United States v. Lowe , 664 F. App'x 38 ( 2016 )

14-4791-cr
United States v. Lowe
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 2nd day of November, two thousand sixteen.
PRESENT: ROBERT D. SACK,
REENA RAGGI,
DENNY CHIN,
Circuit Judges.
------------------------------------------------------------------
UNITED STATES OF AMERICA,
Appellee,
v. No. 14-4791-cr
MELVIN E. LOWE,
Defendant-Appellant.
------------------------------------------------------------------
APPEARING FOR APPELLANT: TINA SCHNEIDER, Law Office of Tina
Schneider, Portland, Maine.
APPEARING FOR APPELLEE: PERRY A. CARBONE, Assistant United States
Attorney (Karl Metzner, Assistant United States
Attorney, on the brief), for Preet Bharara,
United States Attorney for the Southern District
of New York, New York, New York.
Appeal from a judgment of the United States District Court for the Southern
District of New York (Vincent L. Briccetti, Judge).
1
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment entered on December 23, 2014, is AFFIRMED.
Defendant Melvin E. Lowe was convicted after a jury trial of substantive and
conspiratorial wire fraud, 18 U.S.C. §§ 1343, 1349; failing to file and subscribing to false
tax returns, 26 U.S.C. §§ 7203, 7206(1); and causing a false entry in a statement of a
federally insured bank, 18 U.S.C. §§ 1005, 2. Currently serving a 36-month prison
sentence for these crimes, Lowe challenges (1) the failure to charge the jury on the
defense of “reliance on a tax preparer”; (2) evidentiary rulings excluding hearsay
statements from his tax-return preparer, but admitting out-of-court communications
between Lowe and former New York State Senator John Sampson; (3) the sufficiency of
the evidence supporting the wire fraud and false bank statement counts of conviction; and
(4) the denial of his motion for a new trial. We assume the parties’ familiarity with the
facts and record of prior proceedings, which we reference only as necessary to explain
our decision to affirm.
1. Denied Tax-Preparer Defense Instruction
Lowe argues that the district court should have charged the jury that he could not
have acted with the willfulness necessary for the charged tax crimes if he relied on his
“tax preparer’s advice without having any reasonable basis to believe that the advice was
[in]correct.” Appellant’s Br. 32. To prevail on that claim, Lowe must show that the
requested charge accurately represented the law in every respect and that the charge
given was prejudicial as well as erroneous. See United States v. Rowland, 826 F.3d
100, 115 (2d Cir. 2016). Lowe cannot satisfy this standard because, as the district court
2
found, a tax-preparer defense in his case lacked the requisite basis in the evidence. See
United States v. Evangelista, 122 F.3d 112, 116–17 (2d Cir. 1997). For the defense to
apply, there must be some evidence that defendant (1) sought the advice of a presumably
competent accountant, (2) made full and accurate disclosure to the accountant, (3) strictly
followed the accountant’s advice, and (4) had no reason to think the advice was incorrect.
See id. at 117 (citing Williamson v. United States, 207 U.S. 425, 453 (1908)); Leonard B.
Sand et al., 2 Modern Federal Jury Instructions, Instr. 59-9 (2016). Here, the only
evidence Lowe proffered regarding his tax-preparation activities came from his life
partner, Mariame Camara, who testified that Lowe’s accountant had stated that Lowe
could file personal returns first and business returns later. Wholly missing was any
evidence that Lowe provided his accountant with a full and accurate disclosure of his
income, that he believed the sequential-filing advice, or that he followed it. Rather,
these elements of the defense are belied by Lowe’s personal returns, which reported as
business income on his IRS Form 1040, Schedule C, an amount equal to only ten percent
of his actual earnings. See, e.g., Trial Tr. 513; App’x 84, 86, 93, 95, 100, 102, 108, 110,
114, 116. Lowe offered no evidence that he filed supplemental “business” returns.
