United States v. Malone

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
6-23-2008
USA v. Malone
Precedential or Non-Precedential: Non-Precedential
Docket No. 07-3220
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 07-3220
__________
UNITED STATES OF AMERICA
v.
CAMPBELL MALONE,
Appellant
__________
On Appeal from the District Court
of the Virgin Islands
(D.C. Civil No. 04-cr-00038-2)
District Judge: Honorable James T. Giles
__________
Argued on May 5, 2008
Before: RENDELL, FUENTES, and CHAGARES, Circuit Judges.
(Filed June 23, 2008)
Paul A. Murphy, Esq. [ARGUED]
office of United States Attorney
1108 King Street, Suite 201
christiansted, St. Croix
USVI, 00820-0000
Counsel for Plaintiff-Appellee
United States of America
Judith L. Bourne, Esq. [ARGUED]
P. O. Box 6458
34B-35 Norre Gade
Charlotte Amalie, St. Thomas
USVI, 00804-0000
Counsel for Defendant-Appellant
Campbell Malone
__________
OPINION OF THE COURT
__________
RENDELL, Circuit Judge.
Campbell Rone Malone, a Certified Public Accountant (“CPA”), was convicted by
a jury on four counts of wire fraud (Counts 2-5), in violation of 18 U.S.C. § 1343, and on
one count of making a false claim against the Government of the Virgin Islands (“GVI”)
(Count 7), in violation of 14 V.I.C. § 843. Malone was sentenced to 48 months’
imprisonment and fined $75,000 for the wire fraud offenses, and sentenced to a
concurrent 12 months’ imprisonment for the false claim offense. On appeal, Malone
argues that (1) there was insufficient evidence to support the wire fraud convictions,
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(2) there was insufficient evidence to support the false claim conviction, (3) comments
made by the prosecution at closing effectively denied him the due process right to a fair
trial, and (4) the fine was improperly assessed because the evidence did not demonstrate
that he would be able to pay it. For the reasons discussed below, we will affirm.1
I.
In 1985, the GVI and the United States entered into a consent decree in the District
Court of the Virgin Islands, under which the GVI agreed to make certain improvements to
its wastewater treatment system. For more than a decade and a half, the GVI consistently
failed to fulfill the decree’s requirements. Finally, in December 2001, the District Court
ordered the GVI to complete the necessary repairs by a specific deadline and to deposit
the funds needed to pay for the project into a dedicated trust fund. Virgin Islands
Governor Charles Turnbull declared a state of emergency, which freed the GVI to
negotiate a no-bid contract with a construction company to get the project done — absent
the state of emergency, the GVI would have had to select a contractor through a
competitive bidding process.
Around this time, a lawyer named Ashley Andrews created a construction
company called Global Resources Management (“GRM”). Andrews became GRM’s
CEO and Ohanio Harris, Special Assistant to the Governor, became its president. The
newly formed company submitted a $3.6 million “bid” for the sewer project, and, without
1
The District Court had jurisdiction pursuant to 18 U.S.C. § 3231, and we have
jurisdiction pursuant to 28 U.S.C. § 1291.
3
revealing his ties to GRM, Harris used his inside influence to help make sure that GRM
was awarded the project. In early October 2002, the GVI tentatively accepted GRM’s
bid, conditioned on (1) GRM’s procurement of a performance bond and payment bond for
100% of the contract price and (2) the Governor’s approval. Further, a “Notice to
Proceed” would have to be issued by the Department of Property and Procurement before
GRM would be permitted to start work on the project.
On October 7, acting as a CPA on behalf of GRM, Malone faxed a letter to Alan
Feuerstein, a lawyer, asking him for help in securing the bonds required by the GVI.
Feuerstein put Malone in touch with Wayne Price, a bond broker, who emailed Malone a
collection of bond application paperwork on October 10 (Count 2). On October 11
and 17, Price faxed and emailed Malone bond-related paperwork (Counts 3 and 4).
On October 18, Malone emailed Price a completed bond application package
(Count 5), which was signed by Malone as “attorney-in-fact” for Andrews and included a
substantial amount of what the evidence demonstrated to be false information. For
instance, Malone answered “no” to a question that asked whether GRM or any of its
owners or officers was currently involved in any litigation, even though Andrews was in
the midst of a $350,000 lawsuit related to another company that he owned. More
significantly, in the “work on hand” section of the application, which asked for a list of all
contracts that GRM had secured but not yet completed, Malone listed five “contracts”
worth a total of $26 million. However, at trial, it became clear that none of these
contracts had been obtained and some of the entries appear to have been complete
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fabrications. Crucially, it is undisputed that “work on hand” does not include expected
contracts.
