United States v. Adkinson

PUBLISH
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
No. 92-2872
D. C. Docket No. 91-03052-RV
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
Cross-Appellant,
versus
WILLIAM MICHAEL ADKINSON,
ANN POWELL MINKS, f.k.a. Ann Powell, et al.,
Defendants-Appellants,
Cross-Appellees.
_________________
No. 95-2061
_________________
D. C. Docket No. 91-03052-RV
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
RONALD D. PEEK, ANN POWELL MINKS, et al.,
Defendants-Appellants.
Appeals from the United States District Court
for the Northern District of Florida
(February 23, 1998)
Before DUBINA, Circuit Judge, and HILL and GIBSON*, Senior Circuit Judges.
*Honorable John R. Gibson, Senior U.S. Circuit Judge for the Eighth Circuit, sitting by
designation.
HILL, Senior Circuit Judge:
Defendants appeal from the denial of their motion for a new trial and from
their convictions and sentences upon multiple counts of conspiracy, bank, mail and
wire fraud, interstate transportation of stolen property and money laundering. The
government appeals the district court’s determination that the sentencing guidelines
do not apply to these defendants. For the following reasons, all convictions and
sentences WILL BE REVERSED AND VACATED.1
I.
Confronted with a situation similar to the one presented here, a judge wisely
wrote:
1
We do not reach the government’s appeal. Judgment to this
effect will follow further proceedings consistent with this
opinion.
2
Although there is ample ground for argument that the Supreme
court has doubts about Lau’s continued vitality, a requiem may be
premature and, in any event, should not be sung by this choir.
NAACP v. Medical Center, Inc., 657 F.2d 1322, 1330 (3d Cir. 1981) (Judge Joseph
Weiss).
Had this admonition been taken to heart at the outset of this case, a most
troublesome path would have been avoided.
II. Background
This case began as a basic bank fraud case arising out of alleged false
statements and misrepresentations made to procure loans for a land development
project and that large amounts of loan proceeds were allegedly diverted for personal
use. Somewhere along the line, the case mutated into a broad conspiracy against
the government involving wire, mail, and tax fraud, interstate transportation of
3
money taken by fraud and money laundering.2 There was evidence of the following
facts.
William Adkinson, a Houston real estate developer, had expanded a modest
business of acquiring and renovating foreclosed homes into a complex series of
interlocking corporate entities under the umbrella of The Development Group, Inc.
(DGI). Adkinson named Ronald Peek president of DGI. During this time,
Adkinson met Keith Cox, a London solicitor. Cox represented a group of Kuwatis
who invested internationally through a multi-billion dollar company called
Compendium Trust. After several successful business ventures with Cox, Adkinson
began to engage in large, complex real estate transactions.
2
The district court stated at the end of the government's
case:
Preliminarily, let me just say that this has
probably been the most difficult case to try
to understand what is charged and what the
evidence is of any criminal case that I have
ever dealt with, and I suspect most of you can
say the same thing. Part of the problem is
that the government has attempted to turn a
bank fraud case into a case that includes an
income tax case and a mail fraud and wire
fraud, and everything else, and the pieces
simply don’t fit together very well; and, when
you have as far-reaching factual circumstances
that are in this case, it makes it extremely
difficult to try to deal with all of the
defendants and all of these charges that, for
the most part, are not even related.
4
In the summer of 1985, Adkinson became interested in purchasing an
exceptional piece of beachfront property and contiguous forest land from the St. Joe
Paper Company of Jacksonville, Florida (St. Joe). The property is situated in the
panhandle of Florida and includes 6.5 miles of sugar white beaches, dense pine
forests, fresh water lakes and magnificent sand dunes.
Adkinson employed Robert Alligood, then president of the engineering firm
of Reynolds, Smith & Hills (RS&H), to help Peek and him negotiate the purchase
from St. Joe. Alligood had a relationship with the principals of St. Joe that
Adkinson hoped would help in the negotiations. In addition, RS&H performed
engineering studies on the feasibility of developing the property. Alligood and
RS&H were to receive a broker's commission of $3 million through its real estate
subsidiary, Plantec Realty Corp.
A contract was ultimately negotiated, providing for $50 million in cash for
approximately 780 acres, a tax-free property exchange of 18,000 interior acres, and
an additional 2,000+ acres purchased on a seller-financed note and mortgage for
$132 million. The contract provided for the immediate release of portions of the
beach front and a staged release of the other land as mortgage payments were made.
On October 3, 1985, the contract was entered into by St.Joe and Panhandle
Coast Investors, Inc. (Panhandle), a Florida corporation, formed at the request of
5
Cox who had joined the deal.3 Adkinson's attorney, Robert Collins, had arranged
for Panhandle to be formed.
The contract required a deposit of $2.1 million in earnest money with
Imperial Title Company, a title company owned by Collins and Ann Powell Minks.
Adkinson sent two DGI checks to Minks, totaling $2.1 million, to establish the
escrow account. On October 7, 1985, Minks communicated to St. Joe receipt of the
deposit. On October 9, 1985, Panhandle assigned its interest in the land purchase
contract to DGI. Funding for the land purchase was originally to be provided by
a bank with which Adkinson had done business over several years. That bank,
however, backed out. In order to cover the DGI checks, Adkinson moved the
escrow account to West Belt National Bank (Bank) and that bank honored the
checks based upon an agreement by Sandsend Financial Consultants, Ltd.
(Sandsend), the lending arm of Cox' Compendium Trust, to fund the escrow from
a certificate of deposit. The Bank confirmed that the total escrow was on deposit
as of March 12, 1986, and Minks and Collins communicated this fact to St. Joe.4
3
Cox was named as a defendant in this case, but was not
tried.
4
The account statement did not show a deposit of the funds
until March 23, 1986.
6
The certificate of deposit had a maturity date of March 19, 1986. Sandsend
redeemed the certificate on March 21, 1986.
In April of 1986, Adkinson secured a purchase money loan from Hill
Financial Savings Association (Hill) of Red Hill, Pennsylvania. As structured by
Hill, the loan would be to a joint venture comprising a DGI subsidiary, FSD Group,
Inc. (FSD), and a subsidiary of Hill. The joint venture would be called Emerald
Coast Joint Venture (Emerald Coast), which would take the property in its name
and execute the loan document. Ronald D. Peek, president of DGI, was also
president of FSD.5
Subsequently, Hill became concerned that the loan might be considered an
investment, which by law it was not permitted to make. Hill retained the
accounting firm of KPMG Peat Marwick to perform an accounting investigation of
the loan, which included a close examination of the borrower, DGI, and its
principal, Adkinson. Richard Sundheim, of Main Hurdman now Peat Marwick,
performed the audit.
Consequently, as one of the conditions of the loan, Hill required Emerald
Coast to pre-sell approximately 130 acres of the property. In order to satisfy this
5
Adkinson formed a subsidiary, The Accounting Group, Inc. to
handle all his and his companies' accounting, administered by Rick
Maniscalco, who reported directly to Adkinson.
7
requirement, Adkinson approached his friend, Robert Corson, who had recently
purchased a Texas savings association, Kleberg County Savings Association of
Kingsville, Texas, later known as Vision Banc. Vision Banc agreed to make loans
to four entities for the purpose of purchasing the 130 acres.
Adkinson and Cox chose Crossview Development Company, owned by a
Kuwati investor, a client of Cox, as one of the entities. Two others were former
DGI subsidiaries, First Western Equity, Inc. and Development Mortgage Group,
Inc. (DMG), which were in the process of being sold off to their respective
presidents, Barney Van Huss and Gilbert G. Dufilho. Both Van Huss and Dufilho
agreed on behalf of their respective companies to participate in the transactions.
The fourth company, suggested by Corson, was Ferguson/C & D, Inc., owned by
Robert Ferguson.
On May 26, 1986, a new brokerage agreement was executed between
Adkinson and Plantec in which Plantec and Koshkin would share one-third and
two-thirds, respectively, in a 5% or $9.1 million brokerage commission. The
agreement was backdated to August, 13, 1985, by Plantec's president.
On June 1, 1986, Cox and Adkinson entered into an agreement that Sandsend
would lend DGI $30 million to be used to purchase the contract rights to
approximately 268 acres of the Walton County land purchase from Panhandle. In
8
consideration for the loan, DGI would arrange for St. Joe to deed those acres to
Sandestin Investors, Inc., a wholly owned subsidiary of Sandsend.
On June 2, 1986, the four loans from Vision Banc to the above-named
entities were closed in Houston. Adkinson's lawyers, Robert Collins and Daniel
Kistler, were present. A newly formed Florida corporation, Walton County
Investors, Inc. (Walton) acted as the initial purchaser of the 130 acres from St. Joe.
