FOR THE ELEVENTH CIRCUIT
_________________________________
DOCKET NO.: 96-4225
_________________________________
DANA SCHEER,
Appellant,
vs.
UNITED STATES OF AMERICA,
Appellee.
On Appeal from the United States District Court
for the Southern District of Florida
Miami Division
________________________________
INTIAL BRIEF OF APPELLANT
________________________________
Wm. J. Sheppard, Esquire
Florida Bar No.: 109154
D. Gray Thomas, Esquire
Florida Bar No.: 956041
SHEPPARD AND WHITE, P.A.
215 Washington Street
Jacksonville, Florida 32202
(904) 356-9661
COUNSEL FOR APPELLANT
UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_________________________________
DOCKET NO.: 96-4225
_________________________________
DANA SCHEER,
Appellant,
vs.
UNITED STATES OF AMERICA,
Appellee.
CERTIFICATE OF INTERESTED PERSONS
AND CORPORATE DISCLOSURE STATEMENT
1. Robert Erickson, Esquire
U.S. Department of Justice
2. Michael D. Foxman
Defendant
3. Jonathan Frenkel, Esquire
Counsel for Defendant Treadwell
4. M. Kalman Gitomer
Defendant
5. Thomas M. Gannon, Esquire
U.S. Department of Justice
6. Lothar R. Genge, Esquire
(Former) Assistant United States Attorney
7. Linda Collins Hertz, Esquire
Assistant United States Attorney
8. The Honorable William M. Hoeveler
United States District Judge
9. Gerald Houlihan, Esquire
Counsel for M. Kalman Gitomer
10. William A. Keefer, Esquire
United States Attorney
11. Jane W. Moscowitz, Esquire
Counsel for Defendant Scheer
12. Irvin B. Nathan, Esquire
Counsel for Defendant Treadwell
13. Jane Raskin, Esquire
Counsel for Defendant Foxman
14. Martin Raskin, Esquire
Counsel for Defendant Foxman
15. Dana M. Scheer
Appellant
16. Anne R. Schultz, Esquire
Assistant United States Attorney
17. Wm. J. Sheppard, Esquire
Counsel for Appellant
18. Jeffrey Sloman, Esquire
Assistant United States Attorney
19. D. Gray Thomas, Esquire
Counsel for Appellant
p-4 of 4
STATEMENT REGARDING ORAL ARGUMENT
This case presents substantial and complex
issues of law and fact, including significant constitutional issues. Accordingly,
undersigned counsel believes oral argument would aid the Court significantly
in resolving this appeal.
_____________________________
ATTORNEY
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CERTIFICATE OF TYPE SIZE AND STYLE
The size and style of type used in this
brief is 23 point, Courier 10.
-ii-
TABLE OF CONTENTS
Page
CERTIFICATE OF INTERESTED PERSONS . . .
. . . . . . C-1 of 4
STATEMENT REGARDING ORAL ARGUMENT . . .
. . . . . . i
CERTIFICATE OF TYPE SIZE AND STYLE . .
. . . . . . ii
TABLE OF CONTENTS . . . . . . . . . . .
. . . . . . iii
TABLE OF CITATIONS . . . . . . . . . .
. . . . . . vi
STATEMENT OF JURISDICTION . . . . . . .
. . . . . . xi
STATEMENT OF THE ISSUES . . . . . . . .
. . . . . . xii
STATEMENT OF CASE AND FACTS . . . . . .
. . . . . . 1
A. Course of Proceedings and
Dispositions in the Court Below . . . .
. 1
B. Statement of the Facts . . . . . . .
. . 4
C. Standard of Review . . . . . . . . .
. . 10
SUMMARY OF THE ARGUMENT . . . . . . . .
. . . . . . 12
ARGUMENT . . . . . . . . . . . . . . .
. . . . . . 15
I.
THE DISTRICT COURT ERRED IN FAILING
TO DISMISS THE INDICTMENT ON GROUNDS
OF PREJUDICIAL PREINDICTMENT DELAY . . . . . . 15
II.
THE COURT ERRED IN ITS FAILURE TO
DISMISS COUNT ONE PRIOR TO TRIAL
OR LIMIT TESTIMONY IRRELEVANT TO
DEFENDANTS ON TRIAL . . . . . . . . . .
. . . 22
III.
THE DISTRICT COURT ERRED IN
FAILING TO DISMISS OR, IN THE
ALTERNATIVE, GRANT A NEW TRIAL
BECAUSE OF THE GOVERNMENT'S
BRADY VIOLATIONS . . . . . . . . . . . . . . 27
A. The Prosecutor's Threat to
Jacoby . . . . . . . . . . . . . . 27
B. Failure to Produce Exculpatory
Grand Jury Testimony . . . . . . . 32
C. Failure to Produce Result of
Investigation of Professional
Misconduct by Prosecutor . . . . . 35
D. Brady Violations are Reviewed
for Cumulative Effect on the
Verdict . . . . . . . . . . . . . . 37
IV.
