United States v. Benjamin Grey ( 2018 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 3, 2018 Decided June 8, 2018
No. 14-3003
UNITED STATES OF AMERICA,
APPELLEE
v.
BENJAMIN BRANDON GREY,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 1:13-cr-00031-1)
Tony Axam Jr., Assistant Federal Public Defender, argued
the cause for appellant. With him on the briefs were A.J.
Kramer, Federal Public Defender, and Rosanna M. Taormina,
Assistant Federal Public Defender.
Christopher R. Howland, Assistant U.S. Attorney, argued
the cause for appellee. With him on the brief were Jessie K.
Liu, U.S. Attorney, and Elizabeth Trosman and Jonathan P.
Hooks, Assistant U.S. Attorneys.
Before: TATEL, SRINIVASAN, and MILLETT, Circuit
Judges.
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Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: Want to buy a luxury car at a great
price? Appellant Benjamin Brandon Grey had a deal for you:
go to a bank, take out a loan (or several), hand him the money,
and you get your car. But Grey’s offer had a serious hitch: he
kept the money and you never got a car, for which a jury
convicted him of twenty-one counts of bank fraud and other
offenses. On appeal, Grey challenges the district court’s
admission of (1) evidence of a judgment in a related civil case,
(2) evidence of uncharged acts under Federal Rule of Evidence
404(b), and (3) evidence of the financial damage that Grey’s
scheme inflicted on his would-be customers. Grey also argues
that his trial counsel’s representation was ineffective. For the
reasons that follow, we affirm his conviction and deny his
ineffective-assistance claim.
I.
At Grey’s four-day jury trial, the government offered the
following evidence:
Hector Williams Jr. testified that Grey, whom he had met
through a mutual acquaintance, claimed to be a car dealer able
to buy luxury cars at low prices, and that he could get Williams
a good deal on a BMW. Following several weeks of discussion,
Grey claimed to have purchased a BMW and gave Williams a
buyer’s order for the car. Order in hand, Williams took out a
$35,000 loan from his credit union, and gave Grey the money,
which Grey deposited in his bank account. Grey never
delivered a car. After repeatedly contacting Grey, who offered
a variety of excuses, Williams filed a police report and sued
Grey in D.C. Superior Court. Grey failed to appear, and the
court entered a default judgment. Williams testified that
because he was unable to make payments on his loan, his credit
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union “end[ed] up suing [him]” and “won.” Trial Tr. 267 (Sept.
16, 2013); see id. at 219–67.
Another witness, Jennifer Bertelsen, testified that Grey,
with whom she was romantically involved, claimed to own
Planet Cars, a business through which he bought cars and
resold them at a profit. He urged her to take out loans, which
he would use to buy cars to resell, and then split the profits with
her. Though “skeptical,” Bertelsen testified that she was “in
love so [she] trusted him” and took out three loans from three
different banks for some $30,000 each and then signed the
three checks over to Grey. Trial Tr. 116 (Sept. 17, 2013). Grey
deposited the money in his bank account and gave Bertelsen
buyer’s orders describing the vehicles she was ostensibly
purchasing through Planet Cars. Bertelsen’s relationship with
Grey ended, and she never received any money. At trial,
Bertelsen testified that she was forced into bankruptcy due to
her inability to repay the loans. See id. at 102–70.
Ronny Fernandez, a high school friend of Grey’s, testified
that Grey told him about Planet Cars, offered to sell him a
BMW, and gave him a document purporting to be the car’s title
and listing Planet Cars as the owner. In response to Fernandez’s
“concern[]” about the transaction, which would involve taking
out a loan from a credit union, Grey explained that “because
it’s a federal credit union . . . if he didn’t give [Fernandez] the
car or [the] money . . . it would be a federal offense.” Trial Tr.
104–05 (Sept. 18, 2013). Reassured, Fernandez took out a
$30,000 loan and gave the money to Grey, who deposited it in
his bank account. Grey neither delivered a car nor refunded the
money. Fernandez sued Grey, but dropped the suit when Grey
warned that “if [Fernandez] take[s] him to court, it’s a federal
offense and [Grey will] be in jail and then he won’t be able to
give [Fernandez] [his] money back.” Id. at 116. Grey then
offered Fernandez a second deal: if he allowed Grey to list him
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as a founder of GreyMaxx, another company through which
Grey was seeking to buy and sell cars, he would return the
money. Fernandez agreed, but Grey neither involved him in
GreyMaxx nor repaid the money. Fernandez attempted to pay
off his loan to preserve his credit but was ultimately unable to
do so, leading his bank to increase the interest rate. Fernandez
testified that his debt “put [him] on edge” and that he “ended
up losing [his] job being so stressed out.” Id. at 118; see id. at
93–120.