It then sold off tracts of the 130 acres to the four entities for an aggregate price of
$48 million, of which $20.4 million was provided by Vision Banc.
On June 3 through June 5, 1986, the Hill loan transaction closed in
Jacksonville, Florida. At closing, however, Hill demanded material changes in the
structure of the loan transaction. Hill required Adkinson to purchase certain real
estate owned by Hill, cede a greater equity share (75%) of the Florida purchase to
it, and transfer to Hill 7,300 acres of the most valuable property as a loan fee.
Adkinson objected, but chose to close.
The land was conveyed by four separate deeds. Crossview took 260 acres
directly; a second deed went to Emerald Coast; a third to Hill for the 7,300 acres it
had demanded at the last minute; and the fourth deed was to Walton for the 130
9
acres. The escrow funds were paid by Imperial to St. Joe upon closing.6 Plantec
received a commission of $9.1 million by way of checks in the amounts of $1, $2
and $6.1 million. Plantec had agreed to lend $1 million to DGI so it could close,
so the $1 million check was endorsed by the president of Plantec over to DGI, and
returned to Collins. Collins gave Alligood a promissory note signed by Adkinson
as president of DGI for the loan back. The $6.1 million check was endorsed to
Benjamin Koshkin, a real estate broker who had worked on the deal. Koshkin paid
the $6.1 million to Sandsend to reduce Adkinson's and Koshkin's liabilities to
Sandsend.
After closing, Adkinson sued Hill, claiming usury and bad faith relating to
its eleventh-hour modifications to the loan agreement. The suit was settled; Hill
agreed to convey to the joint venture the 7,300 acres it had taken as a fee and to
make an additional $12 million loan.
Some time later, Sandsend acquired all of Adkinson's DGI stock in a
foreclosure. Sandsend continued to develop and market the property, including an
effort to sell portions to the State of Florida. Political contributions were made to
6
St. Joe learned of Collins' interest in Imperial prior to
closing.
10
certain state officials which are alleged to have been attempts to influence the State
to buy the property.
Ultimately, the sale to the State was not successful, and mortgage payments
were not made in a timely fashion. St. Joe sued for foreclosure, and settled for the
return of 2,000 acres. Vision Banc released any remaining liability in exchange for
transfer of the mortgaged property. Adkinson declared personal bankruptcy.
III. Indictment and Pre-Trial Proceedings
On September 27, 1991, a grand jury empaneled by the United States District
Court for the Northern District of Florida, Pensacola Division, returned a 115-page,
fifteen count indictment against fourteen defendants. Count I of the Indictment
alleged a conspiracy to commit an offense against the United States in violation of
18 U.S.C. § 371. The conspiracy was said to have five objectives: to impede the
Internal Revenue Service (IRS); to defraud Hill and Vision Banc; to commit mail
and wire fraud in defrauding the banks; and to transport their fraudulent proceeds
interstate.7 Counts II through XV alleged substantive violations of the same
offenses. Counts II and III alleged bank fraud; Counts IV, IX, X, mail fraud;
Counts V and VI, VII, wire fraud; and Counts VIII, XI, XII charged interstate
7
The statutes alleged to have been violated are 18 U.S.C. §§
1341, 1343, 1344, 1956 and 2314.
11
transportation of money taken by fraud. Finally, Counts XIII, XIV, and XV
charged money laundering.
Defendants moved to dismiss Count I pointing out that four of the five
conspiratorial objectives alleged in Count I did not state an offense. The then-
controlling law of this circuit required the United States to be the victim of a
Section 371 conspiracy. United States v. Hope, 861 F.2d 1574, 1577 (11th Cir.
1988) (Hope I); United States v. Hope, 901 F.2d 1013, 1018 (11th Cir. 1990) (Hope
II). Four of the five conspiratorial objects (objects 2-5) alleged in Count I,
however, describe a scheme targeted not at the United States but at two private
banks--Hill and Vision Banc.8 Defendants objected that the government had
persuaded the grand jury to indict them on a count, eighty percent of which, under
then-controlling law, alleged no crime at all.
Several defendants also moved for severance, arguing that dismissal of the
improper bank fraud conspiracy from Count I would require their severance since
their joinder was predicated upon allegations of a broad bank fraud conspiracy.
These defendants argued that the tax fraud which would remain the sole object of
8
A federally insured financial institution is not a federal
agency under Section 371. See United States v. Falcone, 934 F.2d
1528,1535(11th Cir. 1993).
12
the Section 371 conspiracy charged in Count I could not support their continued
joinder.
At the hearing on the motion, the government admitted that the bank fraud
conspiracy alleged in Count I did not, under Hope I and Hope II, state a violation of
Section 371. Nevertheless, government counsel, asserting that there was ample
ground for the argument that the Eleventh Circuit had doubts about the continued
vitality of Hope I and Hope II, urged the district court not to dismiss the allegations
of bank fraud as objects of the conspiracy. The government counseled the court to
defer ruling.
The government pointed out that, in July of 1991, a panel of this court,
following Hope I and Hope II, had reversed convictions under Section 371 because
the offense alleged was directed against private banks rather than the United States.
United States v. Falcone, 934 F.2d 1528, 1539 (11th Cir. 1991). The panel,
however, had expressed “some doubts” about Hope I’s continued vitality.9 Id. at
1539. Then, on August 12, 1991, this court announced that it would rehear Falcone
en banc.10 939 F.2d 1455 (11th Cir. 1991) (en banc). The government had drafted
9
Still, the Falcone panel concluded, “[w]e are bound,
however, to follow circuit precedent.” Id.10
This announcement vacated the panel opinion in Falcone.
Nevertheless, Hope I and Hope II remained the controlling precedent
in this circuit. United States v. Hogan, 986 F.2d 1364, 1369 (11th
13
Count I, knowing it was subject to dismissal under the circuit’s controlling
precedent, but with the expectation that Falcone, en banc, would overrule Hope I
and Hope II, and that, at that point in time, all of Count I could sustain a conviction.
The government urged the court to take what it characterized as a “high risk”
approach to the trial of these defendants:
Your Honor, . . . may I suggest one other alternative, the bold, high
level, high risk approach, and that is to simply leave the indictment as
is and if Hope is sustained let them take it up on appeal and have it
reversed. (emphasis added)
The court noted this invitation to error:
[I]f we treat [the motion to dismiss] as not having been granted and
the evidence is admitted as if all those other purposes were part of the
conspiracy and then the Eleventh Circuit decides that Hope is still the
law, I think we’ve got an almost virtual certainty for a mistrial.
(emphasis added)
In its written order the next day, the court elected not to dismiss the bank
fraud conspiracy.11 On the government’s assurance that Falcone would legitimize
Cir. 1993).
11
Defendants, of course, were entitled to a ruling on their
motion. A Rule 12(b)(2) motion aimed at the sufficiency of the
indictment which is capable of determination without the trial of
the general issue “shall be determined before trial unless the
court, for good cause, orders that it be deferred for determination
at the trial of the general issue or until after verdict . . . .“
Fed. R. Crim. P. 12 (e). United States v. Coia, 719 F.2d 1120,
1123 (11th Cir. 1983). “A defense is capable of pretrial
determination if trial of the facts surrounding the commission of
14
the allegations of Count I at some point during the trial, the district court agreed to
proceed to trial on Count I as though it could sustain a conviction.12
IV. The Trial
The trial lasted five months; 115 witnesses generated more than 85 volumes
and 17,500 pages of transcript; 1,447 exhibits were admitted. Although the court
had indicated that the government should refrain from mentioning objects 2-5 in its
opening statement, the court itself during voir dire told the jury:
The indictment charges that the defendants conspired among
themselves and with others to violate the law in a number of respects.
. . it includes an allegation to defraud these lending institutions and to
impede the Internal Revenue Service. . .
Over the next five months, defendants objected to a mass of evidence on the
grounds that it was, under Hope I and Hope II, irrelevant, and certainly would be
irrelevant if the court ultimately dismissed the bank fraud conspiracy from Count
the alleged offense would be of no assistance in determining the
validity of the defense.” United States v. Covington, 395 U.S. 57,
60 (1969). Thus, good cause for deferral exists only if facts at
trial will be relevant to the court’s decision, but “a district
court must rule on any issue entirely segregable from the evidence
to be presented at trial.” United States v. Barletta, 644 F.2d 50,
57-58 (1st Cir. 1981) (emphasis added); accord, United States v.
Jones, 542 F.2d 661, 664-65 (6th Cir. 1976) (district court must
dispose of motions raising legal defense prior to trial if it can).
12
Of course, if a jury convicts on a count containing
insufficient grounds, the conviction cannot stand since the verdict
may have rested on the insufficient ground. Zant v. Stephens, 462
U.S. 862, 881 (1983).