THE COURT ERRED IN FAILING TO
SEVER COUNTS AND DEFENDANTS . . . . . . . . . 38
V.
THE COURT ERRED IN JURY SELECTION
AND EXCUSAL AND FAILING TO GRANT
A MISTRIAL . . . . . . . . . . . . . .
. . . . 41
VI.
THE COURT ERRED IN PERMITTING THE
CASE TO BE INCURABLY INEFECTED
WITH PROSECUTORIAL MISCONDUCT . . . . .
. . . 42
VII.
THE COURT ERRED IN DENYING
MOTION FOR JUDGMENT OF ACQUITTAL . . . . . . . 48
CONCLUSION . . . . . . . . . . . . . . . . . . . . 54
CERTIFICATE OF SERVICE . . . . . . . .
. . . . . . 55
-v-
TABLE OF CITATIONS
Case(s) Page
Brady v. Maryland,
373 U.S. 83 (1963) . . . . . . . . . . . . . . . 27,37
Braxton v. United States,
858 F.2d 650 (11th Cir. 1988) . . . . . . . . . 53
Doggett v. United States,
505 U.S. 647 (1992) . . . . . . . . . . . . . . 18-19
Drake v. Kemp,
762 F.2d 1449 (11th Cir. 1985) (en banc) . . . . 47-48
Kastigar v. United States,
406 U.S. 441 (1972) . . . . . . . . . . . . . . 1
Kyles v. Whitley,
514 U.S. ___, 115 S.Ct. 1555,
131 L.Ed.2d 490 (1995) . . . . . . . . . . . . . 11,29,33, 36,37
Old Chief v. United States,
519 U.S. ___, 117 S.Ct. ____,
136 L.Ed.2d 574 (1997) . . . . . . . . . . . . . 23
Purkett v. Elem,
514 U.S. ___, 115 S.Ct. 179,
131 L.Ed.2d 834 (1995) . . . . . . . . . . . . . 41
Thompson v. Calderon,
120 F.3d 1045 (9th Cir. 1997) (en banc) . . . . . 47
U.S. v. Adams,
74 F.3d 1093 (11th Cir. 1996) . . . . . . . . . 11
United States v. Arnold,
117 F.3d 1308 (11th Cir. 1997) . . . . . . . . . 31
U.S. v. Alzate,
47 F.3d 1103 (11th Cir. 1995) . . . . . . . . . 31
United States v. Bagley,
473 U.S. 667 (1985) . . . . . . . . . . . . . . 32,37
United States v. Baker,
61 F.3d 317 (5th Cir. 1995) . . . . . . . . . . 53
United States v. Blakey,
14 F.3d 1557 )11th Cir. 1994) . . . . . . . . . 43
United States v. Brown,
79 F.3d 1550 (11th Cir. 1996) . . . . . . . . . 49-50
United States v. Castro,
829 F.2d 1038 (11th Cir. 1987) . . . . . . . . 23,40
United States v. Crouch,
84 F.3d 1497 (5th Cir. 1996) (en banc) . . . . . 20
United States v. Eason,
920 F.2d 731 (11th Cir. 1990) . . . . . . . . . 10,25-38-
39,48
United States v. Espinosa-Hernandez,
918 F.2d 911 (11th Cir. 1990) . . . . .
. . . . 36
United States v. Eyster,
948 F.2d 1196 (11th Cir. 1991) . . . . . . . . . 42
United States v. Foxman,
87 F.3d 1220 (11th Cir. 1996) . . . . . . . . . 1,3,10,16,
17-18,35
United States v. Francis,
131 F.3d 1452 (11th Cir. 1997) . . . . . . . . . 11
United States v. Grigsby,
111 F.3d 806 (11th Cir. 1997) . . . . . . . . . 11
United States v. Grossman,
117 F.3d 255 (5th Cir. 1997) . . . . . . . . . . 50
United States v. Hardy,
895 F.2d 1331 (11th Cir. 1987) . . . . . . . . . 45
United States v. Heller,
785 F.2d 1524 (11th Cir. 1986) . . . . . . . . . 41
United States v. Horseley,
864 F.2d 1543 (11th Cir. 1989) . . . . . . . . . 41
United States v. Jacoby,
955 F.2d 1527 (11th Cir. 1992) . . . . . . . . . 1,4
United States v. LeQuire,
943 F.2d 1554 (11th Cir. 1991) . . . . . . . . . 43
United States v. Levine,
546 F.2d 658 (11th Cir. 1977) . . . . . . . . . 24
United States v. Martel,
792 F.2d 630 (7th Cir. 1986) . . . . . . . . . . 53
United States v. Morris,
568 F.2d 396 (5th Cir., 1978) . . . . . . . . . 43
United States v. Pelullo,
14 F.3d 81 (3d Cir. 1994) . . . . . . . . . . . 10,26
United States v. Preciado-Cordobas,
981 F.2d 1206 (11th Cir. 1993) . . . . . . . . . 11,55
United States v. Ramos,
666 F.2d 469 (11th Cir. 1981) . . . . . . . . . 23
United States v. Schlei,
122 F.3d 944 (11th Cir. 1997) . . . . . . . . . 10-11,24
United States v. Skillern,
947 F.2d 1268 (5th Cir. 1991) . . . . . . . . . 45
