United States v. Cluck ( 1998 )

REVISED - JUNE 22, 1998
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 97-50444
_____________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
ELWOOD CLUCK, also known as
Jack Cluck,
Defendant-Appellant.
_________________________________________________________________
Appeal from the United States District Court for the
Western District of Texas
_________________________________________________________________
June 3, 1998
Before WISDOM, JOLLY, and HIGGINBOTHAM, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
Elwood “Jack” Cluck appeals his conviction and sentence for
committing bankruptcy fraud in violation of 18 U.S.C. § 152(1) &
(3). Finding no merit in any of Cluck’s multitudinous and niggling
points of error, we affirm.
I
A
Before the events in this case, Cluck was an attorney who
specialized, by his own admission, in the legal avoidance of
income, estate, and gift taxes.1 His practice was, by all
accounts, quite successful, allowing Cluck to enjoy many of the
finer things in life. In his case, the finer things ranged from an
assortment of properties located throughout the state of Texas, to
his own Beechcraft Bonanza airplane, to a collection of classic
Jaguar automobiles.
Smooth travel sometimes comes to an abrupt halt, however, and
so it was in the case of Cluck. In October 1989, the road ahead
worsened considerably when a state court rendered judgment against
him in the staggering amount of $2.9 million.2 Although Cluck had
high hopes that an appellate detour would shortly return him to his
golden highway,3 he soon found that the detour itself would require
1
An undoubtedly satisfying profession that we do not
disparage. See Estate of McLendon v. Commissioner of Internal
Revenue, 135 F.3d 1017, 1025 n.16 (5th Cir. 1998).
2
The suit was based on alleged fraudulent conduct by Cluck in
his handling of the estate of Booney M. Moore, one of his tax
planning clients. It was brought pursuant to Texas’s Deceptive
Trade Practices Act, whose punitive damage provisions gave rise to
the large award. For further background, see generally Coble Wall
Trust Co. v. Palmer, 848 S.W.2d 696 (Tex. App.-San Antonio 1991,
writ granted), rev’d and remanded, 851 S.W.2d 178 (Tex. 1992), on
remand, 859 S.W.2d 475 (Tex. App.-San Antonio 1993, writ denied).
3
As well he should have. The judgment entered on the jury’s
verdict was reversed on appeal for lack of subject matter
jurisdiction in the trial court. See Coble Wall Trust Co. v.
Palmer, 848 S.W.2d 696 (Tex. App.-San Antonio 1991, writ granted).
Although that decision was itself reversed by the Texas Supreme
Court, see Palmer v. Coble Wall Trust Co., 851 S.W.2d 178 (Tex.
1992), on remand the appellate court found a further reason to
reverse the verdict that was apparently less offensive. See Coble
2
a steep toll of 10 percent in the form of the supersedeas bond
necessary to forestall execution. Short of funds and in need of a
cul de sac in which to safely park his troubled vehicle for a
while, Cluck turned to the refuge of the bankruptcy court, as many
a similarly threatened sojourner had done before him.
Unlike these other voyagers, however, Cluck apparently
concluded that his resources would need more protection than the
bankruptcy court could provide until his appellate travels had
reached their final destination. Thus, before invoking the power
of Title 11, he perceived that it might be useful to keep some
Jaguars in reserve, some money within easy access, and, maybe, just
for good measure, a few of his favorite things beyond the reach of
his creditors and the bankruptcy court. To this end, on March 26,
1990, Cluck returned a note for $50,000 to its grantor, Perfect
Union Lodge. Perfect Union was one of Cluck’s clients, and the
note had been originally tendered in payment of certain legal
services. Three days later, on March 29, Cluck pawned three
Jaguars, a 1983 Chevrolet truck, his airplane, a Lone Star boat,
and a Winnebago camper shell (“the Jaguars, etc.”) to a used car
Wall Trust Co. v. Palmer, 859 S.W.2d 475 (Tex. App.-San Antonio
1993, writ denied) (acknowledging subject matter jurisdiction, but
finding suit nonetheless barred by res judicata and for other
reasons).
3
dealer for $32,000,4 retaining for himself and his designee a right
to reacquire at a set price5 within thirty to ninety days of the
sale.
