UNITED STATES v. THOMAS

Rehearing and Rehearing En Banc Denied October 31, 1985.

Rehearing and Rehearing En Banc Denied November 18, 1985 in No. 84-1211.

WILLIAM J. CAMPBELL, Senior District Judge.

Codefendants Jerry Troutman and Donald R. Thomas bring this consolidated appeal from their convictions arising from an elaborate bank loan financing scheme. Troutman was convicted on two counts of wire fraud (in violation of 18 U.S.C. § 1343), a single count of using a fictitious name to perpetrate the scheme (18 U.S.C. § 1342) and one count of conspiracy to embezzle (18 U.S.C. § 371). Thomas was convicted on the conspiracy to embezzle count. Both defendants appeal their convictions for a number of reasons. We affirm the convictions.

Both defendants allege the admission of the testimony of a third codefendant, Steven Freel, after he had negotiated a plea agreement nine days into the sixteen-day trial, constituted reversible error.1 The defendants claim error was committed here for three reasons. First, they argue Freel had participated in the pre-trial defense planning with them as a defendant and was therefore aware of privileged conversations and strategies. Second, they argue Freel's testimony violated Federal Rule of Evidence 615, the witness exclusion rule, because he had heard the other witnesses testify during the first nine days of the trial when he was still a defendant. Hence Freel could mold his testimony to stand consistent with other government witnesses. The third reason the defendants believe Freel's and the other codefendant's testimony is cause for reversal is more general: simply that the prejudicial impact upon the jury of testimony of a defendant-turned-government witness "cannot be overstated." (See Thomas brief p. 27.)

Taking the last argument first, it is well-recognized that the testimony of codefendants after negotiating a mid-trial plea bargain is admissible in certain instances for limited purposes. This is true even if the testimony addresses the plea bargain itself. See U.S. v. Bryza, 522 F.2d 414, 425 (7th Cir.1975); U.S. v. Romeros, 600 F.2d 1104, 1105 (5th Cir.1979); U.S. v. Halbert, 640 F.2d 1000, 1004 (9th Cir.1981). Defendants fail to cite a significant line of case law that rules otherwise. At the appellate level, an examination of the lower court's cautionary instructions concerning the use of the testimony and the evidence of the guilty plea is the key to determining whether a constitutional violation occurred. This is because the testimony is admissible for limited purposes.

Defendants in the case sub judice never allege how the district judge's cautionary instruction was lacking. Instead the defendants resort to broad statements that the codefendants' testimony was somehow manifestly prejudicial. Yet no specifies as to how they were prejudiced from Freel's or the other codefendant's testimony is advanced. Only the event of Freel and the others testifying is advanced as grounds for reversal. This is insufficient according to the current legal criteria. The only recent legal authority relied upon by the defendants for support is Bisaccia v. Attorney General of the State of New Jersey, 623 F.2d 307 (3rd Cir.1980). The case is easily distinguishable. In Bisaccia the admission of a codefendant's guilty plea was considered reversible error because the trial judge failed to give any cautionary instructions to the jury about the use of the testimony. In the case sub judice the district court gave a cautionary instruction and defendants never argue how it was deficient. Hence Bisaccia cannot be used for reversal in our case.

Defendants also fail to specifically allege how they were prejudiced by Freel's participation in their pretrial strategy conferences with counsel. There is no evidence any confidences from these sessions were revealed by Freel on the witness stand or that his testimony was formulated with any pretrial strategies of the defendants taken into account. As for Freel's apparent violation of Federal Rule of Evidence 615, the witness exclusion rule, the case law surrounding Federal Rule of Evidence 615 reveals that absent any indication Freel's presence in the courtroom was the product of government connivance (or in some way a willful violation of the rule) it is within the district court's sound discretion to allow the witness to testify. See U.S. v. Schaefer, 299 F.2d 625, 360-31 (7th Cir.1962); Hollstein v. Grier, 262 S.W.2d 954 (1953). We see no abuse of discretion by the district court here. There is no evidence of a willful or strategic violation of Federal Rule of Evidence 615 by the prosecution or Freel. Nor is there evidence Freel's presence throughout the trial prejudiced the defendants. We note Freel's testimony appears limited to one of many financial transactions surrounding the case which were already documented. We find no reason for reversal.

Defendant Thomas argues his speedy trial rights were violated, requiring reversal. (Defendant Troutman adopts this argument in a footnote in his brief, but has nothing to add to Thomas' argument.) The Speedy Trial Act, 18 U.S.C. § 3161, et seq., requires a defendant be tried within seventy days from either the date the information or indictment was filed, or from the date upon which the defendant appeared before a judicial officer of the court in which the charge is pending, whichever date occurs last. In this case Thomas' arraignment on August 8, 1983 triggered the speedy trial clock. On September 12, thirty-five days later, a codefendant named Stoller filed a motion for a continuance. The court granted the continuance and saw fit to set a trial date for November 10, well beyond the seventy-day speedy trial deadline.

