U.S. v. Kelly ( 1992 )

UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT
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No. 91-5645
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UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
WILLIAM M. KELLY,
Defendant-Appellant.
__________________________________________________
Appeal from the United States District Court
For the Western District of Texas
__________________________________________________
(September 16, 1992)
Before WISDOM, SMITH, and EMILIO M. GARZA, Circuit Judges.
EMILIO M. GARZA, Circuit Judge:
William M. Kelly was indicted and tried for conspiring to
violate the Bank Bribery Act, 18 U.S.C. § 215, and the Bank Fraud
Act, 18 U.S.C. § 1344. A jury subsequently found Kelly guilty on
all charged counts. On appeal, Kelly argues that the district
court improperly: (1) denied his motion for continuance; (2)
denied his request to produce evidence; and (3) admitted the
hearsay statements of a coconspirator. Kelly also contends that
the Bank Bribery Act is unconstitutionally vague as applied to
his case. Finding no error, we affirm Kelly's conviction.
I
The facts of this case are straightforward and uncontested.
Kelly was a senior vice-president at the Valley-Hi National Bank
in San Antonio, Texas. Kelly's two co-defendants had previously
been his customers: John T. Haney was a customer at Valley-Hi,
and Leslie A. Leverett was a business associate of Haney's.1
The other party involved in this case, Steven A. Marburger,
was president of La Hacienda Savings Association. Haney was a
customer at La Hacienda, and had previously befriended Marburger.
Haney introduced Leverett to Marburger. Later, Marburger told
the two men he needed money, and Haney and Leverett told
Marburger that they would help him get a loan from Kelly, if he
would help Kelly get a loan from La Hacienda.
Kelly subsequently applied to La Hacienda for a $100,000
loan. At Haney's and Leverett's direction, Kelly contacted
Marburger by telephone. Kelly and Marburger agreed to make
reciprocal loans to each other to cover their respective
financial needs. Kelly then met Marburger in his office to fill
out the loan application form, even though he had no collateral
to secure the loan.
Kelly told Marburger that he would be glad to consider a
loan request from him. Marburger requested a $125,000 loan from
Valley-Hi. Valley-Hi's president, however, denied the loan
request because of Marburger's extensive debt. When Marburger
learned that Valley-Hi had denied his loan request, he refused to
approve Kelly's loan request because he thought that Kelly had
reneged on the "loan swap." Marburger later determined, however,
1
After the district court denied the motions for severance
and continuance, Kelly and Haney proceeded to a jury trial.
Leverett was a fugitive and was not tried with Kelly and Haney.
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that Kelly had not personally denied his loan, and eventually
provided Kelly with a $50,000 unsecured line of credit from La
Hacienda.
To obtain his money, Marburger then used Leverett as a
surrogate borrower. Leverett applied for and received a $125,000
loan from Valley Hi. To secure the loan, Leverett submitted
numerous financial statements, including papers showing that he
owned a mortgage company. Kelly took personal charge of the
loan, and it was quickly approved. Kelly issued a $50,000
cashier's check directly to Leverett, deposited $25,000 in an
account controlled by Haney, and used the remaining $50,000 to
purchase a certificate of deposit. Haney and Leverett gave
$50,000 of the loan proceeds to Marburger.
The defendants' troubles began when Valley-Hi's board of
directors subsequently discovered that the name of the
institution reported on Leverett's financial statement and the
name of the institution listed on the line of credit were
different, and that a financial institution with the same name as
that listed on Leverett's financial statement had filed for
bankruptcy. Kelly attempted to remedy this situation by stating
to the board of directors that he had contacted the accountant
who had audited the mortgage company's financial statement and
that the accountant had verified the financial statement.
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In the meantime, Marburger was indicted by a federal grand
jury for "kiting" checks.2 Before the jury returned a verdict,
Marburger pled guilty, and agreed to cooperate with the
Government. As part of his plea agreement, he telephoned Haney
and Kelly, and recorded his conversations with them. Marburger
then became the Government's principal witness in Kelly's trial,
and testified that he and Kelly had arranged a "loan swap" with
the participation of Haney and Leverett.
