United States v. Moffie

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 07a0539n.06
Filed: August 1, 2007
No. 06-3323
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR THE
JEFFREY J. MOFFIE, NORTHERN DISTRICT OF OHIO
Defendant-Appellant.
/
BEFORE: CLAY and SUTTON, Circuit Judges; and GREER, District Judge.*
CLAY, Circuit Judge. Defendant, Jeffrey J. Moffie, appeals his conviction and sentence.
Defendant was convicted of bank fraud, under 18 U.S.C. §§ 371 and 1344, for providing false and
fraudulent financial information to Bank One in connection with five loan applications. Defendant
was sentenced to a term of imprisonment of thirty-seven months and to three years of supervised
release. For the reasons set forth below, we AFFIRM Defendant’s conviction and sentence.
*
The Honorable J. Ronnie Greer, United States District Judge for the Eastern District of
Tennessee, sitting by designation.
No. 06-3323
BACKGROUND
Defendant and Dale Delgado (“Delgado”) met in 1993 while working as securities brokers
with Dean Witter. Defendant and Delgado left Dean Witter to form Cambridge Investment Group,
Inc. (“Cambridge”), a financial and investment services company. Defendant began to get involved
in the “consulting and investment banking business,” (J.A. 1024), but “in the fall of 1994 . . . .
decided not to renew his brokerage license, [and] all of his clients got transferred to [Delgado],”
(J.A. 1015). Defendant
ha[d] an idea of helping people get loans that had trouble getting
loans, had been turned down many times before either for cash-flow
problems or collateral problems or credit problems, and he thought
if [Cambridge] bought Treasury Bonds and put them up as collateral
for people, the bank would be more apt to approve that loan. And
then [Cambridge] could take fees.
(J.A. 604) Defendant’s banking and financing business focused on purchasing “the[ ] bonds on
margin,” at ten percent of the bonds’ market value, and pledging the bonds as collateral in support
of loans approved by Bank One. Id. Cambridge “prepare[d] financial statements, and [ ] would
prepare the loan application to the bank, basically asking for a loan for [a] particular client.” (J.A.
610) In the application process, Cambridge’s clients and Bank One officials were led to believe that
the collateral bonds were owned outright by Defendant, rather than on margin. Cambridge charged
“fees for closing . . . . took a document preparation fee, . . . a closing fee . . . [and] points on [ ] the
amount borrowed.” (J.A. 608) In support of this security arrangement, Cambridge’s clients were
required to sign “a security agreement, . . . a pledge agreement, . . . a promissory note, . . . [and] an
actual Leveraged Asset Program agreement.” (J.A. 609)
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Defendant’s fraudulent scheme induced Bank One to grant numerous loans for substantial
amounts. Indeed, Bank One made five loans between January 20, 1994, and November 7, 1994,
ranging from $27,000 to $724,500. On November 17, 2004, a grand jury indicted Defendant and
Delgado, charging them, under 18 U.S.C. §§ 371 and 1344, with one count of conspiring to commit
bank fraud; one count of knowingly providing false and fraudulent financial information to Bank
One in connection with loan applications; and two counts of transmitting fraudulent financial
statements to Bank One. On December 1, 2004, Defendant pled not guilty. On September 20, 2005,
the case proceeded to a jury trial.
At trial, the government presented evidence that Cambridge continuously misrepresented the
ownership of the bonds and failed to disclose that the bonds were purchased on margin. At trial,
Delgado and Gary Cerasi (“Cerasi”), a licensed certified public accountant, testified that they worked
with Defendant to implement the bank fraud scheme. Veronica Fears (“Fears”), the owner of 15449
Euclid Avenue, Inc., a company based in Cleveland, Ohio, also testified that she arranged to borrow
$680,400 from Bank One through Cambridge, and that she signed a promissory note to Cambridge
for $760,000 because Defendant represented that Cambridge owned the collateral for the loan and
that the value of the bonds was “700-some thousand dollars.” (J.A. 116)
A Bank One commercial loan representative, Maria Cahill (“Cahill”), testified that Defendant
applied for loans and that the loans were secured by bonds purportedly owned by Cambridge that
were allegedly of equal to, if not greater than, the value of the loans. Cahill affirmed that she
received monthly financial statements from Cambridge concerning the alleged market value of the
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collateral bonds. Cahill indicated that if Bank One had known that the equitable value of the
collateral bonds was less than the loan amount, a loan would not have been approved.
