United States v. Barney L. Sandow ( 1996 )

No. 95-2218
United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the
* Eastern District of Missouri.
Barney L. Sandow, *
*
Appellant. *
Submitted: January 10, 1996
Filed: March 12, 1996
Before BEAM and MORRIS SHEPPARD ARNOLD, Circuit Judges, and KYLE,* District
Judge.
MORRIS SHEPPARD ARNOLD, Circuit Judge.
Between 1981 and mid-1993, Barney Sandow worked as an insurance agent
(representing insurance companies in selling policies) and an insurance
broker (representing individuals in buying policies). In 1990, he
persuaded one of his individual customers to pledge an annuity worth over
$100,000 as collateral for a bank loan to a person unknown to the customer
but vouched for by Mr. Sandow; in return, the customer was supposed to
receive income from what was described to him as interest on the annuity
of at least 12 percent. The borrower (who turned out to be Mr. Sandow
himself, although his customer was unaware of that) defaulted on
*
The HONORABLE RICHARD H. KYLE, United States District
Judge for the District of Minnesota, sitting by
designation.
the loan, however, and the bank sued to foreclose on the annuity.
Mr. Sandow then instructed the bank to cash in the annuity; the bank
applied the proceeds to pay off the loan and sent the surplus to
Mr. Sandow, who never returned any money to his customer. Those events
were the subject of one federal indictment against Mr. Sandow (which, for
simplicity's sake, we call the annuity pledge case). That indictment
contained two counts of mail fraud and one count of wire fraud.
A different federal indictment against Mr. Sandow charged that,
between mid-1991 and mid-1993, he and several co-defendants were involved
in establishing four companies that collected premiums for health insurance
but in fact failed to provide that insurance (for simplicity's sake, we
call those charges the insurance fraud case). That indictment contained
nine counts of mail fraud, two counts of wire fraud, and one count of
conspiracy (with his co-defendants). The co-defendants all pleaded guilty,
but Mr. Sandow chose to go to trial.
The two cases were consolidated for trial. After an eight-day jury
trial in early 1995, Mr. Sandow was convicted on all counts. He was
subsequently sentenced to 60 months in prison. He appeals his convictions,
contending that the trial court improperly admitted into evidence a
professional license suspension, four civil judgments, and a tax lien
against him; incorrectly instructed the jury about that evidence; and
improperly refused a jury instruction on multiple conspiracies. Mr. Sandow
also appeals his sentence, asserting that the trial court incorrectly
calculated the loss to the victims and erred in refusing to grant him a
reduction in offense level for acceptance of responsibility. We affirm
Mr. Sandow's convictions and his sentence.
I.
On the second day of trial, the government sought to introduce
documents showing that the insurance department of the state of
2
Missouri had suspended Mr. Sandow's agent/broker license by consent for
three months in 1990. That suspension was the result of a customer
complaint that Mr. Sandow had "misappropriated funds, solicited insurance
when he was not appointed [authorized by a particular insurance company to
sell its policies] and failed to keep his fiduciary duty as a broker."
(The customer alleged that Mr. Sandow had accepted $1,700 to buy an annuity
for her but never bought one and did not refund her money until six months
later. The factual details of the customer complaint were brought out
through testimony.)
Mr. Sandow objected, but the trial court admitted the documents under
Fed. R. Ev. 404(b), holding that the documents were evidence of "motive,
... intent, ... [or] plan," as permitted by the rule. Although the trial
court did not explicitly say so at the time the documents were admitted,
the discussion between the trial court and the lawyers suggests strongly
that the trial court's ruling related solely to the annuity pledge case.
There was no discussion, at the time the documents were admitted, of how,
if at all, they might relate to the insurance fraud case.
On the seventh day of trial, the government sought to refer again to
the documents showing the suspension of Mr. Sandow's agent/broker license.
The government cited those documents at that time as showing that
Mr. Sandow lied to various insurance companies, when subsequently applying
for agent status, about whether any of his customers had ever filed a
complaint against him, whether he had ever been investigated or disciplined
by any state insurance department, and whether his professional license had
ever been suspended. Mr. Sandow objected, but the trial court allowed the
government to refer to that evidence, the court stating that the documents
were relevant to the question of intent on the conspiracy count included
in the insurance fraud case. See Fed. R. Ev. 404(b).