II
A
Kelly contends that the district court erred in denying his
second motion for continuance, and that he was "materially
prejudiced by such denial." The grant or denial of a continuance
is within the sound discretion of the trial court, and will be
disturbed on appeal only for abuse of discretion. See United
States v. Shaw, 920 F.2d 1225, 1230 (5th Cir.) (quotation
omitted), cert. denied, U.S. , 111 S. Ct. 2038 (1991); United
States v. Uptain, 531 F.2d 1281, 1285 (5th Cir. 1976) (citations
omitted). Kelly must demonstrate an abuse of discretion
resulting in serious prejudice. See United States v. Webster,
734 F.2d 1048, 1056 (5th Cir.) (citation omitted), cert. denied,
469 U.S. 1073, 105 S. Ct. 565 (1984). Furthermore, "[w]hether a
continuance was properly denied depends on the circumstances of
the case." See United States v. Hopkins, 916 F.2d 207, 217 (5th
2
At Kelly's federal trial, Marburger stated that he would
have La Hacienda cashier's checks issued, and then put the money
to his own use.
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Cir. 1990) (citation omitted). Relevant circumstances may
"include the amount of time available, the defendant's role in
shortening the time needed, the likelihood of prejudice from a
denial, and the availability of discovery from the prosecution."
Id.3
Kelly argues that his counsel was prevented from preparing
adequately, because his counsel had a conflicting trial set for
the same day as Kelly's trial, and that the Government's alleged
failure to timely comply with its discovery obligations resulted
in material prejudice to his case. The Government responds that
Kelly was not prejudiced by the denial of another continuance, as
he did not show how the granting of another continuance would
have significantly aided his case. Furthermore, regarding the
alleged tardy production of discovery materials, the Government
asserts that Kelly had access to the tapes throughout the
pretrial proceedings and, that, even if there was some delay in
providing Kelly with a final copy of the transcript, it did not
result in prejudice to Kelly's substantial rights.
3
See also Uptain, 531 F.2d at 1286-87 (noting that cases
regarding motions for continuance are numerous and involve
varying factual contexts, and that in assessing claims of
inadequate preparation time the court considers such factors as
the quantum of time available for preparation, the likelihood of
prejudice from denial, the defendant's role in shortening the
effective preparation time, the degree of complexity of the case,
and the availability of discovery from the prosecution)
(citations omitted); United States v. Hamilton, 492 F.2d 1110,
1112-13 (5th Cir. 1974) (no abuse of discretion in denying motion
for continuance where defendant alleged that Government failed to
provide a transcript of preliminary hearing, because appellant
had shown no prejudice).
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The trial was originally set for July 16, 1990. Kelly's co-
defendant, Haney, moved for a continuance on July 5, 1990, and
the district court granted the motion and rescheduled the trial
for September 10, 1990. On August 28, 1990, Kelly submitted his
own motion for continuance, and the district court granted this
motion and rescheduled the trial for October 29, 1990. Thus,
Kelly received the benefit of two continuances, by which he
received approximately three additional months to prepare for
trial. On October 19, Kelly moved for a continuance of the
October 29 trial date. This motion was denied. On October 29,
1990, Kelly filed a renewed motion for continuance, and the
district court denied the motion.4
As the Government notes, the record does not indicate that
Kelly's case was so complicated as to warrant additional delay.
In addition, the record does not indicate that Kelly's counsel
failed to provide an adequate defense. His counsel participated
in pretrial preparation, and actively participated in trial by
cross-examining the Government's witness and calling witnesses on
Kelly's behalf. An examination of the totality of circumstances
indicates that Kelly's counsel had sufficient time to prepare for
the case. See Webster, 734 F.2d at 1056-57 (when claims of
4
As grounds for the motion for the continuance, Kelly
pointed out that his counsel had a conflict with the October 29,
1990 trial date, as his counsel had another trial set in federal
court on this same date. In addition, Kelly stated that: (1) the
other case was a multi-defendant case which would take several
weeks to try; (2) his counsel was a solo practitioner and his
time would be consumed by the other trial; (3) his case was
complex and his counsel had not had adequate time to prepare; and
(4) discovery was incomplete.
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insufficient time for preparation are advanced, the court of
appeals examines the totality of circumstances to determine if
the continuance should have been granted). Furthermore,
regarding any delays in discovery, Kelly has failed to show how
any alleged delay prejudiced him. See United States v. Hamilton,
492 F.2d 1110, 1112-13 (5th Cir. 1974) (abuse of discretion is
defined as a trial error that harms or prejudices the defendant).
Accordingly, the district court did not abuse its discretion in
denying Kelly's motion for continuance.
