United States v. Michael Peninger , 456 F. App'x 214 ( 2011 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-4732
UNITED STATES OF AMERICA,
Plaintiff – Appellee,
v.
MICHAEL DERRICK PENINGER,
Defendant – Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Charleston. Patrick Michael Duffy, Senior
District Judge. (2:09-cr-00034-PMD-1)
Argued: October 28, 2011 Decided: December 1, 2011
Before GREGORY, SHEDD, and DAVIS, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Thomas Aull Withers, Sr., GILLEN, WITHERS & LAKE, LLC,
Savannah, Georgia, for Appellant. Michael Rhett DeHart, OFFICE
OF THE UNITED STATES ATTORNEY, Charleston, South Carolina, for
Appellee. ON BRIEF: William N. Nettles, United States Attorney,
Columbia, South Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
A federal jury found that Michael Derrick Peninger operated
a fraudulent investment and commodity trading scheme and,
accordingly, convicted him of eight counts of mail fraud, in
violation of 18 U.S.C. § 1341 and 18 U.S.C. § 2, and one count
of making a false statement to a federal officer, in violation
of 18 U.S.C. § 1001. Peninger absconded prior to sentencing,
but he was eventually apprehended and sentenced to 240 months
imprisonment and 3 years supervised release. On appeal,
Peninger raises numerous issues regarding his conviction and
sentence, and, considering each argument in turn, we affirm. 1
I.
We first consider Peninger’s contention that the district
court abused its discretion in granting the Government’s motion
in limine to exclude testimony by Dr. Leonard Mulbry, the
psychiatrist who performed Peninger’s pretrial competency exam.
See United States v. Iskander, 407 F.3d 232, 238 (4th Cir. 2005)
1
Peninger raises a total of nine issues. In addition to
the four addressed herein, Peninger also challenges the denial
of a motion for continuance; the limiting of his cross-
examination of a witness; and the denial of his motion for a new
trial based upon newly discovered evidence. Peninger also
challenges the procedural reasonableness of his sentence and
contends that the Assistant United States Attorney’s opening
remarks constituted prosecutorial misconduct. We have reviewed
each of these contentions and find them to be without merit.
2
(noting that we review exclusion of expert testimony for abuse
of discretion). In a pretrial proffer, Dr. Mulbry testified
that because of Peninger’s severe narcissistic personality
disorder, many of the fraudulent statements attributed to him
were “most likely due to his mental illness,” rather than an
intent to defraud. (J.A. 119). The district court excluded the
testimony, concluding that it was “simply diminished capacity
evidence or some other form of justification in disguise,” and
that “[t]he fact that [Peninger’s condition] may motivate that
behavior in some way . . . does not negate the specific intent
of doing it.” (J.A. 129).
We conclude that the district court did not abuse its
discretion in excluding the testimony. In United States v.
Worrell, 313 F.3d 867 (4th Cir. 2002), we addressed the
admission of diminished capacity testimony in cases, such as
this, where the defendant was not pursuing an insanity defense.
We started with a discussion of the Insanity Defense Reform Act
(IDRA), which provides:
(a) Affirmative defense.-It is an affirmative defense
to a prosecution under any Federal statute that, at
the time of the commission of the acts constituting
the offense, the defendant, as a result of a severe
mental disease or defect, was unable to appreciate the
nature and quality or the wrongfulness of his acts.
Mental disease or defect does not otherwise constitute
a defense.
3
(b) Burden of proof.-The defendant has the burden of
proving the defense of insanity by clear and
convincing evidence.
18 U.S.C.A. § 17. As we explained, “[t]he language of the
statute leaves no room for a defense that raises ‘any form of
legal excuse based upon one’s lack of volitional control’
including ‘a diminished ability or failure to reflect adequately
upon the consequences or nature of one’s actions.’” Worrell,
313 F.3d at 872 (quoting United States v. Cameron, 907 F.2d
1051, 1061 (11th Cir. 1990).
Applying Worrell, we conclude the district court was within
its discretion to exclude Dr. Mulbry’s testimony. The evidence
of Peninger’s mental illness did not negate the specific intent
to defraud his victims. In Worrell, we suggested testimony
might be admissible if it was being offered “to show he did not
do it, not that he could not help it.” Id. at 874. Dr.
Mulbry’s testimony falls short of this standard because it does
not suggest that Peninger did not defraud his victims or mean to
defraud them. As the district court noted, the testimony is the
very type of “volitional” evidence Worrell and the IDRA
prohibit—a suggestion for why he committed fraud or why he could
not help himself commit fraud. As we succinctly stated in
Worrell, “IDRA bars a defendant who is not pursuing an insanity
defense from offering evidence of his lack of volitional control
as an alternative defense.” Id. at 875.