3
Although it is not completely clear from his appellate brief,
Mr. Sandow appears to concede that evidence of his agent/broker license
suspension was properly admitted under Fed. R. Ev. 404(b) in the annuity
pledge case. At oral argument, furthermore, Mr. Sandow acknowledged that
that evidence was properly admissible in the insurance fraud case to show
"intent, preparation, plan, knowledge, ... or absence of mistake or
accident," see Fed. R. Ev. 404(b), on the conspiracy count. Given the
latter concession, we are unsure whether Mr. Sandow still challenges (as
he did in his appellate brief) the admission of those documents in any
other respect -- perhaps with regard to the remaining counts in the
insurance fraud case. In the interest of thoroughness, however, we briefly
address that question.
We do not see the relevance of Mr. Sandow's agent/broker license
suspension to the mail fraud or wire fraud counts in the insurance fraud
case. Even if that evidence was marginally relevant, moreover, we believe
that its probative value was far outweighed by its potential for generating
unfair prejudice against Mr. Sandow. See Fed. R. Ev. 403. We conclude,
nonetheless, that the error in admitting that evidence was harmless, given
the overwhelming proof of Mr. Sandow's guilt on all of the counts in the
insurance fraud case. We therefore decline to reverse his conviction in
that case for any reason associated with the admission of the evidence
regarding his professional license suspension.
During discussion with the trial court about the evidence on the
suspension of Mr. Sandow's agent/broker license, Mr. Sandow asked for an
instruction, first, that the jury should "disregard the Government's
references to [those documents] as substantive evidence" in the insurance
fraud case and, second, "that that evidence was admitted ... for the
purpose of showing knowledge and intent ... and that [the jury] cannot
consider that evidence for any other purpose" in the annuity pledge case.
During the jury
4
instructions conference, the trial court referred to "the [Fed. R. Ev.
404(b)] instruction, which we discussed substantially, and elected to give
... as tendered by the Defendant." Mr. Sandow made no objection to the
instructions at that time, nor did he object when the trial court actually
charged the jury.
We see no plain error in the trial court's instructions, and
certainly no prejudice resulting from them, and therefore we reject
Mr. Sandow's further arguments that the trial court's instruction was too
narrow in that it failed to address the insurance fraud case at all and
that it was too broad in that it "used the umbrella term 'state of mind'"
instead of specifying the exact limits under Fed. R. Ev. 404(b) of the
jury's use of that evidence in the annuity pledge case. See, e.g., United
States v. Aranda, 963 F.2d 211, 216 (8th Cir. 1992); see also Fed. R. Ev.
105, Fed. R. Crim. P. 30, Fed. R. Crim. P. 52(b), and 21 C. Wright and
K. Graham, Jr., Federal Practice and Procedure: Evidence § 5065 at 325,
327 (1977).
II.
On the second day of trial, the government sought to introduce
documents showing that Mr. Sandow had had two civil judgments against him
and had written checks in late 1990 or early 1991 to pay those judgments.
Mr. Sandow objected, but the trial court allowed the documents to be
admitted, accepting the government's contentions that they were relevant
to show Mr. Sandow's motive for taking money from his customer in
connection with the charges in the annuity pledge case. See Fed. R. Ev.
404(b).
On the seventh day of trial, the government sought to refer again to
those two civil judgments and to introduce additional documents showing two
more civil judgments and a federal tax lien against Mr. Sandow. The
government cited all of those exhibits at that time as showing that
Mr. Sandow lied to various insurance companies, when subsequently applying
for agent status, about
5
whether he had ever been a judgment debtor and whether any federal tax
liens had ever been filed against him. Mr. Sandow objected, but the trial
court allowed the government to refer to all of those documents, the court
stating that they were relevant to the question of intent on the conspiracy
count included in the insurance fraud case. See Fed. R. Ev. 404(b). On
appeal, Mr. Sandow argues that none of that evidence should have been
admitted and that, even if its admission was proper, the trial court should
have instructed the jury not to use it except for the purposes allowed by
Fed. R. Ev. 404(b).