15
I. Defendants argued that had the bank fraud conspiracy been dismissed before
trial, as the law required, much of the evidence would have been inadmissible
under Rule 404(b) as evidence of “other bad acts.” The district court, again upon
the government’s assurance that all the evidence was “inextricably intertwined”
with the bank fraud conspiracy, allowed it under the government’s “high risk”
strategy.
The “high risk” strategy did not pay off.13 The requiem for Hope I and Hope
II remained unsung by the Eleventh Circuit choir and the en banc decision in
Falcone did not issue by the time the government rested its case. The defendants,
of course, renewed their objections to being tried for “non-crimes.”
13
This opinion makes clear that indictments should follow
rather than anticipate the law; therefore, we express no opinion on
whether the “high-risk strategy” urged upon the court would have
been successful had Falcone issued earlier. We note only that the
new rule announced by the en banc court in Falcone was applied
retroactively in that case. 960 F.2d at 990. But see Bouie v.
City of Columbia, 378 U.S. 347, 353 1964)(an unforeseeable judicial
enlargement of a criminal statute, applied retroactively, operates
precisely like an ex post facto law, such as Article I, § 10, of
the Constitution forbids). See also United States v. Burnom, 27
F.3d 283, 284 (7th Cir. 1994)(a clear break in the law that imposes
criminal liability for acts not previously punishable may not be
applied retroactively to criminal defendants’ detriment); United
States v. Jenkins, 349 F. Supp. 1068, 1073 (E.D.N.Y. 1972)
(district court would not permit criminal prosecution based upon
criminalization of defendant’s act by an intervening court decision
because it would “seriously erod[e] fundamental and basic equitable
principles of law”), aff’d on other grounds, 432 U.S. 358(1975)
(double jeopardy).
16
At the urging of the government, the court had proceeded as though the bank
fraud conspiracy alleged in Count I was sufficient to convict these defendants of a
violation of Section 371, even though it was not, either at the time the Indictment
was returned or at the conclusion of their trial. After four months of trial, the
government and the district court, having taken off in an aircraft without wings,
anticipating that Falcone en banc would supply them, decided that an emergency
landing was in order and dismissed the bank fraud conspiracy.14
At this point the district court was in exactly the position it had predicted it
would be in if the en banc Falcone decision had issued “and . . . the Eleventh
Circuit decides that Hope is still the law, . . . an almost virtual certainty for a
mistrial.” Defendants did move for the mistrial the court had predicted, arguing
that the nature of the Indictment and trial had changed midstream. Even though the
court had forecast a mistrial under these circumstances, it denied the motion.
14
The district court, having allowed the government to proceed
on these objectives, on April 15, 1992, entered judgments of
acquittal as to objectives 2-5 of the conspiracy alleged in Count
I. On May 20, 1992, the en banc decision in Falcone did overrule
Hope I, Hope II, and the Falcone panel. 960 F.2d 988, 990 (11th
Cir. 1992). That these acts later became sufficient is of little
importance in this appeal since they are no longer a part of this
case and further prosecution on them is barred. Lee v. United
States, 432 U.S. 23, 30 (1977). Nor does their subsequent
validation by Falcone change the fundamental unfairness of trying
these defendants under the law of Hope I and II, but permitting the
government to proceed as though en banc Falcone were the law.
17
This was not the only unusual circumstance attending this trial. Immediately
prior to trial, government counsel filed a pleading, to which he attached his own
affidavit, alleging that “the” defendants had threatened to kill a government witness,
had threatened another witness at gunpoint, had beaten and left an unconscious
witness in a burning car, and committed other acts of intimidation. These
allegations became front page headlines on the morning of jury selection. This
inflammatory pleading should have been filed sealed,15 but government counsel,
having filed it without seal, explained that his secretary had overlooked the
necessity. During the trial, jurors speculated in the jury room about which
defendants had threatened to kill which witnesses.16
15
The district court found that government counsel had violated
the local rule requiring all parties to a criminal trial to avoid
the release of information which a reasonable person would expect
to become the subject of pre-trial publicity if there is a
substantial likelihood that such publicity would cause material
prejudice to a fair trial. See Rule 77.3 (B)(1), Local Rules for
the Northern District of Florida. Furthermore, when questioned by
the court regarding the necessity to protect the witnesses,
government counsel conceded that the alleged threats had occurred
two to four years prior and that his office was conducting no
current investigation of threats.
16
The district court found that the pre-trial publicity was an
improper extrinsic influence on this jury, but held there was no
prejudice. But see United States v. Perkins, 748 F.2d 1519, 1533
(11th Cir. 1984) (a new trial is required if the [extrinsic]
evidence poses a reasonable possibility of prejudice to the
defendant) (emphasis added).
18
Additionally, the government offered the testimony of the now “retired” Peat
Marwick accountant, Richard Sundheim, who had audited the Hill loan on the
critical issue of the quality of the loan. Sundheim testified that he had audited the
proposed loan and “flagged it” because it was seriously under-collateralized, the
borrowers were not at risk, and, therefore, it was not really a “loan” at all, but an
investment. A year later in a deposition taken by the Resolution Trust Corporation,
Sundheim gave exactly the opposite testimony. He testified that he had concluded
that the loan was well within banking guidelines, was adequately collateralized and
not an investment requiring disclosure by Hill. He also testified that he had then
a well-founded opinion that the borrowers could repay the loan and that no special
loss reserves were required to back up the loan.17
There was also a highly unusual in camera proceeding involving another
important government witness. One of the major allegations regarding the bank
fraud was that these defendants conspired to avoid the restrictions on loans to “one
borrower” by arranging for some of the Vision Banc loans to go to companies
controlled by Adkinson, but with “sham” owners. There being no competent
17
He also admitted that he had been fired from Peat Marwick,
and was not retired as he had been represented at trial by the
government, and that he was paid by Peat Marwick to prepare his
trial testimony, a fact not revealed at the time to defendants.
19
documentary evidence showing any common ownerships between the corporate
entities receiving the loans,18 the government offered the testimony of Barney Van
Huss that he had merely posed as the owner of one of the corporations so that it
could receive loan monies as an arm’s-length participant in the transactions. The
difficulty with this testimony was that Van Huss had on numerous previous
occasions, under oath, claimed just the opposite. In order to buttress his testimony
in this trial, the district court allowed him to explain that his prior statements that
he owned the corporation were lies made because of threats to him and his family,
but that his present testimony was the truth because there were no more threats.
The defense, however, learned almost a year later that the court, in an in camera
procedure requested by the government four days after the beginning of this trial,
had granted Van Huss permission to carry a shotgun because of alleged threats.
After five months of trial, nine defendants were convicted on various
counts.19 Several defendants moved for a new trial, alleging juror misconduct in
18
In fact, a substantial amount of documentary evidence and
testimony was to the contrary.
19
Adkinson, Collins, Peek, Koshkin, and Alligood were convicted
on Count I. Adkinson, Collins, Peek, Tinsley, Minks and Koshkin
were convicted on Count II--defrauding Hill. All those convicted
on Count II, plus Kistler and Dufilho, were convicted on Count III-
defrauding Vision Banc. Convicted of Count VI, wire fraud, were
Adkinson, Collins, and Minks. Adkinson and Collins were convicted
on Counts VIII, interstate transportation of stolen property, and
20
discussing the defendants’ alleged threats to witnesses. They also argued that the
in camera proceeding which resulted in the government’s witness being allowed to
carry a gun, which they only learned about after trial, was Brady and Jencks
material.20 They asserted prosecutorial misconduct in that the government knew or
should have known of the perjury by Sundheim and Van Huss (and other)
witnesses. The denial of this motion is appealed.21
Defendants raise some seventeen issues on direct appeal. First and foremost,
they challenge the fundamental fairness of their trial. They assert the failure to
dismiss the bank fraud conspiracy from Count I before trial was error and led to the
erroneous admission of extensive evidence which confused and misled the jury.
IX, mail fraud. Collins was convicted of money laundering as
charged in Count XIII. The remaining counts were either dismissed
or no convictions were obtained. Count VII was dismissed upon
motion of the government. No one was convicted on Counts IV, V, X,
XI, XIV, and XV.
20
Defendants claim that the grant of permission to a “felon”
was an inducement to testify favorably for the government which
they had a right to know. Defendants also argue that had they
known about the in camera proceeding, they could have discredited
Van Huss’ testimony that he was no longer lying because there were
no current threats.
21
No evidentiary hearing was held on the issues of juror and
prosecutorial misconduct. See United States v. Harris, 908 F.2d
728, 733 (11th Cir. 1990) (failure to hold evidentiary hearing into
juror misconduct constitutes abuse of discretion and reversible
error). The appeal of the denial of the motion for a new trial was
consolidated with the direct appeal. Our judgment of reversal of
all convictions renders moot the motion for a new trial.