United States v. Stahl,
616 F.2d 30 (2d Cir. 1980) . . . . . . . . . . . 46
United States v. Tokars,
95 F.3d 1520 (11th Cir. 1996) . . . . . . . . . 11
United States v. Treadwell and Scheer,
No. 96-4319 (11th Cir. 1996) . . . . . . . . . . 2-3
United States v. Schuchmann,
84 F.3d 752 (5th Cir. 1996) . . . . . . . . . . 51
United States v. Trenton Potteries, Co.,
273 U.S. (1927) . . . . . . . . . . . . . . . . 50
United States v. Talley,
108 F.3d 277 (11th Cir. 1997) . . . . . . . . . 11
United States v. Vebeliunias,
76 F.3d 1283 (2d Cir. 1996) . . . . . .
. . . . 39
Constitution
U.S. Const. Amend. VI . . . . . . . . .
. . . . . 18
Rules and Statutes
18 U.S.C. 657 . . . . . . . . . . . . . . . . . 5,49,49,
52,53,54
18 U.S.C. 1014 . . . . . . . . . . . . . . . . 5,48-49,
53,54
18 U.S.C. 3282 . . . . . . . . . . . . . . . . . 20
18 U.S.C. 3293 . . . . . . . . . . .
. . . . . . 20
-x-
STATEMENT OF JURISDICTION
Jurisdiction of this Court is invoked pursuant
to 28 U.S.C. 1291. The district court entered its judgment on February
1, 1996. Mr. Scheer timely filed his notice of appeal on February 8, 1996.
On September 6, 1996, this Court stayed briefing in the present appeal
pending proceedings in the district court pursuant to United States v.
Ellsworth, 814 F.2d 613 (11th Cir. 1987). The district court denied Mr.
Scheer's post-judgment motion on June 25, 1997, and denied his motion for
reconsideration of that Order and for production of specific Brady material
on October 31, 1997. The Court subsequently initiated briefing.
-xi-
STATEMENT OF THE ISSUES
I.
THE DISTRICT COURT ERRED IN FAILING TO DISMISS THE INDICTMENT ON GROUNDS OF PREJUDICIAL PREINDICTMENT DELAY.
II.
THE COURT ERRED IN ITS FAILURE TO DISMISS COUNT ONE PRIOR TO TRIAL OR LIMIT TESTIMONY IRRELEVANT TO DEFENDANTS ON TRIAL.
III.
THE DISTRICT COURT ERRED IN FAILING TO DISMISS OR, IN THE ALTERNATIVE, GRANT A NEW TRIAL BECAUSE OF THE GOVERNMENT'S BRADY VIOLATIONS.
IV.
THE COURT ERRED IN FAILING TO SEVER COUNTS AND DEFENDANTS.
V.
THE COURT ERRED IN JURY SELECTION AND EXCUSAL AND FAILING TO GRANT A MISTRIAL.
VI.
THE COURT ERRED IN PERMITTING THE CASE TO BE INCURABLY INFECTED WITH PROSECUTORIAL MISCONDUCT.
VII.
THE COURT ERRED IN DENYING MOTION FOR JUDGMENT OF ACQUITTAL.
-xii-
STATEMENT OF THE CASE AND FACTS
A. Course of Proceedings and Dispositions in the Court Below.
Dana Scheer, formerly an associate attorney with Blank, Rome, Comisky and McCauley ("Blank, Rome"), was charged in an indictment along with former Blank, Rome partners Michael D. Foxman, M. Kalman Gitomer and Kenneth Treadwell and banker William Frame on January 29, 1993. [R. 1 - 436]. The indictment charged conspiracy to misapply funds of Sunrise Savings and Loan Association, misapplication of such funds and making material false statements in certain financial documents. [R. 1 - 436]. A predecessor case was brought against bankers and borrowers. See United States v. Jacoby, 955 F.2d 1527 (11th Cir. 1992).
Prior to trial, the district court granted Foxman's motion to dismiss the indictment for prejudicial preindictment delay. [R. 2 - 685; see United States v. Foxman, 87 F.3d 1220 (11th Cir. 1996)]. Gitomer was severed from the case because of illness. [2 Tr. 129-30]. Treadwell was granted dismissal and judgment of acquittal for Kastigar(1) violations, duplicity and insufficiency of the evidence following trial. [R. 4 - 817]. Frame, who was severed from the Jacoby trial after a heart attack, see Jacoby, 955 F.2d at 1530, died prior to sentencing in this case. [R. 4 - 847, 848, 862].
