United States v. Jimmie D. Childers , 254 F. App'x 772 ( 2007 )


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  •                                                            [DO NOT PUBLISH]
    IN THE UNITED STATES COURT OF APPEALS
    FILED
    FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
    ________________________ ELEVENTH CIRCUIT
    NOV 20, 2007
    No. 06-10868                  THOMAS K. KAHN
    ________________________                CLERK
    D. C. Docket No. 03-00531-CR-2-SLB-TMP
    UNITED STATES OF AMERICA,
    Plaintiff-Appellee,
    versus
    JIMMIE D. CHILDERS,
    KENNON R. PATTERSON, SR.,
    LARRY E. BISHOP,
    Defendants-Appellants.
    ________________________
    Appeals from the United States District Court
    for the Northern District of Alabama
    _________________________
    (November 20, 2007)
    Before TJOFLAT, HULL and WILSON, Circuit Judges.
    HULL, Circuit Judge:
    After a jury trial, defendants-appellants Kennon R. Patterson, Sr.
    (“Patterson”), Larry E. Bishop (“Bishop”), and Jimmie D. Childers (“Childers”)
    appeal their convictions for bank fraud conspiracy and related offenses. Patterson
    and Bishop also challenge the restitution portion of their sentences. After review
    and oral argument, we affirm.
    I. BACKGROUND 1
    A.      The parties
    Defendant Patterson was the CEO and Chairman of the Board of
    Community Bank, a federally-insured financial institution headquartered in
    Blountsville, Alabama. Patterson was also the CEO and Chairman of the Board of
    Community Bancshares, Inc. (“Bancshares”), the holding company for Community
    Bank.
    Additionally, Patterson (personally) owned and operated Heritage Valley
    Farms (“HVF”), a 1000-acre horse and cattle farm located in Blountsville. In
    1998, Patterson commenced construction of a 17,000-square-foot mansion at HVF,
    which was to serve as his personal residence. Beyond HVF, Patterson had ties to
    several other pieces of personal property: a mobile home in Auburn, Alabama,
    1
    Defendants challenge the sufficiency of the evidence presented against them at trial, and
    because Defendants were convicted, we recount the facts in the light most favorable to the
    government. See United States v. Garcia, 
    405 F.3d 1260
    , 1269 (11th Cir. 2005).
    2
    where his son lived; a parcel of land in Blount County, Alabama, known as Royal
    Acres that Patterson co-owned with another individual; and a house in Leeds,
    Alabama that was owned and occupied by Patterson’s mother. As explained
    below, defendants’ convictions in this case arise out of the fraudulent billing of
    Community Bank for construction work performed for Patterson at HVF and at
    Patterson’s other personal properties.
    Defendant Bishop was Community Bank’s Vice President of Construction
    and Maintenance. Bishop was hired in the mid-1990s, and he essentially served as
    the “in house” general contractor on various ongoing Community Bank
    construction projects throughout Alabama. Bishop chose which subcontractors
    worked on Community Bank’s construction projects, communicated with the
    subcontractors on an ongoing basis, and approved all subcontractors’ invoices for
    payment by Community Bank.
    Bishop also acted as the general contractor for work performed at
    Patterson’s HVF. Bishop received nominal payments—approximately $5000 per
    year—from Patterson during the course of the HVF construction, and Patterson
    promised Bishop that he would be “well compensated” upon the project’s
    completion.
    Defendant Childers owned and operated J&M Materials, Inc. (“J&M”), one
    3
    of the subcontractors hired by Bishop. J&M performed various construction
    services on several Community Bank projects and at HVF. J&M’s two biggest
    customers were Patterson and Community Bank.
    Separately indicted co-conspirators Dewey and Linda Hamaker owned and
    operated Morgan City Construction, Inc. (“MCC”). MCC, like J&M, provided
    construction services for various Community Bank projects and HVF. In addition,
    MCC provided construction services on two of Patterson’s other personal
    properties. Cf. United States v. Hamaker, 
    455 F.3d 1316
    , 1319 (11th Cir. 2006).2
    B.     Offense conduct
    Again, defendants’ convictions arise out of a scheme to fraudulently bill
    Community Bank for construction work performed for Patterson at HVF and his
    other personal properties, and to have Community Bank—rather than
    Patterson—pay for the bulk of that work. Defendant Bishop, as the general
    contractor on both Community Bank’s construction projects and Patterson’s
    personal construction projects, acted as the intermediary and facilitated
    Community Bank’s payment of Patterson’s personal projects.
    Because the scheme involved several subcontractors, some of whom were
    2
    The Hamakers were separately indicted, tried, and convicted. Further details about this
    same Community Bank scheme can be found in Hamaker, in which this Court affirmed the
    Hamakers’ convictions for their roles in the scheme.
    4
    indicted and others of whom were not, and because the activity of the
    subcontractors impacts our analysis of defendants’ convictions, we detail the
    relevant conduct of each subcontractor and explain how that conduct pertains to
    each defendant.
    1.     MCC
    MCC, owned and operated by the Hamakers, fraudulently billed Community
    Bank for hundreds of thousands of dollars worth of construction services that MCC
    performed for Patterson. See also Hamaker, 
    455 F.3d at 1319
    . According to the
    evidence presented at the trial of these three defendants, the MCC component of
    the scheme worked as follows.
    MCC recorded the number of hours worked by each construction employee,
    as well as the location at which each employee performed the work, in a
    computerized accounting system called Quickbooks. MCC’s Quickbooks records
    included accounts for each of MCC’s individual construction projects, and
    documented the materials, labor, and other costs that MCC incurred on each
    particular project.
    Between 1995 and 2001, MCC provided construction services at
    Community Bank branches throughout Alabama, as well as services at a site in
    Tennessee. Additionally, beginning in late 1997, MCC began providing services at
    5
    defendant Patterson’s HVF.
    Between January 1, 1998 and July 15, 2000, MCC billed and received from
    Community Bank a total of $3,122,977 for work reportedly done on several
    Community Bank construction projects. The trial evidence established that
    MCC—even accounting for price mark-ups in accordance with MCC’s “cost-plus”
    billing arrangement3—overbilled Community Bank by over $1.6 million. In the
    meantime, MCC barely billed Patterson at all while performing substantial work on
    HVF and Patterson’s other personal properties.
    For example, of the more than $3 million that MCC invoiced to Community
    Bank, MCC attributed approximately $500,000 to work performed at Community
    Bank’s Guntersville, Alabama branch. However, MCC’s records established that
    MCC incurred only approximately $30,000 in direct labor costs on the Guntersville
    project. MCC was due approximately $48,000 for such work after its “cost-plus”
