United States v. Shelby Coleman

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 11a0882n.06
No. 08-5461
FILED
UNITED STATES COURT OF APPEALS Dec 22, 2011
FOR THE SIXTH CIRCUIT
LEONARD GREEN, Clerk
UNITED STATES OF AMERICA, )
) ON APPEAL FROM THE
Plaintiff-Appellee, ) UNITED STATES DISTRICT
) COURT FOR THE EASTERN
v. ) DISTRICT OF KENTUCKY
)
SHELBY J. COLEMAN, ) OPINION
)
Defendant-Appellant. )
BEFORE: DAUGHTREY, COLE, and ROGERS, Circuit Judges.
COLE, Circuit Judge. Shelby Coleman, the Defendant-Appellant, appeals her jury conviction
of two counts of violating 18 U.S.C. § 666 for stealing, embezzling, and otherwise defrauding her
employer, the Johnson County Board of Education. She argues that the district court abused its
discretion when it excluded the testimony of Coleman’s co-Defendant, Peggy VanHoose, after
VanHoose repeatedly invoked her Fifth Amendment privilege in response to the prosecution’s
questions on cross-examination. We AFFIRM the judgment of the district court.
I. BACKGROUND
Shelby Coleman was the payroll clerk for the Johnson County Board of Education for
nineteen years. In this capacity, she administered the payroll and issued checks to all employees of
the Johnson County school system. Coleman, along with her supervisor Peggy VanHoose, the
finance director, controlled all aspects of the payroll software system, known as “MUNIS.”
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After the death of the school superintendent Orville Hamilton, the Board hired Stephen
Trimble as Hamilton’s replacement. One of Trimble’s first acts as superintendent was to get a grasp
on the school system’s finances, and he requested an updated list of all employees’ salaries from
VanHoose. VanHoose previously furnished such a list to the Board, but her and Coleman’s
information was left off that list. Trimble submitted the new list to the Board, and some members
suspected that Coleman and VanHoose’s information was incorrect.
Trimble then contacted the Kentucky Department of Education, which also kept records on
Kentucky school system employees’ salaries. The information from the state agency alerted Trimble
to possibly fraudulent behavior. The list VanHoose gave to Trimble did not include her son,
Michael, who did appear on the state’s payroll list. VanHoose also appeared to be receiving a full
salary and retirement benefits at the same time. The most concerning indication of fraud was that
VanHoose and Coleman’s salaries on the list given to Trimble were substantially less than the
amount the state agency reported that they earned. Trimble notified members of the school board
and turned the information over to the state police, the Commonwealth Attorney, and the state
Department of Education.
A federal grand jury jointly indicted Coleman and VanHoose on two counts of violating 18
U.S.C. § 666, and separately indicted VanHoose on two additional counts of violating 18 U.S.C. §
666. Count 1 alleges that Coleman and VanHoose issued money in excess of $5,000 to Michael
VanHoose at times when they knew that he was not an authorized employee of the Johnson County
School District. Count 2 alleges that Coleman and VanHoose arbitrarily, and without authority, gave
themselves substantial pay raises in excess of $5,000.
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The district court granted Coleman and VanHoose’s motion to sever their trials. VanHoose
pleaded not guilty, and after a five-day trial, a jury convicted her of three of the four counts.
Coleman, during her jury trial, sought to call VanHoose as a defense witness, but the district court
noted that “there is a question that was raised as to whether or not [VanHoose] would seek to invoke
a Fifth Amendment privilege as it relates to her testimony.”
Coleman’s attorney informed the district court that he expected VanHoose to testify “that Ms.
Coleman did nothing knowingly wrong,” and merely “followed the directives of the supervisor.”
Moreover, that even though Coleman issued checks to Michael VanHoose while he was actually in
jail, she “wasn’t aware of the water cooler talk about [Michael VanHoose’s] problems . . . [and] she
believed that he was on a work release program.” After hearing argument on whether VanHoose
waived her Fifth Amendment rights by testifying in her own trial, the district court, outside the
presence of the jury, permitted a voir dire of VanHoose.
During VanHoose’s direct testimony during the voir dire, she answered questions on whether
Coleman ever knowingly assisted her in stealing funds from the Johnson County School Board;
whether Michael VanHoose had been incarcerated and whether she discussed his legal problems
generally, or with Ms. Coleman specifically; whether Coleman ever received a raise, and more
generally, how other employees within the school district received raises; and whether Coleman
worked overtime, and whether there was paperwork that VanHoose reviewed when approving her
overtime. VanHoose invoked her Fifth Amendment right against self-incrimination numerous times
on direct, in response to questions about whether Coleman assisted in embezzling funds to
VanHoose’s son; whether VanHoose told Coleman that her son was in a work-release program; and
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whether VanHoose approved the overtime Coleman worked. Coleman’s counsel twice asked
VanHoose whether she approved Coleman’s overtime hours. She answered it once and invoked her
Fifth Amendment rights the second time it was asked.
On cross-examination, the prosecution asked a number of questions to which VanHoose
responded by invoking her Fifth Amendment rights: whether VanHoose went into the MUNIS
system, under Coleman’s username, to manipulate her or Michael VanHoose’s salary information;
whether VanHoose was trying to protect Coleman; whether VanHoose embezzled money from the
Johnson County School District; and whether VanHoose awarded herself sick days to which she was
not entitled. The prosecution argued that it would be severely hampered if VanHoose were permitted
to answer questions posed by defense counsel, but was unamenable to cross-examination.
