 United States v. Wagner 3 4 United States v. Wagner No. 03-4313
is no merit to Wagner’s various arguments, we AFFIRM Wagner refused to conference with the Trustee’s Office, Wagner’s conviction. asking, “Are you one of the good old boys and are you bonded?” and stating, “If you persist on this meeting, that I I. FACTUAL HISTORY AND PROCEDURE am not going to attend, I will put this in a letter that I am writing [to the bankruptcy judge] that you are not following The factual and procedural history of Wagner’s appeal can the due process of law in bankruptcy.” Joint Appendix be divided into three segments: 1) the events leading up to (“J.A.”) at 603 (Letter from Wagner, 05/06/02). In several and the declaration of Chapter 11 bankruptcy; 2) the instances during the early part of May 2002, Wagner bankruptcy court proceedings; and 3) Wagner’s indictment, repeatedly refused to meet with the Trustee’s Office and trial, and conviction. failed to produce financial documents required by the court. As a result, on May 13, 2002, the Trustee’s Office filed a A. Wagner’s Declaration of Bankruptcy and Subsequent motion to convert Wagner’s Chapter 11 bankruptcy petition Actions to a Chapter 7 petition, under which Wagner would no longer serve as his own trustee. The Bankruptcy Court scheduled a In the mid-1970s, Wagner developed Edgewood Estates, a hearing to consider this motion on June 3, 2002. three-hundred acre subdivision in Lima, Ohio containing 156 rental units. Wagner also built six “smart houses,” which During the interlude, Wagner visited a branch office of the were outfitted with electronic devices that automated various United States Small Business Administration (“SBA”) in household chores. At some point after 1997, Wagner began Columbus, Ohio on May 22, 2002. Wagner requested a loan to have difficulty with his multiple mortgage obligations, and application, but the SBA officials informed Wagner that the in 1999, Wagner ceased paying several of his mortgagees. SBA does not distribute loan applications because the SBA These lenders commenced foreclosure proceedings against does not make direct loans. Indeed, the SBA works primarily most of Wagner’s properties. At one point, Wagner was with institutional lenders, such as banks, to guarantee loans, juggling over seventy-five separate foreclosure proceedings. and the application for SBA assistance is usually completed by the financial institution making the loan. One of the SBA Seeking a way to forestall the foreclosures, Wagner officials attempting to assist Wagner suggested that Wagner contemplated declaring bankruptcy. Wagner obtained a do-it- explore the SBA’s website, which fully described the SBA’s yourself bankruptcy kit and filed a pro se Chapter 11 program and its role in making loans. Wagner responded that bankruptcy petition on April 26, 2002, which automatically he understood that the SBA did not make direct loans and that stayed the foreclosure proceedings. Shortly after the filing of he had already looked at the website, but he persisted in the Chapter 11 petition, the United States Trustee’s Office asking for the loan forms, and eventually the SBA officials contacted Wagner. Because debtors serve as their own relented. trustees in Chapter 11 proceedings, it is standard practice for the Trustee’s Office to hold an informal meeting with the On Friday, May 24, 2002, and with neither authorization debtor to advise the debtor about the timely filing of financial for a loan from the SBA nor approval from the Trustee’s reports, the fiduciary duties incumbent upon the debtor, and Office to further encumber property belonging to his estate, the prohibition against selling or further encumbering Wagner filed a mortgage against several of his properties. disputed assets without prior approval. The Trustee’s Office Wagner recorded with the Allen County Recorder’s Office a asked Wagner to attend such a meeting. In a bizarre letter, mortgage which listed close to ninety-five properties and No. 03-4313 United States v. Wagner 5 6 United States v. Wagner No. 03-4313
included Wagner and his wife as mortgagors. Wagner days from the date of this letter, they are deemed not to attached a loan note to the mortgage, which claimed that the be a Creditor and will forfeit any right to a Claim. Upon SBA had granted Wagner a $10.75 million loan. further examination with council [sic], the amount that Harry Herbert Wagner, Jr owes may decrease. If there The following Tuesday (Monday was Memorial Day), are any disagreements with the Verified Proof of Claims, Wagner returned to the Recorder’s Office and asked for the Harry Herbert Wagner, Jr is ready to use mediation, return of the mortgage. The Recorder informed Wagner that arbitration if both parties agree, or litigation to resolve the mortgage could not be rescinded unless the mortgagee them. authorized a release, which SBA had not done, given that it was not yet aware of the purported loan’s existence. Wagner J.A. at 514 (Plan of Arrangements) (emphasis added). then recorded a second mortgage, which listed only himself Wagner attached three items to the Plan of Arrangements. as the mortgagor. On May 30, several days after publicly First, he attached the second mortgage filed with the Allen recording an SBA mortgage that did not exist, Wagner County Recorder’s Office, which purported to be worth submitted his “loan package” forms to the SBA. Wagner $10.75 million and which listed the SBA as the mortgagee. contends that the SBA accepted the loan forms, time- Second, he included a mortgage note, written on an SBA stamping the package, but that no individual ever informed form, which listed the SBA as a lender of $10.75 million at an him that his forms were improperly filed. The SBA did not interest rate of 6.5%. Third, Wagner included a letter from formally reject Wagner’s “application” until June 11, 2002. Investt Acura Cal S.A. (“IAC”), allegedly located in Kent, Washington, which expressed IAC’s intent to loan Wagner up B. The Bankruptcy Court Proceedings and Chapter 7 to $10.75 million. Wagner claimed that he paid $18,000 for Proceedings this loan guarantee, and he characterized the IAC loan commitment as a “backup” to the SBA loan. The bankruptcy court heard the Trustee’s conversion motion as scheduled on June 3. The morning of the hearing, There were several problems with the alleged mortgage and Wagner filed a “Plan of Arrangements,” a layman’s stab at note attached to the Plan of Arrangements. First, and most what is more technically known as a “Plan of obviously, the SBA was not capable of making a loan to