United States v. John C. Best, Gregory J. Bewick and Paul F. Conarty ( 1991 )

BAUER, Chief Judge.

In this en banc review, we must decide whether the defendants were deprived of a fair trial due to the presence of binders containing certain government exhibits in the jury room during deliberations. In our prior opinion, see United States v. Best, 913 F.2d 1179 (7th Cir.1990), vacated, 924 F.2d 646 (7th Cir.1991), a panel of this court held that the presence of the binders during jury deliberations was jury tampering that constituted reversible error. After rehearing the case en banc, we now hold that the presence of the binders in the jury room was not error, and, therefore, affirm the defendants’ convictions.

I.

Having recited the complex facts of this case in the earlier opinion, we need only glean from that recitation here. See Best, 913 F.2d at 1181. John C. Best, Gregory J. Bewick, and Paul F. Conarty were indicted on thirty-five counts of mail fraud, misapplication of bank funds, bank fraud, and related crimes committed in the course of the failure of the American Heritage Savings and Loan Association (“American”), a federally insured institution of which Best, Bewick, and Conarty were officers. Best was its president and chaired its Board of Directors, Bewick its executive vice-president and managing officer, and Conarty its in-house counsel.

American had been experiencing financial difficulties since 1981, when the State of Illinois Commissioner of Savings and Loans and the Federal Home Loan Bank Board conducted a joint examination of its economic condition and projected a net loss in excess of $1.7 million and net worth deficiency of approximately $200,000 by the end of the fiscal year. Between late 1981 and mid-1983, Best and Bewick, joined later by Conarty, embarked on a course of desperate efforts to keep American afloat. It was those actions that eventually led to the insolvency of the association and gave rise to this prosecution.

By 1981, American and its subsidiaries, American Heritage Service Corporation (“Service”), Metrodyne, Incorporated (“Me-trodyne”), and Landfinder’s Realty Corporation (“Landfinder’s”), had accumulated large holdings in real estate, primarily through foreclosure, known as “real estate owned” or “REO.” Best wanted to get the REO off American’s books because it was a non-earning asset and a drain on American’s earning power. In addition to several other practices that violated the norms of the savings and loan industry, Best and Bewick would require borrowers to purchase REO from American and its subsidiaries as a condition of obtaining a loan. See Id., 913 F.2d at 1181. In so doing, Best and Bewick attempted to disguise the American’s deteriorating financial status. They would apply as much of the loan as was necessary to cover the down payment for the purchase of the real estate. By this tactic, Best and Bewick, in effect, were selling American’s real estate to the borrower — who typically was not creditworthy and known by Best and Bewick to be so— for no cash down. Moreover, they were selling this real estate at inflated prices, based on inflated appraisals, so that American could book a profit on the sales and thereby improve its balance sheet even though it was extremely unlikely that the borrower would be able to complete the payments for the property or that, when the borrower stopped making payments, the property could be sold for a price equal to the purchase price — or for that matter, equal to the loan. Id. While engaging in these reckless transactions, which predictably flopped, and while the bank was losing money hand over fist, Best and Bewick paid themselves large bonuses from the Landfinder’s account. Id.

Conarty became involved when he joined American as its in-house counsel in early 1983. During that year, American made sizeable loans to a partnership, but two of the three partners were ineligible to borrow from the association because they had reached their loan limit. Conarty at least knew that one of the partners was in bankruptcy because he was one of that partner’s creditors and had filed a claim in the bankruptcy proceeding. Id. The loan was made to enable the partnership to purchase and develop real estate owned by American, yet the proceeds of the loan were going to two of the partners to enable them to pay off pre-existing debts unrelated to the real estate project. This loan, therefore, constituted a misuse of bank funds of which Conarty was aware and in which he participated.

As American’s financial condition deteriorated, the Federal Home Loan Bank Board (“FHLBB”), which promulgates and enforces the rules and regulations that govern federally insured savings and loan associations, more carefully scrutinized American’s lending practices. Between 1981 and 1983, Best and Bewick were able to keep the examiners at bay, in part by concealing the ultimate recipients of loan proceeds. Best’s and Bewick’s maneuvers to continue to manipulate the net worth of American allowed it to continue to operate approximately one year beyond the point of insolvency. It was only after an extensive review of the loan files and the other records of the association that the examiners were able to determine the true recipients of the loan proceeds. The FHLBB took control of American in 1984 — an event that would have occurred much sooner if the true financial condition of American had not been concealed by Best and Bew-ick.