B
His affairs now in preliminary order, on March 30, Cluck filed
his petition for Chapter 7 liquidation in the United States
Bankruptcy Court for the Western District of Texas. As part of the
standard Chapter 7 procedure, Cluck was required to file a Schedule
of Assets and a Statement of Financial Affairs. These documents
required, among other things, disclosure of all accounts
receivable, rights of acquisition, and asset transfers during the
prior year. On his forms, Cluck made no mention of the assets
recently pawned to the used car dealer or of his right to
reacquire. He also did not disclose his return of the $50,000 note
or the corresponding account receivable from Perfect Union Lodge.
In addition, Cluck failed to list a transfer of 351 acres of land
in McMullen County, Texas, that he had made on June 21, 1989.
Finally, and significantly for this appeal, Cluck also neglected to
include a further $150,000 in pre-petition accounts receivable from
another of his clients, the O.D. Dooley Estate.
4
A price that was, needless to say, significantly below the
assets’ fair market value.
5
About $38,000.
4
On July 31, Cluck’s bankruptcy came to its first purported
close, and the bankruptcy court entered an order discharging him
from all dischargeable debts. Thinking his plan to have succeeded,
on November 9, Cluck collected $48,000 from the O.D. Dooley Estate
in partial payment of that client’s aforementioned pre-petition
account receivable. On November 16, the remaining $102,000
followed. About seven months later, on June 28, 1991, Cluck
collected $35,000 from Perfect Union in settlement of its still-
outstanding $50,000 account receivable. Of these funds, a portion
was deposited into the account of First Capitol Mortgage, a Nevada
corporation owned by Cluck’s wife, Kristine. By this time, First
Capitol had also reacquired all of the assets that had been pawned
to the used car dealer. As might be suspected, neither the receipt
of the money nor the reacquisition of the assets was revealed to
the bankruptcy trustee.
As the dog days of summer 1991 wore on, the bankruptcy trustee
finally got scent of Cluck’s machinations. After gathering his
evidence, on October 9, the trustee initiated an adversary
proceeding against Cluck, his wife, First Capitol Mortgage, and the
used car dealer, all pursuant to 11 U.S.C. § 548, alleging
fraudulent concealment of assets and requesting that Cluck’s
discharge be revoked. After a one-day trial, the bankruptcy court
agreed, finding that Cluck had engaged in the pattern of fraudulent
5
concealment and deception outlined above, and that First Capitol
Mortgage was his alter ego. The court revoked Cluck’s discharge,
and, on December 31, 1992, ordered him: (1) to turn over to the
trustee the assets that had been pawned to the used car dealer; (2)
to pay $195,0006 to the trustee for the concealed accounts
receivable; and (3) to pay an additional $13,000 to the trustee for
a fourth Jaguar automobile that had been otherwise concealed and
could no longer be located.
II
The bankruptcy court’s finding of intentional concealment
apparently aroused the interest of the U.S. Attorney, and on
March 27, 1995, Cluck was charged with eight counts of bankruptcy
fraud in violation of 18 U.S.C. § 152(1) & (3). The counts were
essentially as follows:
Count One: Making a false statement in violation of
§ 152(3) for failing to include the
Perfect Union and O.D. Dooley accounts
receivable on his Statement of Financial
Affairs.
Count Two: Fraudulent concealment in violation of
§ 152(1) for failing to reveal the return
of the $50,000 Perfect Union note, the
sale of 351 acres of land in McMullen
County, Texas, and the pawning of the
Jaguars, etc., all of which were
6
It is unclear from the record before us why this sum was
$195,000, and not $185,000, as the simple addition of the O.D.
Dooley and Perfect Union (settlement) figures would suggest.
6
transfers that occurred within one year
of his bankruptcy petition.
Count Three: Fraudulent concealment in violation of
§ 152(1) for failing to reveal his post-
petition receipt of the $35,000 payment
from Perfect Union Lodge on a pre-
petition account receivable.
Count Four: Making a false statement in violation of
§ 152(3) for failing to include the
return of the $50,000 Perfect Union note,
the sale of 351 acres of land in McMullen
County, Texas, and the pawning of the
Jaguars, etc., on his Statement of
Financial Affairs.