The district court denied Scheer's motions to disqualify the prosecutor, dismiss the indictment for due process violations, dismiss the indictment based on time bar and prejudicial preindictment delay, sever the trials of co-defendants and strike certain allegations from the indictment. [R. 2 - 691]. The district court also denied rehearing of these matters. [R. 3 - 694].
Trial commenced on October 17, 1994, and continued until the jury verdict on January 18, 1995. [R. 3 - 695-755]. Mr. Scheer was found guilty as to five counts of the indictment and not guilty as to another eight counts. [R. 3 - 754, 761]. Mr. Scheer timely filed a post-trial motion for judgment of acquittal, arrest of judgment or new trial, and adopted Treadwell's post-trial motions. [R. 3 - 763, 765, 788, 789; R. 4 - 813]. The district court denied Mr. Scheer's post-trial motions other than granting judgment of acquittal as to the conspiracy charge. [R. 4 - 817].
The judgment of acquittal as to the conspiracy count resulted from failure of the evidence to establish a single conspiracy. [R. 4 - 817 - 28-35]. The court also found that Mr. Scheer suffered substantial prejudice from this failure. "By introducing the alleged crimes of Foxman and Gitomer, the prosecution succeeded in imputing to [Scheer] defendants acts in which [he] did not participate." [R. 4 -817 - 35]. The court found that the prosecution was motivated to introduce this evidence in order "to prejudice these defendants by tainting them with crimes in which they played no role." [R. 4 - 817 - 37]. Additionally, the district court found that the Government's attempt to charge a single conspiracy resulted from improper Government attempts to circumvent the statute of limitations as to Foxman. The Government itself dismissed its appeal of the judgment of acquittal on the conspiracy count. See United States v. Treadwell and Scheer, No. 96-4319 (11th Cir. Oct. 29, 1996).
The court further concluded that the Government engaged in inexcusable Brady violations, prejudiced Scheer by producing evidence of improper acts by the Blank, Rome law firm (which was not indicted) in general, violated the court's pretrial order prohibiting the Government from presenting evidence or argument regarding the total fees earned by Blank, Rome from Sunrise, engaged in improperly prejudicial questioning, including over 250 leading or argumentative questions to which objections were sustained, and engaged in clear transgressions that sacrificed "the pure pursuit of justice" for "the Government's desire to implicate as many members of the Blank, Rome law firm as possible." [R. 4 - 817 - 38-42]. The court, however, found the Government's conduct not sufficiently prejudicial to warrant remedy other than on the conspiracy count. The court further found that the prosecutor had improperly threatened the single most important government witness, Jacoby, but found that the conduct did not warrant granting a new trial. [R. 4 - 817 - 43-46]. Mr. Scheer unsuccessfully moved for reconsideration, [R. 4 - ___, 823, 829, 839, 863].
On February 1, 1996, Mr. Scheer was sentenced to a term of four years probation and a $10,000.00 fine. [R. 4 - 867]. He timely filed his notice of appeal on February 8, 1996.
Prior to briefing, Mr. Scheer moved this
Court to remand for reconsideration in light of this Court's opinion in
United States v. Foxman, supra, and subsequently filed appropriate motions
in the district court for certification of its intent to dismiss the indictment
and for discovery of certain Brady material that did not exist at the time
of trial. The district court denied these motions. This appeal follows.
B. Statement of the Facts
Dana Scheer was an associate in the West Palm Beach, Florida, office of Blank, Rome in 1984. His immediate supervisor was partner Kenneth Treadwell. Among the clients with whom Mr. Scheer worked was Sunrise Savings and Loan Association, which had been founded by Blank, Rome partner Michael Foxman in 1980. The Chief Executive Officer of Sunrise in 1984 was Robert Jacoby. Among the borrowers using Sunrise's services were William Frederick and Thomas Moye.
By 1984, Sunrise had loaned Frederick and Moye more than $150 million for various real estate development projects. Frederick and Moye overdrew accounts by more than $4 million. United States v. Jacoby, 955 F.2d 1527, 1532 (11th Cir. 1992). To resolve these overdrafts, bank officials decided to finance purchases of real estate owned by Frederick and Moye by purchasers they selected. Id. at 1532-33, 1543. Scheer's role was solely as outside closing attorney. [R. 11 - 1020]. He was instructed by Jacoby to close these loans on August 30, 1984, notwithstanding a number of questions that he raised to Jacoby regarding the adequacy of documentation for the loans. 955 F.2d at 1534-35. Jacoby described Mr. Scheer as a "nuts and bolts transactional lawyer" involved in real estate closings relating to Sunrise. [R. 4 - 850 - 938]. He described Treadwell, Gitomer and other management attorneys with Blank, Rome as working on "bigger picture stuff," and Mr. Scheer as a closing attorney who reported to Treadwell. [R. 4 - 850 - 939-40].