21
They also allege prejudicial joinder, prosecutorial misconduct,22 and challenge the
sufficiency of Counts II, III, VI, IX, VIII and XIII of the Indictment. We address
the issues addressed to the Indictment first.
V. Count I
Defendants assert that the district court’s refusal to dismiss the allegations
of a bank fraud conspiracy from Count I before trial was reversible error. We need
not decide this issue,23 however, because the initial inclusion of these allegations,
22
Defendants argue that the government knew it should file in
camera its inflammatory allegations concerning defendants’ alleged
threats to kill witnesses, but deliberately filed them openly.
They also allege that the government induced the favorable Van Huss
testimony in this case by supporting his request to carry a
shotgun.
23
But see United State v. Cure, 804 F.2d 625, 627 (11th Cir.
1986) (a district court is required to dismiss an indictment if it
does not state a prosecutable offense)(emphasis added)(citing
United States v. Coia, 719 F.2d 1120, 1123 (11th Cir. 1983)(“It is
perfectly proper, and in fact mandated, that the district court
dismiss an indictment if the indictment fails to allege facts which
constitute a prosecutable offense.”(emphasis added)). See also
th
United States v. Polychron, 841 F.2d 833 (8 Cir. 1988); United
States v. Finn, 919 F. Supp. 1305, 1339 (D. Minn. 1995); United
States v. Lebron, 704 F. Supp. 332 (D.P.R. 1989); United States v.
Was, 684 F. Supp. 350, 351 (D. Conn. 1988); United States v.
Cogswell, 637 F. Supp. 295, 296 (N.D. Cal. 1985). In order to be
valid, an indictment must allege that the defendants performed acts
which, if proven, constitute the violation of law for which they
are charged. Polychron, 841 F.2d at 833. An indictment should be
tested against the law “as we find it on the date of our decision.”
United States v. City of Philadelphia, 644 F.2d 187, 192 n.3 (3d
Cir. 1980). “Judicial precedence serves as the foundation of our
federal judicial system. Adherence to it results in stability and
22
coupled with their subsequent dismissal after the government’s case created a
unique set of circumstances 24 which rendered the trial of Count I fundamentally
unfair and denied these defendants due process of law.
The allegations of a conspiracy to defraud the banks were insufficient to
sustain a conviction under Section 371 during the entire course of this trial, but they
were dismissed only after the government concluded its case. In permitting the
government to try the case for four months as a bank fraud conspiracy, the district
court allowed the introduction of an enormous amount of evidence under rules
applicable only to conspiracies. The court made four months of evidentiary rulings
based upon the government’s assurances that all the 17,500 pages of testimony and
1447 documents25 were inextricably intertwined because of the far-flung conspiracy
to defraud the banks.26 See United States v. Ripinsky, 109 F. 3d 1436, 1442 (9th Cir.
predictability.” Jaffree v. Wallace, 705 F.2d 1526, 1533 (11th
Cir. 1983).
The announcement of an en banc rehearing by a court of appeals
does not suspend stare decisis. The disorder that resulted in this
trial is testament to the wisdom of that rule.
24
We can find no other case in which such a sequence of events
occurred.
25
The government’s assurances extended only to its own
witnesses and documents, of course.
26
The government argues that no irrelevant evidence was
introduced because it was all relevant to the substantive bank
fraud charges. This is not so. The jury was exposed to four
23
1997) (Rule 404 does not prevent admission of evidence of other bad acts where
they are inextricably intertwined with the ongoing conspiracy and scheme to
defraud banks). Moreover, as all defendants were charged with the bank fraud
conspiracy, all the evidence came in against each and every defendant regardless
of when their participation in the scheme was alleged to begin or end.
We recall the prophecy of the district court upon initial consideration of
defendants’ motion to dismiss:
[I]f we treat [the motion to dismiss] as not having been granted and
the evidence is admitted as if all those other purposes were part of the
conspiracy and . . . Hope is still the law, I think we’ve got an almost
virtual certainty for a mistrial.
We agree. Mountains of details relevant only tangentially, if at all, to the
ultimately charged scheme to defraud the IRS certainly must have confused the
jury. Furthermore, under the circumstances of this case, this evidence obviously
months of extremely prejudicial evidence relevant only to the much
broader conspiratorial scheme charted in the original indictment,
including enormous amounts of evidence about the St. Joe Paper
Company negotiations, the relationships between the various
business entities involved in the alleged conspiracy, the absence
of funds in the earnest money accounts for the land purchase, the
political “bribes,” the alleged coercion of an employee of Adkinson
to perjure himself in a lawsuit between DGI and a wholly unrelated
bank, Adkinson’s purchase of a gun collection, post-closing efforts
to sell the property, efforts to remove documents from the country
to obstruct the Hill investigation, and the ultimate failure of the
banks and savings and loans.
24
invited the jury to convict for conduct not, ultimately, even alleged to be a crime.27
The defendants’ objections to this evidence were overruled upon the government’s
“inextricably intertwined” theory. Before the dismissal of the improper objectives,
however, it was impossible to rule correctly since no one knew with what charges
the evidence was “intertwined.” After the deletion of objectives 2-5, it was clear
that much of the evidence was not “intertwined” since the bank fraud conspiracy
had been dismissed.28
Then, after all this evidence was in the record, the government conceded, as,
of course, it had known all along, that the allegations of a bank fraud conspiracy
did not violate Section 371 under the law of this circuit, and would have to be
dismissed. But the government’s evidence remained in; none was stricken.29 There
27
The district court itself commented at sentencing, “I keep
asking myself . . . what specifically--what specifically is
illegal? If you look at it bit by bit, it really is hard to do
that.”
28
Examples of prejudicial evidence unrelated to any scheme to
defraud the IRS but which was admitted as “inextricably
intertwined” are: the testimony concerning alleged misdealing in
relation to the payment of real estate commissions; land price
manipulation; kick backs out of the loan proceeds; political
payoffs via improper political contributions; check kiting.
29
Ironically, had the district court continued on its course
of allowing objects 2-5 to remain in the Indictment, it would have
avoided the prejudice which resulted from proceeding to trial on
the bank fraud conspiracy only to have it dismissed after the
government’s evidence was in. But see note 10 supra.
25
was no instruction to the jury to disregard any of it. If this strategy is sanctioned,
the rules of evidence provide little protection against conviction by inadmissible
evidence. See United States v. Turquitt, 557 F.2d 464, 468 (5th Cir. 1977) (evidence
which shows or tends to show commission of crimes not charged is inadmissible
in a trial for a particular crime); United States v. Castell, 584 F.2d 87, 89 (5th Cir.
1978) (Judge O’Kelly, in excluding evidence from a trial on charges of interstate
transportation of stolen goods, commented that “. . . you would have thought we
were trying either a drunken driving case or an interstate transportation of women
for immoral purposes rather than what were trying, if you had listened to the
evidence in the courtroom.”); United States v. Broadway, 477 F.2d 991, 993 (5th Cir.
1973) (extraneous evidence may severely prejudice the defendant by the confusion
of issues).
A most damaging prejudice was to the ability of these defendants to mount
a coherent defense. Defendants were forced to defend themselves against charges
which were not offenses under the prevailing law. They made decisions about
cross-examination, whether to testify and to object, and how to explain the case to
the jury without knowing what the ultimate charges would be. Defendants asked
the court for a ruling on whether they had to defend against charges that they
26
actively conspired to defraud institutions other than the federal government, and the
court answered “maybe.” The court continued to give this answer for the next four
months during the government’s case. Only at the end of the government’s case,
with all of its evidence in, did the court grant the motion to dismiss the improper
conspiracy from the Indictment. Nothing that had occurred during the trial affected
this ruling; the outcome was the same as it would have been had it been made
before trial. The only difference was that it was only at this point that these
defendants knew the charges against them.30
The “inability of a defendant adequately to prepare his case skews the
fairness of the entire system.” Doggett v. United States, 505 U.S. 647, 654 (1992)
(quoting Barker v. Wingo, 407 U.S. 514, 532 (1972)). “An indictment must
sufficiently warn the defendant of the charges against him so that he may
adequately prepare his defense.” United States v. Alford, 516 F.2d 941, 945 (5th Cir.
1975). In this case, the defense was put in the position of both defending against,
and not defending against, the central conspiracy charges -– precisely what the
30
This is not a case where perfectly proper charges are
ultimately found by the court not to be supported by the evidence
at trial and acquittals are entered. In that case, defendants know
the charges from the beginning. They defend against those charges.
The fact that they prevail on the evidence entitles them to be
acquitted. See Salinger v. United States, 272 U.S. 542, 548-49
(1926) (withdrawing part of a charge from the jury’s consideration
does not work an amendment of the indictment).