The court's main reason for granting the continuance far beyond the seventy-day speedy trial time table was that the case was complex. In a written order explaining its actions, the district court observed the case involved six defendants and thousands of financial documents which had been secured through discovery. The district court concluded the defendants' request for more time to prepare a defense was reasonable.

Such a decision is well within the sound discretion of the district court.

We believe the written order of the district court sufficiently articulated legitimate reasons for granting the continuance and was well within the necessary guidelines found at 18 U.S.C. § 3161(h)(8)(A) and (B). We see no abuse of discretion here.

Thomas' reliance on U.S. v. Perez-Reveles, 715 F.2d 1348 (9th Cir.1983) is misguided. In Perez-Reveles the Circuit Court reversed the district court because the lower court's rulings did not include explicit findings required by the Speedy Trial Act as to why the continuance was granted. The district court even failed to characterize the continuance as an "interest of justice continuance." The court labeled the case complex, yet gave no reason why it was. In the case sub judice the district court stated in a written order that the case was complex because it contained numerous defendants and thousands of financial documents. The court also explicitly mentioned it was granting an "ends of justice" continuance. Such an explanation, contained in a written order, sufficiently separates the case at bar from Perez-Reveles. A final case advanced by Thomas, U.S. v. Carrasquillo, 667 F.2d 382 (3rd Cir.1981) is also distinguishable. In that case no formal continuance was ever granted by the district court. Instead, the trial date was set beyond the speedy trial time limit by a deputy clerk at the request of defendant's attorney. Hence, judging whether the reason for the continuance in the case at bar was legally sufficient cannot be deduced by referring to Carrasquillo.

Thomas claims he did not have notice his codefendants were moving for a continuance and had no input into the motions. Yet Thomas was sent a court order of the granting of the continuance. Approximately one week later he appeared before the court and failed to assert any claim the continuance violated his speedy trial rights. Two weeks after that, he moved to dismiss his case by arguing the speedy trial act violation. Such conduct leaves Thomas' argument unpersuasive.

Defendant Thomas' final argument is that there was insufficient evidence for the jury to convict him of the crime of conspiracy beyond a reasonable doubt. We find no compelling reason to reverse the findings of the jury here. In U.S. v. Wiehoff, supra, we noted:

We do not find the evidence in this case so unconvincing. The facts of this case reveal there were numerous large transfers of money through the Farmers State Bank in Lewistown, Illinois. Thomas was the President of the bank. He had continuous dealings with defendant Troutman and provided Troutman with large unsecured loans. He also approved transfers of money to Troutman at key times, and often to the Troutman-controlled Sherwood Forrest account.

In U.S. v. Alexander, 743 F.2d 472 at 475 (7th Cir.1984), we stated:

We believe a rational trier of fact could have found beyond a reasonable doubt that defendant Thomas was involved in the conspiracy. We find no reason to reverse the jury's verdict. We AFFIRM the Thomas conviction.

Defendant Troutman raises a multitude of alleged errors, all of which he claims constitute grounds for reversal. The first series of arguments advanced consist of allegations of prosecutorial misconduct. Troutman's first argument has already been rejected — the use of codefendant Freel's testimony. In his second argument Troutman claims the government created reversible error by misleading and confusing the jury when arguing in its closing the correct standard for reasonable doubt. The argument is without merit. It must be remembered pursuant to Seventh Circuit law the trial court did not offer a definition of reasonable doubt. "We have repeatedly admonished district courts not to define `reasonable doubt' ... because often the definition engenders more confusion than does the term itself." U.S. v. Martin-Trigona, 684 F.2d 485, 493 (7th Cir.1982); see also, U.S. v. Allen, 596 F.2d 227, 230 (7th Cir.1979). Therefore, in the case sub judice what happened was counsel for both the government and codefendant Stoller advanced their own analyses of the reasonable doubt standard. Yet importantly defense counsel actually opened the discussion of reasonable doubt in its closing argument. The government only countered in rebuttal by using its own analogies. Unfortunately for Troutman, the law states that once defense counsel spoke on the matter, the government was allowed to rebut.

The above quote appears to describe exactly what happened in the case at bar. Further, it appears Troutman's attorney failed to object to either side's arguing of the reasonable doubt standard at trial. There is no sufficient evidence the government was deliberately trying to mislead the jury. We find nothing the government said demonstrably prejudicial. Therefore, this argument must fail.

During its closing argument the government queried that if Troutman allegedly had extensive business relationships with two people, Robert Marco and Gus Fields, who the government claims were names of nonexistent people, why didn't Troutman produce these individuals? Troutman claims this is a direct reference on his election not to testify. This argument is ridiculous. As the government correctly points out, any evidence of Fields' or Marco's existence could have been presented without Troutman testifying. We do not draw the inference, as Troutman does, that he should have taken the stand to explain where these people were.