Two of the three loan closings on August 30, 1984, constituted the basis for all four counts of conviction for Mr. Scheer, two of misapplication for bank funds in violation of 18 U.S.C. 657 and two of making false statements in loan documents in violation of 18 U.S.C. 1014. Mr. Scheer was acquitted of other 657 and 1014 charges. [R. 3 - 754, 761].
Jacoby testified at length that he and Foxman committed misconduct in diverting Sunrise funds to a Pennsylvania savings and loan, Crusader, which Foxman had established prior to Sunrise. The Government acknowledged that Treadwell and Scheer were not involved in any matters relevant to Crusader. [R. 4 - 850 - 983]. The defense requested dismissal of count 1, severance, mistrial and preclusion of certain evidence based on the enormity of prejudice arising from the Crusader evidence. [R. 4 - 850 - 986]. The district court warned the Government that its presentation of the Crusader evidence, if not linked to the Frederick matters as a single conspiracy, could not be cured by a jury instruction. [R. 11 - 981]. However, despite this warning, a substantial portion of the Government's case covered the irrelevant Crusader matters, which the district court found after trial were not a part of the same conspiracy as the Frederick matters. [R. 11 - 988-1017].
Jacoby's only testimony purporting to link the Crusader and Frederick matters as a single conspiracy, that the legal advice he had gotten from Foxman and Gitomer was "characteristic" in both circumstances, was stricken on motion. [R. 13 - 1195]. He admitted that the Crusader and Sunrise matters were otherwise unrelated. [R. 14 - 1682; R. 4 - 87 - 32].
Frederick and Moye began securing loans from Sunrise beginning in about 1982 to develop shopping centers. [R. 11 - 1018-20]. Sunrise ultimately structured certain loans in order to increase the loan amounts advanced to Frederick and Moye in the face of restrictions on the maximum amounts of loans which, under civil regulations, could not exceed certain amounts to a single borrower. [R. 11 - 1020-44]. To this end, other individuals served as guarantors of loan repayments. [R. 11 - 1051-52]. Sunrise ultimately loaned Frederick, Moye and others associated with them in excess of $120 million, and further loaned to them approximately $2 million for purchase of a boat, entered into a joint venture agreement with Frederick and Moye regarding certain ocean front property and covered a bad check that Frederick had written to purchase a 26-carat diamond, as well as being involved with Frederick and Moye as to other financial matters. [R. 4 - 850 - 1053-62]. By late 1983, Frederick and Moye began to fall behind on their loans and were permitted by Sunrise to obtain additional loans through the use of large overdrafts that ultimately reached some $4 million. [R. 4 - 850 - 1063-67]. The Government conceded that Mr. Scheer had no involvement in most of these matters. [R. 4 - 850 - 893].
To reconcile the Frederick overdrafts, a number of transactions were executed on August 30, 1984. Jacoby needed the transactions closed prior to August 31 so Sunrise would not receive a negative evaluation by its auditors. [R. 4 - 854 - 1717-22]. Certain real properties were sold by Frederick or his entities to third parties. The proceeds of these secured loans covered the otherwise unsecured overdrafts. Three individuals, alleged by the Government to have been nominee borrowers, executed mortgages in favor of Sunrise. Sunrise executive Joseph Tabor admitted that the borrowers were chosen by participants in a meeting at which Mr. Scheer was neither involved nor present, but rather was attended by Jacoby, Tabor, Frame, mortgage broker Charles Powell and Ron Berkovitz, a Powell associate. [R. 37 - 3338-40]. The individuals chosen were Frederick's relatives or business associates. [R. 4 - 852 - 1287-88]. The August 30th transactions were approved by the Sunrise executive committee on August 28, 1984. [R. 4 - 852 - 1295; R. 4 - 855 - 1925-26].
Despite Scheer's expressed questions, Jacoby told Scheer that his concerns were unwarranted and to close the loans. Jacoby, 955 F.2d at 1534-35. At Jacoby's own trial, the prosecutor had contended, and the court had found, that Scheer's memorandum regarding the closings was reliable. Id. However, at Scheer's trial, the Government and Jacoby challenged the truthfulness of the Scheer memorandum. [R. 4 - 852 - 1303-06]. Substantial argument resulted from the Government's complete reversal of position on this issue, and others. [R. 4 - 13 - 1329-39].
Jacoby admitted that he approved the August 30th transactions. [R. 4 - 854 - 1778]. He admitted directing Tabor and Frederick to get the transactions done. [R. 4 - 854 - 1736]. He also admitted that Scheer had not advised him to conduct the August 30th transactions. [R. 4 - 855 - 1924]. He testified that he had little dealing with junior partners or associates of Blank, Rome. Jacoby testified that Mr. Scheer never told him not to complete the closings. [R. 4 - 855 - 1865; R. 4 - 856 - 2186].