    mark-ups, but MCC submitted, Bishop approved, and Community Bank paid
    invoices totaling $484,750 for work at Guntersville—more than ten times the
    amount actually due.
    Moreover, MCC’s records established that MCC incurred no labor costs at
    3
    MCC and Community Bank agreed to a “cost-plus” billing agreement whereby MCC’s
    labor costs were used as a benchmark and then percentage markups were added for workers’
    compensation, taxes, overhead, and profit.
    6
    all on the Guntersville project between February 9, 2000 and June 20, 2000. MCC
    nevertheless invoiced Community Bank for $178,500 of work purportedly done at
    the Guntersville site during that time, and Bishop approved and Community Bank
    paid those invoices as well.
    By contrast, over the same two-and-a-half year period, MCC received only
    $10,000 from defendant Patterson for MCC work performed at HVF.4 MCC
    received this relatively small amount of compensation despite the fact that MCC’s
    Quickbooks records reflect that MCC employees worked over 61,000 hours at
    Patterson’s personal HVF during that time period, incurring a total labor cost of
    $691,359.58. In other words, “during the same time frame in which MCC billed
    Community Bank over 1600% of the labor costs at the Guntersville project, MCC
    received from Patterson less than 1.5% of the labor costs at [Patterson’s] Heritage
    Valley Farms.” Hamaker, 
    455 F.3d at 1320-21
    .
    Additionally, at Community Bank’s Albertville, Alabama site, MCC
    4
    MCC sent Patterson two invoices during this period: a December 28, 1998 invoice for
    $37,500, and an April 21, 1999 invoice for $10,000. The government presented evidence that
    Patterson only paid MCC $10,000 prior to the discovery of the conspiracy in approximately
    June-July 2000. The government also presented evidence that Patterson requested the $37,500
    invoice from MCC in the latter part of 1998. At that time (November-December 1998), certain
    Bancshares stockholders threatened and ultimately filed a shareholder derivative suit in which it
    was alleged that Community Bank funds were being spent improperly. (This shareholder
    derivative suit is referred to infra as the “Townes litigation.”) In other words, the government
    presented evidence that, viewed in the light most favorable to the government, established that
    Patterson only requested the $37,500 invoice in late 1998 in response to the Townes litigation.
    7
    incurred approximately $70,000 in direct labor costs, which should have equated to
    about $110,000 in invoices under the “cost-plus” arrangement. Instead, MCC
    billed Community Bank approximately $585,000 for the Albertville project. Just
    as with the Guntersville project, Bishop approved MCC’s Albertville invoices, and
    Community Bank paid the full overcharge of approximately $475,000.
    Further evidence of MCC’s fraudulent billing of Community Bank was
    introduced in the form of handwritten entries made on a printout of MCC’s
    Quickbooks records. On a November 9, 1998 report reflecting numerous printed
    entries for labor costs and expenses on HVF-related projects, there were
    handwritten entries in the margins next to each HVF project that bore the names of
    various Community Bank projects. MCC administrative employee Tina Rogers
    testified that she made the handwritten notes next to the HVF-related entries at the
    direction of Linda Hamaker. Comparison of the November 1998 report with data
    found in MCC’s computer systems in 2000 revealed that each entry from the HVF-
    related accounts was subsequently shifted to Community Bank accounts, and
    Community Bank was invoiced to cover those charges.
    Finally, evidence established that MCC charged Community Bank not only
    for HVF-related work, but also for work performed at other personal properties
    connected to Patterson. MCC employees performed construction services on
    8
    Patterson’s Royal Acres property in Blount County, Alabama in March 2000, and
    at Patterson’s mother’s house in Leeds, Alabama in 1999. Former MCC
    employees testified that Bishop directed them to work on both the Royal Acres and
    Leeds sites.
    2.       J&M
    Again, defendant Childers owned and operated J&M. J&M itself performed
    excavating and hauling services at certain Community Bank locations and at HVF,
    and J&M subcontracted other excavating and hauling services at those locations.
    Between January and July 2000, J&M submitted approximately $325,000 in
    invoices to Community Bank for construction services purportedly performed at
    Community Bank’s Guntersville and Albertville locations. Evidence established
    that J&M (and its subcontractors) performed little work at those Community Bank
    sites during that time, but a great deal of work at HVF. Nevertheless, the
    approximately $325,000 in invoices from J&M were approved by Bishop and paid
    by Community Bank.
    The three subcontractors hired by J&M to perform work at Community
    Bank’s Guntersville and Albertville locations testified at trial. One of the
    subcontractors stated that he completed work on all Guntersville and Albertville
    projects by December 1999; the other two subcontractors testified that they
    9
    invoiced Childers for a total of approximately $68,000 in work performed at those
    sites between January and June 2000. Moreover, the subcontractors stated that
    they rarely, if ever, saw Childers or any other J&M employee on site at the
    Guntersville and Albertville locations, and former J&M employees confirmed that
    they performed little work at the Guntersville and Albertville locations between
    January and July 2000. By contrast, the government presented testimony that J&M
    and its subcontractors performed extensive work at HVF in 1999 and 2000.
    In addition, the government presented evidence of two false charts created at
    Childers’s direction that purported to show construction services performed by
    J&M. The charts, which were prepared as the scheme was being discovered,
    reflected that J&M had performed hundreds of thousands of dollars of construction
    services at the Guntersville and Albertville sites. However, Russell Speegle, a
    former Childers employee, testified that upon beginning work for Childers in June
    2000—around the time the scheme was being discovered—he was assigned the
    task of preparing the charts. Speegle testified that Childers gave him a list of
    invoices and instructed him to “fabricate” hours worked, so that the hours reflected
    on the charts would be roughly commensurate with the amounts billed. Speegle
    explained that in making the charts, he never reviewed any J&M time sheets,
    general ledger entries, or evidence reflecting the amount of time J&M machines
    10
    were in use. Speegle further testified that he never spoke to any other J&M
    employees or contacted any of J&M’s subcontractors before making the charts.
    3.     Defendants’ other fraudulent conduct
    The government also presented evidence that Bishop directed other
    contractors to bill Community Bank for work performed on HVF and Patterson’s
    other personal properties.
    a.    CAC