B
Kelly also argues that the district court erred in refusing
to require the Government to produce documentary materials
related to other crimes by Marburger. The evidence that Kelly
contends should have been produced is evidence related to the
$50,000 he allegedly gave to Marburger. He alleges that the
Government should have produced evidence related to the check-
kiting charges against Marburger. By having such evidence, Kelly
argues that he would have discovered who the cashier's checks
were payable to, and how Marburger received the funds. Kelly
contends that he would have been able to show that Marburger
received the $50,000 not from him, but from another source.
The Government argues that, because the cashier's checks
were noted in Marburger's indictment5, Kelly had sufficient
5
Kelly had access to Marburger's indictment, which noted
the kited checks. See Defendant's Exhibit 3, included in Record
on Appeal, United States of America v. William M. Kelly, No. 91-
5645 (5th Cir.) (copy of twenty-six count indictment against
Stephen A. Marburger).
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evidence to argue that Marburger obtained the $50,000 without
Kelly's participation. The Government also contends that Kelly
had the opportunity to cross-examine Marburger about the issuance
of the $50,000 check from La Hacienda, allegedly issued with the
funds from Kelly.
"It is well[-]settled that the government has the obligation
to turn over evidence in its possession that is both favorable to
the accused and material to guilt or punishment." Pennsylvania
v. Ritchie, 480 U.S. 39, 57, 107 S. Ct. 989, 1001 (1987), citing
Brady v. Maryland, 373 U.S. at 87, 83 S. Ct. at 1196 (other
citation omitted). "Suppressed evidence is material ``if there is
a reasonable probability that, had the evidence been disclosed to
the defense, the result of the proceeding would have been
different.'" Cordova v. Collins, 953 F.2d 167, 171 (5th Cir.
1992) (citation omitted), petition for cert. filed (Jan. 21,
1992). This court applies a strict standard of materiality: the
alleged exculpatory evidence must be "materially favorable to
[Kelly] as to guilt, punishment, or both." United States v.
Masat, 948 F.2d 923, 932 (5th Cir. 1991) (citation omitted),
petition for cert. filed (Apr. 3, 1992).
Kelly has failed to show how the production of the kited
checks6 "were material to his defense, how the documents'
production would have changed the outcome of the case, or that
the documents' failure to be produced has undermined the
confidence in the integrity of the outcome of his trial." Id.
6
See supra note 2.
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Kelly's counsel examined Marburger about the issuance of the
$50,000 cashier's check, and Marburger stated that Kelly's
$50,000 was the source of the check. His counsel cross-examined
Marburger about the kited checks, thereby fleshing out the
possibility that Kelly's $50,000 was not the source of the check
to Marburger's company, a possibility which the jury apparently
rejected. Kelly has failed to show that the outcome of this case
would be different had the Government provided discovery of the
kited checks.
C
Kelly contends that the district court also erred in denying
his motion for relief from prejudicial joinder, on the ground
that his defense was prejudiced by the admission of incriminating
hearsay statements by his co-defendant Haney. "As a general
rule, defendants who are indicted together are tried together."
United States v. Featherson, 949 F.2d 770, 773 (5th Cir. 1991)
(citation omitted), cert. denied, U.S. , 112 S. Ct. 1698 (1992),
cert. denied, U.S. , 112 S. Ct. 1771 (1992). This court reviews
a district court's denial of a motion for severance for abuse of
discretion. Id. To show abuse of discretion, "the defendant
must show that he ``received an unfair trial and suffered
compelling prejudice against which the trial court was unable to
afford protection.'" United States v. Webster, 734 F.2d 1048,
1052 (5th Cir.) (citation omitted), cert. denied, 469 U.S. 1073,
105 S. Ct. 565 (1984).
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Kelly alleges prejudice because a 1987 tape recording of
Marburger and Haney was not redacted according to the terms of
the district court order. In addition, Kelly claims that an
unredacted transcript of this tape was given to the jury to read
while the tape was played. Kelly also claims error in admitting
statements made in 1986 by Haney which Marburger and his former
business secretary recounted at trial.
The Government argues that the 1987 tape between Haney and
Marburger was properly admitted because the district court gave
proper limiting instructions to the jury and because the district
court ordered that the transcript be redacted only "out of an
abundance of [caution]." Furthermore, the Government asserts
that the tape did not provide incriminating statements that
implicated Kelly. In addition, the Government alleges that the
1986 statements by Haney were properly admitted because Kelly and
Haney were members of the same conspiracy.
(1)
A tape of a 1987 conversation between Haney and Marburger
was played to the jury during Marburger's testimony. Kelly
objected to the playing of the tape,7 as well as the transcript
that accompanied the tape.8 Kelly argues that, although the tape
7
See Government Exhibit 6, included in Record on Appeal
(tape of July 16, 1987 conversation between Marburger and Haney).
