DocketNumber： 92-1790
Filed Date： 3/30/1993
Status： Precedential
Modified Date： 9/21/2015
March 30, 1993 UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 92-1790
UNITED STATES OF AMERICA,
Appellee,
v.
JOHN M. CRONIN,
Defendant, Appellant.
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No. 92-1791
UNITED STATES OF AMERICA,
Appellee,
v.
ROBERT E. STARCK,
Defendant, Appellant.
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No. 92-1792
UNITED STATES OF AMERICA,
Appellee,
v.
NATHANIEL M. MENDELL,
Defendant, Appellant.
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APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
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Before
Breyer, Chief Judge,
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Aldrich, Senior Circuit Judge,
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and Selya, Circuit Judge.
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Annemarie Hassett with whom Federal Defender Office was on brief
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for appellant John M. Cronin.
Richard C. Driscoll, Jr., with whom Driscoll and Mattingly, P.C.
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was on brief for appellants Robert E. Starck and Nathaniel M. Mendell.
Mark J. Balthazard, Special Assistant United States Attorney,
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with whom A. John Pappalardo, United States Attorney, was on brief for
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appellee.
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March 30, 1993
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ALDRICH, Senior Circuit Judge. Defendants Cronin,
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Starck and Mendell were variously convicted on some 15 of a
20 count indictment for mail fraud and inducing interstate
transportation to obtain property by fraud, 18 U.S.C. 1341
and 2314. Cronin was sentenced as an organizer or leader;
Starck and Mendell as managers or supervisors. They appeal,
claiming that the evidence did not warrant findings of guilt,
or, in any event, justify these added characterizations, and
that the orders for restitution were excessive. We affirm,
except as to the last.
The fraud involved sales of time shares in a
proposed Cape Cod resort, Village Green. Although there were
many subsidiary misrepresentations of consequence, the basic
ones were that Village Green was a sound long-term
investment; that its property, then a motel, would be
renovated for the 1989 season; and that it was a member of
RCI, Resort Condominium International, Inc. Membership in
RCI would permit exchanging time at Village Green for other
resorts, and was a most attractive inducement. In point of
fact Village Green had no financing even sufficient to get
off the ground; initial obligations were not met, and, not
long after the start, foreclosure and bankruptcy were not
only inevitable, but imminent. Second, with respect to
renovation, there was no bona fide prospect of financial
ability to accomplish it. Third, the sales pitch was larded
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with RCI posters; brochures were offered many customers
(contrary to RCI's instructions), and the sales agreements
recited membership, whereas, in fact, the membership
application was never completed, and was rejected. In sum
total, some $272,000 was collected of which little was
returned, with sales continuing while other protests were
ignored.
Each defendant denies guilt, or, at the least, says
that the others were more responsible. According to Cronin,
"[T]he prosecution's evidence amounted to nothing more than
mere association between defendant and the sales people (sic)
who made the misrepresentations. . . . The prosecution
presented no substantial evidence that defendant had, or,
more importantly, exercised control over the manner in which
the time shares were sold. . . There was no evidence that
defendant read, reviewed, discussed, or otherwise knew the
contents of the sales documents. . . The evidence was that
the salespeople . . . not defendant, told prospective
purchasers that Village Green was a member of RCI . . .
These salespeople were under the direct and constant
supervision of Hart, the Project Director."
In point of fact Cronin was the originator of the
development. He had made contact with one Hatfield, who led
him to Starck and Mendell to provide financing. The
financing was never completed, as he knew, and Hatfield told
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him it was essential. Cronin obtained a sizeable six month
loan at 24% interest annually, subject to endorsement by
Starck and Mendell. He was to receive $400,000 for his
contribution to the development, and was said not to share
with Starck and Mendell as owners because he had had some
difficulty at the Registry of Deeds. He took a note and
third mortgage, which, surely, maintained his interest.