For his part, Defendant offered the testimony of Kenneth Lapine (“Lapine”), an attorney
associated with Cambridge who specializes in banking and commercial law. Lapine asserted that
Bank One should have known that the collateral bonds were purchased on margin because “there
w[ere] indications that margined bonds were going to be involved as the collateral in the[ ] loan
transactions.” (J.A. 975) Notwithstanding Lapine’s testimony, the record indicates that Bank One
discovered Defendant’s scheme accidently.
The record shows that Defendant objected to two evidentiary rulings at trial. First, the
district court allowed the government to introduce as evidence portions of Defendant’s deposition
testimony from a civil case to recover loan assets that was filed by Bank One in the Court of
Common Pleas of Cuyahoga County, Ohio. In connection with the civil case, Bank One subpoenaed
Defendant and ordered him to appear for a deposition. In his deposition testimony, Defendant
conceded that the collateral bonds were purchased on margin and that he failed to disclose this
material fact to Bank One. Over Defendant’s objection, the district court allowed the government
to introduce portions of the deposition testimony as evidence at trial. Second, over Defendant’s
objection, the district court allowed the government to admit into evidence Federal Deposit Insurance
Corporation (“FDIC”) certificates to show that Bank One was insured by the FDIC through
September 30, 1997.
Defendant made motions for judgment of acquittal on September 28, 2005, and October 3,
2005. These motions were denied by the district court. At the conclusion of the trial, the jury found
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No. 06-3323
Defendant guilty of bank fraud. The district court sentenced Defendant to an imprisonment term of
thirty-seven months and three years of supervised release. Defendant was also ordered to pay
restitution in the total amount of $1,145,989. On appeal, Defendant challenges his conviction and
sentence, and the district court’s evidentiary rulings.
DISCUSSION
I. Reasonableness of Defendant’s Sentence
Defendant challenges the reasonableness of his sentence. This Court reviews a sentence
imposed by a district court for reasonableness. Rita v. United States, No. 06-5754, – S. Ct. –, 2007
WL 1772146, at *9 (June 21, 2007); United States v. Booker, 543 U.S. 220, 261-62 (2005); United
States v. Harris, 397 F.3d 404, 409 (6th Cir. 2005); United States v. Cage, 458 F.3d 537, 540 (6th
Cir. 2006). The Court reviews the district court’s interpretations of the sentencing guidelines de
novo and its factual findings for clear error. United States v. Williams, 411 F.3d 675, 677 (6th Cir.
2005); United States v. Burke, 345 F.3d 416, 428 (6th Cir. 2003). The Court defers to the district
court’s application of the sentencing guidelines to the facts. United States v. Charles, 138 F.3d 257,
266 (6th Cir. 1998).
In this case, the district court made a finding of fact concerning Bank One’s total loan loss
amount. Based on this finding, the court increased Defendant’s base offense level from level six to
level eleven. Defendant argues that the increased offense level violates his Sixth Amendment rights
because the loan loss amount was never submitted to the jury. We find Defendant’s argument to be
unpersuasive.
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No. 06-3323
“Booker did not eliminate judicial fact-finding.” United States v. Coffee, 434 F.3d 887, 898
(6th Cir. 2005). “It is clear under the law of this Circuit that a district court may make its own
factual findings regarding relevant sentencing factors, and consider those factors in determining a
defendant’s sentence[.]” United States v. Gardiner, 463 F.3d 445, 461 (6th Cir. 2006) (citing Coffee,
434 F.3d at 897-98). “[W]hen a trial judge exercises his discretion to select a specific sentence
within a defined range, the defendant has no right to a jury determination of the facts that the judge
deems relevant.” Booker, 543 U.S. at 233. Simply put, Booker does not bar the district court from
calculating and considering a loan amount provided that the sentencing guidelines are used as
advisory and not mandatory. Post-Booker, a district court may enhance a defendant’s sentence
“based upon facts not found by a jury, provided they do not consider themselves required to do so.”
United States v. Davis, 397 F.3d 340, 352 (6th Cir. 2005) (Cook, J., concurring); see also United
States v. Kosinski, 480 F.3d 769, 777 (6th Cir. 2007).
In the instant case, the record clearly indicates that the district court properly considered the
guidelines as advisory, and calculated the loan loss amount based on evidence in the record. (J.A.
1130) Therefore, we find that the district court properly calculated Defendant’s loan loss amount.
II. FDIC Certificates
The record shows that the government presented FDIC certificates at trial to show that Bank
One was insured by the FDIC through September 30, 1997. Defendant objected to the certificates
arguing that the certificates failed to cover all relevant periods because “allegations in th[e]
indictment run from January 1994 through some time in 1998.” (J.A. 906) The district court
admitted the certificates over Defendant’s objection. On appeal, Defendant argues that the period
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of the conspiracy exceeds the period covered by the FDIC certificates, and that “[w]ithout evidence
[that] Bank One was a federally insured organization for all of the periods alleged in the Indictment
the district court would have no jurisdiction to review and decide this matter.” (Def. Br. at 20)
An essential element that the government must prove “for a conviction for bank fraud under
section 1344(1)” is “that the financial institution was insured by the FDIC.” United States v.