27
right to indictment was meant to prevent. Id. Like an indictment which fails to
allege an essential element, the district court’s failure to rule on the motion to
dismiss the improper objectives from Count I forced the defendants to go to trial
with the chief issue undefined. After a trial which had as its centerpiece allegations
that the defendants conspired to defraud Hill and Vision Banc, the district court
decided that was not what the trial had been about after all. After the trial, the court
determined that the only conspiracy upon which convictions lawfully could have
been based all long was the tax conspiracy.
Ill-defined charges leave “the prosecution free to roam at large -- to shift its
theory of criminality so as to take advantage of each passing vicissitude of the trial
and appeal.” See Russell v. United States, 369 U.S. 749,768 (1962). For example,
the government was permitted to put in extensive evidence regarding the
subsequent failure of Hill, Vision Banc, West Belt and other banks and S& L’s in
support of its conspiracy allegations. This evidence was not only ultimately
irrelevant, but improper since it might have misled the jury into thinking that these
defendants were on trial for causing these banks’ ultimate failure. See United States
v. Wicker, 933 F.2d 284, 290 (5th Cir. 1991) (failure of bank irrelevant to bank fraud
charge).
28
Furthermore, the merits of defendants’ motions for severance would have
been substantial if the bank fraud conspiracy had been dismissed prior to trial.
Tinsley, Kistler, and Dufilho are not even named in the tax conspiracy.31 Kistler
and Dufilho had no dealings with Hill. The initial motions for severance were
denied predicated upon the government’s bank fraud conspiracy theory. If this
conspiracy had been dismissed pre-trial, severance of these defendants into two or
more smaller cases would likely have been required since the prejudice to them of
being joined when they were charged with no conspiratorial objectives was substantial.
See Kotteakos v. United States, 328 U.S.750, 775(1946) (error to deny substantial right
not to be tried en masse for a conglomeration of distinct and separate offenses
committed by others).
At the conclusion of the government’s case in chief when the bank fraud
conspiracy was dismissed, defendants again moved for severance based upon
prejudicial misjoinder. The court denied these motions.
Generally, misjoinder will not be found after dismissal of a count in an
indictment during trial. See United States v. Ong, 541 F.2d 331, 337 (2d Cir. 1976).
31
Early in the trial, the court instructed the jury that
evidence of the tax conspiracy was not applicable to these
defendants. Upon the objection of co-defendant Morgan, the court
discontinued this practice.
29
This rule is inapplicable where the count justifying the joinder was not alleged by
the government in good faith, i.e., with the reasonable expectation that sufficient
proof will be forthcoming at trial. Id. See also United States v. Aiken, 373 F.2d 294,
299 (2d Cir. 1967). Since the government in this case knew at the time the
Indictment was obtained that no amount of evidence at trial would be sufficient to
convict defendants of a Section 371 bank fraud conspiracy, these defendants were
misjoined insofar as the joinder was predicated upon that conspiracy. Id.This misjoinder was not harmless. In a trial of this duration and size, guilt
by association is always a threat. Kotteakos, 328 U.S. at 762. The only way all of
these defendants were tied together at all in this far-flung series of events was by
the allegation of a violation of Section 371 through a bank fraud conspiracy which
no amount of evidence at trial could establish. Prejudice resulted from the spillover
effect of the massive amount of testimony and exhibits which came in against all
30
defendants under the “inextricably intertwined” theory.32 This is bad faith joinder
and was seriously prejudicial to these defendants.33
The circumstances underlying the trial of Count I were fundamentally unfair.
With full knowledge that it was contrary to recent and controlling precedent, the
government induced the grand jury to charge these defendants in Count I with a
violation of Section 371 through a bank fraud conspiracy. Fourteen defendants
alleged to be participants in this massive conspiracy were joined. Then after the
close of the government’s case, having had the benefit of evidentiary and severance
rulings predicated upon the charge of a bank fraud conspiracy, the government
32
At sentencing, Tinsley repeatedly stressed that the
government had totally failed to articulate a single act on
Tinsley’s part that was criminal. The court responded:
. . . the difficulty is, when you start coming down to
the specifics and trying to say, “Well, what did you
actually do?” The government has tried to do that, but
they haven’t been very successful in pointing out
specific behavior that constitutes a crime. In the
aggregate, there was wrongdoing in this case. I think
that is what the jury sensed, and that’s how they went
about analyzing it, and that’s how I viewed it. In the
aggregate, there was certainly wrongdoing.
33
Whether the tax conspiracy alone can support the joinder of
all these defendants is an issue that has never been addressed or
resolved in this case. We do not address it now except to note
that the tax conspiracy requires proof that the conspirators knew
they were in a common plan to impede the functions of the IRS.
United States v. Klein, 247 F.2d 908 (2d Cir.1957).
31
conceded that it should never have been part of the case. This course of conduct
does not display good faith. See Ong, 541 F.2d at 347. The resulting prejudice to
these defendants affected their substantial rights and denied them due process of
law. We shall reverse all convictions on Count I.34
VI. Counts II and III
Defendants also challenge their convictions on Counts II and III, 35 alleging
that these counts are defective for two reasons: first, the counts fail to allege
“execution” of the bank fraud; and, second, Counts II and III are unsupported by
allegations of an underlying bank fraud “scheme.” Both of these claims have
merit. 18 U.S.C. §1344 requires allegation and proof of both a scheme and an
execution of the scheme to sustain a conviction for bank fraud. In this case, the
execution of any scheme was never alleged, and the description of the scheme itself
was redacted away –- consigned to the ash can.36
1. Execution
34
The prejudice to defendants from the handling of Count I
undoubtedly spilled over to affect the trial as to Counts II and
III as well.
35
All defendants were convicted of one or both of these counts.
36
See Section “2" below.
32
Counts II and III of this Indictment never allege that these defendants
actually executed a bank fraud scheme. Instead, these counts omit this essential
element of the offense and charge incorrectly that the offense of bank fraud was and
can be committed through “devising or intending to devise”a scheme to defraud.
See United States v. Lemons, 941 F.2d 309, 318 (5th Cir. 1991) (bank fraud statute
imposes punishment only for each execution of the scheme).37 When the case was
submitted and the jury charged, they were instructed by the judge no less than five
times that the charges against the defendants were those set forth in the Indictment.
Although the court did read an instruction to the jury containing the execution
element of bank fraud, the Indictment was then given to the jury for their
37
An indictment need do little more than track the language of
the statute charged to be sufficient. United States v.
Stavroulakis, 952 F.2d 686, 693(2nd Cir. 1992). This Indictment
does not even do that. A count does not state an offense if it
does not contain all the elements of the offense charged. Hamling
v. United States, 418 U.S. 87 (1974); United States v. Chesney, 10
F.3d 641 (9th Cir. 1993); United States v. Ramos, 666 F.2d 469, 474
(11th Cir. 1982) (an indictment is generally constitutionally
sufficient if it sets forth the offense in the words of the statute
itself, as long as those words of themselves fully, directly, and
expressly, without any uncertainty or ambiguity, set forth all the
elements necessary to constitute an offense under the laws of the
United States.”) (emphasis added). The failure to allege the
element which establishes the very illegality of the behavior and
the court’s jurisdiction is fatal to the indictment. Russell v.
United States, 369 U.S. 749 (1962); United States v. Cina, 699 F.2d
853, 859 (7th Cir. 1983).
33
deliberations. Counts II and III told the jury that the defendants were guilty if they
“devised or intended to devise” a scheme to defraud the banks. We have held:
“[A] general verdict must be set aside if the jury was instructed that
it could rely on any of two or more independent grounds, and one of
those grounds is insufficient, because the verdict may have rested
exclusively on the insufficient ground.”
United States v. Elkins, 885 F.2d 775, 782 (11th Cir. 1989) (quoting Zant, 462 U.S.
at 881. Accord United States v. Ochs, 842 F.2d 515 (1st Cir. 1988). These counts
invited the jury to convict for conduct not an offense.
Even if the failure to allege an execution is not fatal,38 however, Counts II
and III suffer from an even more serious deficiency which is the direct result of the
“high-risk” strategy urged upon the court by the government.
2. The Scheme
The Indictment which ultimately charged these defendants contains no
description of the bank fraud scheme they were alleged to have perpetrated. Count
II charges that defendants devised a scheme to defraud Hill; Count III charges that
defendants devised a scheme to defraud Vision Banc. Originally, a scheme to
38
The Fifth Circuit has held that the failure to allege an
execution is not fatal to an indictment if the indictment “fairly
imports all the elements” of the offense. United States v.
th
Blackburn, 9 F.3d 353, 357 (5 Cir. 1993). We need not consider
whether this indictment fairly imports all the elements vis-à-vis
execution because we find these counts fatal for failure to allege
a scheme.