4
II.
Next, Peninger contends that the district court abused its
discretion in admitting certain bank records through an FBI
agent. See United States v. Blake, 571 F.3d 331, 346 (4th Cir.
2009) (noting that a district court’s evidentiary rulings are
reviewed for abuse of discretion). At trial, the Government’s
case agent, Agent Derr, compared the investment statements
Peninger issued to his investors with the investors’ actual bank
records. This comparison illustrated that Peninger sent false
statements to his investors, claiming their accounts had much
more money than they actually did. Agent Derr received the
actual bank statements by way of subpoena. Peninger objected to
the admission of these statements, arguing that someone had to
“lay a foundation as to who received it, where it came from.”
The district court overruled the objections, concluding that
anything received from a grand jury subpoena could be admitted
through Agent Derr.
Peninger now argues that the bank statements are hearsay
not subject to Federal Rule of Evidence 803(6), the business
records exception. Peninger, however, failed to raise this
objection below. Instead, as noted above, Peninger asserted
only the Government’s duty to authenticate the evidence and the
agent’s lack of personal knowledge regarding it.
5
Because Peninger failed to specifically object on the
grounds raised on appeal, we review this argument for plain
error. See Fed. R. Crim. P. 52(b). Peninger cannot meet this
rigorous standard. In this appeal, the Government has filed a
supplemental appendix noting that, before trial, the Government
attorneys and Peninger’s counsel communicated by email that the
records would be admitted under Federal Rule of Evidence 902(11)
and that the Government made the records and the written
documents authenticating them available at the pretrial exhibit
conference. Certification under Rule 902(11) obviates the need
for the Government to authenticate business records at trial and
permitted the bank records admission under Rule 803(6). See
Fed. R. Evid. 902(11) (noting business records are admissible
without authentication at trial if accompanied “by a written
declaration of [the] custodian or other qualified person”
attesting that the records satisfy the requirements of Rule
803(6)).
III.
Peninger also challenges the district court’s decision to
permit the testimony of Kara Mucha, a trading investigator with
the Commodities Futures Trading Commission (CFTC). Mucha
testified regarding trading logs that showed the numbers of
commodity futures Peninger was trading. These logs were
obtained by subpoena from other commodity futures trading firms.
6
The purpose of this testimony was to show that Peninger traded
far fewer commodity futures than he told his investors and
clients.
Peninger objected that Mucha’s testimony was hearsay, an
objection which the district court overruled after it asked
several questions to lay a foundation. Mucha told the district
court that the documents were records maintained by companies at
the direction of the CFTC, that the companies maintained the
documents as business records, and that the companies had to
forward these trading documents to the CFTC upon request. Mucha
did not testify, however, as to how these individual trading
firms maintained the records. The Government also noted that it
had offered Peninger the opportunity to review these records
months before trial, but Peninger had declined to do so.
The Government contends that Mucha’s testimony was properly
admissible under Rule 803(6). Peninger argues that these
documents do not meet the requirements of 803(6) because Mucha
was neither the “custodian” of the trading logs nor a “qualified
witness.” Courts have recognized that “[a] foundation for
admissibility may at times be predicated on judicial notice of
the nature of the business and the nature of the records as
observed by the court, particularly in the case of bank and
similar statements.” Federal Deposit Ins. Corp. v. Staudinger,
797 F.2d 908, 910 (10th Cir. 1986) (internal quotation marks
7
omitted). Thus, records and testimony are admissible if there
are sufficient “circumstances demonstrating the trustworthiness
of the documents.” United States v. Johnson, 971 F.2d 562, 571
(10th Cir. 1992). Applying this rationale in Johnson, the Tenth
Circuit found admissible bank receipts that showed certain
transactions between investors and the criminal defendants. The
court noted:
There is simply no dispute that the transactions shown
by the receipts took place as recorded. As noted
above, bank records are particularly suitable for
admission under Rule 803(6) in light of the fastidious
nature of record keeping in financial institutions,
which is often required by governmental regulation.
Id.Like banks, commodity futures trading firms are highly
regulated by the federal government, and in this case there are
sufficient “circumstances demonstrating the trustworthiness of
the documents” to permit Mucha’s testimony.
Moreover, even assuming this testimony was erroneously
admitted under Rule 803(6), any error is harmless for two
reasons. First, courts have found that erroneous Rule 803(6)
rulings are harmless when the evidence was otherwise admissible
under Rule 807, the catchall provision. See Karme v. C.I.R.,
673 F.2d 1062, 1064-65 (9th Cir. 1982); United States v. Jacobs,
No. 94-5055, 1995 WL 434827, *2 (4th Cir. 1995) (unpublished)
(noting incorrect admission of evidence under Rule 803(6)
8
harmless when evidence was “both material and probative and the
interests of justice were well served by their admission” and
“nothing in the record . . . suggest[s] that the documents were
other than what they purported to be”).