Lucy Holton, a Blank, Rome real estate paralegal, [R. 33 - 2529-36], testified that Mr. Scheer usually was assigned by Blank, Rome to handle closings on Frederick loans for Sunrise. [R. 33 - 2543]. She also testified that she remembered few particulars because of the passage of time. [R. 33 - 2557]. Ms. Holton prepared the forms for the August 30th closings. [R. 33 - 2559-60]. She testified that Mr. Scheer was the "low man on the totem pole," and was supervised by others of higher rank with Blank, Rome. [R. 33 - 2636]. Work he performed was basic nuts and bolts work. [R. 33 - 2637].
Ms. Holton, Tabor and expert witness Charles Harris testified that Mr. Scheer was not responsible for ensuring or even researching the credit worthiness of borrowers or the value of real estate used as collateral. [R. 33 - 2638; R. 37 - 3436; R. 50 - 6484, 6492]. Although the Government sought to make much of checks related to the August 30th transactions that had been voided by cutting off signatures, [R. 33 - 2601-29], Ms. Holton testified that she procured new checks to reflect the proper borrower and parcel of land used as security and was unaware of any direction by Scheer or anyone else to obliterate or remove any portion of any of the checks. [R. 33 - 2658-60].
Ms. Holton was present during the Wood closing, and she testified that Mr. Scheer answered questions of borrowers and provided them copies of their loan documents. [R. 33 - 2663-64]. The borrowers were sent copies of loan documents. [R. 33 - 2666-79]. Her testimony, and that of Berkovitz, failed to support Wood's claim that Scheer refused to let Wood read the documents and laughed at his request to do so. Wood acknowledged his intent to complete a development as a result of the transactions. [R. 43 - 4450-52, 4458-59].
Virginia Valosin, an employee and cousin of Frederick, [R. 40 - 3868], was told by Frederick or Moye to sign the loan documents. [R. 40 - 3873]. She testified that she signed a false loan to one borrower statement but that she did in fact own stock in a real estate development that secured her loan. [R. 40 - 3879-84]. However, no evidence was presented that Mr. Scheer was actually involved in the Valosin closing.
Ms. Valosin testified that she followed the directions of Frederick, who was her benefactor and who she trusted, with full knowledge that she was signing loan documents to assist in resolving problems with some of Frederick's outstanding debts to Sunrise. [R. 40 - 3910-18]. She testified: "I thought I was borrowing $500,000.00 that would have been guaranteed by a portion of property that they were transferring to my name." [R. 40 - 3920]. Ms. Valosin further acknowledged that Frederick often asked her to sign forms and do things for his company without a full understanding of the matters at issue, and did so at his request. [R. 40 - 3925-26].
The August 30th transactions transformed
the previously unsecured overdraft debts of Frederick and Moye into debts
secured by real property. [R. 37 - 3451, 3457-64]. Tabor testified that
Scheer's extra efforts ensured that Sunrise was secured in the transactions.
[R. 37 - 3468]. Sunrise ultimately realized a profit from the August 30th
transactions.
C. Standard of Review
Failure of the trial court to dismiss an indictment on the basis of preindictment delay is reviewed for the reasons for delay and resulting prejudice. United States v. Foxman, 87 F.3d 1220 (11th Cir. 1996).
Review of whether evidence admitted solely as to an invalid count prejudiced a defendant as to whether other counts is for determination of whether the error was harmless beyond a reasonable doubt, in other words, whether the reviewing court is convinced that the evidence did not influence the verdict on the remaining counts. United States v. Eason, 920 F.2d 731, 735 (11th Cir. 1990); United States v. Pelullo, 14 F.3d 81, 900 (3d Cir. 1994). Matters relating to alleged Brady violations are reviewed de novo for whether their cumulative effect undermines confidence in the verdict. United States v. Schlei, 122 F.3d 944, 989 (11th Cir. 1997). Kyles v. Whitley, 514 U.S. ___, ___, 115 S.Ct. 1555, ___, 131 L.Ed.2d 490, 506-07 (1995).
Failure of a district court to sever counts or defendants from trial is reviewed for abuse of discretion in light of uncured prejudice. United States v. Talley, 108 F.3d 277, 279 (11th Cir. 1997); United States v. Francis, 131 F.3d 1452, 1459 (11th Cir. 1997).
Review of Batson claim is for clear error. United States v. Tokars, 95 F.3d 1520 (11th Cir. 1996).
Review of a claim of prosecutorial misconduct is a determination of whether the conduct is sufficiently pronounced and persistent as to permeate the entire trial, and works to prejudicially affect the substantial rights of the accused by undermining confidence in the outcome. United States v. Tokars, 95 F.3d 1520 (11th Cir. 1996); United States v. Adams, 74 F.3d 1093 (11th Cir. 1996).
Sufficiency of the evidence is reviewed de novo, viewing the evidence in the light most favorable to the Government. United States v. Grigsby, 111 F.3d 806 (11th Cir 1997).