    The architectural firm of Coker, Anderton & Cosper (“CAC”) provided
    services for HVF and for various Community Bank projects. In early 1998, when
    CAC was first approached by Patterson and Bishop to work on HVF and
    Community Bank projects, CAC set up separate billing numbers and separately
    invoiced the work it performed for HVF and Community Bank. However, Wesley
    Anderton, one of the principals of CAC, testified that in May 1998, CAC was
    instructed by defendant Bishop to combine all work for HVF and Community
    Bank on one invoice. CAC complied with Bishop’s directive, although Anderton
    testified that CAC found Bishop’s request “rather strange.” As such, CAC began
    to combine its charges for HVF and Community Bank on one invoice as directed
    by Bishop, but CAC persisted in submitting cover sheets in which the charges were
    separated by each job.
    11
    Bishop then removed the explanatory sheets from the invoices, approved
    them, and submitted them to Community Bank for payment.5 The government
    submitted evidence that Community Bank paid approximately $35,000 in charges
    for CAC work on HVF projects between May 1998 and November 1998.
    In approximately November 1998, at Bishop’s request, CAC began to
    provide separate invoices for Community Bank and HVF work. Bishop also asked
    CAC to provide a separate breakdown of costs incurred on Community Bank and
    HVF projects between May 1998 and November 1998. Anderton testified that
    Bishop told CAC that the original, lump-sum billing arrangement had been a
    “mistake.” By approximately March 1999, the money originally paid by
    Community Bank for CAC work at HVF had been refunded to the Bank.
    However, the government presented evidence that in approximately
    November 1998—i.e., at the same time Bishop instructed CAC to ignore his
    original lump-sum billing directive and to start separating HVF and Community
    Bank charges again—certain Bancshares stockholders threatened and then filed a
    shareholder derivative lawsuit. This lawsuit, known as the “Townes litigation,”
    questioned the general manner in which Community Bank funds were being spent.
    5
    Occasionally, the combined invoices would contain relatively small charges that were
    specifically attributed to miscellaneous expenses incurred at HVF. Bishop paid those amounts
    by separate check; the government’s theory is that Bishop did this “so as not to arouse suspicion
    by Community Bank’s accounts payable department.”
    12
    William Caughren, who was the general counsel of Community Bank in 1998,
    testified that he met with Patterson and Bishop in November or December 1998 to
    discuss the Townes litigation. According to Caughren, during that meeting,
    Patterson said to Bishop that “the next thing that . . . Townes would raise a concern
    about was the building of [Patterson’s] house.” Caughren further testified that
    Bishop agreed with Patterson, and that Caughren then assisted Patterson “in
    draft[ing] some statements for the contractors to sign, stating that they were
    keeping the two projects [i.e., HVF work and Community Bank work] separate.”
    b.    L&L
    Lighting and Lamp Wholesalers, Inc. (“L&L”) provided light fixtures for
    HVF and for Community Bank projects. When Bishop began doing business with
    L&L, he did not request separate accounts, and when L&L supplied fixtures for
    HVF, the invoices for the fixtures were submitted to and paid by Community
    Bank.
    In November 1998, after commencement of the Townes litigation, Bishop
    opened a separate account for HVF, and thousands of dollars were refunded to
    Community Bank’s L&L account.
    Moreover, on an L&L invoice from September 1998, charges were
    specifically marked as having been incurred by L&L at the “Arena” at HVF.
    13
    Nevertheless, Bishop crossed out the “Arena” designation and wrote in
    “Demopolis,” which is the name of a Community Bank branch that was under
    construction in Demopolis, Alabama. Bishop approved the invoice for payment by
    Community Bank, and Community Bank paid accordingly.
    c.    Langford
    C.A. Langford Company, Inc. (“Langford”) provided stone materials for
    both Community Bank projects and HVF. In October 1997, Bishop opened a
    single account with Langford, in the name of Community Bank. Bishop routinely
    asked Langford to provide materials to be billed to that account, and Bishop then
    provided driving directions to the specific locations where he wanted the materials
    delivered. The directions often led to HVF. Moreover, Langford drivers often
    were directed to deliver materials to Community Bank’s headquarters in
    Blountsville and then re-directed to HVF upon their arrival.
    In December 1998, shortly after the Townes litigation began, Bishop
    directed Langford to create separate accounts for Community Bank and HVF.
    d.    Sheffield
    Sheffield Electrical Contractors, Inc. (“Sheffield”) also provided
    construction services for HVF and Community Bank projects. In December 1998,
    Bishop directed three Sheffield employees to travel to Auburn, Alabama to
    14
    perform services on a trailer then occupied by Patterson’s son. Patterson’s son
    testified that he did not hire or pay Sheffield for the work that was performed.
    At the time Bishop directed Sheffield to perform the work for Patterson’s
    son, neither Patterson nor Bishop maintained personal accounts with Sheffield;
    Community Bank had the sole account. Bishop never told Sheffield’s personnel to
    bill the Auburn work separately, and the services provided at Auburn were billed to
    and paid for by Community Bank.
    e.    Avant
    Avant Painting (“Avant”) also provided construction services for HVF and
    Community Bank projects. In September 1998, Bishop directed Avant to paint
    Patterson’s son’s trailer in Auburn. Avant did so, and the cost was billed to
    Community Bank and paid after Bishop’s approval. Patterson’s son testified that
    he never hired nor paid Avant for the painting work.
    C.    Discovery of the conspiracy
    On June 20, 2000, at a Community Bank board meeting, several directors
    raised questions about the progress of the Guntersville project. Michael Alred, an
    executive vice president and board member, noted that over $700,000 had been
    spent on the site (beyond land acquisition costs), yet nothing had been built above-
    ground. Defendant Patterson expressed his surprise and pledged to investigate.
    15
    On July 11, 2000, Patterson asked Community Bank director Wayne
    Washum to come to Patterson’s office. Patterson recorded their conversation,
    unbeknownst to Washum. Patterson asked Washum several times for the identity
    of those who were raising questions about the Guntersville project, and after
    learning that Alred was among the group, Patterson stated several times that Alred
    “need[ed] to be fired.”
    On July 15, 2000, at Patterson’s request, the board of Bancshares (the
    holding company for Community Bank) convened a special meeting. Bishop,
    Childers, and Dewey Hamaker (one of MCC’s principals) attended, and each
    denied that there had been any wrongdoing in the invoicing of Community Bank.
    Notably, Dewey Hamaker stated at this meeting that he invoiced Patterson “about