William Hill, who had met Grey through a mutual friend,
testified that Grey also offered him an opportunity to invest in
GreyMaxx. Hill agreed and gave Grey $34,000, after which
communications with Grey tapered off and ultimately ended.
Grey never returned the money. See id. at 193–216.
The government called seven employees of the banks and
credit unions where the relevant transactions occurred. They
described each of the loans and the corresponding deposits in
Grey’s bank accounts. Together with this testimony, the
government introduced into evidence the associated loan
applications, security agreements, checks, deposit slips, and
bank statements. See, e.g., Trial Tr. 57–67 (Sept. 17, 2013)
(Williams loan and associated documentation).
Two government witnesses provided evidence of
uncharged acts under Federal Rule of Evidence 404(b).
Although the government had sought to introduce five such
acts, at a pretrial hearing, the district court, concerned that
admitting too many acts would be “overkill” and
“prejudic[ial],” rejected two and then allowed the government
to “pick two” from the remaining three. Hearing Tr. 10 (July
23, 2013). One of the witnesses the government selected,
Waleed Esbaitah, testified that he gave Grey $1,500 to buy a
car. Grey neither delivered a car nor returned the money. See
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Trial Tr. 32–42 (Sept. 19, 2013). The other witness, Ralph
Kolius, a sales manager at Chevy Chase Nissan, testified that
the dealership had to repossess a car Grey had purchased when
it discovered that Grey’s check was drawn on a closed Planet
Cars bank account. See Trial Tr. 167–81 (Sept. 18, 2013). The
court cautioned the jury about the Rule 404(b) evidence’s
“limited purpose” three times during trial—after opening
statements and after each witness’s testimony—and then again
in its instructions to the jury. Trial Tr. 207 (Sept. 16, 2013);
Trial Tr. 182–83 (Sept. 18, 2013); Trial Tr. 81–82 (Sept. 19,
2013).
Grey presented no evidence in defense, and the jury
convicted him on twenty-one counts of wire fraud, bank fraud,
false statement on a loan application, and first-degree fraud.
See 18 U.S.C. § 1343 (wire fraud); id. § 1344 (bank fraud); id.
§ 1014 (false statement); D.C. Code § 22-3221(a) (first-degree
fraud). The district court sentenced him to 102 months’ (eight-
and-a-half years’) imprisonment and 60 months’ supervised
release.
II.
Grey’s strongest challenge is to the district court’s
admission of Williams’ testimony about the default judgment,
and so we begin there. Because Grey’s counsel failed to object,
we review for plain error, which means Grey can prevail only
if we find “(1) an error, (2) that is clear or obvious, (3) that
affected the outcome of the district court proceedings, and (4)
that seriously affects the fairness, integrity, or public reputation
of judicial proceedings.” United States v. King-Gore, 875 F.3d
1141, 1144 (D.C. Cir. 2017) (citing Puckett v. United States,
556 U.S. 129, 135 (2009)).
Grey argues that Williams’ testimony was hearsay and
“both irrelevant and highly prejudicial.” Appellant’s Br. 24.
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Although our court has yet to rule on the issue, numerous courts
have held that civil judgments introduced in subsequent cases
for the truth of their underlying facts are inadmissible hearsay.
See, e.g., United States v. Sine, 493 F.3d 1021, 1036 (9th Cir.
2007) (“A court judgment is hearsay ‘to the extent that it is
offered to prove the truth of the matters asserted in the
judgment.’” (quoting United States v. Boulware, 384 F.3d 794,
806 (9th Cir. 2004))); see also, e.g., Greycas, Inc. v. Proud, 826
F.2d 1560, 1567 (7th Cir. 1987) (same); State v. Johnson, 381
S.E.2d 732, 733 (S.C. 1989) (same). Three major evidence
treatises agree. See 5 Wigmore on Evidence § 1671a
(Chadbourn rev. ed. 1974) (“[A] judgment in another cause,
finding a fact now in issue, is ordinarily not receivable.”); see
also 2 McCormick on Evidence § 298 (7th ed. 2016) (same); 5
Weinstein’s Federal Evidence § 803.25 (2d ed. 2018) (same).