34
defraud Hill and Vision Banc had been described in Count I and incorporated by
reference into Counts II and III. Count I’s introductory section alleged the bank
fraud conspiracy, and then it was divided into Sections A-E. Section A, headed
“Scheme,” described a broad conspiracy to defraud Hill and Vision Banc. Section
B briefly described the St. Joe property. Section C, “Defendants, Entities and
Other Persons,” identified fifty-four individuals and institutions in the case and
described how they were alleged to fit into the conspiracy. Section D set forth the
“Manners and Means by Which the Conspiracy was Carried Out,” in thirty-six
paragraphs describing the conspiratorial scheme. Finally, Section E, the “Overt
Acts” section, recited 227 discrete overt acts which were said to be part of and
pursuant to the conspiracy but with no explanation of how they fit into the alleged
scheme.
The dismissal of the bank fraud conspiracy from the introductory section of
Count I led the district court to redact the Indictment by eliminating all description
of that conspiracy from the rest of the count. Of the forty-eight pages originally
describing the scheme in Count I, there remains a single paragraph describing a
scheme to evade taxes on fraudulently obtained money. All allegations of the bank
fraud scheme were removed from Section A, the “Scheme.” Twenty-nine of the
original thirty-six paragraphs in Section D’s “Manner and Means” were removed.
35
The seven remaining paragraphs charged only a narrow scheme to distribute and
conceal the proceeds of the Vision Banc loans.39 Hill was no longer even
mentioned. Vision Banc is mentioned, but the “new” indictment essentially picks
up the story after the funds have been obtained from Vision Banc and focuses on
their distribution and concealment from IRS.40 The complete elimination of the
39
These paragraphs state only that it was part of the
conspiracy: (1) to defeat the lawful functions of the IRS by
concealing the $20.4 million obtained from Vision Banc; (2) to
arrange the various transactions to give the appearance they were
arm’s-length; (3) to fraudulently distribute the Vision Banc
proceeds; (4) transmit the Vision Banc proceeds to Imperial Title
and then disburse them to Adkinson, Alligood and Ferguson; (5) to
conceal the diversion of Vision Banc proceeds; (6) for the
corporate entities to fail to file, or to file false, tax returns
with regard to the Vision Banc proceeds; and (7) for Adkinson and
Koshkin to fail to file, and for Alligood and Collins to file
false, tax returns with regard to the Vision Banc proceeds.
40
There was much discussion between the court, the government,
and the defendants about whether and how to redact the indictment.
There were two fundamental problems created by elimination of the
improper bank fraud objectives from Count I. First, the
allegations of a scheme to defraud the banks were so pervasive that
complete elimination of them would eviscerate the Indictment,
leaving great gaps in the written document as well as the
government’s case. Second, the Indictment was organized so that
all the substantive counts, which were supported by the existing
law, depended for their context on the allegations of a conspiracy
to defraud the banks. If these allegations were redacted, the
substantive counts of mail and wire fraud, as well as interstate
transportation of money obtained by fraud and money laundering
would be in furtherance of no underlying scheme. The court,
government and the defendants could not agree on a satisfactory
solution. Ultimately, the court elected to redact the Indictment,
and to do so extensively--more extensively, in fact, than any
party requested.
36
bank fraud scheme from Count I left Counts II and III with no scheme to be
incorporated by reference.
A redaction of an indictment is permissible so long as the elements of the
offense charged are fully and clearly set out in what remains. United States v.
Miller, 471 U.S. 130, 136 (1985); United States v. Bissell, 866 F.2ds 1343, 1356 (11th
Cir. 1989). An indictment may not, however, be so severely redacted that any of
the elements of the offense are expunged. United States v. Doherty, 867 F.2d 47, 55
(1st Cir. 1989).
The allegation of a scheme is an essential element of the offense of bank
fraud. 18 U.S.C. § 1344. United States v. Hess, 124 U.S. 483, 488-89 (1888).41 In
Hess, the Supreme Court held:
After the court finally dismissed the bank fraud allegations
from Count I, it observed, “The nature of the case, certainly the
complexion of the case is quite different once you take out the
real guts of the conspiracy charge, which is really what the case
is all about.”
Defendants agreed and objected to the redacted indictment.
Counsel for Collins and Minks argued, “[i]t’s now no longer the
Indictment even that the grand jury returned.” See Appendix A, the
Redacted Indictment.
41
The bank fraud statute was modeled on the mail and wire fraud
statutes and, where it dovetails with those statutes, we look to
precedents arising under those statutes to inform our
interpretation of such amorphous phrases as “scheme to defraud.”
Stavroulakis, 952 F.2d at 694.
37
The essential requirement, indeed, all the particulars constituting the
offense of devising a scheme to defraud, are wanting. Such
particulars are matters of substance, and not of form, and their
omission is not aided or cured by the verdict.
See also United States v Goldsmith, 109 F.3d 714, 715 (11th Cir. 1997) (bank fraud
statute requires the government to establish that a scheme existed in order to obtain
money from the bank); United States v. Stavroulakis, 952 F.2d 686, 694 (9 th Cir.
1992) (bank fraud statute makes an individual criminally culpable for devising and
executing or attempting to execute a scheme with the intent to defraud a bank).
After the redaction of this Indictment, the target of the scheme set forth in
Count I is the IRS. Hill is not mentioned at all. Nor does a fair reading of the
redacted Indictment adequately describe how the Vision Banc loans were
fraudulently procured or even that the Vision Banc was a target of fraud in any way.
Government counsel now argues that the missing scheme to defraud the
banks can be located among the 227 overt acts remaining in Count I. The overt
acts, however, are there to support the allegations of a conspiracy, not to describe
an alleged scheme to defraud. United States v. Mercer, 133 F. Supp. 288, 290-91
(N.D. Cal. 1955) (indictment charging defendant with wire fraud supported only by
overt acts and no particulars of the scheme insufficient).
38
Furthermore, the overt acts describe no coherent scheme. In the original
Indictment, the overt acts were put into context by the detailed descriptions of the
scheme contained in Parts A, C, D and the introductory section of Count I. When
the court redacted all of these sections except as they related to the narrow tax
scheme, it left the overt acts without context. Standing alone, they do not indicate
the nature of the scheme to defraud, and so cannot supply the missing allegations
of a scheme or artifice to defraud the banks. See Mercer, 133 F. Supp. at 290.
(“Even if the overt acts charged in count one were to be considered, they do not
indicate the nature of the scheme to defraud.”).
Finally, even if the overt acts could supply the missing “scheme,” the jury,
having no description of a bank fraud scheme, was left free to pick and choose that
“scheme” from wherever they wished among the 227 overt acts. Under such
circumstances, the probability that the resulting verdict was not unanimous would
be overwhelming. For example, Juror A may have located the scheme in overt acts
1-10, while Juror B found the scheme in acts 2-20 only. Although both voted to
convict, they had different schemes in mind.
Therefore, even if the overt acts could supply the missing scheme, the failure
of the jury to unanimously agree on which of the 227 overt acts constituted the
scheme would violate these defendants’ right to a unanimous verdict. United States
39
v. Gipson, 553 F.2d 453, 458 (5th Cir. 1977) In Gipson, the Fifth Circuit reversed a
conviction where the jurors were instructed that they could convict the defendant
if they found that he had performed any of the six acts prohibited by the statute.
The court held that such an instruction violated the defendant’s constitutional right
to a unanimous verdict since it authorized a guilty verdict despite the fact that some
jurors may have believed that the defendant had committed certain of the acts, while
other jurors were convinced that he committed different ones of the prohibited acts.
Id. The court wrote that “[r]equiring the vote of twelve jurors to convict a
defendant does little to insure that his right to a unanimous verdict is protected
unless this prerequisite of jury consensus as to the defendant’s course of action is
also required.” Id. See also United States v. Grandlund, 663 F.2d 534, 544 (5th Cir.
Unit B 1981) (conviction reversed where impossible to tell if jurors agreed that
defendant committed same act which could properly support conviction for mail
fraud and conspiracy).
Although defendants’ did not request a more specific jury instruction,42 after
having redacted away the scheme, the failure of the district court to instruct the jury
that they must unanimously agree on the acts constituting defendants’ scheme was
42
The district court instructed only that “Now, any verdict you
reach in the jury room, whether it’s guilty or not guilty, must be
unanimous.”
40
plain error. See Gipson, 553 F.2d at 458. Therefore, even if the missing scheme could
be located among the 227 overt acts as the government now argues, we would reverse
the convictions on Counts II and III for violation of these defendants’ substantial right
to a unanimous verdict.