Reorganization,” which serves as the outline of how a debtor Wagner. Second, the SBA did not guarantee loans exceeding intends to pay his or her creditors. The document, signed by $1 million, so that even if Wagner had received a $10.75 Wagner, read: million loan from a lending institution, the SBA could only guarantee a small portion of the loan amount. Third, the note Harry Herbert Wagner, Jr.’s Plan of Arrangement is to referenced the alleged SBA loan as “SBA Loan 0001,” which pay all legitimate Creditors a 100 cents on the Dollar of was clearly false, because the SBA employs eleven-digit loan exactly what they are actually owed. The Note Mortgage numbers. Fourth, the 6.5% interest rate listed on the note was is in Place, and Harry Herbert Wagner, Jr. is ready to fabricated. Fifth, the IAC “backup” loan commitment was Commence, but there are no Certified Proof of Claims to unverified. The IAC loan commitment filed with the plan pay at the moment. Judge Mary Ann Whipple, you are was not written on IAC letterhead, and the government letting people move this Court, who have no interest in alleges that no such loan commitment ever truly existed. any Claim. “Enough is Enough”. If there is not a Verified Proof of Claim submitted to the Court within 30 No. 03-4313 United States v. Wagner 7 8 United States v. Wagner No. 03-4313
At the hearing, Wagner openly testified to his recalcitrance. informing them that all rents were to be paid to the Trustee. Wagner admitted to his refusal to meet with the Trustee’s A few days later, Wagner wrote a responsive letter to his Office and further confirmed that he had not assisted the tenants. Wagner claimed that all rents were still payable to Trustee’s Office in any meaningful fashion. During the him and that failure to pay rents “as usual” could result in the hearing, Wagner initially testified that the SBA had granted cessation of maintenance and lawn care. his loan request. However, upon further questioning, Wagner admitted that the SBA had not actually approved the loan and Trustee French’s difficulties with the disposition of that despite the lack of approval, he had still publicly recorded Wagner’s property were compounded by Wagner’s actions the mortgage. with regards to three of the six “smart houses” that were among Wagner’s assets. These houses were unoccupied and On June 6, the bankruptcy court granted the Trustee’s on the market for sale. Consequently, Trustee French hired motion to convert Wagner’s Chapter 11 bankruptcy to a a real estate company to sell the homes and changed the locks Chapter 7 bankruptcy. The court also addressed and denied so as to effectuate this goal. In the beginning of July 2002, several motions filed by Wagner, some of which the court Wagner directed one of his employees to change the locks described as “defamatory.” J.A. at 541 (Bankr. Ct. Or. again and to return a single key for each home only to 06/06/02). As to the Plan of Arrangements, the court stated Wagner. Shortly after, one of the realtors could not show the that “[i]t is hard for the court to decide what the most home to a prospective buyer. Wagner claimed that he shocking aspect of this filing is, as between the fact that it changed the locks because there was a rash of break-ins at the turns out [Wagner] has not actually received any loan from three houses and he wanted to control all the outstanding keys the SBA and has thus publically filed a fraudulent note and to halt any future incidents, but the government presented mortgage and the fact that all of this occurred postpetition on contrary evidence that Wagner in fact changed the locks to May 28, 2002, without any notice, a hearing, court approval interfere with Trustee French’s efforts. or Bankruptcy Code authority.” J.A. at 541-42. Finding multiple bases for conversion pursuant to 11 U.S.C. C. Wagner’s Indictment, Trial, and Conviction § 1112(b), including Wagner’s bad faith in prosecuting his petition, Wagner’s inability to create a reorganization plan, Wagner was indicted on November 6, 2002, in the United and Wagner’s dereliction of his fiduciary duties to creditors, States District Court for the Northern District of Ohio. The the court determined that conversion was the proper result. grand jury charged three separate counts: 1) Wagner fraudulently presented the SBA mortgage and note in the Plan As a result of the conversion, Bruce French was appointed of Arrangements in violation of 18 U.S.C. § 157(2); trustee on June 6. Trustee French went to Wagner’s office 2) Wagner fraudulently ordered his tenants not to pay rent to and informed Wagner that he was assuming control of the Trustee in violation of 18 U.S.C. § 157(3); and 3) Wagner Wagner’s assets and business operations. According to concealed assets in violation of 18 U.S.C. § 152(1) by Trustee French, Wagner claimed that he would not cede changing the locks on houses that were assets of the Trustee. control of anything until Trustee French provided official The case proceeded to trial, and during the trial, the defense documentation of his role. Allegedly, Wagner also explicitly tried to call Alyssa Leaser (“Leaser”), Wagner’s audiologist, stated that he would not cooperate with the Trustee’s Office to testify as to Wagner’s hearing problems. The district court and that he considered the proceedings to be unlawful. On did not admit her testimony on relevancy grounds. The trial June 8, Trustee French drafted a letter to Wagner’s tenants, concluded on April 4, 2003. The jury returned a guilty No. 03-4313 United States v. Wagner 9 10 United States v. Wagner No. 03-4313
verdict on Counts One and Three, but the jury was unable to Wagner’s chief argument is that obstructing a Trustee’s reach a unanimous verdict on Count Two. The district court access to real property, and thus potentially hindering the sale sentenced Wagner to a six-month term for each conviction to of that property, does not constitute concealment under run concurrently. After Wagner filed his timely notice of 18 U.S.C. § 152(1). We have resolved very few cases appeal, the district court stayed the defendant’s sentence involving 18 U.S.C. § 152(1), and we have never addressed pending this appeal. this particular issue. We begin, as always, with the text of the statute under which Wagner was convicted, which provides: II. ANALYSIS A person who — (1) knowingly and fraudulently On appeal, we must resolve four distinct issues: 1) the conceals from a custodian, trustee, marshal, or other meaning of “conceal” as used in 18 U.S.C. § 152(1); officer of the court charged with the control or custody of 2) whether the