Malone and GRM had trouble obtaining the bonds without a construction contract
signed by the Governor. The Virgin Islands Attorney General learned of this and advised
the Governor to sign the construction contract — so that the GVI would be able to meet
the District Court’s latest sewer-repair deadline, December 31, 2002 — but with the
condition that no Notice to Proceed would be issued until GRM successfully obtained the
requisite bonds. The Governor followed the Attorney General’s advice and signed the
contract on December 20. The contract included no firm deadlines and only minimal
work specifications, and it allowed for virtually unlimited cost overruns.
On January 23, 2003, the United States filed a motion to enjoin the enforcement of
the contract. On January 28, before GRM was able to obtain the bond and before any
Notice to Proceed was issued, the Governor terminated the contract and the GVI then
asked the District Court to dismiss the injunction motion on mootness grounds. The
District Court refused, admonished the GVI for its handling of the entire process and,
inter alia, enjoined the GVI from re-contracting with GRM. See United States v. Gov’t of
V.I., 248 F. Supp. 2d 420, 422 (D.V.I. 2003) (“A distinct odor emanates from the
construction contract the Governor of the Virgin Islands, Charles Wesley Turnbull,
signed with [GRM] on December 20, 2002, for emergency sewer repairs, and it is not the
smell of sewage from the decrepit and failed St. Croix sewer system. It is the reek of
politics and political influence, and quite possibly of political corruption.”).
5
On June 12, 2003, Andrews submitted to the GVI a $750,000 post-termination
claim, prepared by Malone (Count 7), for compensation for the time and resources that
GRM had devoted to putting together its proposal and preparing to bid on the project.
The five-volume claim submission included a number of instances of what the evidence
showed to be duplicate charges, totaling thousands of dollars.
In 2004, Malone, Andrews, and Harris were indicted for various offenses in
connection with these events. Harris pled guilty and Malone and Andrews were tried and
convicted together.
II.
In reviewing a sufficiency-of-the-evidence claim, we “must consider the evidence
in the light most favorable to the government and affirm the judgment if there is
substantial evidence from which any rational trier of fact could find guilt beyond a
reasonable doubt.” United States v. Frorup, 963 F.2d 41, 42 (3d Cir. 1992). Thus, an
appellant who raises such a claim faces a very steep burden.
We review a district court’s ruling on a challenge to the prosecution’s comments at
closing for abuse of discretion. United States v. Brown, 254 F.3d 454, 458 (3d Cir. 2001).
We review only for plain error, however, if the defendant failed to raise the issue below.
Id.
The ability or inability of a defendant to pay a fine is a factual finding, which we
review for clear error. United States v. Seale, 20 F.3d 1279, 1284 (3d Cir. 1994).
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III.
A.
To convict a defendant of federal wire fraud, a jury must find beyond a reasonable
doubt that the defendant (1) knowingly and willfully participated in a scheme or artifice
to defraud, (2) with the specific intent to defraud, and (3) used or caused to be used
interstate wire communications in furtherance of the scheme. 18 U.S.C. § 1343; United
States v. Antico, 275 F.3d 245, 261 (3d Cir. 2001).
Malone argues that the evidence was insufficient in two ways. First, he contends
that obtaining the bond was “was not for the purpose of executing the fraudulent scheme
charged.” (Appellant’s Br. 13.) According to Malone, the indictment charged a
fraudulent scheme with two purposes: (1) obtaining a no-bid contract and (2) submitting a
fraudulent claim for expenses incurred in preparing the contract proposal. He maintains
that the faxes and emails that he and Price exchanged could not have furthered either of
these purposes because (1) the no-bid contract was already awarded at this point and
(2) the idea to submit a false claim did not arise until the contract was terminated by the
Governor a few months later.
The Government successfully counters this argument, rightly noting that the
scheme, as charged in the Second Superseding Indictment, was for the purpose of
fraudulently obtaining money from the GVI and that applying for the bonds was in
furtherance of this more-broadly construed scheme. Securing the no-bid contract and
submitting the fraudulent claim were described in the indictment as parts of the scheme,
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not as the purposes of the scheme. Further, the Government emphasizes that, even
assuming arguendo that Malone’s narrower characterization of the scheme’s purposes is
correct, the sewer contract had not yet been secured when Malone and Price corresponded
about the bond application — GRM still needed to obtain the bonds and the approval of
the Governor.
Second, Malone asserts that there is no evidence to demonstrate that he had an
intent to defraud because, he contends, the Government failed to prove that he knew the
bond application was fraudulent. According to Malone, “at most, the government may
have proved that [he] was inattentive in his compilation of the bond application.”
(Appellant’s Br. 17.)