Indeed, the evidence indicated that he filed no returns at all for tax years 2010, 2011, and
2012. Accordingly, on this record, the district court correctly declined to instruct the
jury on the tax-preparer defense. See generally United States v. Evangelista, 122 F.3d at
117 (stating that defendants are not entitled to rely on alleged advice that “deferring” tax
payments was proper where defendants did not follow that advice). The court’s
willfulness charge was sufficient to instruct the jury adequately as to the mens rea
3
requirement of the crime charged and to avoid any prejudice to Lowe. See United
States v. Sabhnani, 599 F.3d 215, 237 (2d Cir. 2010) (observing that successful jury
instruction challenge requires showing of “both error and ensuing prejudice” when
“viewing the charge as a whole” (citation omitted)).
2. Evidentiary Challenges
We review Lowe’s challenge to evidentiary rulings for abuse of discretion. See
United States v. Rowland, 826 F.3d at 114. We conclude that the district court did not
abuse its discretion here.
a. Excluded Tax-Preparer Statements
Lowe asserts that out-of-court statements from his tax preparer were admissible
(1) to impeach the preparer’s statements in Lowe’s tax returns, see Fed. R. Evid. 806; and
(2) as substantive evidence under Fed. R. Evid. 804(b)(3) (statements against penal
interest) and 807 (residual hearsay exception).
Lowe’s impeachment argument fails because his tax returns were not statements
by the tax preparer—who did not sign them—but, rather, statements by Lowe himself.
See Trial Tr. 569–70. Accordingly, the district court did not abuse its discretion in
concluding that there was no preparer testimony to impeach under Fed. R. Evid. 806.
Lowe’s Rule 804(b)(3) and 807 arguments also fail. The former rule requires
that the proffered statement both “expose the declarant to . . . criminal liability” and be
“supported by corroborating circumstances that clearly indicate . . . trustworthiness.”
Fed. R. Evid. 804(b)(3). Rule 807 similarly demands “circumstantial guarantees of
trustworthiness.” The absence of such circumstances confirms that the district court
4
acted within its discretion. Further, the statements to which these arguments pertain
were made after the preparer pleaded guilty, while attempting to avoid a sentencing
enhancement for the use of a “special skill.” See Trial Tr. 628–36. Accordingly, the
district court did not abuse its discretion in declining to admit such statements, which
were designed to mitigate—not enhance—the preparer’s criminal liability. See United
States v. Tropeano, 252 F.3d 653, 658 (2d Cir. 2001) (holding that non-self-inculpatory
portions of defendant’s plea allocution were not admissible under Rule 804(b)(3)); see
also Williamson v. United States, 512 U.S. 594, 604 (1994) (opinion of O’Connor, J.)
(observing that statement intended to decrease liability “at least so far as sentencing
goes” does not fall under penal-interest exception); United States v. Albert, 773 F.2d 386,
389 (1st Cir. 1985) (holding Rule 804(b)(3) inapplicable to statement at sentencing
allocution where defendant’s purpose was to “help [himself], not to be sentenced to a
longer term of incarceration”). Accordingly, the district court did not abuse its
discretion in declining to admit such statements under Rule 804(b)(3).
b. Lowe-Sampson Conversations
Lowe argues that a witness’s account of overheard conversations between Lowe
and Sampson regarding money that the former owed (and later paid) to the latter was
irrelevant and prejudicial. The district court admitted the conversations for the limited
purpose of demonstrating the men’s relationship of trust, as background to the events at
issue. It specifically instructed the jury that (1) Lowe was not charged with any criminal
conduct in connection with the transfer of money on the debt obligation, and (2) the
evidence should not be considered for any purpose other than to establish the men’s
5
relationship. Trial Tr. 253–54. These actions fell within the district court’s discretion
under Fed. R. Evid. 403 and 404(b). See United States v. Williams, 205 F.3d 23, 33–34
(2d Cir. 2000) (holding uncharged bad acts admissible to “inform the jury of the
background” of charged conduct or “to . . . explain to the jury how the illegal relationship
between the participants in the crime developed” (citation omitted)). In urging
otherwise, Lowe argues that other trial evidence demonstrated the relationship of trust
between Lowe and Sampson. Even if this is so, that only renders the evidence
cumulative, which does not necessarily equate to irrelevant or prejudicial. Any
concerns in that regard were dispelled by the district court’s limiting instruction. See
Trial Tr. 253–54. Accordingly, we identify no abuse of discretion.