evidence was sufficient to uphold Wagner’s property, or, in connection with a case under title 11, bankruptcy fraud conviction; 3) Wagner’s ineffective from creditors or the United States Trustee, any property assistance of counsel claim; and 4) the district court’s belonging to the estate of a debtor . . . shall be fined exclusion of the testimony of Wagner’s audiologist. Each under this title, imprisoned not more than 5 years, or issue involves a distinct standard of review, which we both. describe in turn. 18 U.S.C. § 152(1). To prove Wagner’s guilt under 18 U.S.C. A. Wagner’s “Concealment” of Assets § 152(1), the government must show that: 1) Wagner knowing and fraudulently; 2) concealed property; 3) from the Wagner’s first claim attacks his conviction for concealing trustee; 4) that belonged to his estate. See United States v. three unoccupied “smart houses” from Trustee French by Christner, 66 F.3d 922, 925-26 (8th Cir. 1995). The only changing the locks on the doors of those houses. While both issue here is whether Wagner concealed property. 1 Under parties suggest that the issue is best viewed as a question of either a narrow or a broad understanding of the term the sufficiency of the evidence, we analyze the problem “conceal,” we must conclude that Wagner concealed the differently. In essence, the parties ask us to determine smart houses from the trustee. whether the word “conceal,” as used in § 152(1), extends to Wagner’s conduct. This is not a sufficiency-of-the-evidence The narrow construction of “conceal” — “To hide, secrete, inquiry, as the evidence is clear that Wagner changed the or withhold from the knowledge of others. . . . To cover or locks, but rather a question of statutory interpretation. We review de novo questions of statutory interpretation. United States v. Ninety-Three Firearms, 330 F.3d 414, 420 (6th Cir. 1 2003). “We begin our analysis by looking at the language of There is no doubt that the houses belonged to Wagner’s bankruptcy the statute itself to determine if its meaning is plain. Plain estate and that Wagner’s actions were directed at Trustee French. If there meaning is examined by looking at the language and design is any question about the sufficiency of the evidence demo nstrating the knowing and fraudulent nature of Wagner’s actions, it is resolved in favor of the statute as a whole.” Id. (quotations and citations of the government because the government presented enough evidence omitted). “[W]e may look to the legislative history of a such that a rational juro r could convict W agner. While Wagner presented statute if the statutory language is unclear.” United States v. evidence that he changed the locks for the non-fraudulent purpose of Choice, 201 F.3d 837, 840 (6th Cir. 2000). keeping out vandals and robbers, the government presented evidence that W agner in fact changed the locks to keep out the Trustee. No. 03-4313 United States v. Wagner 11 12 United States v. Wagner No. 03-4313
keep from sight. To hide or withdraw from observation, or provisions governing bankruptcy crimes, exists not to protect prevent discovery of” — springs from its dictionary individual creditors, but rather “to prevent and redress abuses definition. Black’s Law Dictionary 288 (6th ed. 1990); see of the bankruptcy system.” 1 Collier on Bankruptcy also Random House Unabridged Dictionary 422 (2d ed. ¶ 7.01[1][a], at 7-15 (15th ed. 2004) (hereinafter “Collier”). 1993) (“[T]o hide; withdraw or remove from observation; “[S]ection 152(1) promotes disclosure and revelation by cover or keep from sight.”). By depriving the Trustee of debtors, and furthers one of the main goals of the statute: access to the house, Wagner concealed (i.e., he hid, secreted, identification of all the debtor’s assets and affairs so that there prevented discovery of, and withheld from the knowledge of can be an objective evaluation of each bankruptcy estate. the Trustee) the value of the property. That the Trustee knew Thus, the statute prohibits hiding assets from bankruptcy of the house’s existence does not alter our conclusion, officers and actively frustrating collection efforts by because mere awareness of the property does not creditors.” Id. at ¶ 7.02[1][a][i], at 7-22 (emphasis added); concomitantly reveal the property’s value. Without access to see also Stuhley v. Hyatt, 667 F.2d 807, 809 n.3 (9th Cir. the inside of the home, no prospective buyer could accurately 1982) (“[T]he principal objectives of the provisions are to assess the worth of the house and place a bid, which in turn prevent and punish efforts by a bankrupt to avoid the prevented the Trustee from learning the value of the house distribution of any part of a liable bankrupt estate.”). Several and accordingly disposing of the estate. It would be no circuits have recognized that § 152 is “a congressional different if Wagner revealed to the Trustee the existence of a attempt to cover all of the possible methods by which a cache of diamonds in a locked box, but refused to give the debtor or any other person may attempt to defeat the intent Trustee the key to open the box, preventing a buyer (and and effect of the bankruptcy law through any type of effort to consequently the Trustee) from assessing whether the keep assets from being equitably distributed among diamonds were of pristine cut, color, and clarity such that creditors.” United States v. Goodstein, 883 F.2d 1362, 1369 they were worth $100,000 or were instead low-grade (7th Cir. 1989) (internal quotations omitted) (emphasis diamonds worth only $10,000. Like diamonds, the value of added); United States v. Thayer, 201 F.3d 214, 226 (3d Cir. the smart house, as embodied in the sale price, cannot be 1999) (quoting Goodstein); United States v. Shapiro, 101 known until a purchaser bids on the house, which provides F.2d 375, 379 (7th Cir. 1939) (“The object of Congress in the only true measure of the house’s value. Few rational passing [§ 152] was to punish those debtors who, although buyers would purchase a home without seeing the inside first. wanting relief from their debts, did not want to surrender what Thus, limiting access to the inside of the house effectively property there was to the creditors.”). Section 152 serves a precluded any potential purchaser from making an informed broad purpose; it exists to prevent a wide array of behavior decision, which in turn prevented the Trustee from learning designed to stymie the bankruptcy system, and consequently the true value of the house. Such actions constitute it targets many different kinds of conduct. concealment of an asset. The history of the word “conceal” in the statute also The purposes of § 152, the section’s history, and its demonstrates that “conceal” has a broad meaning. Section interpretation by other courts support a broader construction 152, along with the other bankruptcy crimes provisions, first of “conceal,” and applying a more encompassing definition appeared in § 29 of the Bankruptcy Act of 1898, which was does not alter our conclusion. Because the efficiency and codified in Title 11 of the United States Code. See manageability of the bankruptcy system relies heavily on the Bankruptcy Act of 1898, ch. 541, § 29(b), 30 Stat. 544, 554 free flow of accurate information, § 152, like the rest of the (1898). In 1938, Congress amended the Bankruptcy Act; No. 03-4313 United States v. Wagner 13 14 United States v. Wagner No. 03-4313
