United States v. Johnson

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 94-5595
EDWIN J. JOHNSON,
Defendant-Appellant.
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 94-5596
GARY BRUCE,
Defendant-Appellant.
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 94-5597
JOSEPH BLOSENSKI,
Defendant-Appellant.
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 94-5598
EDWIN J. JOHNSON,
Defendant-Appellant.
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 94-5630
HAROLD H. JOHNSON,
Defendant-Appellant.
Appeals from the United States District Court
for the District of Maryland, at Baltimore.
J. Frederick Motz, Chief District Judge.
(CR-93-355-JFM, CR-93-354-JFM)
Argued: February 2, 1996
Decided: June 19, 1996
Before NIEMEYER and LUTTIG, Circuit Judges, and DOUMAR,
United States District Judge for the Eastern District of Virginia,
sitting by designation.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Andrew David Levy, BROWN, GOLDSTEIN & LEVY,
Baltimore, Maryland; John DeWitt Cline, WILLIAMS & CON-
NOLLY, Washington, D.C.; Harry Jacques Trainor, Jr., GREENAN,
WALKER, TRAINOR & BILLMAN, Landover, Maryland, for
Appellants. Ira Lee Oring, Assistant United States Attorney, Balti-
more, Maryland, for Appellee. ON BRIEF: Martin H. Schreiber, II,
BROWN, GOLDSTEIN & LEVY, Baltimore, Maryland, for Appel-
lant Blosenski; James C. Savage, LAW OFFICES OF JAMES C.
SAVAGE, Rockville, Maryland, for Appellant Bruce. Lynne A. Bat-
2
taglia, United States Attorney, Jane F. Barrett, Assistant United States
Attorney, Baltimore, Maryland, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Appellants were convicted of conspiracy and mail fraud following
an extensive trial in the United States District Court for the District
of Maryland. In these consolidated appeals, they raise numerous
claims challenging their convictions. Finding no merit in any of their
claims, we affirm the judgment of the district court.
I.
Eastern Waste Industries ("EWI") is a large waste management
business headquartered in Annapolis, Maryland. In April 1988, EWI
was acquired by Attwoods, plc, a multinational waste hauling firm
headquartered in Great Britain. EWI has division offices in Annapo-
lis, Beltsville, Finksburg, Frederick, Salisbury, and Northeast, Mary-
land and in Honeybrook, Pennsylvania and Delmar, Delaware.
In preparation for the Attwoods takeover, and to make its bottom
line look better, EWI began large-scale billing fraud. It began secretly
charging a "margin" (sometimes 50-100% of costs or more) to its
commercial roll-off customers (customers from whom they pick up
waste to transfer to a landfill). Additionally, it began charging for
"ghost loads," landfill trips that never occurred, and, when customers
became suspicious, switching tickets to show them false landfill
receipts.
On August 26, 1993, appellants (all employees of EWI), four other
persons, and EWI were charged with conspiracy and mail fraud. EWI
3
and two individual defendants pleaded guilty; one of those two defen-
dants, Dean Roe, agreed to cooperate with the government. After a
full trial, the jury found appellants Edwin Johnson 1 and Joseph
Blosenski2 guilty on all counts and appellants Gary Bruce3 and Harold
Johnson4 guilty on all counts except one (a specific mailing with
which they were not involved).5 The district court then sentenced
Edwin Johnson to 57 months and to a concurrent 41 months (for
fraudulent government contracts, described below), Bruce to 18
months, Blosenski to 30 months and a $20,000 fine, and Harold John-
son to 54 months and a $40,000 fine. All four herein appeal.
II.