A jury trial commenced on April 20,1987, in the United States District Court before the Honorable Nicholas Bua. After a seven-week trial, the jury found Best and Bew-ick guilty of all counts save one. The jury found Conarty guilty of six counts, including mail fraud, misapplication of savings and loan funds, and participation by a savings and loan officer in an improper loan. Four months later, Judge Bua sentenced Best to one year and a day in prison, three years probation, and five hundred hours of community service; Bewick to six months work release, three years probation, and five hundred hours of community service; and Conarty to three years probation and four hundred hours of community service.

All three defendants appealed. A panel of this court reversed the defendants’ convictions and remanded the cause to the district court. We vacated that opinion and granted the government’s petition for rehearing en banc to reconsider whether the jury’s use of the government’s binders during deliberations constitutes reversible error.

II.

Near the beginning of the trial, the government furnished each juror with a loose-leaf binder containing the key government exhibits arranged by transaction. The district court understood that the binders would be used to help the jury follow the descriptions of the various exhibits. See Transcript of Trial Proceedings (“Trial Trans.”) at 677. Yet, because the exhibits in the binders had not yet been placed in evidence, the judge told the jurors not to look in the binders until a particular exhibit was admitted into evidence, and then to look only at that exhibit in the binder. He also told them to leave the binders in the jury box during recesses. See Id. at 678, 730. The binders remained in the jury box with the jurors throughout the trial. None of the defendants objected to this use of the binders by the jury. See Id. at 678.

When the trial ended, the binders were left by the jurors in the jury box. The district judge instructed the parties to review the exhibits and to agree on which exhibits were to be sent to the jury for deliberations. The various defense counsel and the prosecutors spent the morning of June 9, 1987, reviewing the many exhibits that the parties intended to send into the jury room. There were ten boxes of exhibits — nine boxes of government exhibits and one box of defense exhibits — lined up on the front row spectator bench in the courtroom. Defense counsel claim that the prosecutor promised them that the binders were not going to be sent to the jury room. The prosecutor denies ever making such a promise. See Affidavit of Prosecutor at 7. After resolving some minor issues regarding one or two of the exhibits, the judge directed that the exhibits entering the jury room be placed in the custody of the United States Marshal. Defense counsel then left the courtroom and the judge turned to other business. The prosecutor and the case agent from the FBI began loading all the exhibits, including the binders, onto a cart that the marshal wheeled into the jury room.

After the jury had been deliberating for four days, one of the defense counsel learned that the binders had been sent into the jury room and moved for a mistrial. See Trial Trans, at 5986. Defense counsel argued that the submission of the binders to the jury during deliberations constituted reversible error. The binders were, counsel argued, merely roadmaps to conviction, highlighting the key exhibits of the government’s case. Moreover, these binders were sent to the jury room with neither the knowledge nor consent of the defendants. The district court denied the motion. See Trial Trans, at 5990, 5999, 6029. However, because the government agreed to defense counsel’s request to have the binders removed, the binders were removed from the jury room after the jurors were dismissed for the weekend. See Trial Trans, at 5997-98, 6007.¹

On the following Monday, the jurors finished deliberating and returned the verdicts described above. There is no doubt that the jurors noticed the absence of the binders: on Monday morning, the foreperson asked about the missing binders and requested the return of various slips of paper upon which jurors made notes and which were placed inside the binders. The district court chose not to respond to the jurors’ request, and approximately four hours later, the jury came in with its verdicts. Following the verdicts, the district court agreed to conduct an examination of each juror to determine whether he had used the binders to the exclusion of all the original exhibits admitted in evidence. Each juror stated that he used the binders only in conjunction with the original exhibits during the deliberations. Every juror remarked that they had examined the other exhibits in the jury room. See Trial Trans, at 6195-6215.

Regardless of the jurors’ statements about considering all the evidence, the defendants filed a joint post-trial motion for a new trial based on the prejudicial impact of the binders on jury deliberations and the alleged misconduct by the government. Defense counsel argued that they had been misled by the prosecution regarding what was to be sent to the jury room and that the presence of the binders in the jury room had contaminated the jurors’ deliberations. Prior to sentencing the defendants, the district court heard argument from the parties on the post-trial motion. At that time, both parties were prepared to give sworn testimony regarding the defendants’ allegations. But they didn’t get the chance: the district court declined to hold a hearing on the issue of government misconduct, finding that the issue was mooted by the fact that all the exhibits contained in the binders had been admitted properly in evidence during the trial, and thus, no harm was done by their presence in the jury room. See Trial Trans, at 6272. The district court specifically added that it was not finding that the government intentionally deposited the binders in the jury room to prejudice the defendants. See Trial Trans, at 6188-89. The district court accordingly denied the defendants’ motion for a new trial and proceeded with sentencing.