As to Cronin's innocence of what was going on,
Hart, the Project Director, was partly hired by him, and
reported to him. Cronin, in fact, was in charge of
marketing, and was said to be present every day. He had been
in charge of marketing at an earlier development, and was no
amateur. He could not help but see the RCI posters and
brochures having, in fact, directed the installation of an
RCI room, and he told at least one salesman they were already
a member. (Others said he said it was going through as a
matter of course, which was equally untrue.) The rosy view
painted in his brief is not what we consider. The most that
might be said is that the enterprise may have started on good
intentions, but when that paving ran out it proceeded on the
backs of prone customers.
We mention briefly Cronin's objection to testimony
that he instructed the contract secretary to place the name
Bernard Cohen on the weekly payroll request at $1,500, at the
same time telling her that Cohen was a dead friend of his.
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Cronin asserts this to have been irrelevant and highly
prejudicial. Rather, it was highly relevant. In addition to
showing that Cronin was improperly milking the scheme,
contrary to his denial "that money was paid [him]" (payroll
distributions were in cash), it showed the degree to which he
was in charge. The court's finding that relevancy prevailed
over prejudice was well warranted.
We pause here to say that enough has been shown to
justify the court's finding, with reference to sentence, that
Cronin was an organizer or leader. U.S.S.G. 3B1.1(a).
Turning to Starck and Mendell, they, as trustees,
were the title owners, and had personally endorsed the
purchase note. The jury found in their favor on some early
counts. They contend, for this and other reasons, that they
did not "devise the scheme." Passing the fact that
defendants can take no comfort from inconsistent verdicts,
Harris v. Rivera, 454 U.S. 339, 345 (1981), it is not
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necessary that a defendant be an original organizer. United
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States v. Serrano, 870 F.2d 1, 6 (1st Cir. 1989). On the
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issue of the RCI alone there were ample incidents to warrant
conscious deceit. On top of this, these defendants could not
have been ignorant of the many financial difficulties that,
in due course, presaged ruin.
As to the sentencing increase because these
defendants were found to be managers or supervisors, U.S.S.G.
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3B1.1(b), Starck and Mendell were, after all, the owners.
We review only for clear error, United States v. Panet-
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Collazo, 960 F.2d 256, 261 (1st Cir.), cert. denied sub nom.,
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Diaz v. United States, 113 S.Ct. 220 (1992), and we see none.
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Manifestly they cannot deny responsibility for deliberate
misrepresentation by salesmen of which they were aware, even
to the point of receiving complaints, simply on the ground
that they were not the ones who devised the procedure. This
would be a happy day for vendors with loose consciences. The
record is replete with misrepresentations, and of
defendants', at least occasional, awareness and lack of
concern.
With reference to sentences, Starck and Mendell
complain that the court charged them with points for
obstructing justice by committing perjury. Our prior
rejection of this contention, United States v. Batista-
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Polanco, 927 F.2d 14, 21-22 (1st Cir. 1991), has since been
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confirmed. United States v. Dunnigan, 122 L. Ed.2d 445
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(1993).
Next, defendants complain that their scheme had
commenced prior to the Guidelines. As to the prison
sentences, they were concurrent, and even though mail fraud
counts are separate offenses, see United States v. Lilly, 983
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F.2d 300 (1st Cir. 1992), there can be no possible
constitutional question. There is a problem, though, with
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regard to restitution. Although Starck and Mendell state in
their brief that the court ordered restitution for the full
amount obtained, this was not so individually. No defendant
was convicted on all counts, and as to each defendant the
court ordered deducted from the full amount the counts as to
which he had been acquitted. This, however, still charged
him for more than the counts on which he was convicted --
there had been much more collected than was named in the
indictment's 20 counts. The government argued that in
determining the length of sentence it was proper to look at
the entire picture. This is correct, United States v. Fox,
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889 F.2d 357 (1st Cir. 1989); indeed, even to considering
offenses found by the court though there had been a jury
acquittal. United States v. Mocciola, 891 F.2d 13, 17 (1st
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Cir. 1989). This, however, is for enhancement of prison
terms within the guidelines. Restitution is a separate
matter. 18 U.S.C. 3663. In United States v. Hughey, 495
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U.S. 411 (1990), the defendant, charged, in several counts,
with the use of stolen credit cards, pled guilty to the
fraudulent use of one. The order for restitution included
use of others. The Court reversed, saying the outer limit
was "the loss caused by the conduct underlying the offense of
conviction." Id. at 420. This decision, however, did not
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entirely clear the air, and the circuits have split as to its
application in mail fraud cases.