All four appellants contend that the district court should have
instructed the jury that it could find, rather than a single conspiracy,
multiple conspiracies.6 Appellants argue that the alleged single con-
spiracy -- a "wheel" conspiracy with the EWI regional office (Roe,
Edwin Johnson, and Harold Johnson) serving as the"hub" and the
five indicted division employees (Bruce, John Speake, Paul Bartle,
Anthony Blosenski, and Joseph Blosenski) serving as the spokes --
lacked the necessary "rim." Although there was evidence of connec-
tions between the hub and each of the spokes (and so of individual
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1 Edwin Johnson was vice president of operations for EWI beginning
in December 1988.
2 Blosenski sold his own trash hauling business to EWI in 1987 and
became division manager of Honeybrook.
3 Bruce was division manager of Northeast and, subsequently, of
Annapolis, and of Delmar.
4 Harold Johnson became president of EWI in August 1988, following
the Attwoods acquisition.
5 The remaining two individual defendants were also found guilty, but
they declined to appeal their convictions.
6 The only other argument that all four appellants raise is that the dis-
trict court erred in not defining "reasonable doubt" for the jury. Although
appellants admit that the rule in this circuit is that district court should
not define "reasonable doubt," absent a specific jury request to do so, see
United States v. Oriakhi, 57 F.3d 1290, 1300 (4th Cir.), cert. denied, 116
S. Ct. 400 (1995), they argue that this rule should be abolished, see
Appellant's Br. at 29. Obviously, the panel is without authority to do so.
4
conspiracies), appellants maintain that there was not enough evidence
of connections between each spoke, uniting them together in a larger
conspiracy.
In light of the abundant evidence connecting all of the defendants
in a single conspiracy, we conclude that the district court did not err
in declining to instruct the jury on the possibility of multiple conspira-
cies. As we explained in United States v. Kennedy,
[a] multiple conspiracy instruction is not required unless the
proof at trial demonstrates that appellants were involved
only in "separate conspiracies unrelated to the overall con-
spiracy charged in the indictment." Here, Ingram and Ken-
nedy did not make an adequate showing that they were
involved in conspiracies unrelated to the single conspiracy
charged in the indictment. As the district court explained,
although it is conceivable that Stewart's group and Kenne-
dy's group constituted separate conspiracies, there was
ample evidence that the groups were related by virtue of
their extensive and long-lasting distributional relationships
with Ingram. Therefore, we find that the district court's
refusal to instruct on multiple conspiracies . . . was not in
error.
32 F.3d 876, 884 (4th Cir. 1994) (first, third, and fourth emphases
added) (citations omitted), cert. denied , 115 S. Ct. 939 (1995).
At the very least, any possible "multiple conspiracies" were not
unrelated to the overall conspiracy. All of the conspirators worked for
EWI. All of them were corporate officers, arranged in the corporate
hierarchy. All of them were aware that it was "company policy" to
charge the deceptive margins to their roll-off bills. And there was sig-
nificant testimony that the policy was expressly adopted in order to
improve the company's "bottom line."
Defendants rely on the fact that the divisions did not all use the
same methods to charge the margins. Some used ghost loads, some
used switched tickets, some charged different percentages, etc. And,
they place great emphasis on the fact that different people imple-
mented the policy in each division, and that the divisions rarely dis-
5
cussed between themselves the particulars of the overbilling. Even
assuming that all of that is true,
[o]nce it has been shown that a conspiracy exists, the evi-
dence need only establish a slight connection between the
defendant and the conspiracy to support conviction. A
defendant need not have had knowledge of his coconspira-
tors, or knowledge of the details of the conspiracy. And a
defendant may be convicted despite having played only a
minor role in the overall conspiracy.
United States v. Brooks, 957 F.2d 1138, 1147 (4th Cir.) (citations
omitted), cert. denied, 505 U.S. 1228 (1992). The district court,
accordingly, did not err in declining to instruct on multiple conspira-
cies.