In summary, the failure of Counts II and III to sufficiently allege the
underlying scheme to defraud Hill and Vision Banc respectively is fatal.43 To the
extent that the overt acts allege any scheme, the defendants’ right to jury unanimity
as to this scheme was unconstitutionally impaired. See United States v. Huls, 841
F.2d 109, 112 (5th Cir. 1988) (reversal required where indictment fails to allege
essential element of the offense). All convictions on these counts will be reversed.
VII. Counts VI, VIII, IX and XIII
We hold that under the circumstances described above, defendants’
convictions on these counts must be reversed. All of these offenses require
allegations of an underlying scheme. See 18 U.S.C. §§ 1341 and 1343; Hess, 124
U.S. at 488-489 (mail and wire fraud); United States v. Ferrara, 571 F.2d 428, 429-
43
In similar circumstances, a district court upon remand
stated, “It is noted that the government must modify the redacted
version of the indictment. The redacted version does not contain
the Count 2 allegations of a scheme to defraud that the remaining
mail and wire fraud counts refer to as being incorporated by
reference. The scheme allegations should be included in the
redacted indictment.” United States v. Bailin, 816 F. Supp. 1269,
1272 n. 4 (N.D. Ill. 1993).
41
30 (8th Cir. 1978) (offense of interstate transportation of money taken by fraud is
meant “to reach the fraudulent scheme whereby the criminal is the efficient cause
of the interstate transportation”); United States v. Alford, 999 F.2d 818, 830 (5th Cir.
1993) (essential element of the money laundering count is that proceeds of financial
transactions represent proceeds of specified unlawful activity); United States v.
Restivo, 8 F.3d 274, 279 (5th Cir. 1993) (defendant charged with, as an essential
element of the money laundering counts, conducting financial transactions with the
intent to promote the specified unlawful activity of bank fraud). These counts
originally incorporated by reference the description of the bank fraud scheme found
in Count I. The redaction completely eliminated this scheme. The counts,
therefore, all must be reversed for failure to allege an essential element of these
offenses.
VIII. Sufficiency of the Evidence
As already apparent, the case has presented troublesome issues often difficult
to grasp. We come now to another.
We must, as seen, remand the case for further proceedings generally
expected to include retrials under more traditional and less gambling processes.
Yet, we have not decided which of the defendants remain exposed to trial.
Strenuous argument is advanced by and on behalf of each that, in the trial from
42
which this appeal is taken, there was insufficient evidence to support verdicts of
guilt.44
Adjudicating such claims is not usually of great difficulty. It can be tedious.
Citations to transcripts of witnesses' testimony and to exhibits are required, but
ought not be hard to do. Here, however, we encounter well-nigh insurmountable
difficulties.
The government's brief is supposed to refer us to volume and page of
transcribed testimony where, it is said, we shall find evidence sufficient to support
these convictions. There are some such references. However, the government's
brief incorporates a novel citation scheme. Instead of advising the reader where
certain testimony can be found in the record, the brief identifies witnesses and
44
In ruling on the defendants’ motions for judgments of
acquittal, the district court commented:
[T]here’s been some serious doubt in my mind as to what
really has been established by the government in
connection with the stated purpose of the remaining
portion of the conspiracy. In truth, there really has
not been much evidence that there was a conspiracy to
conspire or frustrate the IRS function in this case. .
. .
Part of the problem is that the government has
attempted to turn a bank fraud case into a case that
includes an income tax case and a mail fraud case, and
everything else, and the pieces simply don’t fit
together very well.
The district court went on, however, to uphold the convictions.
43
volumes of transcript, advising the court that, if the court peruses all the testimony,
some support for the proposition advanced might be found! Instead of identifying
pages upon which the contended proof is found, the brief says "passim"! Thus, the
first such record reference, found on page 10 of the government's brief reads,
"Manuscalco R95: passim." (On that page, there are five more such references.)
These invitations to us to read entire volumes of transcript on the chance that
we shall discover the testimony upon which the prosecutor relies are not merely
occasional. From page ten through page thirty-nine of the government's brief, we
count no less than eighty-three (83) such references! Eliminating duplications, we
count forty volumes of record transcripts called to our attention followed by the
Latin word "passim" ("everywhere"). Apparently, the United States Attorney
depends on us to search through these volumes looking for what we believe the
government proffers as supporting evidence on the fact issue being discussed.
We shall not undertake to do this. Appellants say that they cannot find
testimony tending to prove guilt in these volumes. Perhaps they have overlooked
something. Left to sift through the pages by ourselves, unguided by an advocate,
we might overlook it, too. The government allocates too much advocacy to the
court. To guard against this sort of happening, the court fashioned a rule:
44
In the statement of the case, as in all other sections of the brief, every
assertion regarding matter in the record shall be supported by a
reference to the volume, document number and page number of the
original record where the matter relied upon is to be found.
11th Cir. R. 28-2 (1).45
Why is compliance important? Our opinion thus far makes it clear that the
court will not allow these convictions to stand. However, upon remand, new trials
might be conducted.46 Yet, if, in the trial here under review the government failed
to present sufficient evidence to support a conviction of any one of the appellants,
that defendant may not be placed in further jeopardy by a new trial.47 We must,
45
It should also be noted that the Clerk of Court for the
Eleventh Circuit sends every party notice of the rule upon the
filing of the appeal. Government counsel admitted he was aware of
the rule, that his record references violated it, and that the
Eleventh Circuit in a recent case had chastised another attorney
for a similar failure to follow the rule. See Freund v.
Butterworth, 117 F.3d 1543,1569 n.60 (11th Cir. 1997). See also
F.R.A.P. 28(e).
46
Double jeopardy prevents retrial on the acquitted bank fraud
conspiracy theory. See Richardson v. United States, 468 U.S. 317,
325(1984)(“. . . the protection of the double jeopardy clause by
its own terms applies only if there has been some event, such as an
acquittal, which terminates the original jeopardy.”); Price v.
Georgia, 398 U.S. 323, 329 (1970). All other convictions, though
reversed for trial error, would be subject to retrial. Montana v.
Hall, 481 U.S. 400 (1987). See also United States v. Miller, 952
F.2d 866, 872 (5th Cir. 1992) (no double jeopardy unless the
original jeopardy has terminated; and it is abundantly clear that
a reversal for [trial] error is no more a termination of jeopardy
than a mistrial where the jury is unable to agree.”)
47
Burks v. United States, 437 U.S. 1 (1978).
45
therefore, determine whether or not there was sufficient evidence vis-à-vis each
appellant.48 The government says that, as to each, there was sufficient evidence.
Government counsel owes the court the duty of pointing it out.
Therefore, this appeal will remain in the breast of the court until further order
or judgment. A separate order will issue from the Clerk of Court directing
compliance with Eleventh Circuit Rule 28-2 (i).
IX. Conclusion
The circumstances surrounding the allegations in Count I of a bank fraud
conspiracy denied these defendants a fair trial on this count. The convictions under
Count I WILL BE REVERSED. Counts II , III, VI, VIII, IX and XIII are
insufficient as a matter of law for failure of the redacted Indictment to allege an
essential element of these offenses and all WILL BE REVERSED. By separate
order to the Clerk of Court, we DIRECT further documentation on the sufficiency
48
Although not mandated by the double jeopardy clause, it is
clearly the better practice for the appellate court on an initial
appeal to dispose of any claim properly presented to it that the
evidence at trial was legally insufficient to warrant the thus
challenged conviction. Miller, 952 F.2d at 874. Accord United
States v. Szado, 912 F.2d 390, 393 (9th Cir. 1990); United States
Quinn, 901 F.2d 522, 529 n.5 (6th Cir. 1990); United States v.
Anderson, 896 F.2d 1076,1078 (7th Cir. 1990).
46
of the evidence to sustain the convictions obtained in order to permit retrial upon
remand. Therefore, the question of remand remains in the breast of the court.
ORDER WILL ISSUE BY CLERK OF COURT; JUDGMENT TO
FOLLOW FURTHER PROCEEDINGS.
47
APPENDIX A _____________________________________/
THE GRAND JURY CHARGES:
IN THE UNITED STATES DISTRICT COURT FOR THE At all times relevant to the indictment :
COUNT I
NORTHERN DISTRICT OF FLORIDA From on or about June 1,1985,and continuo u s l y thereafter up
to and including the dat e o f this indictme n t , i n t h e N o r t h e r n
PENSACOLA DIVISION District of Florida,and elsewhere, WILLIAM MICH A E L A D K I N S O N , K E I T H
ALAN COX, ROBERT L. COLLINS, ROBERT ALLIGOOD a / k / a B O B A L L I G O O D ,
UNITED STATES OF AMERICA, RONALD D. PEEK, ROBERT E.BROCKMAN,
BENJAMIN L. KOSHKIN, ANN POWELL MINKS f/k / a A N N P O W E L L
v. PCR 91-03052/RV
SUPERSEDING
WILLIAM MICHAEL ADKINSON, INDICTMENT
the defendants herein, will f u l l y a n d k n o w i n g l y
KEITH ALAN COX,
did combine, conspire, confe d e r a te, and agree t o g e t h e r a n d w i t h
one another andwith other indivi duals, both k n o w n a n d u n k n o w n t o
ROBERT L. COLLINS,
the grand jury, to accomplish the following:
The defendants, WILLIAM MICHAEL ADKIN S O N , K E I T H A L A N C O X ,
ROBERT ALLIGOOD a/k/a BOB ALLIGOOD,
ROBERT L. COLLLINS, ROBERT ALLIGOOD a/k/a BOB A L L I G O O D , R O N A L D D .