III.

On appeal, the defendants renew their arguments that the prosecutor’s misconduct in sending the binders into the jury room prejudiced the defendants and, thereby, deprived them of a fair trial. We need only reach the misconduct issue, however, if the defendants establish that there was some prejudice or substantial right affected by the presence of the binders in the jury room during deliberations, and that the district court abused its discretion by refusing to hold an evidentiary hearing on that alleged misconduct. See United States v. Wilson, 715 F.2d 1164, 1169 (7th Cir.), cert. denied, 464 U.S. 986, 104 S.Ct. 434, 78 L.Ed.2d 366 (1983). Thus, first— and, as we shall see, the only — issue we face is whether the district court acted reasonably in refusing to set aside the verdict because it found no possible prejudice. See United States v. Bruscino, 687 F.2d 938, 940 (7th Cir.1982) (“The proper standard of appellate review ... is whether the district court abused its discretion in denying defendant’s motion for a new trial.”) (quotations omitted). We note that, under the abuse of discretion standard, the proper inquiry “is not how the reviewing court would have ruled if it had been considering the case in the first place, but rather whether any reasonable person could agree with the district court.” Graefenhain v. Pabst Brewing Co., 870 F.2d 1198, 1201 (7th Cir.1989) (quoting United States v. $103,387.27 in U.S. Currency, 863 F.2d 555, 561 (7th Cir.1988)).

In Bruscino, we faced a similar question. In that case, the two defendants, inmates at a federal penitentiary, were charged with the murder of another inmate. The defendants argued that their convictions were unlawful because the jury had been exposed to two documents not in evidence —specifically, a Bureau of Prisons report and a newspaper article. The report suggested that one of the defendants was involved with the “Mexican Mafia,” and the article related that all of the individuals who had been indicted for the murder had pleaded guilty, except the two defendants. We held that the district court did not abuse its discretion in concluding that it was highly unlikely that the jury had been prejudiced by the documents in question. Therefore, we affirmed the convictions. Given the wealth of admitted evidence against the two defendants, we found the challenged documents “drably descriptive,” telling the jury “nothing it did not already know,” and thus insufficient to justify reversing the convictions. See Bruscino, 687 F.2d at 942.

The instant case presents an even stronger argument for affirming the convictions of Best, Bewick, and Conarty. In Brusci-no, the challenged documents were not admitted in evidence; therefore, it was error for the jury to see such documents. See Id. at 940 (“A criminal defendant in our system has a right to be tried on the basis of the evidence admitted at his trial, and this right may be violated if the jury gets access to extra-record evidence_”). Thus, the question in Bruscino was whether the district court abused its discretion in concluding that that error had not prejudiced the jury. But in the present appeal, all parties agree that the jury properly could review the exhibits contained in the binders — after all, they openly had been examining those binders, document by document, in the course of the seven-week trial, and by the end of the trial, every document in the binder had been admitted in evidence. Thus, it simply could not have been error for the jury to see the exhibits contained in the binders.

The only contention of prejudice is that the use of the binders during deliberations made it easier for the jurors to follow the government’s case, and that the jurors might have taken the absence of any binders provided by the defendants as an indication that the defense agreed that the government’s binders contained all the relevant evidence. See Best, 913 F.2d at 1184. This argument ignores the fact that the binders contained only copies of documents admitted in evidence; the original exhibits, both the government and the defense documents, were carefully organized in boxes that were just as easily accessible to the jury. The binders were no more “road-maps to conviction” than were the ten boxes of carefully ordered evidence.

Even if we accept the argument that the binders permitted greater access to the government exhibits, we nevertheless fail to see how easy access by itself amounts to error. If the defendants objected to the ease of access which the binders provided, the time to object was when the binders were first distributed to the jury in the opening days of the trial. Not only did they fail to object, but the record reveals that during the trial the defendants themselves frequently directed the jury’s attention to the binders in order to focus the jurors on a particular document or transaction. As the district court appropriately ruled, once it was determined that the documents in the binders properly were admitted in evidence, and considering the fact that the binders had been on the jurors’ laps for seven weeks, there can be no issue of prejudice:

The Court: Well, I think, here again, it would be a serious issue, obviously, and I would declare a mistrial at the snap of a finger in the event the jury did not have that jury book [i.e. binder] on their laps for almost two months, and, also, if, indeed, the exhibits appearing in the jury book were not exhibits actually received in evidence. I’d have no problem with it. I don’t think it is a proper reaction for the court to declare a mistrial just because this evidence has been compiled in one jury book.