In a related argument, defendants assert that there was a material
variance between the single conspiracy alleged in the indictment and
the multiple conspiracies proven by the evidence. They rely on
Kotteakos v. United States, 328 U.S. 750 (1946); but there, many of
the defendants had no connection with each other whatsoever, besides
the fact that they had all transacted with the same individual to obtain
fraudulent housing loans -- they had no connection, no relationship,
and did not even know each other. Id. at 754-55. In Kotteakos, the
hub was the only tie. Here, as explained above, there was far more.7
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7 Moreover, there is no way that any possible variance affected substan-
tial rights, thereby causing actual prejudice. See Kennedy, 32 F.3d at 884
n.1 ("Even if the evidence were read to support a multiple conspiracy
instruction, the district court's failure to give such an instruction is not
reversible error ``unless the defendants demonstrate that they have been
prejudiced by the variance' between the single conspiracy charged in the
indictment and the multiple conspiracies proven at trial.").
Arguing that there was a great danger of "spillover," defendants main-
tain that, at the very least, the district court should have ordered sever-
ance. But, "[t]he party moving for severance must establish that
prejudice would result from a joint trial, not merely that separate trials
would result in a better chance of acquittal. The fact that the evidence
against one defendant is stronger than the evidence against other defen-
dants does not in itself justify severance. . . . We review a district court's
6
III.
Appellants Bruce and Edwin Johnson also argue that the district
court abused its discretion when it refused to grant a new trial when
the government informed it, three days following the verdict, that it
had inadvertently failed to provide the jury with government exhibit
247, J.A. at 1234, which counsel had used during rebuttal but forgot-
ten to return to the clerk to be delivered to the jury room. The exhibit
in question is a chart showing the amounts refunded to EWI custom-
ers for overcharges beginning in 1982. Appellants argue that, because
the chart shows overbilling before 1987 (indeed, all the way back to
1982), that it somehow tends to prove that there were multiple con-
spiracies. The district court found this relatively unimportant exhibit
to be cumulative, and the failure to give it to the jury harmless, J.A.
at 1287, a conclusion with which we fully agree.
IV.
Bruce also claims that the district court abused its discretion in per-
mitting the following cross examination:
Q Are you saying that Ms. Billings was wrong when she
testified to that?
A I am saying she is mistaken because I remember no
such calls like that.
...
Q Are you saying that Mr. Roberts didn't testify truthfully
when he testified?
A I am saying I never asked him to bring front-end tickets
into that office.
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denial of a motion for severance under an abuse of discretion standard."
Brooks, 957 F.2d at 1145 (citations omitted). Here, the district court by
no means abused its discretion in declining to try these coconspirators
separately.
7
Q Sir, are you saying, sir, that Mr. Roberts was not testify-
ing truthfully?
MR. SAVAGE: Objection to the form Your Honor.
THE COURT: Sustained.
J.A. at 892-93. And, Bruce finds fault with the following statements
in the government's closing argument:
Gary Bruce also attacked the credibility of every witness
that testified and implicated him, and he told you that every
single one of those witnesses had a motive to lie. He
attacked Jackie Heimbuch, Karen Bauler, Helen Billings,
J.P. Roberts, Jennifer Sandman. It doesn't make sense,
ladies and gentlemen. It doesn't ring true. How is it that
those five people have a motive to lie?
J.A. at 1156.
Bruce cites no persuasive authority as to why these exchanges are
erroneous, and we can discern no error with them at all, particularly
in light of the trial court's sustaining of defendant's objection the
instant it was made.
V.
Appellant Joseph Blosenski raises three individual claims, none of
which have merit. First, he maintains that there was insufficient evi-
dence to convict him of conspiracy because he was ignorant about the
details of the overbilling, he rarely discussed it with others, and he did
not directly implement it himself. By his own admission, however,
Blosenski said that Dean Roe came up to Honeybrook because "they
needed to get the bottom line up." He told Blosenski to add a ton to
every load when he billed it, and to charge the customers for that non-
existent ton. Blosenski did not like this instruction, and asked if the
other divisions were doing the same thing, and Roe said "yes."