Moreover, neither of the two narrow hearsay exceptions that
allow admission of certain types of judgments applies here. See
Fed. R. Evid. 803(22) (excepting certain judgments of criminal
convictions); Fed R. Evid. 803(23) (excepting certain
judgments “admitted to prove a matter of personal, family, or
general history, or boundaries”). And the government’s
purported nonhearsay rationale for introducing this evidence—
that it served to explain Williams’ actions and support his
credibility, Appellee’s Br. 37 n.8—does not hold water. The
default judgment was not entered until after Williams’ dealings
with Grey, and any credibility-related benefit arises solely from
the facts underlying the judgment (a.k.a. hearsay). See Fed. R.
Evid. 801(c) (defining hearsay as out-of-court statements
“offer[ed] in evidence to prove the truth of the matter
asserted”).
Not only was the evidence of the Williams judgment
inadmissible hearsay, its probative value was “substantially
outweighed” by its prejudicial impact. Fed. R. Evid. 403. Any
relevant inferences about Williams’ actions or his relationship
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with Grey arise from the fact that he sued Grey; introducing
evidence of the judgment provided no incremental probative
benefit other than to suggest that Grey was at fault. Against this
meager probative value, the evidence was highly prejudicial.
“A practical reason for denying [judgments] evidentiary
effect,” the Seventh Circuit has explained, is “the difficulty of
weighing a judgment, considered as evidence, against whatever
contrary evidence a party . . . might want to present,” especially
“for a jury, which is apt to give exaggerated weight to a
judgment.” Greycas, Inc., 826 F.2d at 1567; see also 2
McCormick on Evidence § 298 (describing “the danger of
undue prejudice” from admitting prior judgments because
“juries may . . . giv[e] the judgment binding effect even if this
is contrary to substantive law”). Here, the civil judgment and
the criminal charges involved virtually identical conduct,
exacerbating the risk that the jury would improperly rely on the
judgment. The government even encouraged such reliance,
calling attention to the judgment in its opening statement:
“[S]omeone who claim[ed] to be [Grey]’s cousin” told
Williams, “[i]f you have a problem with something that [Grey]
did, I suggest you take it up in a court of law.” Trial Tr. 187
(Sept. 16, 2013). “Mr. Williams,” the prosecutor continued,
“does exactly that. He sues [Grey] in DC Superior Court for
$35,444. [Grey] never shows up to court. Mr. Williams gets a
default judgment against [Grey].” Id. The court, moreover,
offered the jury no clarifying or limiting instruction that could
have perhaps mitigated this clear prejudice, such as an
explanation of the differing burdens in civil and criminal
proceedings or the nature of default judgments.
Admission of this evidence was thus “a legal error that was
. . . ‘plain’ (a term that is synonymous with ‘clear’ or
‘obvious’).” United States v. Brown, 508 F.3d 1066, 1071
(D.C. Cir. 2007) (quoting United States v. Sullivan, 451 F.3d
884, 892 (D.C. Cir. 2006)). In so concluding, we emphasize
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that we are not adopting a per se rule that any admission of a
civil judgment for its truth in a related criminal case is clearly
erroneous. We conclude only that the admission of Williams’
testimony was plain error under the circumstances of this
particular case, including the government’s failure to offer a
nonhearsay basis for admission, the substantial overlap
between the facts of the civil judgment and the instant charges,
the government’s calling attention to the judgment in its
opening statement, and the trial court’s failure to offer any
limiting instruction.
We shall not, however, reverse Grey’s conviction, as he
has failed to meet the other requirements of the plain error
standard, namely that the error “affected the outcome of the
[trial], and . . . seriously affect[ed] the fairness, integrity, or
public reputation of judicial proceedings.” King-Gore, 875
F.3d at 1144. This was not a close case. The government’s four
principal witnesses described Grey’s scheme in detail. Two
witnesses—Williams and Fernandez—testified that, at Grey’s
insistence, they took out car loans and gave him the money, but
neither got a car. Another witness, Bertelsen, testified that Grey
offered her a share of his resale profits, which she never
received. Fernandez and another witness, Hill, testified that
Grey also offered them investment opportunities, in their case
in GreyMaxx, and that they, too, were left empty-handed.
According to Fernandez, Grey twice acknowledged that his
conduct would constitute a “federal offense.” Each fraudulent
transaction, moreover, was confirmed by bank-employee
witnesses and bank records. Taken together, all of this
evidence, largely unchallenged by the defense and excluding
Williams’ default judgment (and, for good measure, the other
challenged evidence discussed below), is more than enough to
demonstrate that any error in admitting evidence of the
judgment, even if clear, was insufficiently prejudicial to merit
reversal.
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III.
Grey next challenges the district court’s admission of
evidence under Federal Rule of Evidence 404(b). See Fed. R.