Hoglund, 178 F.3d 410, 413 (6th Cir. 1999) (citing United States v. Brandon, 17 F.3d 409, 424-25
(1st Cir. 1994)); Cf. United States v. Sandles, 469 F.3d 508, 513 (6th Cir. 2006) (holding that “[t]he
Government must prove that the deposits of the bank were insured by the FDIC at the time that
[Defendant] robbed the bank.”). Since this Court has found that “an FDIC certificate is kept in the
ordinary course of a banking business and. . . is an admissible business record,” the district court
properly admitted the FDIC certificates to show that Bank One was insured by the FDIC through
September 30, 1997. United States v. Rowan, 518 F.2d 685, 693 (6th Cir. 1975).
In this case, all material conduct in furtherance of the bank fraud took place before September
30, 1997, except for a “telephonic discussion with . . . Bank One” on December 22, 1997. (J.A. 23)
This Court has repeatedly found that certificates of FDIC coverage that pre-date or post-date the
criminal incident may be sufficient to prove a bank’s FDIC-insured status. See, e.g., United States
v. Couch, No. 94-6019, 1995 WL 583386, at *8 (6th Cir. Oct. 3, 1995) (unpublished case) (holding
that testimony from branch manager and the introduction of post-dated FDIC certificate is sufficient
evidence); see also Rowan, 518 F.2d at 693 (holding that testimony from branch manager and the
introduction of pre-dated FDIC certificate is sufficient evidence, even though the branch manager
“did not know [based on] his own personal knowledge that the premiums were paid”); but see
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No. 06-3323
Sandles, 469 F.3d at 516-17 (finding that “[t]he Government presented only one piece of competent
evidence as to the bank’s insured status,” namely, an affidavit, “and that [the affidavit] was
insufficient to establish a necessary element of a federal bank-robbery charge.”); United States v. Ali,
266 F.3d 1242, 1245 (9th Cir. 2001) (noting that “‘[d]espite the fact that FDIC-insured status is an
express requirement of the applicable statutes, an essential part of a valid indictment, and an
indispensable item of proof of an offense, prosecutors have been extremely lax in the treatment
accorded this element.’”) (quoting United States v. Platenburg, 657 F.2d 797, 799 (5th Cir. 1981)
(alteration in original).
Although Defendant’s bank fraud continued after September 30, 1997, the record clearly
shows that all loans were requested, processed or procured by September 30, 1997. In short, the
principal criminal activities which form the basis of Defendant’s conviction overwhelmingly took
place before September 30, 1997. Since this Court is charged with “[c]onstruing the evidence and
drawing reasonable inferences in the light most favorable to the Government,” we find that it is
reasonable to infer that the branch was FDIC-insured during the relevant time periods. Rowan, 518
F.2d at 693. Accordingly, we find that Defendant’s argument with respect to the FDIC certificates
to be without merit.
III. Motions for Judgment of Acquittal
Defendant argues that the district court erred in denying his motions for judgment of
acquittal. The standard of review for a challenge to the sufficiency of the evidence is “whether, after
viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could
have found the essential elements of the crime beyond a reasonable doubt.” Jackson v. Virginia, 443
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No. 06-3323
U.S. 307, 319 (1979) (emphasis in original); see also United States v. Davis, 473 F.3d 680, 681 (6th
Cir. 2007).
Defendant maintains that “[r]epresentatives from the bank were made aware, albeit by
accident, [that] the bonds pledged as collateral had been purchased on margin and were not owned
outright.” (Def. Br. at 24) During the trial, Defendant made two motions for judgment of acquittal.
The first motion was made when the prosecution rested its case. In support of this motion, Plaintiff
argued that employees at the bank either knew or should have known that the collateral bonds were
purchased on margin. This motion was based primarily on the testimony of a former Bank One
employee, Judith Kuclo, which indicated that Cambridge inadvertently revealed that the collateral
bonds were purchased on margin in one of the monthly financial statements. Defendant renewed the
motion for judgment of acquittal after all proofs had been entered. The second motion relied on
Lapine’s testimony, which indicated that Bank One should have been aware of the use of margin
bonds based on information contained in financial statements. The district court found, and we
agree, that the motions for judgment of acquittal were meritless.