Trial Trans. at 6038-39.

The cases upon which the defendants and the panel’s opinion rely easily are distinguishable. In each of these cases involving the jury’s exposure to “unauthorized” materials during deliberations, the materials in question were not properly admitted in evidence. Indeed, the three main eases cited by the defendants, United States v. Brown, 451 F.2d 1231 (5th Cir.1971); Sanchez v. United States, 293 F.2d 260 (8th Cir.1961); and United States v. Ware, 247 F.2d 698 (7th Cir.1957), all involved situations in which federal agents in narcotics cases had handwritten on the envelopes that contained the narcotics the time, date, and place of the defendant’s sale of the drugs, as well as the results of the laboratory analysis including the drugs’ purity and amount. The courts in those case, observing that the notes were profoundly detailed, concluded that the labels on the envelopes amounted to a “neat condensation” of the government’s case on each sale. Brown, 451 F.2d at 1234; Sanchez, 293 F.2d at 269; Ware, 247 F.2d at 700. The important distinction here is that, unlike the documents in the binders in the present case, the labels in Brown, Ware, and Sanchez had not been admitted properly in evidence.

Even in more recent cases in which we have held that unauthorized materials in the jury room did not require a mistrial, we still focused on whether the materials in issue had been admitted in evidence. See United States v. Herrero, 893 F.2d 1512, 1539-41 (7th Cir.), cert. denied, — U.S. —, 110 S.Ct. 2623, 110 L.Ed.2d 644 (1990) (presence of map in the jury room not in evidence did not require mistrial); United States v. Sababu, 891 F.2d 1308, 1332-34 (7th Cir.1989) (presence of transcript from telephone conversation previously excluded from evidence in the jury room did not violate defendant’s constitutional rights); United States v. Key, 859 F.2d 1257, 1264 (7th Cir.1988) (debtor not entitled to new trial because there was no reasonable probability that evidence that debtor’s husband had been convicted of tax evasion, which one juror learned from an outside source and communicated the information to another juror, had affected the jury’s verdict); United States v. Weisman, 736 F.2d 421, 424 (7th Cir.), (one juror’s bringing into the jury room a newspaper clipping that referred to the co-defendant’s guilty plea was harmless and did not warrant new trial) cert. denied, 469 U.S. 983, 105 S.Ct. 390, 83 L.Ed.2d 324 (1984). If exposure to such improper evidence did not warrant a new trial in these cases, the jury’s exposure in this case to copies of documents properly admitted in evidence in a binder that the jury had used for the length of the trial cannot warrant a new trial.

Moreover, the district court did not simply rely on the fact that the documents had been admitted in evidence. The court also verified, through individual voir dire of each juror, that the jurors considered all the evidence, not just the binders, in arriving at their verdicts. See Trial Trans, at 6275-76. Given this support, the district court’s denial of the defendants’ motion for mistrial was not an abuse of discretion. As we declared in Bruscino:

The trial judge will always be in a better position than the appellate judges to assess the probable reactions of jurors in a case over which he has presided.... As we cannot put ourselves in the district judge’s shoes in these matters we ought to accept his judgment unless we have a very strong conviction of error.

687 F.2d at 941. Here, the district court found no error resulting from the presence of the binders in the jury room during the deliberations. The record competently supports such a finding.²

Because we determine that the district court did not abuse its discretion, we need not even address the defendants’ charges of prosecutorial misconduct. Simply put, if there was no error in the jurors’ use of the binders during deliberations, then how the jurors came to have the binders in the jury room is immaterial. The district court felt similarly, as it refused to hold an evidentia-ry hearing regarding possible government misconduct; “There is no need for any additional hearing. I think it is mooted out. The only concern this court had was the jury might have had with them during their deliberations exhibits which were not admitted in evidence.” Trial Trans, at 6272.