Blosenski and his wife discussed it that night, and she wanted him to
quit, but they instead decided "to go ahead and go along with what
Dean had told them to do." J.A. at 533-35.
8
Second, Blosenski complains that the trial court abused its discre-
tion by refusing to admit testimony by two of his co-workers --
Roger Ruggeri and Karen Weiss -- that they believed that the over-
billing was legal, testimony directly relevant to his asserted defense
that he, too, had a good-faith belief that the practice was legal. When
Ruggeri was asked if he thought the practice was"illegal or criminal,"
the court sustained the government's objection, saying,
[i]llegal or criminal is a legal conclusion. Whether it is right
or wrong, I am going to let you get into. Criminal and illegal
is clearly improper. Why the objection wasn't made a long
time ago, I don't know. . . . I will let you get close to it. I
just don't think legal and criminal are the right ones to ask
about. Certain things go toward good faith that I will allow
you to ask.
J.A. at 419-21; see also J.A. at 447-49 (testimony of Weiss). This rul-
ing was not an abuse of discretion.
And third, Blosenski claims that, although he was a manager of his
company division, he was not a manager of the criminal activity. He
did not know the details, and other people implemented it. This claim
is baseless. As discussed above, he admitted that, after initial resis-
tance, he decided "to go ahead and go along with what Dean had told
them to do," after which point, the Honeybrook division began over-
charging as well. That he did not supervise the day to day operations
or fill out the bills himself is irrelevant; in the division, he was the
ultimate decisionmaker.
VI.
Appellant Harold Johnson subpoenaed EWI counsel Stanley Klos
and Attwoods chief financial officer Edwin Johnson ("Miami Edwin
Johnson," not the Edwin Johnson who is an appellant here). Both,
through counsel, moved to quash the subpoenas and asserted that they
would plead the Fifth Amendment to any questions. The district court
granted the motions to quash, in contravention, Harold Johnson
argues, of Gaskins v. McKellar, 916 F.2d 941, 950 (4th Cir. 1990)
("When a witness indicates that he will assert the fifth amendment
privilege, the trial judge must make a proper and particularized
9
inquiry into the legitimacy and scope of the witness' assertion of the
privilege. A witness may be totally excused only if the court finds that
he could legitimately refuse to answer any and all relevant ques-
tions."), cert. denied, 500 U.S. 961 (1991).8
Harold Johnson argues that Miami Edwin Johnson was necessary
for his defense that it was not his fault that refunds were delayed over
a year because Miami Edwin Johnson was in charge of the refund
program during that time. And, he argues that Klos was necessary to
his defense that he was behaving on advice of counsel (Klos) that the
overbilling was legal.
At the time of the subpoenas, Miami Edwin Johnson had been
informed by the Government that he was the target of an active crimi-
nal investigation concerning these and related matters. His counsel
informed the court that he would plead the Fifth to"every question"
but his name.9 J.A. at 586, 594. The court then invited Harold John-
son's counsel to make a proffer as to what Miami Edwin Johnson
would testify to, as required by Fed. R. Evid. 103(a)(2), but counsel
declined to do so because the court was unwilling to hear the proffer
in camera. J.A. at 591-95. When the issue came up again later, Harold
Johnson's counsel said simply that he wanted Miami Edwin Johnson
to testify that Harold Johnson had called him in Miami in 1990 and
that Miami was "running the show" from that point on. J.A. at 692-93.
The court responded,
it seems to me that there is already evidence that Miami cor-
porate was involved in the refund decision. I would think
that the government's position is probably they don't care
who is controlling it. The fact of the matter is it is not a
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8 In Gaskins, however, (which discussed this issue in only three short
paragraphs) the court concluded that "the trial court's refusal to require
[the witness] to assert his fifth amendment privilege before the jury was
in any event harmless . . . [because] [the witness's] testimony would
have been merely cumulative." 916 F.2d at 950. The court, here, also
concluded that the testimony would have been cumulative. J.A. at 696.