The cumulative effect of errors that individually
may be harmless is reviewed for prejudice to the right to a fair trial.
United States v. Preciado-Cordobas, 981 F.2d 1206 (11th Cir. 1993).
SUMMARY OF THE ARGUMENT
A 1993 indictment with a duplicitous conspiracy count, which allowed introduction of much prejudicial and otherwise inadmissible evidence, resulted in convictions of Dana Scheer on four counts relating to two loan closings that occurred in 1984, when he was a young associate at a 200-member law firm that represented a troubled savings and loan association. This appeal presents substantial errors that individually and cumulatively require reversal.
This case should have been dismissed prior to trial on the basis of prejudicial preindictment delay. A substantial delay in initiating this prosecution was caused by deliberate tactical decisions of the Government in order to gain an advantage over all the defendants in this case. This delay resulted in actual, substantial prejudice to Mr. Scheer, which is demonstrated in the record. Further, less tangible prejudice also resulted because the delay presumptively compromised the reliability of trial.
The trial in this case was unfair because the district court, relying on false representations of the prosecutor, failed to dismiss the conspiracy count in this case prior to trial. Following trial, the conspiracy count was dismissed for prejudicial variance and duplicity. The Government erroneous presented a large volume of evidence unrelated to any defendant on trial, and particularly unrelated to Mr. Scheer, which the Court found following trial that Mr. Scheer was prejudiced in the jury room by evidence rendered inadmissible because of the invalidity of the count to which it pertained.
The Government committed numerous Brady violations before, during and after trial in this case, which individually and cumulatively not only undermined but actually vitiated confidence in the verdict. The prosecutor threatened to jail the witness whose testimony the jury relied upon for its determination of all counts, which threat was neither known nor reasonably could have been known to the defense until it was discovered following trial. The Government further delayed production of exculpatory grand jury testimony in a manner that prejudiced the trial itself and resulted in the unavailability of an exculpatory witness for Mr. Scheer. The Government further continues to this day to withhold the results of an investigation of professional misconduct by the prosecutor in this case, which matters necessarily must be favorable to the defense. The court below further erred by failing to consider the cumulative effect on the verdict of all of the violations that occurred in this case, which the district court found inexcusable.
The district court should have severed counts and defendants in light of the dismissal prior to trial of one defendant and the cumulative prejudicial effect of evidence of an invalid conspiracy charge. Mr. Scheer was tried in reliance on the conspiracy charge found by the district court following trial to be invalid for duplicity. This error was further compounded by the lower court's failure to sever certain counts of the indictment from one another. The district court's failure in this regard prejudiced Mr. Scheer's substantial rights.
The district court mistakenly permitted the Government to exercise a peremptory challenge to excuse the last potential juror of the same ethnic group as Mr. Scheer. The court failed to apply the correct standard in considering Mr. Scheer's objection. The court further erred in failing to grant a mistrial following a potential juror's comment that prejudicially impacted the jury. The court further erred in dismissing a juror late in the trial after that juror had been arrested through no fault of his own, yet no appreciable delay would have resulted from permitting the juror to return.
The case was prejudicially infected by prosecutorial misconduct before and during the trial, clearly affecting the jury's verdict. The matters addressed above, compounded by grossly improper tactics, argument and questioning by the prosecutor, and the Government's irreconcilably contradictory positions in this trial as contrasted with a previous trial relating to the same transactions, clearly affected the verdict.
As a matter of law, the evidence is insufficient
to sustain Mr. Scheer's convictions. Even in the light most favorable to
the Government, federally insured bank funds were not misapplied, alleged
false statements were simply not false and the evidence simply fails to
establish that Mr. Scheer possessed criminal intent. Accordingly, for all
of these reasons, individually and cumulatively, the judgment below should
be reversed.
ARGUMENT
I.
THE DISTRICT COURT ERRED IN FAILING TO DISMISS THE INDICTMENT ON GROUNDS OF PREJUDICIAL PREINDICTMENT DELAY.
The district court erroneously denied Mr. Scheer's (and Treadwell's) Motion to Dismiss the Indictment for Prejudicial Preindictment Delay. Prior to trial, the Court granted such relief to Mr. Foxman and, following the Government's appeal of the Foxman dismissal, reaffirmed that ruling upon making additional findings. [R. ___ - 1027, 1029]. The 1993 indictment in this case alleged criminal conduct by outside counsel to a savings and loan association during the period 1979 through September 1984. The Department of Justice had declined to authorize indictment of the attorneys both in 1987 and in 1989, when indictment of the law firm also was declined. [R. 13 - 1417-19].