RONALD D. PEEK, PEEK, ROBERT E. BROCKMAN, BENJAMIN L. KOSHKIN , A N N P O W E L L M I N K S
f/k/a ANN POWELL
ROBERT E. BROCKMAN, conspired to defraud the United States by i m p e d i n g , i m p a i r i n g ,
frustrating, obstructing, and defeating the l a w f u l g o v e r n m e n t a l
RICHARD A. TINSLEY, f u n ctions of the Internal Revenue Service s o f t h e T r e a s u r y
Department in the ascertainment, computatio n , a s s e s s m e n t , a n d
DANIEL D. KISTLER, collection of the reven u e o f the United Stat e s ; t o w i t : F e d e r a l
income taxes of one or more persons or entiti e s .
BENJAMIN L. KOSHKIN,
ANN POWELL MINKS f/k/a ANN POWELL,
MARY CATHERINE FAWCETT,
GILBERT G. DUFILHO 49
50 51
A. Scheme
As it relates to the tax c o n spiracy, t h e p u r p o s e o f t h e
conspiracy to imped e and impair the Internal R e v e n u e S e r v i c e w a s
to defraud the United States (1) by concealin g a n d c a u s i n g t o b e
concealed income generated from the proceeds o f c e r t a i n f a l s e a n d
fraudulent loan transactions, which procee d s w e r e p u r p o r t e d l y
applied to real estate transactions but were in a c t u a l i t y d i v e r t e d
and distributed among a number of persons and e n t i t i e s a n d w h i c h
52 53
p r o c e e d s co n s t i t u t e d t a x a b le income to the one or more persons or
e n t i t i e s r e c e i v i n g a n d p o s sessing said proceeds, and (b) by either
f a i l i n g t o f i l e f e d e r a l i ncome tax re t u r n s w hich if truthfully
f i l e d w o u l d h a v e d i s c l o s e d the existence of said inco m e o r by
f i l i n g fa l s e t a x r e t u r n s t hat failed to report income deriv ed from
t h e p r o c e e d s o f t h e f a l s e a n d f r a udulent loans, all so as to
i m p e d e d , i m p a i r , f r u s t r a te, obstruct and defeat the lawful
g o v e r n m e n t a l f u n c t i o n s o f the Internal Reven u e Service in the
a s c e r t a i n m e n t , a s s e s s m e n t , collec t i o n and computation of revenue
o f t h e Un i t e d S t a t e s , t o w it: federal income taxes of one or more
persons or entities.
B. Property
T h e p r o p e r t y i s located south of Highway 98, east of
Sandestin, and consists of approximately 21,000 ac res of
u n i m p r o v e d l a n d i n t h e W a l ton County, Florida, within the Northern
D i s t r i c t of F l o r i d a . T h e property is located on the south side of
H i g h w a y 98 , a n d r u n s a d j a c ent to the Gulf of Mexico, and contains
s e v e r a l m i l e s o f p r i s t i n e beach-front land.
C . Defendants, Entities and Other Persons
[ c o m p l e t e l y r e d a c t e d , i n c l uding the title]
54 55
56 57
58 59
60 61
62 63
64 65
66 67
68 69
70 71
72 73
D. Manner and Means by Which the Conspiracy was
Carried Out.
74 75
76 77
78 79
80 81
82 83
84 85
86 87
88 89
30. It was further part of the conspiracy that the
misappropriate proceeds of the Vi s i on Banc S a v i n g s A s s o c i a t i o n
sham loans were transmitted directly to Imperi a l T i t l e C o m p a n y a n d
thereafter disbursed to the benefit and g a i n o f , i n t e r a l i o s ,
WILLIAM MICHAEL ADKINSON, ROBERT ALLIGOOD a/k / a B O B A L L I G O O D ,
The Development Group, Inc. and Sandsend
Financial Consultants, Ltd.
31. It was further part of the co n s p i r a c y that the
aforem e n tioned diversion of the Vision Banc S a v i n g s A s s o c i a t i o n
sham l o an proceeds was concealed through t h e u s e o f s h e l l
27. It wa s p a r t o f t h e unlawful conspiracy to impede, impa i r corporations, nominees and fraudulent loan tr a n s a c t i o n s .
a n d d e f e a t th e l a w f u l f u n c tions of the Internal Revenue Ser vice to 32. It was further p a r t o f the conspira c y t h a t a l l o f t h e
c o n c e a l or c a u s e t o b e concealed income in the amo unt of corporate entities that received or transmitte d a n y o f t h e i n c o m e
a p p r o x i m a t e l y $ 2 0 , 4 0 0 , 0 0 0 obtained and received from Vision Banc generated by the sham Vision Banc Savings Assoc i a t i o n l o a n p r o c e e d s
S a v i n g s A s s o c i a t i o n o f Kingsville, Texas through sha m loan either (a) failed entirely to file federal tax r e t u r n s , i n c l u d i n g
transactions. Development Group, Inc.; Walt o n County Invest o r s , I n c . ; S a n d s e n d
28. I t w a s f u r t h e r p a r t of the conspiracy to arrange Financial Consultants Limited;Crossview Develo p m e n t C o m p a n y , I n c .
p u r p o r t e d re a l e s t a t e t r a n sactions that involved the crea ti o n of Development Mortgage Group, Inc.; Ferguson C & D , I n c . ; a n d F i r s t
d o c u m e n t a t i o n t o g i v e t h e appearance of arms-length transactions, Western Equity, Inc., or (b) filed false feder a l t a x r e t u r n s t h a t
i n c l u d i n g t h e p u r c h a s e b y Walton County Investors, Inc. Of real faile d to report receipt or possession of sai d i n c o m e , i n c l u d i n g
e s t a t e fr o m S t . J o e P a p e r C ompany and a subsequent resale by Walton Reynolds, Smith& Hills and its subsidiary, Plan t e c R e a l t y C o m p a n y .
C o u n t y I n v e s t o r s , I n c . O f certain parcels o f s u c h property to 33. It was further part of said consp i r a c y t h a t W I L L I A M
R o b e r t C o r s o n a s T r u s t e e ; Cro s s view Development Company, Inc.; MICHAEL ADKINSON and BENJAMIN L. KOSHKIN did n o t f i l e a f e d e r a l
D e v e l o p m e n t M o r t g a g e G r o u p , Inc.; Ferguson C & D, Inc.; an d First
Western Equity, Inc.
2 9. I t w a s f u r t h er p art of t he c onspiracy t o c r e a t e
f i c t i t i o u s an d f r a u d u l e n t c ommissions, feesand loans in connection
w i t h th e fa l s e r e a l e s t a t e transaction and to prepare and execute
f a l s e d o c u m e n t a t i o n i n f urtherance thereof, so as t o d ivert,
m i s a p p r o p r i a t e a n d d i s t r i b ute to certain persons and entities the
i n c o m e de r i v e d f r o m t h e s h am Vision Banc Savings Associatio n loans
a n d fo r a l l s u c h p e r s o n s a n d entities to conceal from the Internal
R e v e n u e S e r v i c e t h e t r u e i n come character of these misappropriated
p r o c e e d s o f t h e s h a m V i s i o n Banc Savings Association loan s.
90 91
t a x r e t u r n i n 1 9 8 6 a n d b o t h ROBERT ALLIGOOD a/k/a BOB ALLIGOOD and
R O B E R T L. CO L L I N S f i l e d f a lse federal tax returns that fa iled to
r e p o r t th e i r r e c e i p t o f i n come derived from the sham Visi on Banc
S a v i n g s A s s o c i a t i o n l o a n p roceeds.
E. Overt Acts.
THERE FOLLOW 50 UNREDACTED PAGES
ASSERTING 227 OVERT ACTS SAID TO
HAVE BEEN COMMITTED IN
FURTHERANCE OF THE CONSPIRACY
ORIGINALLY ALLEGED IN THE PAGES
STRICKEN AND, POSSIBLY, IN
FURTHERANCE OF OTHER CHARGED
CONDUCT.
92 93