United States v. Gregory Krug , 379 F. App'x 473 ( 2010 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 10a0332n.06
No. 08-6405 FILED
Jun 01, 2010
LEONARD GREEN, Clerk
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR THE
GREGORY CHARLES KRUG, MIDDLE DISTRICT OF TENNESSEE
Defendant-Appellant.
/
OPINION
BEFORE: MARTIN, CLAY, and KETHLEDGE, Circuit Judges.
CLAY, Circuit Judge. Defendant Gregory Krug appeals the district court’s finding that
he violated the conditions of his supervised release. The district court revoked Defendant’s
supervised release pursuant to 18 U.S.C. § 3583(e) and imposed a sentence of one year in custody.
The principal violations found by the district court were based on Defendant’s submission of false
financial information, both in sworn legal documents and to his probation officer, as well as
Defendant’s failure to comply with requirements that he wear a global positioning system monitoring
device. For the following reasons, the district court’s revocation of supervised release is
AFFIRMED.
BACKGROUND
On November 4, 1999, Defendant was convicted following a jury trial of possession of an
unregistered silencer in violation of 26 U.S.C. § 5861(d), shipping firearms on a common carrier
without permission in violation of 18 U.S.C. § 922(e) and § 924(a)(1) and shipping a firearm with
intent to commit murder in violation of 18 U.S.C. § 924(b). The district court sentenced him to 120
months in prison followed by three years of supervised release.
Defendant began his supervised release on June 27, 2007. On April 10, 2008, the district
court found that Defendant had violated the terms of his supervised release, sentenced him to time
served, three months in a half-way house, and global position system (“GPS”) monitoring. On July
31, 2008, the probation office recommended a new finding that Defendant had violated the terms of
his supervised release. A revocation hearing was held August 11, 2008 where the district court
found violations had occurred (the “August violations”). The August violations are based on three
separate acts. The district court found Defendant failed to follow the instructions of his probation
officer by refusing to wear the ordered GPS monitoring device, failed to wear the monitoring device
as required, and refused to provide requested financial information to his probation officer. The
district court held those violations in abeyance.
On October 22, 2008, the probation office again filed a petition for summons based on
alleged violations of supervised release. That petition was amended on November 6, 2008 to include
a violation of 18 U.S.C. § 1623, although the factual predicate was identical to the previous alleged
violations. On November 5, 2008, Defendant appeared with counsel for a revocation hearing. At
the hearing, Defendant waived his right to counsel, and his attorney’s motion to withdraw was
granted. Defendant’s attorney remained as “elbow counsel” for a hearing that was adjourned to the
next day. On November 6, 2008, the district court held a revocation hearing and found that all
alleged violations had been committed (the “November violations”). The November violations were
based on several separate allegations. The main complaint was that Defendant provided false
financial information based on a bank account he had that was not disclosed. Technically, the
violations were that he submitted false financial affidavits in violation of 18 U.S.C. § 1001 and
§ 1623, that he submitted false financial reports, that he did not “answer truthfully” in response to
inquiries from his probation officer, and that he failed to provide requested financial information to
his probation officer. In addition, two more violations regarding Defendant’s lack of compliance
with his GPS monitoring device were found.
Defendant does not contest the violations based on his failure to wear GPS monitoring,
arguing only that he is old and forgetful and that he often accidentally leaves the device in its charger
when he leaves the house. He also does not contest the finding in the August violations of failure
to provide financial information. His main arguments deal with the factual underpinnings of the
failure to provide correct financial information that constitute the bulk of the August violations.
After refusing to provide financial information to the probation officer, the district court eventually
ordered Defendant’s previous attorney, Douglas McAlpine, to furnish the probation officer a monthly
financial affidavit for Defendant. McAlpine had a client trust that had Defendant’s money and also
assisted in managing Defendant’s financial transactions. Through this information, the district court
learned about a Wells Fargo account in the name of “Goodall W. McCollough, Jr., for Greg Krug,”
which was referred to at the revocation hearing as the “California account.” Defendant never
disclosed this account as an asset on any document filed with the court or his probation officer.
The account was created when Defendant was in jail, and currently all the money in the
account comes from Social Security checks. The account also originally included proceeds from a
house sale that McCollough was holding on Defendant’s behalf. Defendant relied on his former
attorney, McAlpine, to help manage his affairs.