In response, the Government points to the testimony of an agent who interviewed
Malone about the fraudulent “work on hand” list from the bond application. According to
the agent, Malone said that he knew what “work on hand” meant and admitted that he
knew the list of “contracts” was just a “wish list.” (Appellee’s Supp. App. 101.) The
agent testified, further, that Malone said specifically that he knew that there was no
contract for two of the five listed projects. The agent also said that Malone conceded that,
despite indicating on the bond application that Andrews was not involved in any
litigation, he knew about Andrews’ pending $350,000 lawsuit.
We conclude that, given the agent’s testimony, there was sufficient evidence for a
rational juror to have found beyond a reasonable doubt that Malone (1) knowingly and
willfully participated in a scheme to defraud the GVI, (2) had the specific intent to
8
defraud the GVI, and (3) caused emails and faxes to be exchanged between himself and
Price regarding the bond application, which was an important step in the scheme to
defraud because securing the sewer contract depended on GRM’s obtaining the bonds.
B.
Turning to the false claim conviction, to convict a defendant of violating
subsection (4) of the Virgin Islands statute titled “Fraudulent Claims Against the
Government,” a jury must find beyond a reasonable doubt that the defendant (1) “ma[de]
or use[d] any false bill, receipt, voucher, roll, account, claim, certificate, affidavit or
deposition,” (2) “knowing the same to contain any fraudulent or fictitious statement or
entry,” (3) “in any matter within the jurisdiction of any officer, department, board,
commission, or other agency of the government of the Virgin Islands.” 14 V.I.C.
§ 843(4).2
Malone argues that the evidence was insufficient to prove beyond a reasonable
doubt that he knew the claim that he was preparing for GRM was false. According to
Malone, he was merely an independent contractor providing an accounting service to
GRM and simply “compile[d] data provided to him in the form of handwritten notes into
2
Both Malone and the Government discuss § 843(1) in their briefs, but it appears from
the record that Malone was charged and convicted for violating § 843(4). (Second
Superseding Indictment 27; Presentence Investigation Report 1.) Under § 843(1), the first
element is slightly different, requiring a defendant to have “ma[de] or present[ed] any
claim upon or against the government of the Virgin Islands or any officer, department,
board, commission, or other agency thereof.” However, this discrepancy does not affect
the outcome here.
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the form of a claim.” (Appellant’s Br. 19.) He emphasizes that the Government itself
said at closing that, other than one obvious instance, the duplicate charges were scattered
in “different parts, in different sections of the claim[,] [s]o you really have to sit down and
go through and look at every single one of them, match them up with the others, in order
to try and figure that out.” (App. 243.) Malone asserts that “it was certainly not [his]
place to determine whether or not the submission of any claim by GRM in those
circumstances was somehow fraudulent.” (Appellant’s Br. 20.)
The Government argues that the fact that the duplicate charges were scattered
across the five-volume document does not mean that the jury did not have enough
evidence to conclude that Malone knew about them. It reasons that the jury could have
determined that, while a lay person might have overlooked the duplicate charges in a long
financial document such as this one, a trained CPA like Malone would not have.
We agree with the Government and therefore conclude that Malone has failed to
demonstrate that no reasonable juror could have found beyond a reasonable doubt that he
violated 14 V.I.C. § 843(4).3
C.
Malone contends that the prosecution’s closing arguments “were so replete with
misrepresentations and personal opinion, despite objections by counsel and admonitions
3
We need not address the parties’ arguments as to whether, because the sewer contract
did not authorize GRM to recover any costs associated with preparing its proposal and
obtaining the contract, the entire claim was fraudulent even without the duplicate charges.
10
by the Court, as to produce fundamental unfairness and constitute a denial of due
process.” (Appellant’s Br. 21.) After reviewing the record, we conclude that, although
the prosecution’s closing was not a model of propriety and clarity, Malone has not
demonstrated that the prosecution’s comments (individually or collectively) rendered the
trial fundamentally unfair. Accordingly, we find that the District Court’s failure to take
further remedial action in response to the prosecution’s closing arguments was not an
abuse of discretion, let alone plain error. Therefore, we need not resolve the parties’
dispute regarding the extent to which Malone raised this issue before the District Court.
D.
Finally, Malone argues that the District Court erred in assessing the $75,000 fine
because “[t]he evidence does not support [his] ability to pay” it. (Appellant’s Br. 31.)
Malone fails to recognize that it is the defendant’s burden to show his inability to pay a
fine, not the Government’s burden to demonstrate his ability to pay it. See U.S.S.G.
§ 5E1.2(a); United States v. Carr, 25 F.3d 1194, 1212 (3d Cir. 1994). We conclude that
Malone failed to meet this burden, particularly given his acknowledgment that he and his
wife owned a $250,000 home in St. Thomas and a corporation that owned an income-
producing building in Tortola, and that he was a partial owner of additional, undeveloped
land in Tortola.
IV.
For the foregoing reasons, we will AFFIRM the District Court’s Judgment and
Commitment Order.
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