Evid. 404(b) (permitting evidence of a “crime, wrong, or other
act”). Because Grey objected to the admission of the evidence,
our review is for abuse of discretion. See United States v. Pole,
741 F.3d 120, 124 (D.C. Cir. 2013) (“When a defendant has
preserved his objection to a district court’s evidentiary ruling,
we review that ruling for abuse of discretion.”).
Grey first argues that Waleed Esbaitah’s testimony that he
gave Grey money to buy a car and that Grey neither delivered
a car nor returned the money was needlessly cumulative and
unfairly prejudicial. The government responds—correctly, in
our view—that it was obligated to prove Grey’s specific intent
to defraud and the fact that he engaged in similar conduct
around the same time as the charged conduct was probative of
his state of mind. See Huddleston v. United States, 485 U.S.
681, 685 (1988) (“Extrinsic acts evidence may be critical to the
establishment of the truth as to a disputed issue, especially
when that issue involves the actor’s state of mind and the only
means of ascertaining that mental state is by drawing
inferences from conduct.”). Although the similarity of this Rule
404(b) evidence to the charged conduct risked rendering its
introduction needlessly cumulative, the district court acted well
within its discretion when it concluded that the testimony’s
probative value sufficiently counterbalanced the danger of its
cumulativeness, especially given the court’s careful policing of
this line at the pretrial hearing, where it restricted the
government to introducing only two acts.
Next, Grey argues that Ralph Kolius’ testimony that Grey
purchased a car from Chevy Chase Nissan using a check drawn
on a closed Planet Cars account involved “an altogether
different scheme” and thus served no permissible evidentiary
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purpose. Appellant’s Br. 20. This is a closer call: the schemes
are different, as the charged conduct did not involve the passing
of bad checks; the potential prejudice associated with passing
a bad check is significant; and the government’s explanation of
the evidence’s probative value—that it tends to show how Grey
used his business entities, and Planet Cars in particular, for
automobile-related fraud—offers but a limited offset against its
prejudicial potential. Any error in admitting this evidence,
however, was harmless and thus does not require reversal. See
United States v. Linares, 367 F.3d 941, 952 (D.C. Cir. 2004)
(explaining that non-constitutional error is harmless “unless it
had a ‘substantial and injurious effect or influence in
determining the jury’s verdict’” (quoting Kotteakos v. United
States, 328 U.S. 750, 776 (1946))). Given the overwhelming
and detailed evidence of Grey’s fraud, Kolius’ testimony “was
neither so dramatic nor compelling as to rivet the jury’s
attention,” it “consumed a small part of the trial,” and the
district court, by offering multiple limiting instructions about
the permissible use of Rule 404(b) evidence, “took caution to
guard the space between the permissible and impermissible
inferences,” rendering any error harmless. United States v.
Brown, 597 F.3d 399, 405 (D.C. Cir. 2010) (quoting United
States v. Mitchell, 49 F.3d 769, 777 (D.C. Cir. 1995)).
Grey suggests that the district court acted arbitrarily by
“simply instruct[ing]” the government to pick two acts to
introduce. Appellant’s Br. 20. Simply? Quite to the contrary,
the district court carefully questioned the parties about the
evidence over several transcript pages, explained its concern
that introducing the government’s five proposed acts was
“overkill,” and ultimately limited the government to
introducing just two acts from a narrowed set of three. See
Hearing Tr. 7–12 (July 23, 2013). Given its concern that “at
some point . . . the prejudice far outweighs any probativeness,”
the court acted well within its discretion when, having
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thoroughly considered the options, it drew the line at two. Id.
at 10.
IV.
This brings us to Grey’s challenge to the admission of
testimony about the adverse financial consequences suffered
by Williams, Bertelsen, and Fernandez. Williams testified that
his credit union sued him when he was unable to make the
payments on his loan. Bertelsen testified that she filed for
bankruptcy because she was unable to afford the payments on
hers. Fernandez went further: he testified that his inability to
keep up with his loan payments “stressed [him] out” and “put
[him] on edge,” ultimately causing him to “los[e] [his] job”
because he was “so stressed out” and leading his bank to
increase his interest rate. Trial Tr. 118 (Sept. 18, 2013).
According to Grey, the sole purpose of this evidence “was to
highlight the suffering of the victims and to generate feelings
of sympathy for them and outrage against [Grey].” Appellant’s
Br. 28.