Obviously, if VanHoose denied Coleman’s involvement, but then invoked the Fifth Amendment in
response to questions about her own complicity, the jury would be left with the impression that
VanHoose’s invocation was an admission of culpability.
The district court noted that if VanHoose had invoked her privilege in response to questions
on collateral matters on cross-examination, the prosecution would not be prejudiced because it would
still have the ability to cross-examine her on her direct testimony. Concluding that VanHoose
invoked the privilege in response to questions within the scope of the direct examination on non-
collateral matters, the district court barred VanHoose from appearing as a witness.
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The jury convicted Coleman on both counts of violating 18 U.S.C. § 666, and the district
court sentenced Coleman to twenty-seven months in prison and ordered her to pay $161,387.28 in
restitution. Coleman filed her timely notice of appeal.
II. ANALYSIS
Coleman asserts two arguments in support of her contention that the district court erred in
excluding VanHoose’s testimony in its entirety. First, she argues that VanHoose invoked her
privilege only in response to questions outside the scope of the direct examination, so that the
prosecution was in no way prejudiced, given the ample opportunity to cross-examine VanHoose on
non-collateral matters. Second, Coleman argues that even if the exclusion prejudiced the
prosecution, district courts may exclude privileged testimony only if its inclusion would prejudice
the defendant. A district court’s decision to admit or exclude evidence will be upset only if the
district court abused its discretion. See United States v. Baldwin, 418 F.3d 575, 579 (6th Cir. 2005).
Under this standard, we will reverse “only if we are firmly convinced of a mistake that affects
substantial rights and amounts to more than harmless error.” Id. For this to be the case, the district
court must have relied “on clearly erroneous findings of fact, improperly applie[d] the law, or
employ[ed] an erroneous legal standard.” Id. (internal citations, quotation marks, and punctuation
omitted).
The scope of the direct examination is construed broadly. United States v. Moore, 917 F.2d
215, 222 (6th Cir. 1990). The subject matter of the direct examination includes “all inferences and
implications arising from such testimony” and, on cross-examination, the prosecutor may ask “any
question which would have elicited testimony that was reasonably related to the inferences that
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might reasonably be drawn from [the] direct testimony . . . .” Id. (emphasis added). Coleman argues
that what the prosecution could not obtain because of VanHoose’s assertion of the privilege was not
substantially related to the scope of her direct examination. We cannot agree.
VanHoose testified during direct examination that Coleman never assisted her in embezzling
funds from the school board. But, previous testimony demonstrated that there were some
irregularities within the school system’s accounting mechanisms, since the Board’s records were
different from the state agency’s. After hearing testimony from VanHoose that Coleman did not
commit illegal acts, a juror would wonder how these irregularities could exist, given that it was
Coleman who administered the Board’s payroll. Similarly, a juror would wonder how VanHoose
could manipulate the MUNIS system without Coleman’s knowledge. When the prosecution
attempted to obtain an answer to this question during the voir dire, they were unable to do so because
VanHoose invoked her right against self-incrimination.
This is not the only example. A computer expert’s testimony revealed that someone had used
the username “Shelby” on MUNIS to manipulate Michael VanHoose’s payroll information. Again,
had the jury heard from VanHoose that Coleman did not participate in any fraud, they would
naturally wonder who, then, had used the system with that username. These are natural inferences,
and Coleman’s argument that the questions are somehow outside the scope of the direct examination
strains credulity. Such a claim would unnecessarily hamper the scope of cross-examination to only
the words and specific acts articulated during the direct examination, a position this Court has
specifically rejected. See Moore, 917 F.2d at 222. We cannot say that the district court’s
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determination that the prosecutor’s questions were within the scope of the direct examination was
outside the range of reasonable conclusions.
District courts, Coleman insists, may bar a witness from testifying only if there is a
substantial danger of prejudice arising from the defendant’s inability to challenge the testimony. In
support of this claim, she calls our attention to United States v. Clark, which states that “[i]t is up
to the court to weigh the importance of admitting all relevant information versus the prejudice to the
defendant and strike a balance between these competing interests.” 988 F.2d 1459, 1464 (6th Cir.
1993) (per curiam) (citing United States v. Vandetti, 623 F.2d 1144, 1149 (6th Cir. 1980)). But
Clark cannot possibly stand for the proposition that prejudice to the prosecution may never be
considered when deciding whether to exclude a witness under the circumstances here. Were we to
adopt such a theory, a bizarre conclusion would result. A defendant could elicit testimony from a
witness on direct examination, that witness could then invoke his Fifth Amendment right throughout
cross-examination, and because no prejudice would result to the defendant, but only to the
prosecution, the district court would be unable to exclude the witness from testifying. Although the
prosecutor’s interest in cross-examining VanHoose is not rooted in the Constitution, “one of the
legitimate demands of the adversary system is the right of cross-examination.” United States v.
Gary, 74 F.3d 304, 310 (1st Cir. 1996). The district court was within its discretion when it excluded
VanHoose’s testimony because its admission would unduly prejudice the prosecution.
III. CONCLUSION
The prosecution’s questions to VanHoose during cross-examination were material and not
outside the scope of the direct examination, especially when considering the other testimony that had
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been adduced and the inferences that jurors could then draw. And while the right to confront
adversarial witnesses is constitutionally enshrined for defendants, we cannot say that a weaker
iteration of that interest does not extend to the prosecution. The district court did not abuse its
discretion when it determined VanHoose’s testimony to be inadmissible. For the foregoing reasons,
we AFFIRM the judgment of the district court.
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