3. Sufficiency of the Evidence
Although we review a sufficiency challenge de novo, the defendant bears a heavy
burden because we must view the evidence in the light most favorable to the government
and can affirm the jury’s verdict if “any rational trier of fact could have found the
essential elements of the crime beyond a reasonable doubt.” Jackson v. Virginia, 443
U.S. 307, 319 (1979) (emphasis in original); accord United States v. Harvey, 746 F.3d
87, 89 (2d Cir. 2014). This case presents no sufficiency concern because the evidence
of Lowe’s guilt was compelling.
a. Wire Fraud
As to the wire fraud counts, Lowe argues that the government failed to prove that
the $100,000 he received from the New York State Democratic Senate Campaign
Committee (“DSCC”) was fraudulently obtained, rather than payment for legitimate
6
printing services relating to a mailing campaign. While Lowe submitted evidence that
some draft advertisements were created for the referenced campaign, the government’s
evidence indicated that the drafts were created after the fact in response to a negative
magazine exposé on the DSCC’s payment to Lowe. See Trial Tr. 255–57, 457–62.
Indeed, the prosecution evidence showed that the $100,000 payment was never intended
for printing services, but, rather, was a means to channel some $20,000 to political
consultant Michael Nieves, with Lowe keeping approximately $75,000, which he used to
build a pool and make other home improvements unbeknownst to the DSCC. See Trial
Tr. 247–48, 264, 319–25, 351–53. This evidence, viewed most favorably to the
government, was sufficient to convict Lowe of the charged wire fraud counts. Thus, the
district court did not err in denying Lowe’s motion for a directed verdict.
b. False Entry in a Statement of a Federally Insured Bank
Lowe argues that the evidence was insufficient to prove that the
verification-of-deposit form that he caused a bank employee to sign amounted to a “false
entry in [a] book, report, or statement” of a bank, 18 U.S.C. § 1005. The point merits
little discussion. Trial evidence showed that, in order to secure a $200,000 mortgage
loan, Lowe falsely claimed to have $80,000 on deposit at Commerce Bank when, in fact,
his balance during the relevant time period was approximately $10,000. See Trial Tr.
168. To corroborate his false claim and thus obtain the loan, Lowe persuaded the
assistant manager of a Commerce Bank branch (with whom he was friends, see Trial Tr.
157) to execute and transmit a verification-of-deposit form substantially overstating his
account balance. Lowe offers no adequate explanation why this verification-of-deposit
7
form, created by a Commerce Bank employee, would not amount to a statement of that
federally insured institution.
Lowe also challenges the sufficiency of the evidence to prove his intent to defraud
the lender, Premium Capital Funding, given his professed intent to repay the loan. The
argument fails because our precedent recognizes an intent to defraud when a party
employs falsehood to deprive a person of the right to control its own assets. See, e.g.,
United States v. Binday, 804 F.3d 558, 570 (2d Cir. 2015). As we have stated in
upholding a mail fraud conviction,
[W]here a defendant deliberately supplies false information to obtain
a bank loan, but plans to pay back the loan and therefore believes that
no harm will “ultimately” accrue to the bank, the defendant’s
good-faith intention to pay back the loan is no defense because he
intended to inflict a genuine harm upon the bank—i.e., to deprive the
bank of the ability to determine the actual level of credit risk and to
determine for itself on the basis of accurate information whether, and
at what price, to extend credit to the defendant.
United States v. Rossomando, 144 F.3d 197, 201 (2d Cir. 1998) (citation omitted). By
having a Commerce Bank employee transmit a false account-verification form to
Premium Capital Funding in support of his loan application, Lowe evinced a similar
intent to deprive that lender of the accurate information it required in deciding how to
dispose of its assets. This allowed a reasonable jury to find Lowe’s “intent to defraud.”
Insofar as Lowe objects to application of the right-to-control theory to 18 U.S.C. § 1005,
he provides no basis in law or fact for distinguishing the fraud proscribed in that statute
from that in the mail and wire fraud statutes. See United States v. Snow, 670 F.2d 749,
753 (7th Cir. 1982) (comparing intent element under “similar” financial fraud statutes,
8
such as mail fraud, 18 U.S.C. § 1341; making false bank entries, 18 U.S.C. § 1005; and
counterfeiting securities, 18 U.S.C. § 472).