    every six months” for the work that MCC performed at HVF. In actuality, as noted
    supra at note 4, over the approximately thirty-month period between January 1998
    and July 2000, MCC billed Patterson twice, and one of the invoices was never
    paid.
    During the July 15, 2000 Bancshares board meeting, local sheriffs executed
    a search warrant at MCC’s offices, seizing time sheets, other documents, and
    computers. MCC’s computer records and time sheets were admitted into evidence
    in this case.
    16
    On July 17, 2000, MCC invoiced defendant Patterson for approximately
    $50,000 of work performed at HVF—the first invoice that MCC had sent Patterson
    since April 1999. MCC then sent Patterson twenty-nine invoices over the next five
    months, totaling over $460,000. These invoices sought payment for construction
    services performed years earlier, as far back as 1998. Patterson paid each of the
    invoices.
    On July 18, 2000, the Community Bank board met, and three board
    members—Alred, Michael Bean, and George Barnett—voiced concerns about the
    Guntersville project. Defendants Bishop and Childers, along with Dewey
    Hamaker, attended this meeting as well. Hamaker told the board that MCC had not
    billed Community Bank for services provided at HVF; Childers told the board that
    he had not billed Community Bank for HVF services; and Bishop assured the
    board that no improper conduct had occurred.
    Immediately thereafter, defendant Patterson met with Community Bank’s
    general counsel, Bancshares’s general counsel, and an outside lawyer for
    Community Bank, and sought approval to fire Bean. It was strongly recommended
    that Patterson not fire Bean; nevertheless, Patterson convened a meeting of
    Community Bank’s executive committee and raised concerns about the ability of
    Alred and Bean “to perform their normal duties during the investigation” into the
    17
    Guntersville project.
    Shortly after the Community Bank executive committee meeting, Alred and
    Bean were reassigned to new positions at Community Bank. In September 2000,
    Alred, Bean, and Barnett were removed from the board, and in November 2000,
    Alred and Bean were fired. In a deposition given in a civil suit filed by Alred and
    Bean, defendant Patterson asserted that he did not know why Alred and Bean were
    fired and that he tried to remove himself entirely from the firing process.
    In July 2000, several Bancshares shareholders filed a derivative action
    against the company (the “Benson litigation”), in which it was alleged that
    Patterson, Bishop, the Hamakers, and others harmed Community Bank by
    fraudulently using bank funds for non-bank purposes. The Community Bank and
    Bancshares boards formed a committee (the “Benson Special Litigation
    Committee”) to investigate the allegations raised in the Benson litigation.
    The three defendants in this case—Patterson, Bishop, and Childers—were
    interviewed and deposed in connection with the Benson litigation and other
    ensuing lawsuits and investigations, and their statements in those interviews and
    depositions are relevant to the allegations in this case, as follows.
    During his interview with the Benson Special Litigation Committee,
    defendant Patterson asserted that he did not pay MCC on an ongoing basis for their
    18
    work at HVF because the parties agreed that MCC would “hold the bill” until the
    work was completed. Patterson reasserted this claim during a deposition, stating
    that defendant Bishop told him that the Hamakers preferred a lump sum payment at
    the conclusion of the job.
    Financial statements prepared by the Hamakers and Patterson during the
    relevant time period contradict this claim. The Hamakers never listed any account
    receivable for HVF on any financial statement. In fact, when they applied for a
    general contractor’s license in December 1998, the Hamakers had an incentive to
    declare the highest amount of accounts receivable possible, in order to qualify for a
    license on larger projects, but the Hamakers still listed no money owed by
    Patterson.
    Likewise, Patterson’s financial statements for 1998, 1999, and 2000 list no
    account payable to MCC or the Hamakers, and Patterson’s accountant testified that
    when he communicated with Patterson to prepare those financial statements,
    Patterson never stated that he owed the Hamakers any money.
    When defendant Bishop was asked about MCC’s December 1998 invoice
    sent to Patterson, he first told bank regulators, in August 2000, that he could not
    speak to MCC’s billing practices. Then, in a later deposition, Bishop stated that he
    had personally requested that the December 1998 invoice be sent. Finally, Bishop
    19
    told an FBI special agent that he had not requested the invoice.
    As for defendant Childers, the two false charts discussed earlier (created by
    Speegle, at Childers’s direction) were submitted to the Benson Special Litigation
    Committee.
    Finally, when asked in a civil deposition about the nature of his relationship
    with Dewey Hamaker, defendant Patterson stated that he barely knew Hamaker
    and could not recall any conversations with him. However, the government
    adduced evidence in this case that after the Hamakers were indicted in May 2002
    and received court-appointed counsel, Patterson took numerous steps to help the
    Hamakers be able to afford private counsel.
    Patterson first contacted a law firm that provided outside legal services to
    Community Bank and secured an opinion from the law firm that payment of the
    Hamakers’ legal expenses by Bancshares would not be illegal. The proffered
    reason for payment of the Hamakers’ legal fees was that publicity resulting from
    their prosecution could lead to a fatal run on Community Bank. The Bancshares
    board was presented with this idea at a board meeting on July 2, 2002, and
    ultimately rejected it. Nevertheless, Patterson continued to work toward funding
    the Hamakers’ defense. On July 11, 2002, Patterson informed the same outside
    law firm that he had been approached by the pastor at his church with an offer to
    20
    help the Hamakers. The law firm then put Patterson’s pastor in contact with
    Colonial Bank, another of the firm’s clients, to see if Colonial Bank would loan
    money to the church to pay the Hamakers’ fees. In early August 2002, Colonial
    Bank agreed to make a $200,000 loan to the church, the stated purpose of which
    was “to begin improvements to church property.” Colonial Bank was not told that
    the purpose of the funds was to pay for the Hamakers’ defense.
    After the loan was funded, Patterson’s pastor disbursed $50,000 to Hamaker
    Construction Company (“HCC”), an entity formed by the Hamakers’ son. HCC
    purportedly had a contract to perform construction services at Patterson’s church,
    but HCC never performed any such services. Instead, HCC transferred the money
    to Walter Braswell, the Hamakers’ trial counsel.6
    D.     Indictment
    Patterson, Bishop, and Childers were charged in a twenty-five count
    superseding indictment returned in September 2004. Count 1 charged all
    defendants with conspiring to defraud Community Bank, to misapply bank funds,