Second, Mucha’s testimony regarding Peninger’s trading
records was largely duplicative of evidence presented by the FBI
that indicated only $60,000 of the $7.2 million Peninger
obtained from investors was ever transferred to investment
companies for trading. (J.A. 564-65). Mucha actually testified
to a higher volume of trades, and her testimony in some regards
benefitted Peninger’s contention that he was trading his
investors’ money. 2
IV.
Peninger also contends that the district court violated
Federal Rule of Criminal Procedure 32(h) 3 by failing to provide
notice of an upward departure. Sentencing in this case was
2
The Government accounts for this discrepancy by noting
that Mucha’s records included trades by another individual named
Michael Peninger, who was unrelated to this investigation.
3
Rule 32(h) provides:
Before the court may depart from the applicable
sentencing range on a ground not identified for
departure either in the presentence report or in a
party’s prehearing submission, the court must give the
parties reasonable notice that it is contemplating
such a departure. The notice must specify any ground
on which the court is contemplating a departure.
Fed. R. Crim. P. 32(h).
9
scheduled for April 10, 2010. On that morning, in lieu of
reporting to court, Peninger absconded, remaining a fugitive for
more than one week. After his capture, sentencing was set for
June 25, 2010. Prior to this sentencing hearing, the Government
filed a motion for a two-level upward departure for obstruction
of justice. The Government’s motion stated that “the Government
moves for a 2-level upward departure to account for [Peninger’s]
failure to appear at sentencing.” (J.A. 949). The motion
recounted that Peninger “already received an enhancement for
obstruction of justice when he was convicted of lying to the
FBI,” and that Peninger “obstructed justice again when he
committed perjury at trial.” (J.A. 948-49). At sentencing, the
Government argued that an upward departure was appropriate
because Peninger committed perjury during trial and because he
absconded. The district court, concerned with punishing
Peninger for absconding when the Government had already filed a
new indictment against him for that offense, decided to apply an
upward departure because of Peninger’s perjured testimony. 4
On appeal, the Government argues that its motion can be
fairly read to request an upward departure on both Peninger’s
4
The Presentence Report (PSR) recommended, and the district
court adopted, a two-level enhancement for obstruction of
justice for Peninger’s conviction for making a false statement
to the FBI. This upward departure was in addition to that two-
level enhancement.
10
absconding and his trial testimony. At sentencing, the district
court indicated that it read the Government’s motion to present
both arguments, but Peninger contends that the motion, fairly
read, only requests an upward departure for absconding.
Even assuming the Government’s motion failed to provide
proper notice, we believe any error is harmless. See United
States v. Davenport, 445 F.3d 366, 371 (4th Cir. 2006) (noting
Rule 32(h) errors can be harmless), overruled in part on other
grounds by Irizarry v. United States, 553 U.S. 708 (2008); Fed.
R. Crim. P. 52(a) (noting “[a]ny error, defect, irregularity, or
variance that does not affect substantial rights must be
disregarded”). The Presentence Report recommended a two-level
enhancement for the false statement conviction and also for
Peninger’s numerous instances of perjury during trial. Peninger
was therefore on notice that his perjury was going to be used to
enhance his offense level in some way. Moreover, at sentencing
the district court informed Peninger that it was considering a
departure or additional enhancement for perjury and permitted
Peninger to argue on this point. 5
5
This case is thus distinguishable from United States v.
Spring, 305 F.3d 276, 282-83 (4th Cir. 2002), on which Peninger
relies. In Spring, the district court relied on a ground
presented in the PSR for an upward departure but at sentencing
failed to give the defendant the opportunity to present any
argument. Id. at 279-80.
11
In any event, we have recently indicated that “it would
make no sense to set aside [a] reasonable sentence and send the
case back to the district court since it has already told us
that it would impose exactly the same sentence, a sentence we
would be compelled to affirm.” United States v. Savillon-
Matute, 636 F.3d 119, 123 (4th Cir. 2011) (internal quotation
marks omitted). The district court indicated throughout
sentencing that it believed 240 months was the “appropriate”
sentence, (J.A. 1034), and a sentence of 240 months is
substantively reasonable. 6 See Savillon-Matute, 636 F.3d at 124.
Accordingly, to the extent the district court erred in providing
Rule 32(h) notice, any error is harmless.
V.
For the foregoing reasons, we affirm the conviction and
sentence.
AFFIRMED
6
Even assuming we remanded for a violation of Rule 32(h),
the district court would not be prohibited from simply changing
the two-level upward departure into a variance sentence to reach
240 months.
12