Finally, Lowe argues that he cannot be convicted under § 1005 because the statute,
by its terms, applies only to bank employees. See 18 U.S.C. § 1005 (“Whoever, being
an officer, director, agent or employee of any [federally insured bank] . . . without
authority from the directors of such bank . . . issues or puts in circulation any notes” or
“[w]hoever makes any false entry in any book, report, or statement of such bank, . . .
[s]hall be fined not more than $1,000,000 or imprisoned not more than 30 years, or
both.”). Compare United States v. Barrel, 939 F.2d 26, 39–41 (3d Cir. 1991)
(construing restrictive phrase in first “whoever” clause—“being an officer, director,
agent, or employee”—to also limit parties liable for making false entries in the
subsequent “whoever” clause (citing United States v. Edwards, 566 F. Supp. 1219, 1220
(D. Conn. 1983))), with United States v. Edick, 432 F.2d 350, 352–53 (4th Cir. 1970)
(holding that “whoever makes any false entry in any book” is not limited to bank
employees); cf. United States v. Wells Fargo Bank, N.A., 972 F. Supp. 2d 593, 627–28
(S.D.N.Y. 2013) (holding that “whoever” clause added by subsequent amendment was
not limited to bank employees). The argument fails because Lowe was charged with
aiding and abetting the bank employee’s violation of § 1005, conduct for which he is
liable under 18 U.S.C. § 2. See United States v. Castiglia, 894 F.2d 533, 534, 535 n.4
(2d Cir. 1990) (affirming conviction of bank outsider for aiding and abetting employee’s
§ 1005 violation); see also United States v. Sindona, 636 F.2d 792, 795 (2d Cir. 1980)
(upholding conviction of bank outsider for conspiracy to violate § 1005). Because the
9
evidence overwhelmingly establishes Lowe’s guilt for aiding and abetting the bank
employee’s violation of the statute, his sufficiency challenge to the § 1005 conviction
fails.
4. Motion for a New Trial
Lowe argues that he was entitled to a new trial when, shortly after verdict, his
prosecutor learned from counterparts in the Eastern District of New York that
cooperating witness Michael Nieves had been the subject of a court-ordered FBI
wiretap—for a little less than two weeks—four years earlier. Lowe argues that he could
have used this evidence to impeach Nieves about his conversations with Senator
Sampson, which were relevant to the wire fraud charges.
The district court has “discretion to grant a new trial based on newly discovered
evidence if, among other things, the evidence is so material and non-cumulative that its
admission would probably lead to an acquittal.” United States v. Amato, 540 F.3d 153,
164 (2d Cir. 2008). Such a motion is granted, however, “only in the most extraordinary
circumstances” and requires the defendant to demonstrate that the evidence “could not
have been discovered through the exercise of due diligence before or during trial, and that
the evidence is so material and noncumulative that its admission would probably lead to
an acquittal.” United States v. Parkes, 497 F.3d 220, 233 (2d Cir. 2007) (emphasis in
original) (internal citations and quotation marks omitted). New evidence that “merely
discredits a government witness and does not directly contradict the government’s case
ordinarily does not justify the grant of a new trial.” United States v. Spencer, 4 F.3d
115, 119 (2d Cir. 1993) (internal citations and quotation marks omitted). “We review a
10
district court’s denial of a motion for a new trial based on newly discovered evidence for
abuse of discretion.” United States v. Vernace, 811 F.3d 609, 620 (2d Cir. 2016)
(citations omitted).
No such abuse is evident here. Nieves testified that Lowe had diverted $20,000
of the $100,000 DSCC payment to him. On cross-examination, Lowe’s counsel neither
disputed the payment nor impeached Nieves, though material for doing so was available.
See Trial Tr. 413–19. Rather, in summation, counsel argued that payments to Nieves
were not “improper” because they compensated him for past work. In these
circumstances, new impeachment evidence that did not “directly contradict the
government’s case,” United States v. Spencer, 4 F.3d at 119, fails to satisfy the
“extraordinary” burden necessary for a new trial, United States v. Parkes, 497 F.3d at
233.
5. Conclusion
We have considered Lowe’s remaining arguments and conclude that they are
without merit. Accordingly, the judgment of the district court is AFFIRMED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
11