Following a search of Defendant’s apartment, numerous bank statements were found relating
to this California account.1 The most recent statement showed activity for Defendant under the same
account number and did not mention McCollough. The district court found:
It’s very clear from the documents and from the testimony that these accounts have
only the money of Mr. Krug. Mr. McCollough was following – and Mr. McAlpine
– following very specific instructions of Mr. Krug on checks to be written out of this
account, expenditures to be made, transfers of these funds to Mr. McAlpine, and the
only way that the probation office discovered this account was finally pursuant to my
August 11, 2008 order where I ordered [an] affidavit of Mr. McAlpine. Mr.
McAlpine revealed for the first time that the Social Security checks are deposited in
a preexisting savings account for Mr. Krug in California; that Mr. McAlpine does not
control this account but the funds are dispersed to Mr. McAlpine’s trust account as
needed and that the savings balance in that account on August 31[, 2008] was
$9,952.73.
(Nov. Hr. Tr. 102).
In choosing to revoke supervised release, the district court considered both the August and
November violations and sentenced Defendant to one year in custody.
DISCUSSION
I.
As a preliminary matter, Defendant raises several procedural issues. First, Defendant argues
that the alleged violation of 18 U.S.C. § 1623, which was added on the day of the hearing, prejudiced
his defense.2 However, the factual allegations were identical to the timely-noticed violations, and
1
Some of these statements appear to be from a different account in California, not the Wells
Fargo account at issue here. Defendant asserts that this other account is closed, and the government
provides no evidence to the contrary.
2
The government argues that Defendant has no grounds for appeal because he challenged
only the revocation of his supervised release, not the sentence imposed. Since Defendant freely
admits to multiple violations of the conditions of supervised release, the government believes that
any error is harmless because “a district court need find only a single violation to revoke a criminal
defendant’s supervised release” United States v. Cofield, 233 F.3d 405, 408 (6th Cir. 2000). This
argument is without merit. Defendant admits five violations: the three August violations plus
continued failure to properly wear his GPS device. The August violations were held in abeyance at
the addition of § 1623 was simply adding another statute that Defendant had allegedly violated while
on supervised release. As the district court properly noted: “There’s no new violation. There’s just
an additional criminal statute that the government has added to the petition.” (Nov. Hr. Tr. 3).
Krug’s defense to the timely brought allegations of a violation of 18 U.S.C. § 1001 was identical to
a defense of an alleged violation of § 1623. Cf. Morrissey v. Brewer, 408 U.S. 471, 480 (1972)
(noting that “the full panoply of rights due a defendant in [criminal prosecutions] does not apply to
parole revocations”).
Additionally, Defendant argues that he was prejudiced by the withdrawal of his counsel on
November 5, 2008. We disagree. Defendant made the decision to revoke his right to counsel, and
the district court specifically found that he “knowingly waived his right to counsel for purposes of
this revocation proceeding.” (Nov. Hr. Tr. 3). Furthermore, the court instructed Defendant’s
previous counsel to remain as elbow counsel, further reducing the possibility of prejudice.
II.
On the merits, we review a district court’s decision to revoke supervised release for abuse
of discretion. United States v. Kontrol, 554 F.3d 1089, 1091 (6th Cir. 2009). The district court’s
legal conclusions are reviewed de novo, while its factual findings are reviewed for clear error. Id.
at 1091-92.
Defendant’s failure to properly report the California account in both a series of court filings
and in disclosures to his probation officer led to a number of violations being found. Defendant
makes three arguments as to why the finding of violations was inappropriate. First, he argues that
that time, and the government cannot show that the additional two GPS violations would have
necessarily triggered a revocation of supervised release. Because the district court could have
revoked Defendant’s supervised release does not mean that it necessarily would have revoked it
without making the findings it did at the November hearing.
the district court did not find the requisite intent. Second, he argues that the allegedly false
statements were not actually false. Finally, he argues that the violations were only discovered on the
basis of privileged material. All three arguments must fail.