8
See Government Exhibit 7, included in Record on Appeal
(transcript of July 16, 1987 conversation between Marburger and
Haney).
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was redacted, the transcript was not, violating Bruton v. United
States.9
In Bruton, the Supreme Court "held that the admission of
incriminating nontestimonial statements made by one defendant,
unavailable for cross-examination at trial, created a substantial
risk of prejudice to the nondeclarant codefendant, because the
jury might))despite limiting instructions to the
contrary))consider them against the nondeclarant."10 The Court
spoke of "powerfully incriminating extrajudicial statements of a
codefendant . . . [that] are deliberately spread before the jury
in a joint trial."11 This holding was clarified in Richardson
v. Marsh,12 in which the Court stated that the Confrontation
Clause of the Sixth Amendment "is not violated by the admission
of a nontestifying codefendant's confession with a proper
limiting instruction when . . . the confession is redacted to
eliminate not only the defendant's name, but any reference to his
or her existence."13
In considering such claims under Bruton, this court has
stated that "[a] critical consideration in Bruton claims is
9
391 U.S. 123, 88 S. Ct. 1620 (1968), appeal after remand,
416 F.2d 310 (8th Cir. 1969), cert. denied, 397 U.S. 1014, 90 S.
Ct. 1248 (1970).
10
Bruton v. United States, 391 U.S. 123, 88 S. Ct. 1620
(1968), cited in United States v. Basey, 816 F.2d 980, 1004 (5th
Cir. 1987).
11
Bruton, 391 U.S. at 135-36, 88 S. Ct. at 1627-28.
12
481 U.S. 200, 107 S. Ct. 1702 (1987).
13
Id. at 211, 107 S. Ct. at 1709.
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whether the out-of-court statement at issue clearly implicates
the codefendant; if the statement does not do so, no serious
Bruton issue is presented." United States v. Basey, 816 F.2d
980, 1005 (5th Cir. 1987). Furthermore, even if a statement is
admitted in violation of the Bruton principle, "the error may be
harmless if the statement's impact is insignificant in light of
the weight of other evidence against the defendant." Id.; see
also United States v. Greer, 939 F.2d 1076, 1096 (5th Cir.) (even
if statement admitted in violation of Bruton, error is harmless
if statement's impact is insignificant in light of other evidence
against defendant) (citation omitted), vacated by 948 F.2d 934
(5th Cir. 1991), relevant part reinstated, No. 90-1348, 1992 U.S.
App. LEXIS 17408 (5th Cir. July 30, 1992) (en banc) (per curiam).
In this case, the Haney-Marburger conversation, relayed in
the tape and transcript did not specifically name Kelly as the
perpetrator of the alleged events. Rather, the conversation
simply catalogues interactions with Kelly. Any concrete
connection between Kelly and Marburger "only came through other
evidence presented by the government." Greer, 939 F.2d at 1096.
The Government still had to, and did, present other evidence to
link Marburger and Kelly. Id. For example, the Government
offered Marburger's testimony, as evidence in the form of checks,
and the testimony of Valley-Hi's president. Thus, the district
court did not deprive Kelly of his Sixth Amendment rights.
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(2)
Kelly similarly argues that statements made by Haney in
1986, and quoted by Marburger and Judy Hilton,14 also violate
Bruton because they plainly incriminated Kelly and because no
limiting instruction could protect Kelly from the risk of
prejudice. The Government argues that the statements made in
1986 by Haney were properly admitted because they were made
during the course of a conspiracy.
The district court admitted the statements as a
coconspirator statement under Fed. R. Evid. 801(d)(2)(e).15 "For
a co-conspirator's statement to be admitted pursuant to Rule
801(d)(2)(E), there must be a conspiracy, the statement must be
made in the course of the conspiracy, and the declarant and the
defendant must be members of the conspiracy." United States v.
Vasquez, 953 F.2d 176, 182 (5th Cir.) (citation omitted), cert.
14
Hilton, an executive secretary to Marburger at La
Hacienda in the summer of 1986, testified that in the summer of
1986, she heard a conversation between Marburger, Haney and
Leverett in which Haney told Marburger not to worry because he
would help Marburger get the money he needed, and that they could
probably get it from Kelly. See Record on Appeal, vol. V at 180-
81. Marburger also testified that in the summer of 1986 Haney
told him that he had some friends who would help Marburger get a
loan, and that Kelly was one of these friends. See Record on
Appeal, vol. IV at 70-71.