The civil judgments were manifestly relevant to the element of motive
in the annuity pledge case. See, e.g., United States v. Noland, 960 F.2d
1384, 1387-88, 1388 n.4 (8th Cir. 1992); see also United States v. Shriver,
842 F.2d 968, 974-75 (7th Cir. 1988). We are frankly unable to comprehend
the government's argument concerning the relevance to the insurance fraud
case of the civil judgments or the federal tax lien, and we are in fact,
and equally frankly, inclined to see that evidence as reflective of piling
on by the government. But it was, in any event, harmless error, if it was
error, to admit the evidence in question, given the overwhelming evidence
of Mr. Sandow's guilt on all counts of the insurance fraud case. We note,
too, that any prejudicial effect that the admission of that evidence might
have had was greatly blunted by the fact that the trial court did not allow
the government to refer to the facts on which the civil judgments and the
federal tax lien were based. Mr. Sandow neither objected to the trial
court's instructions, moreover, nor offered a jury instruction on that
evidence. We see no plain error in the trial court's failure to give a
specific instruction on that evidence, and therefore we reject all of
Mr. Sandow's arguments with respect to the civil judgments and the federal
tax lien.
6
III.
Mr. Sandow offered a jury instruction on multiple conspiracies
(rather than the single one charged in the insurance fraud case). The
trial court refused to give that instruction, stating that
"there [was] not sufficient evidence to support the giving of a[n]
[instruction on a] multiple conspiracy theory." On appeal, Mr. Sandow
challenges that refusal. We have read the trial transcript with care.
We see no error in the trial court's conclusion about the insufficiency of
the evidence with respect to multiple conspiracies.
IV.
The presentence report on Mr. Sandow calculated the total loss to the
victims from the insurance fraud case to be $2,745,412 -- premiums of
$2,000,000 and outstanding claims of $745,412. Since Mr. Sandow did not
become involved in the events charged in the insurance fraud case until
early 1992, however, the presentence report deducted $114,111 from that
total (apparently reflecting premiums received before 1992), leaving the
amount of $2,631,301 attributable to Mr. Sandow. Under the federal
sentencing guidelines, a loss to the victims of more than $2,500,000
requires an increase in base offense level of 13 levels. See U.S.S.G.
§ 2F1.1(b)(1)(N). The trial court used that increase in determining
Mr. Sandow's offense level for sentencing purposes.
On appeal, Mr. Sandow contends that the loss to the victims should
have been calculated from the exact premium amounts testified to at trial
-- $1,873,870 -- rather than from the concededly approximate figure of
$2,000,000. We do not see the point of that argument, since even using the
more precise premium amounts yields a loss to the victims of $2,505,171 --
still more than $2,500,000. Mr. Sandow further argues, however, that he
should not be held responsible for the premiums collected after he left two
of the four companies in question (to form the third company) and after a
co-defendant formed the fourth company that
7
was involved. Basically, Mr. Sandow reiterates his previous contention
that the establishment of the various companies amounted to separate
conspiracies rather than a single one.
Under the sentencing guidelines, the calculation of loss to the
victims used in determining the offense level of an individual defendant
who has participated in a "jointly undertaken criminal activity" is to
include "all reasonably foreseeable acts ... of others ... that occurred
during the commission of the offense of conviction." See U.S.S.G.
§ 1B1.3(a)(1)(B) and application note 2, illustration (c)(2); see also
U.S.S.G. § 1B1.1, application note 1(l) (definition of "offense" includes
"all relevant conduct under § 1B1.3"). We have held, as noted above, that
there was no error in the trial court's conclusion that the evidence was
insufficient with respect to multiple conspiracies. We also hold,
accordingly, that the trial court's determination of the amount of loss to
the victims was not clearly erroneous. See, e.g., Kok v. United States,
17 F.3d 247, 250 (8th Cir. 1994).
V.
Under the federal sentencing guidelines, a defendant may receive a
decrease in base offense level of two levels if he or she has "clearly"
accepted responsibility for the offense. See U.S.S.G. § 3E1.1(a). If the
defendant receives that two-level decrease, he or she may receive an
additional one-level decrease if he or she "timely" provides complete
information to the government, see U.S.S.G. § 3E1.1(b)(1), or "timely"
notifies the government of an intention to plead guilty, see U.S.S.G.
§ 3E1.1(b)(2). The trial court declined to grant any decrease for
acceptance of responsibility by Mr. Sandow. On appeal, Mr. Sandow asserts
that the trial court improperly denied one or both of the decreases
authorized by the sentencing guidelines. We have read the sentencing
transcript carefully; the trial court's decision not to grant any decrease
for acceptance of responsibility was not clearly
8
erroneous. See, e.g., United States v. Walter, 62 F.3d 1082, 1083 (8th
Cir. 1995) (per curiam).
VI.
For the reasons stated, we affirm Mr. Sandow's convictions and his
sentence.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
9