§ 1(7) of those amendments stated that “‘Conceal’ shall a hidden compartment, a safe, or a hole in the backyard in include secrete, falsify, and mutilate.” The Chandler Act, ch. order to ‘conceal’ it. It is enough that one ‘withholds 575, § 1(7), 52 Stat. 840, 840 (1938). In 1948, the criminal knowledge,’ or ‘prevents disclosure or recognition.’” Id. provisions of the Bankruptcy Act were moved to Title 18. (quotation omitted). See Crimes and Criminal Procedure Act, ch. 645, § 152, 62 Stat. 683, 689 (1948). Section 1(7) remained a part of Title The purpose of § 152(1) and the broad definition of 11 (even though the term it was defining was nestled in Title “conceal,” adopted first by Congress and then by the courts, 18) until 1979, when the Bankruptcy Reform Act of 1978 guide our holding that “conceal” in this context means more repealed § 1(7) along with large portions of the 1898 than just the act of hiding property or withdrawing it from Bankruptcy Act. Despite this repeal, courts have continued sight. Section 152(1)’s relationship to real property to apply an expanded definition of “conceal” in § 152(1) highlights the problem with an overly rigid definition of cases. See Collier ¶ 7.01[1][b][i], at 7-16 (“Courts . . . have “conceal.” Unlike cash, bonds, stocks, or other liquid assets, not allowed the accident of transference to the criminal code real property cannot be easily hidden. Narrowly construing to change settled interpretations.”); United States v. Grant, the word “conceal” would sharply limit the type of behavior 971 F.2d 799, 802 n.3 (1st Cir. 1992) (noting that “where § 152(1) can reach, which contravenes the purpose of the appropriate we cite to authority antedating the 1979 statute. Naturally, a debtor can withhold information about amendment”). For example, in Thayer, the Third Circuit the debtor’s ownership of a house, a parcel of land, or a upheld a jury instruction in a § 152(1) case which read: vehicle, but such refusal to disclose information about the existence or whereabouts of real property does not exhaust the Fraudulently concealing property of the estate of the ways in which a debtor can conceal real property. Other debtor may include transferring property to a third party, actions, for instance, a debtor’s use of physical force to destroying the property, withholding knowledge prevent a trustee from approaching the debtor’s property or concerning the existence or whereabouts of property, or the intentional marring of property to reduce its value to knowingly doing anything else by which the person acts prospective buyers, hinder or obstruct the trustee’s to hinder, delay or defraud any of the creditors. responsibilities just as much as preventing the trustee from learning about the existence of assets by “hiding” or 201 F.3d at 224 (emphasis added). Similarly, in United States “secreting” away such assets. See, e.g., United States v. v. Turner, 725 F.2d 1154 (8th Cir. 1984), the court adopted a Yagow, 953 F.2d 427, 430 (8th Cir. 1992) (affirming, without comparably broad standard. It upheld the following jury discussion, a conviction under § 152 when the defendant instruction: warned the trustee not to enter his property and constructed a trench around his property to stymie removal of any Concealment means, not only secreting, falsifying and collateral). We agree with the other circuits that have held mutilating as specified in section 1 of the Bankruptcy Act that “concealing” property encompasses actions designed to but also includes preventing discovery, fraudulently hinder, delay, or otherwise obstruct the ability of a trustee to transferring or withholding knowledge or information account for and distribute the debtor’s estate. See Thayer, required by law to be made known. 201 F.3d at 224; Turner, 725 F.2d at 1157. This holding permits § 152(1) to serve its significant task of ensuring that Id. at 1157. The court held that “[c]learly concealment means trustees can equitably distribute assets among creditors more than ‘secreting’; one does not have to put something in pursuant to the bankruptcy laws without interference. No. 03-4313 United States v. Wagner 15 16 United States v. Wagner No. 03-4313
Under this standard, Wagner’s modification of the locks lenity does not apply, and we uphold Wagner’s conviction constituted concealment. By changing the locks, Wagner under § 152(1) for the concealment of property from the prevented the Trustee from showing the property to a Trustee. prospective buyer. It is true that the realtor, and thus by extension the Trustee, was inconvenienced for only a short B. Wagner’s Fraudulent Representation amount of time by Wagner’s decision to change the locks. Also, it is not certain that the individual(s) who wanted to Wagner’s second claim is that insufficient evidence exists view the house on that particular day would have decided to to sustain his conviction for bankruptcy fraud pursuant to purchase it. However, such considerations are irrelevant; 18 U.S.C. § 157(2). Our standard of review for this type of there is no materiality requirement in § 152(1), and Wagner claim presents a defendant with an uphill battle. See United would be no less criminally liable under § 152(1) if he had States v. Henley, 360 F.3d 509, 513 (6th Cir. 2004) (“A changed the locks knowingly and fraudulently but the realtor defendant making such a challenge bears a very heavy had not planned to show the house that particular day. See burden.”) (quotation omitted); United States v. Kelly, 204 Collier ¶ 7.02[1][a][i], at 7-24 (“[S]ection 152(1) has no F.3d 652, 656 (6th Cir. 2000) (“The standard for evaluating implicit or explicit materiality requirement; concealment of claims that a conviction is not supported by sufficient any asset, if done knowingly and fraudulently, can