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As of the moment, five circuits have answered, or
appear disposed to answer, that the "offense of conviction"
is the particular mailing charged. See United States v.
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Pivorotto, No. 92-3207, 1993 U.S. App. LEXIS 2835, at *10,
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n.5 (3d Cir. Feb. 22, 1993); United States v. Seligsohn, 981
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F.2d 1418, 1421 (3d Cir. 1992); United States v. Jewett, 978
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F.2d 248, 252 (6th Cir. 1992); United States v. Streebing,
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1993 U.S. App. LEXIS 3303, at *18-*24 (6th Cir. Mar. 2,
1993); United States v. Gravatt, 1991 U.S. App. LEXIS 30671,
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at *10-*14 (6th Cir. Dec. 27, 1991) (rep'd mem., 951 F.2d
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350); United States v. Sharp, 941 F.2d 811, 814-15 (9th Cir.
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1991); United States v. Angelica, 951 F.2d 1007, 1009 (9th
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Cir. 1991); United States v. Wainwright, 938 F.2d 1096, 1097-
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98 (10th Cir. 1991); United States v. Stone, 948 F.2d 700,
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703-04 (11th Cir. 1991); see also United States v. Marsh, 932
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F.2d 710, 712-13 (8th Cir. 1991) (Heaney, J., with the other
two judges concurring in the result). Two circuits have,
however, answered that the offense includes the scheme as a
whole. See United States v. Stouffer, 1993 U.S. App. LEXIS
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4737, *30-*34 (5th Cir. Mar. 16, 1993) (Garza, J., with whom
Smith, J. concurred; Reavley, J. dissented on this issue);
United States v. Bennett, 943 F.2d 738, 740 (7th Cir. 1991),
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cert. denied, 112 S. Ct. 2970 (1992); United States v.
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Brothers, 955 F.2d 493, 497 (7th Cir.), cert. denied, 113 S.
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Ct. 142 (1992); United States v. Langer, 962 F.2d 592, 600-01
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(7th Cir. 1992); United States v. Turino, 978 F.2d 315, 317-
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19 (7th Cir. 1992).
This is a difficult question, and we well
understand the split. Congress, meanwhile, since defendants'
offenses, has amended the statute in favor of broad
restitution.1 Under these circumstances we forego total
analysis, and for the brief pre-amendment period covered by
the present case are content to accept the lenient majority
view. The sentence with respect to restitution must be
limited to the amounts in the counts on which the particular
defendant was found guilty.
Affirmed, except remanded for correction of orders
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for restitution in accordance with this opinion.
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1. (2) For the purposes of restitution, a
victim of an offense that involves as an
element a scheme, a conspiracy, or a
pattern of criminal activity means any
person directly harmed by the defendant's
criminal conduct in the course of the
scheme, conspiracy, or pattern.
3663(a)(2). Added by Pub. L. No. 101-647, 2509, 104
Stat. 4789, 4863 (Crime Control Act of 1990).
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United States v. Johnny Rafael Batista-Polanco , 927 F.2d 14 ( 1991 )
United States v. Carolyn L. Fox , 889 F.2d 357 ( 1989 )
United States v. Dunnigan , 113 S. Ct. 1111 ( 1993 )
Harris v. Rivera , 102 S. Ct. 460 ( 1981 )
United States v. Warren James Sharp , 941 F.2d 811 ( 1991 )
United States v. John M. Turino , 978 F.2d 315 ( 1992 )
united-states-v-miguel-a-serrano-dba-ponce-developers-inc-united , 870 F.2d 1 ( 1989 )
United States v. Jessie Mae Stone , 948 F.2d 700 ( 1991 )
United States v. Steve Angelica , 951 F.2d 1007 ( 1991 )
United States v. Gerard Peter Mocciola , 891 F.2d 13 ( 1989 )
United States v. James D. Wainwright , 938 F.2d 1096 ( 1991 )