    to make false entries in bank books and records, and to make false statements to
    the Bank, in violation of 18 U.S.C §§ 371 and 2. Counts 2-4 charged all
    6
    The government made clear before the district court and in its brief before this Court
    that it does not believe that Braswell knew the source of his payments or engaged in any
    wrongdoing.
    21
    defendants with bank fraud, in violation of 
    18 U.S.C. §§ 1344
     and 2. Counts 5-7
    charged all defendants with making false statements in bank books and records, in
    violation of 
    18 U.S.C. §§ 1005
     and 2, and Counts 8-13 charged only Patterson and
    Bishop with making false statements in bank books and records, in violation of
    those same statutes. Counts 14-19 charged Patterson alone with making false
    statements in loan applications, in violation of 
    18 U.S.C. §§ 1014
     and 2; Counts
    20-21 charged Patterson alone with money laundering, in violation of 
    18 U.S.C. §§ 1957
     and 2; and Counts 22-23 charged Patterson alone with making false
    statements on tax returns, in violation of 
    26 U.S.C. § 7206
    (1) and 
    18 U.S.C. § 2
    .
    Count 24 sought criminal forfeiture from all three defendants.
    E.     Trial
    Each of the defendants pleaded not guilty, and in January 2005, the case
    proceeded to trial. The government presented evidence as described above. In
    March 2005, the jury found Patterson guilty on all counts except those counts
    charging false statements in loan applications (Counts 14-19) and those counts
    charging money laundering (Counts 20-21).7 The jury found Bishop and Childers
    guilty of all counts against them.
    F.     Sentencing
    7
    The money laundering counts (Counts 20-21) against Patterson were dismissed, on the
    government’s motion, prior to trial.
    22
    In December 2005, the district court sentenced Patterson. With an offense
    level of 30 and a criminal history category of I, Patterson’s advisory guidelines
    range was 97-121 months’ imprisonment. After consideration of the 
    18 U.S.C. § 3553
    (a) factors, the district court imposed a downward variance: 60 months’
    imprisonment on the conspiracy, bank fraud, and false entries convictions, and 36
    months’ imprisonment on the false tax returns conviction, all to be served
    concurrently.
    In January 2006, the district court sentenced Childers and Bishop. With an
    offense level of 26 and a criminal history category of I, Bishop’s advisory
    guidelines range was 63-78 months’ imprisonment. After consideration of the 
    18 U.S.C. § 3553
    (a) factors, the district court imposed a downward variance, and
    sentenced Bishop to 48 months’ imprisonment.
    With an offense level of 16 and a criminal history category of I, Childers’s
    advisory guidelines range was 21-27 months’ imprisonment. The district court
    sentenced Childers to 21 months’ imprisonment, the low end of his advisory
    guidelines range.8
    Also in January 2006, the district court held a separate hearing on restitution.
    The district court ordered Patterson and Bishop, jointly and severally, to pay
    8
    Neither the government nor defendants appeal the duration of defendants’ sentences.
    23
    $1,776,974.24 in restitution.
    II. DISCUSSION
    All defendants contend that the government presented insufficient evidence
    to sustain their convictions.9 Defendants further contend that the district court
    improperly admitted evidence of: (1) Patterson’s attempts to help fund the
    Hamakers’ defense; (2) Patterson’s attempts to have Alred, Bean, and Caughren
    fired; (3) MCC’s Quickbooks records, a printout of an MCC Quickbook record
    with former MCC employee Tina Rogers’s handwriting in the margins, and MCC’s
    employee timesheets; (4) summary charts of J&M’s billings prepared by an FBI
    special agent; and (5) only a selected portion, as opposed to the entirety, of certain
    “statements” given by Childers.10 Patterson further argues that the superseding
    indictment was obtained improperly,11 and that his convictions should be reversed
    because the district court was biased against him.12 Childers further contends that
    9
    We review a challenge to the sufficiency of the evidence de novo, and view all evidence
    in the light most favorable to the government. United States v. Garcia, 
    405 F.3d 1260
    , 1269
    (11th Cir. 2005).
    10
    A district court’s evidentiary rulings are reviewed for abuse of discretion. United States
    v. Range, 
    94 F.3d 614
    , 620 (11th Cir. 1996).
    11
    Generally, the denial of a motion to dismiss the indictment is reviewed for abuse of
    discretion; however, to the extent that the motion to dismiss implicates questions of law, the
    review is de novo. United States v. Noriega, 
    117 F.3d 1206
    , 1211 (11th Cir. 1997).
    12
    A district judge’s conduct during trial is reviewed for abuse of discretion. United States
    v. Verbitskaya, 
    406 F.3d 1324
    , 1337 (11th Cir. 2005).
    24
    the district court should have severed his trial from Patterson’s and Bishop’s.13
    Finally, Patterson and Bishop argue that the district court erroneously ordered them
    to pay over $1.7 million in restitution.14
    After careful review and oral argument, we conclude that each of these
    arguments lack merit. Only defendants’ sufficiency-of-the-evidence arguments
    warrant further discussion.
    A.     Conspiracy
    All defendants contend that the government presented insufficient evidence
    that they agreed to defraud Community Bank, misapply bank funds, and/or make
    false entries in bank books. We disagree.
    To sustain a conspiracy conviction under 
    18 U.S.C. § 371
    , the government
    must prove: “(1) the existence of an agreement to achieve an unlawful objective;
    (2) the defendants’ knowing and voluntary participation in the agreement; and (3)
    the commission of an act in furtherance of the agreement.” United States v.
    Adkinson, 
    158 F.3d 1147
    , 1153 (11th Cir. 1998) (emphasis omitted). The key
    element of conspiracy is the agreement to commit an unlawful act. See United
    13
    The denial of a motion to sever is reviewed for abuse of discretion. United States v.
    Garcia-Jaimes, 
    484 F.3d 1311
    , 1320 (11th Cir. 2007).
    14
    The legality of a restitution order is reviewed de novo, but the factual findings
    underlying the restitution order are reviewed for clear error. United States v. Washington, 
    434 F.3d 1265
    , 1267 (11th Cir. 2006).
    25
    States v. Chandler, 
    388 F.3d 796
    , 805 (11th Cir. 2004). However, “[b]ecause the
    essential nature of conspiracy is secrecy, such an agreement may be proved by
    circumstantial as well as direct evidence.” United States v. Browning, 
    723 F.2d 1544
    , 1546 (11th Cir. 1984); see also United States v. Tampas, 
    493 F.3d 1291
    ,
    1298 (11th Cir. 2007) (conspiracy can be proven by circumstantial evidence).
    After having outlined the trial evidence in great detail above, we conclude
    that substantial evidence supports defendants’ conspiracy convictions. The
    government established that Patterson and Bishop engaged in a fraud scheme