support evidence presents a very difficult hurdle for the criminal conviction.”). Wagner’s intent to delay or obstruct the appellant.”) (quotation omitted). The key inquiry is “whether, Trustee is enough for culpability under § 152(1). after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the In reaching our conclusion, we do not ignore the rule of essential elements of the crime beyond a reasonable doubt.” lenity, which establishes that “in construing an ambiguous United States v. Humphrey, 279 F.3d 372, 378 (6th Cir. 2002) statute, a court should resolve the ambiguity in favor of the (quotation omitted). We “will reverse a judgment for more lenient sentence.” Mallett v. United States, 334 F.3d insufficiency of evidence only if this judgment is not 491, 499 (6th Cir. 2003); see also McElroy v. United States, supported by substantial and competent evidence upon the 455 U.S. 642, 658 (1982) (“[A]mbiguity concerning the reach record as a whole.” United States v. Chavis, 296 F.3d 450, of a criminal statute should be resolved by reading the statute 455 (6th Cir. 2002) (quotation omitted). In analyzing such a narrowly in order to encourage Congress to speak clearly, claim, we do not weigh the evidence, evaluate witness thus giving the populace ‘fair warning’ of the line between credibility, or displace the jury’s judgment with our own. Id.2 criminal and lawful activity, and in order to have the Legislature, not the courts, define criminal activity.”). In 2 evaluating whether a statute is ambiguous for rule-of-lenity At the conclusion of the government’s case-in-chief, Wagner moved purposes, it is not enough for the plain language to be unclear; for a judgment of acquittal pursuant to Federal Rule of Criminal only when the plain language, structure, and legislative Procedure 29. J.A. at 187 (Trial Tr. at 576 ); see Fed. R. Crim. P. 29(a) (“After the government closes its evidence or after the close of all the history provide no guidance will we apply the rule of lenity. evidence, the court on the defendant’s motion must enter a judgment of United States v. Boucha, 236 F.3d 768, 774 (6th Cir. 2001). acquittal of any offense for which the evidence is insufficient to sustain Whatever ambiguity may inhere in the use of the word a con viction.” ). The district judge first indicated that he would deny the “conceal,” there is no doubt that § 152(1) is part of a clear and motion but then later stated that he would take the motion under explicit framework of prohibitions designed to ensure the advisement. Trial Tr. at 576-77 (“M R. K LU GE : Make a Rule 29 motion for judgment of acquittal. THE COURT: That will be overruled. MR. equitable distribution of assets. Accordingly, the rule of KLUGE: You want me to a rticulate the reasons? T HE CO UR T: Sure, No. 03-4313 United States v. Wagner 17 18 United States v. Wagner No. 03-4313
Wagner argues that the evidence does not support his bankruptcy-fraud conviction because his actions did not have if you want, go ahead. MR. KLUG E: The Court’s going to take it under any “proven effect on the Bankruptcy Court.” Wagner Br. at advisement I won’t go into – TH E COU RT: I’ll simply take it under 24. Wagner was indicted and convicted pursuant to 18 U.S.C. advisement. Let the record show the motion has been made, it’s been § 157(2), which provides: taken under advisement, and I deem all the defendant’s rights to be app ropriately protected as of this point in the proceedings.”). However, A person who, having devised or intending to devise a W agner did not renew his motion for judgment of acquittal at the close of all the evidence, and it appears that the district judge never ruled on the scheme or artifice to defraud and for the purpose of motion.
When a court denies a defendant’s motion for judgment of acquittal at the close of the government’s case-in-chief and the defendant then puts at the time the ruling was reserved,” even if the defendant has put on on evidence in his or her own defense without renewing the Rule 29 evidence in his or her own defense. motion, the defendant “waives objection to the denial of his earlier motion, absent a showing of a manifest miscarriage o f justice.” United As the U.S. Co urt of Appe als for the District o f Columbia Circuit States v. Price, 134 F.3d 340 , 350 (6th C ir. 199 8) (“P hrased ano ther way, noted in United States v. Wahl, the text of Rule 29(b) suggests that when where . . . a defendant does not renew his motion for judgment of a district judge reserves decision on a motion for judgment of acquittal at acquittal for insufficiency of the evidence at the close of all of the proo fs, the close of the government’s case-in-chief, the defendant does not waive app ellate review is limited to determining whether there was a m anifest his or her objection to the ultimate denial of the m otion by failing to miscarriage of justice. A miscarriage of justice exists only if the record renew the motion at the close of all the evidence. 290 F.3d 370, 374 is devoid of evidence pointing to guilt.”) (internal quotation marks and (D.C. Cir.), cert. denied, 537 U.S 86 2 (2002 ) (“The Federal Rules are citations omitted). If the defendant does renew the motion for judgment silent as to whether a reserved mo tion must be renewed. See of acquittal at the close of all the evidence, the defendant still waives his Fed.R.Crim.P. 29. For this reason, we see no basis for penalizing a or her objection to the denial of the first motion, and on appeal, all of the defendant who appears before an efficient district court judge who returns evidence will be considered when evaluating an insufficiency of the to a reserved motion without prompting and enters a ruling. We therefore evide nce claim. See United States v. Black, 525 F.2d 668, 669 (6th Cir. hold that when a defendant mo ves for judgm ent of acquittal at the close 1975) (“The rule is settled that when a defendant introduces evidence, he of the government’s case and the court reserves ruling until after the case waives any objection to the denial of his motion to acquit at the close of is submitted to the jury und er Rule 29(b), and whe n the co urt does, in fact, the government’s case. The defendant may re new his motion at the close rule on that motion absent a renewal of that motion at the close of all of all the p roof . . . but the court will then consider the sufficiency of the evidence by the defendant, the defendant is not required to take any evidence on the record as a whole and not the sufficiency of the additional procedural steps to preserve the issue for appellate review.”). government’s