The district court found that Defendant violated the terms of his supervised release by
violating 18 U.S.C. § 1001 and § 1623. Defendant is correct that both statutes have a mens rea
requirement that requires knowledge. Section 1001 punishes false statements “in any matter within
the jurisdiction of the . . . judicial branch of the Government of the United States” that are made
“knowingly and willfully.” Section 1623 deals with false declarations “before or ancillary to any
court . . . of the United States” that are made “knowingly.” According to Defendant, the district
court never established that the failure to disclose the California account was made “knowingly.3”
A district court can revoke supervised release if it finds “by a preponderance of the evidence
that the defendant violated a condition of supervised release.” 18 U.S.C. § 3583(e)(3). The district
court may not have explicitly stated that the statements were made with the requisite mens rea, but
such a conclusion can be readily inferred. Defendant allegedly made false statements on an
indigency affidavit, a net worth statement, and numerous monthly supervision reports. The false
statements primarily stemmed from the failure to disclose the California account. The district court
found that Defendant “failed to respond truthfully” to the probation officer’s request for financial
information. The district court also noted the fact that a search of Defendant’s apartment showed
numerous bank statements from this account. In discussing another violation, the district court notes
that Defendant had “hidden the assets in these accounts and hidden the existence of these accounts.”
3
Defendant also alleges that the petition for summons does not allege that he acted
“knowingly and willfully,” but the summons clearly states that Defendant made false statements “in
violation” of the relevant statutes. Those statutes can only be violated if the Defendant acts with the
necessary mens rea.
(Nov. Hr. Tr. 103). The use of the verb “hidden” indicates intent. Given the deferential standard
of review, the district court adequately found that Defendant’s violations of 18 U.S.C. § 1001 and
§ 1623 were done with the requisite mens rea.4
Defendant’s next argument is that he did not actually make any false statements. The
Monthly Supervision Report asked: “Do you have checking account(s)?” Defendant answered in
the negative, but he argues that technically the California account was not his. Defendant did not
have unrestricted access to the account, although he admits that the money in the account was
exclusively his. Defendant argues that the probation office should have asked if Defendant had
money in a bank account, not whether he had any bank accounts. According to Defendant, therefore,
his statement was “literally true,” and the Supreme Court has decided that a defendant cannot be
convicted of perjury for an answer “that is literally true but not responsive to the question asked and
arguably misleading by negative implication.” Bronston v. United States, 409 U.S. 352, 353 (1973).
First, the district court clearly found that Defendant controlled the California account, even though
his name was not technically on the account. Second, any error would be harmless because the
allegations against Defendant are much broader than simply denying that he had a bank account. The
Petition for Summons also notes that Defendant signed a financial affidavit claiming he only had
$383.50 in cash and not mentioning the California account or other assets. Defendant did not
reference the bank account in a net worth affidavit submitted to the probation office on June 14,
2008. The summons alleges that the probation officer repeatedly questioned Defendant regarding
his finances, and that Defendant “denied having access to or control of, any bank account.” (Def.
4
Defendant also argued that the district court failed to “provide any specifics as to the details
on financial information to which Krug has allegedly failed to respond truthfully.” (Def. Br. at 11).
A review of the hearing transcript makes it apparent that the primary information the district court
believed was withheld was the California account.
Rep. Br. Ex. B). Ample evidence supports a finding that Defendant purposely concealed his money
in the California account, a clear violation of the terms of his supervised release.
Defendant’s final argument is that the district court relied on information that should be
protected by the attorney-client privilege. He argues that the district court’s order requiring
Defendant’s previous attorney, McAlpine, to submit an affidavit about Defendant’s financial
situation led to the disclosure of privileged information. The district court noted at the revocation
hearing that “the only way the probation office discovered th[e California account] was finally
pursuant to my August 11, 2008 order where I ordered this affidavit of Mr. McAlpine.” (Nov. Hr.
Tr. 102).
The information requested of McAlpine was not privileged. “The privilege applies only
where necessary to achieve its purpose and protects only those communications necessary to obtain
legal advice.” In re Columbia/HCA Healthcare Corp., 293 F.3d 289, 294 (6th Cir. 2002) (citations
and quotations omitted). See also Morganroth & Morganroth v. DeLorean, 123 F.3d 374, 383 (6th
Cir. 1997) (discussion of attorney’s fees was “a non-privileged, financial discussion that did not
involve the seeking or provision of legal advice”); United States v. Bartone, 400 F.2d 459, 461 (6th
Cir. 1968) (testimony by attorneys about Defendant’s financial deals was not privileged because
there was “no indication that any of this testimony concerned legal advice given to [Defendant]”).
In this case, Defendant was merely using his attorney to help with financial management. Crucially,
“the burden of establishing the existence of the privilege rests with the person asserting it.” United
States v. Dakota, 197 F.3d 821, 825 (6th Cir. 1999). Defendant has not come forward with sufficient
evidence that his conversations about financial matters with McAlpine were part of a legal
relationship to receive “legal advice.”
CONCLUSION
For the foregoing reasons, the judgment of the district court is AFFIRMED.