Count Five: Fraudulent concealment in violation of
§ 152(1) for failing to reveal his post-
petition receipt of the $102,000 payment
from the O.D. Dooley Estate on a
pre-petition account receivable.
Count Six: Fraudulent concealment in violation of
§ 152(1) for failing to reveal his post-
petition receipt of the $48,000 payment
from the O.D. Dooley Estate on a pre-
petition account receivable.
Count Seven: Fraudulent concealment in violation of
§ 152(1) for failing to reveal his right
to reacquire the Jaguars, etc.
Count Eight: Making a false statement in violation of
§ 152(3) for failing to include his right
to reacquire the Jaguars, etc. on his
Statement of Financial Affairs.
On January 16, 1997, a jury found Cluck guilty on counts one,
three, four, five, six, seven, and eight, and not guilty on count
two. On May 22, 1997, Cluck was sentenced to concurrent terms of
twenty-four months imprisonment on each count, and ordered to pay
7
restitution in the amount of $185,000. Cluck appeals his
conviction, sentence, and restitution order on multiple grounds.
III
Cluck makes four distinct arguments on appeal, none of which
has merit.
A
First, Cluck argues that his original indictment was
insufficient for purposes of the Sixth Amendment in that it did not
specifically allege that the property concealed was property of the
bankruptcy estate, or that the concealment and false statements
arose in connection with a case under Title 11, both of which he
contends are essential elements of § 152(1) and/or (3).
We review the sufficiency of an indictment de novo. United
States v. Asibor, 109 F.3d 1023, 1037 (5th Cir. 1997). “To be
sufficient, an indictment needs only to allege each essential
element of the offense charged so as to enable the accused to
prepare his defense and to allow the accused to invoke the double
jeopardy clause in any subsequent proceeding.” United States v.
Webb, 747 F.2d 278, 284 (5th Cir. 1984). The test of the validity
of an indictment is “not whether the indictment could have been
framed in a more satisfactory manner, but whether it conforms to
minimal constitutional standards.” Id. Under this liberal review,
we look to a practical, non-technical reading of the indictment as
8
a whole, and an indictment will be held sufficient unless “no
reasonable construction of the indictment would charge the offense
for which the defendant has been convicted.” McKay v. Collins, 12
F.3d 66, 69 (5th Cir. 1994).
With respect to Cluck’s first complaint, we note that § 152(1)
only requires that the property concealed “belong[] to the estate
of the debtor,” not to the “bankruptcy estate.” Cf. United States
v. Arge, 418 F.2d 721, 724 (10th Cir. 1969) (referencing
“bankruptcy estate” under a prior version of the statute).
Unsurprisingly, our review of the indictment’s language indicates
that it was more than sufficient to put Cluck on notice that he was
being charged with concealing his own property. There is therefore
no merit to his argument on this point.
With respect to Cluck’s second complaint, it is true that the
relevant portions of § 152(1) & (3) require that the concealment or
false statement be made “in connection with a case under title 11,”
or “in or in relation to a[] case under title 11,” respectively.
Our review of the indictment reveals, however, that it clearly
indicated that all charges arose in connection with Cluck’s
specifically named and cited bankruptcy proceeding. Obviously,
this reference was more than sufficient to put Cluck on notice that
he was being charged with concealment “in connection with a case
9
under title 11,” and making false statements “in or in relation to
a[] case under title 11,” so there is no merit here either.
B
Cluck next contends that he was subjected to a multiplicitous
indictment in that he was charged for the same conduct under both
§ 152(1) & (3) in counts one and two, three and four, and seven and
eight, and, second, in that counts five and six both referenced
payment on a single account receivable. The first part of Cluck’s
argument appears to be a matter of first impression in this
circuit.
We review issues of multiplicity de novo. United States v.