Thus, although the record contains the conflicting affidavits of the prosecutor and the defense counsel, the district court declined to resolve these disputes. With no record to guide us, we refuse to “find facts” on appeal.³ See United States v. Rodriguez, 888 F.2d 519, 525 (7th Cir.1989). See also Mars Steel Corp. v. Continental Bank, 880 F.2d 928 (7th Cir.1989) (en banc). Instead, we hold that the district court’s refusal to entertain an evidentiary hearing concerning the defendants’ charges of prosecutorial misconduct was not an abuse of discretion. See Wilson, 715 F.2d at 1169 (finding no abuse of discretion when the district court denied an evidentiary hearing on the defendants’ claim that the government leaked information to the press, which resulted in prejudicial pretrial publicity, where there was no evidence that the pretrial publicity adversely affected the rights of the defendants.). As the panel rejected the defendants’ other contentions, we do so as well, relying on the panel’s brief discussion. See Best, 913 F.2d at 1180-82, 1185.

IV.

For the reasons discussed above, the judgments of conviction are

Affirmed.

1 . The panel seemed to attach significance to the district court’s decision to remove the binders from the jury room once the defendants raised their objections. See Best, 913 F.2d at 1183. We find that significance unwarranted. The transcript of the district court proceedings plainly reveals that the court had the binders removed not becuase it found their presence in error, but because the parties stipulated to their removal:

Defense Counsel: Judge, ... we are going to also move that at the recess, whenever we break and the jury is excused for the weekend, that those jury books [i.e. the binders] be collected, taken out of the jury room, and that the jury not be permitted to look at those jury books for the remainder of their deliberation, because they have the exhibits and they can look at the exhibits....

The Court: Any objection to that?

Prosecutor: I have no objection to that.

The Court: Fine. Okay. * * * So stipulated. Okay, we’ll sneak in there after they [i.e. the jurors] leave without letting them know. * * * Let the record show that pursuant to agreement of counsel, without waiving any defendant’s rights to a claim of error because of the jury books going back with the evidence, the court has ordered the court room deputy to remove those twelve jury books from the jury room....

Trial Trans, at 5997-98, 6007.

Later, when ruling on the defendants’ post-trial motions, the district court made clear that the removal of the binders did not constitute a finding of error, or, for that matter, any other finding. It was simply a stipulated compromise that was struck between the parties:

Defense Counsel: [I]t wasn’t until Friday afternoon, late in the afternoon, that we discovered that those jury books went back there. And when we made our record, your Honor ruled that the jury books should come out. And what was the first thing—

The Court: I think that was a compromise position after we discussed it.... * * * But rather than a ruling, I think it was a compromise position. The government had no objection to removing them at that time. But at any rate ... the transcript will reflect that.

Trial Trans, at 6150.

2 . The dissent maintains the position that the presence of the binders in the jury room constituted error — that they were “unauthorized materials.” But the materials were authorized — were in fact in the possession of and perused by the jurors for nearly seven weeks. The agreement or acquiescence in their use by the defendants is simply not material to the issue of whether they were admissible pieces of evidence — and each piece of the material in the binders was in evidence.

The dissent also suggests that the immediate agreement of the government to withdraw the binders is somehow an admission that they were wrongfully there. Not so. It is simply an acknowledgement that it didn’t make the slightest difference. With or without the binders, the exhibits were in the jury room. So rather than fight over the program, take the binders out. (It is interesting that when these binders — these "road maps to guilt” — were in the jury room, they deliberated four days without result; four hours after their removal, the jurors found their own road map and returned a guilty verdict. Speculation on jury process is a futile pastime at best but since the subject was raised, why not?)

The dissent also complains that the post-trial questioning of the jurors was inadequate because the only thing the court asked was whether they had used the binders "to the exclusion of the original exhibits.” This is not so. What the court asked was whether they had used the binders to the exclusion of the other exhibits— government and defendant. See Trial Trans, at 6196. The answer to this question was negative. That was the only issue raised by the defense. Any further inquiry would have been an inquiry as to how the jurors arrived at their verdict. That inquiry is clearly improper unless there is an allegation that something not admitted in evidence was in the jury room or some improper communication had occurred. See Fed.R.Evid. 606(b). See generally J. Haddad, J. Zagel, G. Starkman & W. Bauer, Cases and Comments on Criminal Procedure, 1461-62 (3d ed. 1987). Neither of these facts were alleged or were true. The court simply put to rest a stated fear of the defense counsel.

3 . On this question, we note that the findings of the original panel in this case that suggested that Assistant United States Attorney Susan Bogart, the lead prosecutor in this case, had "quite possibly” engaged in misconduct have been vacated. Had the district court believed an inquiry into Ms. Bogart's conduct warranted, it could have conducted one; we should not perform that task in its stead.