case in chief.”) (citations omitted). However, it is unclear whether such analysis equally applies when the district judge fails to rule on a reserved motion for judgment of acquittal Different rules apply, however, when the court does not decide a and the defendant has failed to renew the motion at the close of all the defendant’s motion for judgment of acquittal at the close of the evidence. See id. (“[W]e are not deciding whether a waiver occurs when gove rnment’s case-in-chief, but rather reserves ruling on the motion. a defend ant fails to renew a reserved motion at the close of all the Rule 29(b) permits judges to reserve ruling on motions for judgment of evidence and the district court does not rule.”). acquittal, including motions made at the close of the government’s case- in-chief. See Fed. R. Crim. P. 29(b) (“The court may reserve decision on Because W agner’s insufficienc y of the evidenc e claim lacks m erit the motion, proceed with the trial (where the motion is made before the even if we confine our review to the evidence presented in the close of all the ev idenc e), submit the ca se to the jury, and decide the gove rnment’s case-in-chief and apply the less burdensome rational-trier- motion either before the jury returns a verdict or after it returns a verdict of-fact standard, we d o not need to decide w hether W agner’s failure to of guilty or is discharged without having returned a verdict.”). Rule 29(b) renew his reserved motion for judgment of acquittal, combined with the mandates that when a judge reserves ruling on a motion for judgment of district court’s apparent failure to rule at any point on the motion, alters acquittal, the court “must decide the motion on the basis of the evidence our standard of review or impacts the sco pe of evidence to be examined. No. 03-4313 United States v. Wagner 19 20 United States v. Wagner No. 03-4313
executing or concealing such a scheme or artifice or County, in violation of bankruptcy rules forbidding the attempting to do so — . . . (2) files a document in a encumbrance of property without prior approval. The Plan proceeding under title 11 . . . shall be fined under this and the attached mortgage and note were clear fabrications title, imprisoned not more than 5 years, or both. because they included a fictitious interest rate and a nonexistent SBA loan number, they exceeded the SBA’s loan 18 U.S.C. § 157(2). We have stated, “Section 157(1) . . . guarantee limit, and the SBA is not even institutionally contains three elements: 1) the existence of a scheme to capable of making loans. Wagner’s complete unwillingness defraud or intent to later formulate a scheme to defraud and to aid the Trustee’s Office and his attempts to disrupt the 2) the filing of a bankruptcy petition 3) for the purpose of Chapter 11 process provide collateral evidentiary support for executing or attempting to execute the scheme.” United the notion that Wagner’s Plan of Arrangements constituted States v. DeSantis, 237 F.3d 607, 613 (6th Cir. 2001) one more episode in a series of schemes to mislead the (emphasis added); see also United States v. McBride, 362 bankruptcy court and to delay the bankruptcy proceedings. F.3d 360, 373 (6th Cir. 2004); Collier ¶ 7.07[1], at 7-118 to When combined, the evidence clearly demonstrates an intent 7-119. We apply the same test in analyzing § 157(2), except to defraud, and there is no doubt that a rational trier of fact that we are concerned with the filing of a document in a could have found Wagner guilty. proceeding under Title 11 rather than the filing of a bankruptcy petition. In reviewing the sufficiency of the Wagner offers several unpersuasive reasons why the evidence of the intent to defraud, we are mindful of the fact evidence was insufficient. First, he claims that because the “that the question of intent is generally considered to be one Plan of Arrangements did not cause “anyone to act or refrain of fact to be resolved by the trier of the facts . . . and the from acting,” Wagner Br. at 25, there is insufficient evidence determination thereof should not be lightly overturned,” to support his conviction. This is plainly incorrect; there is United States v. Daniel, 329 F.3d 480, 487 (6th Cir. 2003) simply no requirement that the fraudulent filing have its (quotation omitted) (alteration in original). intended effect for a defendant to be liable under § 157(2). “Success of the scheme is not an element of the crime.” Wagner does not dispute that there is sufficient evidence DeSantis, 237 F.3d at 613. “The [bankruptcy fraud] statute that he filed the Plan of Arrangements, which is the allegedly makes the crime complete upon the filing of the bankruptcy fraudulent document, or that the Plan served to execute the petition when the filing is accompanied by the other two scheme if the scheme existed. Instead, Wagner chiefly defined circumstances. . . . Filing itself is the forbidden act.” contends that “there is a failure of proof that [the Plan and its Id.3 The mere filing of the Plan of Arrangements and the attachments] are a scheme or artifice to defraud.” Wagner Br. at 22. The evidence clearly belies Wagner’s argument. The Plan, to which Wagner attached the falsified SBA mortgage 3 and note, explicitly claimed that he had received a loan of In analyzing the fed eral mail and wire fraud statutes, after which § 157 was patterned, we have held that “[a]ctual reliance is . . . plainly not $10.75 million from the SBA when in fact he had not. required.” United States v. Daniel, 329 F.3d 480, 487 (6th C ir. 200 3); see Furthermore and quite incredibly, at the hearing, Wagner first also Neder v. United States, 527 U .S. 1, 24-25 (1999) (“The common-law falsely explained that he had received a loan from the SBA requirements of ‘justifiable reliance’ and ‘damages[]’ . . . plainly have no before finally admitting not only that he had not received the place in the federal fraud statutes. By prohib iting the ‘scheme to defraud,’ loan, but also that he had claimed the opposite in his Plan of rather than the completed fraud, the elements of reliance and damage would clearly be inconsistent with the statutes Congress enacted.”); Arrangements and had recorded the mortgage with Allen 18 U.S.C. §§ 13 41, 13 43 (both referring to “devis[ing] or intending to No. 03-4313 United States v. Wagner 21 22 United States v. Wagner No. 03-4313