    whereby they had contractors (including Childers’s J&M) perform substantial
    construction work at Patterson’s personal properties and invoice that work to
    Community Bank as purportedly done for the Bank. Patterson and Bishop then
    had Bishop approve the invoices for payment by Community Bank, and in turn,
    Community Bank actually paid the invoices.
    Specifically, the government presented ample evidence from which the jury
    reasonably could have concluded that: (1) Patterson was building a multi-million
    dollar mansion for himself at HVF and having other construction work performed
    at his personal properties; (2) Patterson, as CEO and Chairman of the Board of
    Community Bank, knew that Community Bank was simultaneously engaged in
    various corporate construction projects throughout Alabama; (3) Bishop personally
    26
    managed both Patterson’s personal construction projects and construction on the
    Community Bank projects; (4) the same contractors, including Childers’s J&M and
    the Hamakers’ MCC, were retained to work on both Patterson’s personal
    construction projects and on the Community Bank projects; (5) between January
    1998 and July 2000, those contractors performed hundreds of thousands of dollars
    of work at Patterson’s personal properties, including HVF, and Patterson knew
    such substantial work was performed; (6) between January 1998 and July 2000,
    Patterson received essentially no bills from the contractors, and paid essentially no
    money to those contractors, for the substantial work on Patterson’s personal
    properties; (7) between January 1998 and July 2000, there was very little work
    actually performed by the contractors at Community Bank sites; and (8) Bishop
    approved Community Bank’s payment of hundreds of thousands of dollars for
    work reportedly performed at Community Bank sites, when Patterson and Bishop
    knew the work performed and billed by the contractors was actually performed at
    HVF and Patterson’s other personal properties.15
    There was also evidence that although Patterson had Bishop manage
    Patterson’s personal construction projects, Patterson paid Bishop very little money
    15
    To give one example, although hardly anything had been built above-ground at
    Community Bank’s Guntersville site, various contractors charged, Bishop approved, and
    Community Bank paid, over $700,000 of work as purportedly performed at Guntersville when in
    fact that work had been performed at Patterson’s HVF and other personal properties.
    27
    during the course of HVF’s construction and promised Bishop that he would be
    “well compensated” upon HVF’s completion. The government further established
    that after defendants’ scheme was discovered and the Hamakers were indicted for
    MCC’s fraudulent billing of Community Bank for work on Patterson’s personal
    projects, Patterson went to great lengths to orchestrate payment of the Hamakers’
    legal bills so that they could have the benefit of private counsel. Additionally, the
    government showed that until the Townes litigation commenced in late 1998,
    Patterson was never invoiced by MCC for work on his HVF project, and Bishop
    never requested separate invoices for HVF and Community Bank projects. Even
    after commencement of the Townes litigation—and despite MCC’s substantial
    work on HVF—MCC invoiced Patterson only twice, and Patterson was not
    invoiced at all by MCC between April 1999 and July 2000. However, between
    July 2000—the time defendants’ scheme was discovered—and December 2000,
    MCC sent Patterson twenty-nine invoices, seeking to recover for construction
    services at HVF as long ago as 1998. There was also evidence that CAC actually
    tried to separately invoice HVF and Community Bank projects from the beginning,
    but Bishop expressly resisted those efforts.
    As for Childers, the evidence showed that, through J&M, he fraudulently
    billed Community Bank for approximately $325,000, representing that it was for
    28
    work performed on Community Bank sites. In actuality, most of the $325,000 that
    Childers invoiced was for work performed by J&M or its subcontractors at
    Patterson’s HVF, and not Community Bank sites. As part of the scheme, Bishop in
    turn approved, and Community Bank paid, these invoices from Childers. The
    evidence also established that in June 2000, as the defendants’ scheme was being
    discovered, Childers directed a new employee—Speegle—to falsify charts that
    purported to reflect work performed by J&M and its subcontractors at Community
    Bank sites. Speegle testified that Childers gave him a list of invoices and
    instructed him to fabricate hours worked at Community Bank sites, so as to match
    the amounts billed to the hours reflected as worked on the charts. From this
    evidence, the jury reasonably could have concluded that Childers knowingly
    participated in the conspiracy with Bishop and Patterson.
    Thus, contrary to defendants’ contentions, the government presented ample
    evidence that defendants agreed amongst themselves, and also with the Hamakers,
    to defraud Community Bank. While mere presence or close association with co-
    conspirators is insufficient to establish knowing participation in a conspiracy, see
    United States v. Perez-Tosta, 
    36 F.3d 1552
    , 1557 (11th Cir. 1994), the
    government’s substantial evidence here establishes far more than association.
    Moreover, while defendants emphasize that there was evidence that “Patterson told
    29
    Bishop to keep the billings separate,” in actuality, the evidence only established
    that Bishop told investigators, after-the-fact, that Patterson told him to keep the
    HVF and Community Bank billings separate. Such after-the-fact statements by
    Bishop are not altogether unsurprising, and regardless, the jury was free to
    disregard this evidence. See United States v. Calderon, 
    127 F.3d 1314
    , 1324 (11th
    Cir. 1997) (recognizing that “‘[a] jury is free to choose among the constructions of
    the evidence’”) (citation omitted).16 Accordingly, we conclude that there was
    sufficient evidence to sustain defendants’ conspiracy convictions.
    B.     Bank fraud
    Counts 2-4 charged defendants with defrauding Community Bank by
    causing the Bank to pay J&M invoices that purported to charge for work
    performed at Community Bank sites but actually charged for work performed at
    HVF. In order to sustain a conviction for bank fraud, the government must show
    that a defendant knowingly executed or attempted to execute a scheme (1) to
    16
    Likewise, we reject Childers’s claim that the district court erred because it “failed to
    [require the jury to] exclude every reasonable hypothesis except guilt.” Although this Court
    once subscribed to that standard, we rejected it long ago. See United States v. Bell, 
    678 F.2d 547
    , 549 (5th Cir. Unit B 1982) (en banc) (“It is not necessary that the evidence exclude every
    reasonable hypothesis of innocence or be wholly inconsistent with every conclusion except that
    of guilt, provided a reasonable trier of fact could find that the evidence establishes guilt beyond a
    reasonable doubt.”); see also Calderon, 
    127 F.3d at 1324
     (same); Stein v. Reynolds Sec., Inc.,
    