Dupre, 117 F.3d 810, 818 (5th Cir. 1997). In general,
“multiplicity” is the charging of a single offense under more than
one count of an indictment. United States v. Nguyen, 28 F.3d 477,
482 (5th Cir. 1994). “The chief danger raised by a multiplicitous
indictment is the possibility that the defendant will receive more
than one sentence for a single offense.” United States v. Swaim,
757 F.2d 1530, 1537 (5th Cir. 1985). Where the question of
multiplicity arises because of overlapping statutory provisions,
“[t]he test for determining whether the same act or transaction
constitutes two offenses or only one is whether conviction under
each statutory provision requires proof of an additional fact which
the other does not.” Nguyen, 28 F.3d at 482 (citing United States
10
v. Free, 574 F.2d 1221, 1224 (5th Cir. 1978)); see also Dupre, 117
F.3d at 818 (citing Blockburger v. United States, 284 U.S. 299, 304
(1932)). Where, on the other hand, the question of multiplicity
arises because of a multipart transaction, the question becomes
“‘whether separate and distinct prohibited acts, made punishable by
law, have been committed.’” United States v. Shaid, 730 F.2d 225,
231 (5th Cir. 1984) (quoting Bins v. United States, 331 F.2d 390,
393 (5th Cir. 1964)). In the bankruptcy fraud context, “[m]ultiple
violations of § 152 occur, and multiple indictments lie, when each
fraudulent transfer is a ‘separate act, taken at a discrete time,
with the requisite intent.’” United States v. McClennan, 868 F.2d
210, 213 (7th Cir. 1989) (quoting United States v. Moss, 562 F.2d
155, 160 (2d Cir. 1977)).
With respect to Cluck’s first complaint, there can be no doubt
that charging the same conduct under both § 152(1) & (3) does not
render an indictment multiplicitous. By its very terms, § 152(1)
requires that property be concealed “from creditors or the United
States Trustee” before a violation occurs. Section 152(3)
incorporates no such element. Correspondingly, § 152(3) requires
that the accused make a “false declaration, certificate,
verification or statement under penalty of perjury” before
liability attaches, whereas § 152(1) contains no such prerequisite.
Because each statutory provision “requires proof of an additional
11
fact which the other does not,” charging the same conduct under
both sections does not give rise to a multiplicity problem.7
Cluck’s second complaint is similarly lacking in merit.
Counts five and six charged concealment based on Cluck’s pocketing
of two payments from the O.D. Dooley Estate. Our review of the
record reveals no dispute that two checks, one in the amount of
$102,000 and one for $48,000, were received and deposited on two
separate occasions separated by some seven days. These separate
acts, taken at discrete times, implicated two distinct
opportunities for Cluck to formulate and effect his criminal
intent. Because counts five and six were predicated on these
distinct prohibited acts, they were not duplicitous.
C
Cluck next attempts to persuade us that the evidence was
insufficient on all the counts of his indictment with respect to
7
We note in passing that our decision on the multiplicity of
a combined § 152(1) & (3) indictment appears to conflict with that
of the only other circuit to have expressly considered the matter.
See United States v. Montilla Ambrosiani, 610 F.2d 65, 69 (1st Cir.
1979). With regard to the larger multiplicity question of charging
a single act under more than one of the many subsections of § 152,
however, we note relatively mixed authorities tending in both
directions. Compare, e.g., United States v. Gordon, 379 F.2d 788,
790 (2d Cir. 1967), and United States v. Shireson, 116 F.2d 881,
884 (3d Cir. 1940) (no multiplicity problem), with United States v.
McIntosh, 124 F.3d 1330, 1336-37 (10th Cir. 1997), and Montilla
Ambrosiani (tending to find a problem), and with United States v.
Christner, 66 F.3d 922, 926-30 (8th Cir. 1995) (ambivalent). See
also United States v. UCO Oil Co., 546 F.2d 833, 835-38 (9th Cir.
1976) (finding a multiplicity problem in a similar context).
12
intent. Under § 152(1) & (3), the prosecution must show that the
concealment or false statement was made “knowingly and
fraudulently.” Cluck argues, essentially, that the evidence showed
only that he was careless in providing information to his
bankruptcy attorney, not that he committed intentional fraud.
In assessing sufficiency, we review the evidence in the light
most favorable to the jury verdict. United States v. Willey, 57
F.3d 1374, 1380 (5th Cir. 1995). All credibility determinations
and reasonable inferences will be resolved in favor of the verdict,
and the evidence will be found sufficient unless it was not such as
could lead a rational fact-finder to conclude that the essential
elements of the crime had been proved beyond a reasonable doubt.
Nguyen, 28 F.3d at 480.
In applying this requirement, “[i]t is not necessary that the
evidence exclude every reasonable hypothesis of innocence or be
wholly inconsistent with every conclusion except that of guilt.”