Grey’s trial counsel twice objected to the introduction of
this evidence. The court sustained one objection on relevance
grounds at the tail end of Williams’ testimony, Trial Tr. 272
(Sept. 16, 2013), and overruled an objection to Fernandez’s
testimony that his inability to repay his loan “put [him] on
edge,” Trial Tr. 118 (Sept. 18, 2013). The parties dispute the
timing and adequacy of these objections and, accordingly, the
appropriate standard for our review. See Pole, 741 F.3d at 124
(explaining that we review for abuse of discretion “[w]hen a
defendant has preserved his objection” and that we “review
unpreserved objections for plain error”). We need not resolve
that issue, however, for any errors in admitting this testimony
were harmless. See id. (“Either way, if we determine that the
district court has erred in excluding particular evidence, we will
12
reverse the conviction on that basis only if the error was not
harmless.”).
In response to Grey’s argument that the evidence served
no legitimate purpose, the government offers a theory of its
relevance, namely that “[Grey’s] failure to take any corrective
action, or to terminate his schemes, despite the significant
harms suffered by his victims, reflects [his] intent to defraud.”
Appellee’s Br. 43. Although “proof that someone was actually
victimized by the fraud is good evidence of the schemer’s
intent,” United States v. Reid, 533 F.2d 1255, 1264 n.34 (D.C.
Cir. 1976) (quoting United States v. Regent Office Supply Co.,
421 F.2d 1174, 1181 (2d Cir. 1970)), the extent of the
testimony here—and, in particular, Fernandez’s description of
the emotional effects of Grey’s actions—outstrips any potential
probative purpose, especially absent proof that Grey was aware
of the consequences of his scheme. Moreover, this testimony—
again, especially Fernandez’s—risked prejudicing the jury by,
as Grey argues, “generat[ing] feelings of sympathy for [his
victims].” Appellant’s Br. 28.
Whether the district court abused its discretion in
concluding that the risk of prejudice did not “substantially
outweigh[]” any probative value, however, is of no moment
because any error was harmless. Fed. R. Evid. 403. The
testimony was brief, it played a minor role in the government’s
case, and its prejudicial potential was limited by the
straightforward way in which most of it (again, excepting
Fernandez’s outburst) was presented. Most importantly, as we
have already explained, the evidence against Grey was
overwhelming, confirming that the challenged testimony, even
if admitted in error, had no “substantial and injurious effect or
influence in determining the jury’s verdict.” Linares, 367 F.3d
at 952 (quoting Kotteakos, 328 U.S. at 776).
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V.
We can quickly dispose of Grey’s two remaining
arguments.
First, he argues that even if he fails to prevail on any
individual issue, the “cumulative effect” of his challenges
merits reversal. Appellant’s Br. 31. As explained above,
however, the district court made only one error—admitting
evidence of the default judgment. To be sure, the admission of
Kolius’ Rule 404(b) testimony and certain of the financial-
impact evidence might also have been error, but their effect
was minimal and any prejudice was mitigated in the case of the
Rule 404(b) evidence by the court’s limiting instructions.
Given this, and given the overwhelming weight of evidence
against Grey, we reject his “cumulative effect” argument. See
Brown, 508 F.3d at 1076 (concluding that cumulative effect did
not merit reversal where “the Government’s case was strong
and . . . the District Court’s instructions to the jury mitigated
any harm”).
Second, Grey raises, for the first time on appeal, a claim
of ineffective assistance of counsel. Although our “general
practice is to remand to the district court for an evidentiary
hearing,” we need not do so where “it is clear from the record
that counsel . . . was not ineffective.” United States v. Weaver,
281 F.3d 228, 233–34 (D.C. Cir. 2002). This is just such a case.
Grey’s ineffectiveness claim rests solely on defense counsel’s
“fail[ure] to object” to admission of the Williams judgment and
certain of the financial-impact evidence. Appellant’s Br. 32–
33. We have no need to consider whether “counsel’s
representation fell below an objective standard of
reasonableness” because, given the extensive evidence of
Grey’s guilt, we think it obvious that counsel’s errors, if any,
were not “so serious as to deprive [Grey] of a fair trial.”
Strickland v. Washington, 466 U.S. 668, 687–88 (1984); see
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United States v. Saro, 24 F.3d 283, 287 (D.C. Cir. 1994)
(“[T]he Strickland formulation of ‘prejudice’ comes quite close
to what we have required in plain-error cases.”).
VI.
For the reasons given above, and having considered and
rejected Grey’s pro se argument that “[he] was arrested . . .
without service of process,” Pro Se Br. 2, we affirm his
conviction and deny his claim of ineffective assistance.
So ordered.