9 Likewise, counsel for Klos stated that he would argue attorney/client
privilege, work/client privilege, and, if those both failed, he would plead
the Fifth Amendment. J.A. at 691.
10
defense that somebody else -- assume for the moment that
Miami corporate was heavily involved in the refund, that
you say so what?
MR. ORING: Your Honor, the first defense witness is
going to be Dennis O'Leary. I think he is being called
exactly for the purpose of trying to demonstrate it was
Miami that was controlling this. . . . [The prosecution]
would agree that certainly Miami was involved in 1991.
J.A. at 694.
Therefore, based on the fact that testimony that Miami was control-
ling the refunds10 would be largely irrelevant and cumulative with
Dennis O'Leary's testimony, and based on the fact that counsel both
for Miami Edwin Johnson and for Klos stated that their clients would
plead the Fifth Amendment in any event, we conclude that the court
did not abuse its discretion in quashing the subpoenas.
VII.
Edwin Johnson also challenges the district court's computation of
the loss that resulted from a separate fraudulent transaction in which
he participated. In January 1990, EWI acquired another sanitation
company, Montgomery County Sanitation ("MCS"). While negotiat-
ing that acquisition, Edwin Johnson discovered that MCS had been
defrauding Montgomery County, Maryland. Montgomery County
code provides that the county will contract only with firms that dem-
onstrate that a minimum of 20% of the value of the contract is sub-
contracted to minority-owned businesses. In order to take advantage
of this regulation, MCS had created sham minority businesses, con-
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10 In his general proffer, Harold Johnson stated only that he wished to
show that Miami was controlling the refunds, so he cannot now claim to
have been seeking different testimony. Fed. R. Evid. 103(a)(2). Despite
Harold Johnson's assertion in his brief before this court that Klos was
being called to bolster his good faith/advice of counsel defense, there
was no proffer whatsoever to that effect before the trial court; the only
reason that the trial court was told that Harold Johnson wanted Klos was
to help prove that Miami was running things.
11
sisting entirely of minority employees of MCS with no personal
assets, and had subcontracted 20% of its contracts to them (then
recouping 85% of it through sham lease agreements). Edwin Johnson
not only approved of these phony transactions, he actively partici-
pated in them by firing one of the minority employees running a sub-
contracting business, setting up another minority employee in his
place, and then upping the lease payback to 90% and then to 92.5%.
As a result, Edwin Johnson was convicted in a separate trial of
fraud, and the district court increased his offense level of six by
eleven levels under U.S.S.G. § 2F1.1(b)(1)(L) because the resultant
loss was "between $800,000 and $1,500,000." U.S.S.G. § 2F1.1 Com-
ment 8 requires only a "reasonable estimate" of the loss caused by
fraud, and that is exactly what the district court made. It estimated the
loss in two ways: first, it found that EWI earned a profit of 15% on
the $5,500,000 worth of contracts that it would not have received
without the sham minority subcontractors, for a total of $825,000;
alternatively, it found that 20% of the total payments EWI received,
$1,100,000, should have gone to a minority subcontractor instead.
Edwin Johnson challenges the former calculation because he asserts
that there was no "victim" who actually suffered this loss, and he
attacks the latter as being improperly based on gross rather than net
revenues. We conclude that neither challenge has merit. The former
method was acceptable because the county was a victim in that it did
not get what it bargained for -- increased minority businesses -- and
so EWI's illicit gain is an appropriate measure of damages, and the
latter method is acceptable as well because the county's goal was to
promote minority businesses by upping their total revenue and legiti-
macy, not just their profits. And, in any event, the alleged error had
no effect on Edwin Johnson's sentence because the district court sen-
tenced him to 41 months in the minority contracting case, to run
concurrently with the 57 months he got in the billing fraud case.
CONCLUSION
For the reasons stated herein, the judgment of the district court is
affirmed.
AFFIRMED
12