mendacious mortgage and note are enough to create criminal exist. Furthermore, Wagner cannot claim to fit within any of liability under § 157(2) because such action is evidence of a the exceptions described in the legislative history of § 157. scheme or artifice to defraud. The purported SBA mortgage and note are no less fraudulent merely because they were Third, Wagner suggests that the Plan of Arrangements was unconvincing. It would be counterproductive to hold that not fraudulent because even though the SBA mortgage and debtors making fraudulent statements in bankruptcy note were false, they were allegedly backed up by the IAC proceedings can elude prosecution simply because the loan commitment. In essence, Wagner claims that the Plan bankruptcy court successfully sniffed out the merely demonstrated his intent to pay his creditors and if the misrepresentation. bankruptcy court had approved the Plan without realizing the SBA loan was a forgery, the IAC loan would have served to Second, Wagner directs us to the legislative history of satisfy Wagner’s creditors, such that the Plan’s stated § 157(2), which he believes highlights the insufficiency of the intention was not false. This argument is factually misleading evidence. Section 157(2) was enacted as part of the because it ignores the falsified mortgage and note attached to Bankruptcy Reform Act of 1994. Pub. L. No. 103-394, 108 the Plan and referenced in the text of the Plan. This Stat. 4106, 4140, § 312(a)(1)(B) (1994). The House Report contention also misses the point, as it is actually just a variant states that “[u]nder no circumstances is this section to be of Wagner’s reliance contention. Even assuming that the IAC operative if the defendant is adjudicated as having committed loan commitment was real, which the government has the act alleged to constitute fraud for a lawful purpose.” H.R. convincingly called into question, Wagner still Rep. No. 103-835, at 57 (1994), reprinted in 1994 misrepresented the SBA mortgage and note. Wagner did not U.S.C.C.A.N. 3340, 3366. As examples, the report suggests cease either to engage in a scheme to defraud or to file a that § 157 would not apply when an individual makes a document in furtherance of that scheme simply because he misrepresentation on a financial statement before filing had a legitimate backup plan. The fact that the IAC loan, if bankruptcy so long as the individual did not make the it existed, might have potentially helped to satisfy his misrepresentation in preparation for bankruptcy, nor would creditors does not eliminate the illegality of Wagner’s false the statute apply if an individual made a false statement statements about an SBA loan for which he never received unrelated to the bankruptcy proceeding. Id. at 3366-67. This approval. legislative history does not help Wagner, who argues that the “lawful purpose” behind his filing of the Plan of Fourth, Wagner suggests that he was unaware of both Arrangements was to demonstrate his intent to repay his SBA’s inability to make loans and its guarantee limit of $1 creditors. Wagner’s actions can hardly be considered lawful, million because he could not hear the SBA officials. It is as his Plan fraudulently described a mortgage that did not unclear why his knowledge in this regard is relevant. As an initial matter, the testimony from the SBA officials demonstrated convincingly that Wagner understood that the SBA could not offer him a loan, and Wagner never testified devise any scheme or artifice to defraud ,” similar to § 15 7); Collier at trial that a hearing problem prevented him from § 7.07[1 ][a], at 7-119 to 7-121 (describing links betw een mail fraud understanding the SBA officials. Yet even assuming that statute and bankruptcy fraud statute). The com parable absence of reliance Wagner benignly did not comprehend the SBA’s rules, he still as an element in both mail/wire fraud and bankruptcy fraud informs our fraudulently informed the bankruptcy court that he had rejection of W agner’s claim that his conviction must be overturned because no individual relied upon his misrepresentations. received authorization for a loan when in fact he had not. No. 03-4313 United States v. Wagner 23 24 United States v. Wagner No. 03-4313
Perhaps Wagner misunderstood SBA’s role as a lender, but motion brought under § 2255 is preferable to direct appeal for surely from his thirty years as a developer Wagner knew that deciding claims of ineffective-assistance. When an one cannot obtain a mortgage without lender approval. ineffective-assistance claim is brought on direct appeal, appellate counsel and the court must proceed on a trial record In sum, the government presented adequate evidence to not developed precisely for the object of litigating or support Wagner’s conviction for the bankruptcy fraud. A preserving the claim and thus often incomplete or inadequate rational trier of fact could conclude that Wagner devised a for this purpose.” Massaro v. United States, 538 U.S. 500, scheme to defraud the court and filed his Plan of 504-05 (2003). Nonetheless, because of the relatively short Arrangements for the purposes of furthering that scheme. duration of Wagner’s incarceration, Wagner’s appellate counsel urges us to consider his ineffective assistance of C. Ineffective Assistance of Counsel counsel claim at this time. Upon doing so, we hold that there is nothing currently in the record that permits us to conclude Wagner also argues that he was deprived of his Sixth that “counsel’s conduct so undermined the proper functioning Amendment right to the effective assistance of counsel of the adversarial process that the trial cannot be relied on as because his counsel made several mistakes during the course having produced a just result.” Strickland v. Washington, 466 of his trial. Wagner claims that his counsel erred by: U.S. 668, 686 (1984). 