Troutman argues the prosecution deliberately saved its closing argument concerning the two wire fraud counts until its rebuttal argument, denying him an opportunity to respond. It is true that the prosecution's addressing new arguments on rebuttal is undesirable. However, the issue then becomes whether this was prejudicial or harmless error. We believe it was the latter. Troutman fails to elaborate upon how he was prejudiced by the prosecution's conduct here. The government simply read the jury instructions and charging counts and pointed to exhibits that it believed would prove the wire fraud. Because Troutman claims there never was any wire fraud, the jury's task was merely to determine if the documentation was sufficient to prove guilt. Troutman fails to explain how he was prejudiced by the government's pointing to the documents and reciting the figures. We believe in this instance the prosecution's rebuttal was hardly so elaborate and hard-hitting to constitute reversible error.

Troutman also contends the prosecutor employed inflammatory remarks in his closing argument. The remarks referred to are as follows:

A second comment Troutman objects to is:

While such comments deserve the warning they got from the trial judge, we do not believe they created reversible error. After all, the government charged Troutman on various fraud and embezzlement counts. The fact that the government considered the defendants thieves could hardly have been news to the jury. The fact that the government referred to defendants as dishonest could hardly have been so persuasive and prejudicial after a long trial that it constitutes reason for reversal. The bottom line here is we believe the evidence — and not the comments — caused the jury to convict the defendants in this case.

Troutman advances several arguments regarding his conspiracy conviction. His first argument is his conspiracy count charged him with committing two offenses and was therefore duplicitous.2 This argument was rejected in Braverman v. U.S., 317 U.S. 49, 63 S.Ct. 99, 87 L.Ed. 23 (1942):

The Seventh Circuit recently reaffirmed this principle:

In sum, for the future this argument should be abandoned.

Troutman also claims the jury instruction relating to the conspiracy count was confusing and incomplete because the instruction did not define the mental states connected with the substantive offenses until the end. Yet Troutman never objected to the instruction or offered his own at trial. Very recently in U.S. v. Schultz, 769 F.2d 431, 432, (7th Cir.1985), we reaffirmed the following principle:

The jury instruction here was compatible with Seventh Circuit Instruction No. 5.11. We cannot conclude any mistake, if made at all, "had a probable impact on the jury's finding that the defendant was guilty." See Schultz, supra.

Troutman believes the evidence was not sufficient to allow a jury to find him guilty beyond a reasonable doubt on the conspiracy, mail fraud and wire fraud counts. We have already discussed the appellate standard of review employed when asked to overturn a jury verdict. See Wiehoff and Alexander, supra. We find no reason to overturn the verdicts. Concerning the conspiracy conviction, Troutman controlled commodity accounts in other person's names. He signed notes with phantom names. Several coconspirators testified financial statements were fraudulently created to justify large loans to accounts that Troutman had more than a passing interest in. In many respects a jury could find Troutman was the linchpin and that both he and Thomas fraudulently orchestrated money acquisitions and transfers to accounts for reasons other than stated publicly. As for the mail fraud conviction, a jury could have found Troutman used the phantom name of Marco as cover in receiving important mail, such as monthly bank and commodity statements, to perpetuate the banking scheme. Concerning the wire fraud conviction, the jury could have found any money transferred from the Troutman/Sherwood Forrest account was not only fraudulently obtained but also fraudulently transferred. In sum, defendant has failed to meet the stiff legal standard necessary for us to reverse his convictions.

Troutman's final argument is that the sentence he received was illegal. This is because the court imposed a five-year sentence and $10,000 fine and ordered defendant to stand committed until the fine is paid. There is nothing illegal about such a sentence. In fact it is expressly authorized under 18 U.S.C. § 3565(a)(1). Such a sentence is often employed in criminal tax cases. See U.S. v. Green, 735 F.2d 1203 (9th Cir.1984); U.S. v. Merritt, 639 F.2d 254 (5th Cir.1981). However, such sentences are not limited to criminal tax cases and may be imposed if a defendant is found able to pay the fine.

The sentence also placed Troutman on probation on Counts Four and Five "to commence upon the completion of parole," (parole presumably from the counts which put him under confinement — numbers One and Three). However, Troutman argues since the parole language is found in the paragraph addressing Counts Four and Five, and since there was no confinement associated with Counts Four and Five, he cannot be paroled on these counts (as it reads in that paragraph of the order). Therefore, he believes the sentences on all four counts should be vacated. The court either made a clerical error here or is just guilty of creating ambiguous verbiage. We assume the order should have read that he be placed on probation on Counts Four and Five "upon the completion of the sentence imposed on Counts One and Three," which may begin on completion of parole on Counts One and Three. However, we need not engage in such speculation here. Rule 36 of the Federal Rules of Criminal Procedure states the following:

We see no reversible error here. The answer is for the order to be corrected, not vacated.

The judgments as to both defendants Troutman and Thomas are hereby AFFIRMED, but the cause is remanded solely for the correction of the clerical error in the sentence.