United States v. Bell, 678 F.2d 547, 549 (5th Cir. 1982) (en banc),
aff'd on other grounds, 462 U.S. 356 (1983). In particular, the
court must keep firmly in mind that “what the fact finder ‘is
permitted to infer from the evidence in a particular case is
governed by a rule of reason.’” United States v. Henry, 849 F.2d
1534, 1537 (5th Cir. 1988) (quoting United States v. Cruz-Valdez,
773 F.2d 1541, 1546 (11th Cir. 1985) (en banc)). Fact-finders may
13
properly “‘use their common sense’” and “‘evaluate the facts in
light of their common knowledge of the natural tendencies and
inclinations of human beings.’” Id. Furthermore, it is well
established that “‘[c]ircumstances altogether inconclusive, if
separately considered, may, by their number and joint operation,
especially when corroborated by moral coincidences, be sufficient
to constitute conclusive proof.’” United States v. Ayala, 887 F.2d
62, 67 (5th Cir. 1989) (quoting The Slavers (Reindeer), 69 U.S. (2
Wall.) 383, 401 (1865)).
In this case, it is manifestly clear that Cluck’s repeated
omissions and history of coincidental and questionable transfers
formed just the sort of “circumstances” that the Supreme Court had
in mind in the Reindeer case. Based on our review of the record,
we are convinced that a rational jury could have inferred the
existence of an intentional plan to defraud from the bare facts of
Cluck’s systematic concealment and false statements. We therefore
find no merit to his argument that the evidence was insufficient on
this point.
D
Finally, Cluck pleads that, even if his conviction is allowed
to stand, his sentence and restitution order must be revisited
because the district court clearly erred in its calculation of the
loss caused by his conduct. He argues, essentially, that the
14
district court did not properly give him credit for the fact that
several concealed assets, including those pawned to the used car
dealer, had already been recovered by the trustee.
We give considerable deference to a district court’s factual
findings at sentencing, and will reverse only if they are clearly
erroneous. United States v. Krenning, 93 F.3d 1257, 1269 (5th Cir.
1996). A factual finding is not clearly erroneous as long as it is
plausible in the light of the record read as a whole. Id. In
this case, a close reading of the record reveals that the district
court based both Cluck’s sentence and his restitution order on a
finding that his conduct caused an actual loss of $185,000 to the
bankruptcy trustee. Cf. United States v. Saacks, 131 F.3d 540, 543
(5th Cir. 1997) (“victims,” for purposes of bankruptcy fraud,
includes both creditors and the trustee). This finding, in turn,
was predicated solely on the $185,0008 in concealed accounts
receivable. Because the concealment of these funds was certainly
a loss to the bankruptcy trustee, and because Cluck points us
towards no evidence that they had been otherwise recovered, we can
find no clear error in the district court’s calculation.9
8
Valuing the Perfect Union account, again, at its $35,000
settlement value.
9
We do note, however, that the $185,000 restitution order is
somewhat duplicitous with the bankruptcy court’s civil judgment of
December 31, 1992. Both orders are predicated, at least in part,
on the $185,000 in concealed accounts receivable for Perfect Union
15
VI
Having found no merit in any of Cluck’s numerous points of
error, for the foregoing reasons, the judgment of the district
court is
A F F I R M E D.
Lodge and the O.D. Dooley Estate, and both require Cluck to turn
over these funds to the bankruptcy trustee. Obviously, the trustee
may not recover on both orders. Because Cluck had not (and has
not, for that matter) shown that he actually paid any portion of
the 1992 order, there was no reason for the district court to take
that order into account at the time it calculated his restitution.
See United States v. Sheinbaum, 136 F.3d 443, 449-50 (5th Cir.
1998) (district court must reduce restitution order by any amount
that defendant can show was received by victim as part of a civil
settlement). For future reference, however, we note that the
restitution order must be construed as no more than an additional
enforcement mechanism for $185,000 of the 1992 judgment, and not as
an independent and additional obligation. Cf. United States v.
Landay, 513 F.2d 306, 308 (5th Cir. 1975) (describing a similar
arrangement). Any payment that Cluck makes on the 1992 order must
be credited towards fulfillment of his restitution obligation, and
vice versa.
16