    667 F.2d 33
    , 34 (11th Cir. 1982) (adopting all post-September 30, 1981 decisions of Unit B of
    the former Fifth Circuit as binding precedent in the Eleventh Circuit).
    30
    defraud a financial institution, or (2) to obtain by false or fraudulent pretenses,
    representations, or promises any of the monies or other properties of a financial
    institution. See United States v. McCarrick, 
    294 F.3d 1286
    , 1290 (11th Cir. 2002)
    (quoting 
    18 U.S.C. § 1344
    ). “[C]ircumstantial evidence may prove knowledge and
    intent,” United States v. Williams, 
    390 F.3d 1319
    , 1325 (11th Cir. 2004), and
    knowledge and intent may also be proven through defendants’ false exculpatory
    statements, see United States v. McDowell, 
    250 F.3d 1354
    , 1367 (11th Cir. 2001).
    Defendants acknowledge that the government’s evidence as to the bank
    fraud counts is essentially the same as for the conspiracy count, and defendants do
    not raise any new arguments as to bank fraud. Defendants argue only that the jury
    drew unreasonable and unsupported inferences from the circumstantial evidence in
    convicting defendants of the bank fraud counts. As discussed above, we disagree.
    Accordingly, we conclude that there was ample evidence to sustain defendants’
    bank fraud convictions.
    C.    False entries
    Defendants proffer two arguments as to why the government presented
    insufficient evidence to sustain their false entries convictions. We reject both.
    First, defendants contend that the government failed to present any evidence
    that they knowingly caused false entries in Community Bank’s books and records.
    31
    We disagree. 
    18 U.S.C. § 1005
     prohibits knowingly and willfully making, or
    causing to be made, a false entry in a book or record of a federally insured bank,
    with the intent to defraud or deceive. “The prohibition of false entries is in broad
    and comprehensive terms,” and “[t]he purpose of the statute is to help insure that
    inspection of a bank’s books will yield a true picture of the bank’s condition.”
    United States v. De La Mata, 
    266 F.3d 1275
    , 1296 (11th Cir. 2001). As discussed,
    the government presented substantial evidence that defendants knowingly caused
    false invoices from J&M and MCC to be paid by Community Bank, which
    defendants knew would cause false entries to be made on Community Bank’s
    general ledgers. Accordingly, we reject defendants’ first challenge to their false
    entries convictions.
    Defendants’ second attack on their false entries convictions is premised on
    United States v. Manderson, 
    511 F.2d 179
     (5th Cir. 1975),17 in which our
    predecessor Court stated that “[i]t cannot be a false entry to make an entry on the
    books of the bank which correctly reflects the transaction and was so intended.”
    Manderson, 
    511 F.2d at 181
    . According to defendants, the entries made on
    Community Bank’s general ledger as a result of the MCC and J&M invoices
    17
    In Bonner v. City of Prichard, 
    661 F.2d 1206
    , 1209 (11th Cir. 1981) (en banc), this
    court adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to
    October 1, 1981.
    32
    accurately reflect the Bank’s payment of those invoices, so the entries “correctly
    reflect[] the transaction[s]” that occurred and cannot amount to illegal false entries
    under Manderson.
    We find Manderson materially distinguishable. As the Manderson Court
    itself recognized, in that case, “[t]here was no attempt to defraud” the bank, and the
    bank was not defrauded. Id. at 180. Instead, in Manderson, the defendant bank
    employee knew that funds had been (properly) issued by the bank, and he
    attempted to extort some of those funds after-the-fact. As the Manderson Court
    noted, the entry made in the bank’s books for the check in that case “was the very
    entry that should have been made had there been no later effort to extort.” Id. at
    181. By contrast, in this case, entries were made that reflected Community Bank
    payments for services that were not actually performed for Community Bank.
    Moreover, as discussed supra, there certainly was an “attempt to defraud”
    Community Bank. Id. at 180. Accordingly, we conclude that there was sufficient
    evidence presented to sustain defendants’ false entries convictions.
    D.    False statements on tax returns
    Finally, Patterson challenges his convictions under 
    26 U.S.C. § 7206
    (1) for
    making false statements on his 1998 and 1999 income tax returns by omitting
    income received in the form of work performed by MCC at HVF. Under § 7206,
    33
    the government was required to prove that Patterson willfully filed a tax return that
    he did not believe to be true and correct as to every material matter therein. See
    United States v. Kaiser, 
    893 F.2d 1300
    , 1305 (11th Cir. 1990).
    Patterson acknowledges that the government used the same evidence to
    prove the tax return counts (Counts 22-23) as it did to prove the bank fraud and
    false entries counts, and accordingly, the only argument that Patterson makes as to
    the sufficiency of the evidence on the tax return counts is that the government’s
    evidence as to the bank fraud and false entries counts was insufficient. Because we
    have already rejected Patterson’s sufficiency arguments as to the bank fraud and
    false entries counts, we also reject those arguments here.
    III. CONCLUSION
    For the above reasons, we affirm defendants’ convictions and sentences.
    AFFIRMED.
    34
    