15
Rule 801(d)(2)(E) of the Federal Rules of Evidence
states that:
(d) Statements which are not hearsay. A
statement is not hearsay if--
* * *
(2) Admission by party-opponent. The
statement is offered against a party and is .
. . (E) a statement by a coconspirator of a
party during the course and in furtherance of
the conspiracy.
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denied, U.S. , 112 S. Ct. 2288 (1992). All these elements must
be established by a preponderance of the evidence. Id. at 183.
The evidence in this case shows the existence of a conspiracy for
a loan-swap, statements made during the course of this loan-swap
arrangement, and the participation of Haney, Marburger and Kelly
in this loan-swap arrangement. Thus, the district court properly
admitted the statements as coconspirators' statements. Id.
D
Lastly, Kelly contends that the statute under which he was
convicted, 18 U.S.C. § 215, is "unconstitutionally vague as
applied to him."16 He argues that he could not have reasonably
16
Kelly was convicted under the 1984 version of 18 U.S.C.
§ 215, which provides:
(a) Whoever, being an officer, director, employee,
agent, or attorney of any financial institution, bank
holding company, or savings and loan holding company,
except as provided by law, directly or indirectly,
asks, demands, exacts, solicits, seeks, accepts,
receives or agrees to receive anything of value, for
himself or for any other person or entity, other than
such financial institution, from any person or entity
for or in connection with any transaction or business
of such financial institution; or
(b) Whoever, except as provided by law, directly or
indirectly, gives, offers, or promises anything of
value to any officer, director, employee, agent, or
attorney of any financial institution, bank holding
company, or savings and loan holding company, or offers
or promises any such officer, director, employee,
agent, or attorney to give anything of value to any
person or entity, other than such financial
institution, for or in connection with any transaction
or business of such financial institution, shall be
fined not more than $5,000 or three times the value of
anything offered, asked, given, received, or agreed to
be given or received, whichever is greater, or
imprisoned not more than five years, or both; but if
the value of anything offered, asked, given, received,
or agreed to be given or received does not exceed $100,
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understood that the statute prohibited his conduct because it is
not clear that a loan constitutes "anything of value" under the
statute, thereby making the statute too vague to give him notice
that accepting the loan from La Hacienda or granting the loan to
Leverett was prohibited. The Government asserts that 18 U.S.C. §
215 is not unconstitutionally vague as applied to the facts of
this case because Kelly cannot demonstrate that he could not have
reasonably understood that his conduct in creating a reciprocal
loan agreement was prohibited by the statute.
In United States v. Wicker,17 we considered a vagueness
argument much like Kelly's regarding the 1984 version of 18
U.S.C. § 215. We stated that a "statute violates due process if
it is so vague that a person of ordinary intelligence does not
have a reasonable opportunity to know what is prohibited, and if
the law provides no explicit standards for enforcement."18 To
show that section 215 is unconstitutionally vague, Kelly "must
show that he could not have reasonably understood that his
conduct was prohibited by the statute."19 As was the case in
Wicker, Kelly has failed to make such a showing in this case.
shall be fined not more than $1,000 or imprisoned not
more than one year, or both.
18 U.S.C. § 215 (1984).
17
933 F.2d 284 (5th Cir.), cert. denied, U.S. , 112 S. Ct.
419 (1991).
18
Id. at 288, citing Grayned v. City of Rockford, 408 U.S.
104, 108, 92 S. Ct. 2294, 2298 (1972).
19
Id., citing Parker v. Levy, 417 U.S. 733, 756, 94 S. Ct.
2547, 2561 (1974) (emphasis in Wicker).
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Promising to give a loan from his bank, in order to secure a
loan from another, cannot reasonably be understood to be anything
other than giving, offering, or promising a thing of value, or
seeking, accepting, receiving or agreeing to receive anything of
value contrary to the proscriptions of section 215.20 The
evidence shows that Kelly knew the proceeds from his loan to
Leverett would go to Marburger, who in turn would make a loan
from La Hacienda to Kelly. Kelly's actions were covered by
section 215, and he has not shown that he could not have
reasonably understood that his conduct was prohibited by the
statute))this is especially so given Congress's intent in
enacting section 215 to "remove from the path of bank officials
the temptation of self enrichment" at the borrower's or bank's
expense. United States v. Jumper, 838 F.2d 755, 758 (5th Cir.
1988) (citation omitted).
III
For the foregoing reasons, we AFFIRM.
20
See supra note 16.
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