Under 18 U.S.C. § 1344:
Whoever knowingly executes, or attempts to execute, a scheme or
artifice--
(1) to defraud a financial institution; or
(2) to obtain any of the moneys, funds, credits, assets, securities, or
other property owned by, or under the custody or control of, a
financial institution, by means of false or fraudulent pretenses,
representations, or promises;
shall be fined not more than $1,000,000 or imprisoned not more than
30 years, or both.
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No. 06-3323
18 U.S.C. § 1344. “The three elements required for a conviction for bank fraud under section
1344(1) are: (1) that the defendant knowingly executed or attempted to execute a scheme to defraud
a financial institution; (2) that the defendant did so with the intent to defraud; and (3) that the
financial institution was insured by the FDIC.” Hoglund, 178 F.3d at 413 (citing Brandon, 17 F.3d
at 424-25.
In this case, the government introduced ample evidence that Defendant intentionally devised
a fraudulent scheme by providing false financial information to Bank One. Defendant intentionally
misrepresented that Cambridge was holding valuable bonds as collateral for loans. Numerous
government witnesses consistently described in detail how bonds purchased at margin were pledged
as collateral for loans and that Cambridge overstated the value of the bonds in loan applications and
monthly financial statements. Since the government presented ample testimony and evidence, we
find that “any rational trier of fact could have found the essential elements of the crime beyond a
reasonable doubt.” Davis, 473 F.3d at 681 (internal quotation marks and citation omitted).
Therefore, the district court properly denied Defendant’s motions for judgment of acquittal.
IV. Deposition Testimony
Last, Defendant challenges the district court’s evidentiary ruling in connection with the
admissibility of his deposition testimony. This Court reviews a district court’s evidentiary rulings
for abuse of discretion. United States v. Chambers, 441 F.3d 438, 455 (6th Cir. 2006) (quoting
United States v. Dixon, 413 F.3d 540, 544 (6th Cir. 2005). “[T]his Court does not disturb rulings on
the admissibility of evidence unless the Court is left with the definite and firm conviction that the
[district] court . . . committed a clear error of judgment in the conclusion it reached.” Id. (internal
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quotation marks and citation omitted). “An abuse of discretion will be found if the district court
relies on clearly erroneous findings of fact, improperly applies the law or uses an erroneous legal
standard.” Id. (citation omitted). “Broad discretion is given to district courts in determinations of
admissibility based on considerations of relevance and prejudice, and those decisions will not be
lightly overruled.” Id. (internal quotation marks and citation omitted). “A new trial is not required
unless the error affects substantial rights.” Id. (citing Fed. R. Crim. P. 52).
Defendant argues that his deposition testimony from a civil case in Ohio state court was
inadmissible in this case because the deposition was not signed by the deponent as required under
Ohio R. Civ. P. 30(E). Notably, Defendant cites no case law in support of this argument. We find
Defendant’s argument is unpersuasive. Insofar as this case was litigated under federal law in the
Northern District of Ohio – and not under state law in an Ohio state court – Ohio state civil
procedure rules are simply not applicable. “Although state law may be borrowed if appropriate,
specific aberrant or hostile state rules do not provide appropriate standards for federal law.” North
Dakota v. United States, 460 U.S. 300, 318 (1983) (internal quotation marks and citation omitted).
In this case, the government argues that Defendant’s deposition transcript is admissible party-
admission evidence under Fed. R. Evid. 801(d)(2)(A). In pertinent part, this Rule provides:
A statement is not hearsay if --
. . . The statement is offered against a party and is (A) the party’s own
statement, in either an individual or a representative capacity or (B)
a statement of which the party has manifested an adoption or belief
in its truth . . . .
Fed. R. Evid. 801(d)(2). The record indicates that Defendant testified in his deposition as follows:
Question: . . . Were the bonds margined?
Defendant: Yes.
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No. 06-3323
Question: So do you recall how much the bonds were margined
for, what the amount of margin was?
Defendant: 90 percent.
Question: Did you know . . . that 90 percent of the bonds had
been margined?
Defendant: Yes
Question: When were they margined?
Defendant: Pretty much at the beginning.
Question: Did you tell anyone from Bank One that the bonds
were margined?
Defendant: No.
(J.A. 890) Like the district court, we find that Defendant’s testimony is admissible because it
constitutes a party admission. See, e.g, Schweitzer v. Teamster Local 100, 413 F.3d 533, 538 (6th
Cir. 2005). Therefore, the district court did not abuse its discretion in allowing the government to
read portions of Defendant’s deposition to the jury.
CONCLUSION
For the foregoing reasons, we AFFIRM Defendant’s conviction and sentence.
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