1) failing to file a motion to dismiss on the concealment charge; 2) failing to renew the Rule 29 motion for acquittal; To demonstrate a constitutional violation pursuant to 3) failing to argue during closing argument that there was no Strickland, a defendant must show: 1) “that counsel’s concealment; 4) failing to question a prosecution witness performance was deficient” such that it did not constitute about the alleged loan commitment from IAC; 5) failing to “reasonably effective assistance,” id. at 687; and 2) “that there inform the jury that Wagner’s rental incomes were is a reasonable probability that, but for counsel’s substantially reduced by his expenditures; and 6) failing to unprofessional errors, the result of the proceeding would have offer the audiologist’s testimony for the proper purpose. been different.” Id. at 694. There is nothing in the record that indicates that counsel’s actions were deficient, as opposed to We review de novo claims of ineffective assistance of exercises of justifiable trial strategy, although naturally the counsel because they are mixed questions of law and fact. record before us is limited on this point. Yet, even if the United States v. Fortson, 194 F.3d 730, 736 (6th Cir. 1999). record highlighted clear failures in his attorney’s A direct appeal is not generally the best forum for an representation, Wagner has failed to show that he was ineffective assistance of counsel claim.4 “[I]n most cases a prejudiced by the purported deficiencies. Two of the six alleged deficiencies concern trial counsel’s failure to challenge the “concealment” charge. Because we hold that as 4 W agner’s improper inclusion with his appellate brief of an affidavit, which purp orts to establish “critical facts,” Wagner Br. at 30 n.8, regarding W agner’s Sixth Amendment claim, but which was not a part of the trial court record, und erscores why ineffective assistance claims are Cir. 1992) (“Th is Court will not entertain on appeal factual recitations not best left to collateral review. See Fed. R. App. P. 10 (a) (limiting the presented to the district court.”). The attachment of the affidavit signa ls record on appeal to “the original papers and exhibits filed in the district that there may be other factual issues concerning the alleged ineffective court,” “the transcript of proceedings, if any,” and the district co urt’s assistance of counsel that are best analyzed by a trial court in a § 2255 docket entries); Guarino v. Brookfield Twp. Trs., 980 F.2d 399, 404 (6th proceeding during which the affidavit could be properly received. No. 03-4313 United States v. Wagner 25 26 United States v. Wagner No. 03-4313
a matter of law Wagner’s undisputed actions constituted lightly overruled.” United States v. Jackson-Randolph, 282 concealment, Wagner was not prejudiced by his attorney’s F.3d 369, 376 (6th Cir. 2002). Under Federal Rule of failure to file a motion to dismiss or to argue before the jury Evidence 401, “‘Relevant evidence’ means evidence having that Wagner was not guilty of concealment. Wagner also any tendency to make the existence of any fact that is of suggests that his attorney erred by failing to renew the Rule consequence to the determination of the action more probable 29 motion for acquittal. Yet, even if renewed, the motion or less probable than it would be without the evidence.” Fed. should have been denied because the evidence is sufficient to R. Evid. 401. support the conviction. Furthermore, the attorney’s alleged failure to question a witness about the IAC loan and to inform Under this standard, we uphold the district court’s the jury about Wagner’s rental income did not impact the exclusion of Leaser’s testimony as a valid exercise of its proceedings, because there was sufficient evidence supporting discretion, because this testimonial evidence concerned facts the bankruptcy fraud count even if the attorney had that, if true, were of no consequence to Wagner’s trial. At undertaken these actions. Finally, as we explain below, even trial Wagner sought to introduce Leaser’s testimony to prove if Wagner’s trial counsel had offered the audiologist’s that he had difficulty hearing the bankruptcy court testimony for the proper purpose, the district court still would proceedings. Even if Wagner had difficulty hearing the have been justified in refusing its admission on account of its conversion-motion proceedings, such problems would not irrelevance. Accordingly, Wagner’s Strickland claim fails. have impacted his filing of a fraudulent SBA mortgage and note shortly before the June 3 hearing began or his changing D. The Audiologist’s Testimony of the locks a month after the hearing. Wagner’s final claim concerns the district court’s alleged On appeal, Wagner suggests that his trial counsel erred error in refusing to allow Leaser, Wagner’s audiologist, to because Leaser’s testimony was in fact supposed to show that testify. During the trial, Wagner’s attorney stated that Leaser Wagner failed to hear the statements of the SBA employees would testify regarding Wagner’s inability to hear and to and thus was not aware that the SBA could neither make understand the June 3 proceeding in the bankruptcy court. loans nor guarantee loans over $1 million. Yet, even if The government objected to the testimony on relevancy Wagner’s attorney had profferred the evidence for the grounds, and the district court excluded Leaser’s testimony on supposedly correct purpose, the district court would still have that basis. J.A. at 188-90. We review for abuse of discretion been justified in excluding the evidence on relevancy the district court’s evidentiary rulings. United States v. grounds. Any hearing problems that may have interfered with Bartholomew, 310 F.3d 912, 920 (6th Cir. 2002). “Under this Wagner’s ability to understand fully the SBA’s loan-making standard, we will leave rulings about admissibility of capacity did not excuse the filing of a Plan of Arrangements evidence undisturbed unless we are left with the definite and containing a fraudulent mortgage and note. Wagner’s alleged firm conviction that the [district] court . . . committed a clear hearing problem has no discernible relevance, because error of judgment in the conclusion it reached.” Id. (internal Wagner’s utterance in the bankruptcy court that he had quotations omitted) (alteration in original). In dealing with obtained a loan when he in fact had not is fraudulent no questions of relevance, we have accorded district courts matter his auditory comprehension of the SBA’s loan ample discretion; “Broad discretion is given to district courts policies. Therefore, the district court did not abuse its in determinations of admissibility based on considerations of discretion in declining to admit Leaser’s testimony. relevance and prejudice, and those decisions will not be No. 03-4313 United States v. Wagner 27
III. CONCLUSION In sum, all of Wagner’s claims fail. First, as a matter of law, changing the locks so as to obstruct a trustee’s access to the property of the debtor’s estate constitutes concealment. We accordingly uphold Wagner’s conviction for violating 18 U.S.C. § 152(1). Second, there is sufficient evidence that Wagner filed a fraudulent document in his bankruptcy proceeding. Third, Wagner’s ineffective assistance of counsel claim lacks merit because he cannot demonstrate prejudice. Fourth, we hold that the district court did not abuse its discretion in excluding the testimony of Wagner’s audiologist on relevancy grounds. Therefore, we AFFIRM the judgment of the district court.