Document Info

Docket Number: 06-10868

Citation Numbers: 254 F. App'x 772

Judges: Tjoflat, Hull, Wilson

Filed Date: 11/20/2007

Precedential Status: Non-Precedential

Modified Date: 11/5/2024

Authorities (20)

United States v. Tampas , 493 F.3d 1291 ( 2007 )

United States v. Robert McCarrick , 294 F.3d 1286 ( 2002 )

UNITED STATES of America, Plaintiff-Appellee, v. Manuel ... , 117 F.3d 1206 ( 1997 )

United States v. John Paul Browning , 723 F.2d 1544 ( 1984 )

United States v. Gerald Kaiser , 893 F.2d 1300 ( 1990 )

United States v. Nelson Bell , 678 F.2d 547 ( 1982 )

United States v. Efrain Garcia-Jaimes , 484 F.3d 1311 ( 2007 )

United States v. Hernan Francisco Perez-Tosta, Gustavo ... , 36 F.3d 1552 ( 1994 )

United States v. Dewey M. Hamaker , 455 F.3d 1316 ( 2006 )

United States v. William T. Manderson , 511 F.2d 179 ( 1975 )

Larry Bonner v. City of Prichard, Alabama , 661 F.2d 1206 ( 1981 )

Murray Stein v. Reynolds Securities, Inc. , 667 F.2d 33 ( 1982 )

United States v. Adkinson , 158 F.3d 1147 ( 1998 )

United States v. Alberto Calderon , 127 F.3d 1314 ( 1997 )

United States v. Brenda J. Williams , 390 F.3d 1319 ( 2004 )

United States v. Renard L. Washington , 434 F.3d 1265 ( 2006 )

United States v. Vika Verbitskaya , 406 F.3d 1324 ( 2005 )

United States v. Range , 94 F.3d 614 ( 1996 )

United States v. Fred De La Mata , 266 F.3d 1275 ( 2001 )

United States v. Shedrick McDowell Bardomiano Piedra-Bustos,... , 250 F.3d 1354 ( 2001 )

View All Authorities »