The grand jury investigation of Sunrise had begun by early 1985. By May or June 1986, the Government informed Scheer and Treadwell that they were targets of the investigation, commencing a period of seven years of anxiety and substantial loss of business because of damage to his reputation resulting from leaks regarding the investigation. [R. 2 - 648 - 5-6 and Exh. 5]. The Department of Justice declined to authorize indictment of the attorneys in 1987 [R. 13 - 1417-19]. The prosecutor then sought to obtain convictions of Sunrise officers and borrowers and thereupon compel their testimony against the attorneys. [R. 13 - 1655-57]. However, despite having obtained these predicate convictions in 1989, the Government waited another three years to secure such compelled testimony. The pendency of the appeal in Jacoby in no way impeded the Government in securing compelled testimony from the witnesses sought by the prosecutor. [R. 2 - 648 - 9-10 and Exh. 2 (Affidavit of Dan K. Webb)].
The prosecutor also proposed indicting Scheer and Treadwell in 1989, which proposal was leaked to the public and caused further anguish and financial harm to Scheer, including loss of almost all of his clients. [R. 2 - 648 - 11-12 and Exh. 5]. However, the Department of Justice again declined to authorize an indictment of Mr. Scheer. [R. 10 - 944, 962-63; R. 14 - 1659]. Following affirmance of Jacoby's conviction in 1992, he testified before the grand jury. United States v. Foxman, 87 F.3d 1220, 1223 (11th Cir. 1996). The Government admitted that the only substantial addition to the Government's evidence produced by the Jacoby grand jury testimony in 1992 was information relating to Mr. Foxman and the Crusader Savings and Loan Association. [R. 11 - 986-9]. However, in January 1993, the proposed indictment of the attorneys was approved. [R. 2 - 648-714].
Between 1989 and 1993, three witnesses who would have aided in the defense of this case had died, Paul Hykel, Lake Lytal and Allen Keiser. [R. 2 - 648, 16-20]. Moreover, the delay resulted in substantially dimmed memories of witnesses. Government witnesses testified more than 1,000 times during the trial of this case that they could not remember events or circumstances about which they were asked. [R. ___ - 989 (Exh. C)].
Although a potential defendant's primary protection against a stale prosecution is provided by the applicable statute of limitations, due process can require dismissal of an indictment brought even within the limitation period. United States v. Foxman, 87 F.3d 1220, 1222 (11th Cir. 1996) (citations omitted). Dismissal is warranted where preindictment delay was the result of "a deliberate act by the Government designed to gain a tactical advantage," causing prejudice to the defendant. Id.
A defendant need not show bad faith or a sinister motive by a prosecutor in order to demonstrate that the delay resulted from a deliberate Government act designed for a tactical advantage. Foxman, 87 F.3d at 1223, n. 2. "The critical element is that the Government makes a judgment about how it can best proceed with litigation to gain an advantage over the defendant and, as a result of that judgment, an indictment is delayed." Id. The Government's mere desire that Jacoby be a better witness following affirmance of his convictions, the Government's asserted reason for delay in this case, constitutes a deliberate litigation strategy, the consequences of which may be visited upon the Government. Id. at 1223.
The court found on remand in Foxman that the delay from 1989 until 1993 in securing the indictment "was the result of the United States' attempt to buttress the influential strength of Jacoby's testimony by waiting until the court of appeals ruled conclusively on his appeal." [R. ___ - 1029 - 10]. The court also concluded that the "Government's strategy clearly was designed to obtain a tactical advantage -- in the form of greater and more damaging evidence -- 'against all persons Jacoby implicated, with Foxman simply being one of those persons.'" [R. ___ - 1029 - 12], quoting, Foxman, 87 F.3d at 1224]. The court found that the Government's strategy, adopted in 1989, "was a deliberate act designed to obtain a tactical advantage over all persons [Jacoby] implicated." [R. ___ - 1029 - 12].
Given these findings, the sole issue relating to Mr. Scheer as to preindictment delay is the issue of prejudice. Mr. Scheer has demonstrated both substantial actual prejudice resulting from the delay, and also is entitled to a presumption of prejudice on the basis of the highly unusual circumstances of this case. In Foxman, supra, this Court rejected application of Doggett v. United States, 505 U.S. 647 (1992), to the due process analysis only insofar as the district court had found in Mr. Foxman's case that it need not reach the inquiry of "whether or not the delay was the product of a deliberate act by the Government designed to gain a tactical advantage." 87 F.3d at 1222. This Court stated in Foxman that a showing of actual substantial prejudice is necessary in addition to a showing that the delay was a deliberate act of the Government to gain a tactical advantage. Id.
However, although Doggett is a Sixth Amendment speedy trial clause case, its principles apply in the highly unusual circumstances of the present appeal. First, the due process and speedy trial inquiries may both appropriately address prejudice in the form of the anxiety and concern of the accused and the possibility of impairment of a defense by dimming memories and loss of exculpatory evidence. Doggett, 505 U.S. at 654. Both factors constitute forms of substantial and actual prejudice, and are present in this case. Where Mr. Scheer was subject to repeated attempts to indict him, in 1987 and 1989, which attempts were declined by the Department of Justice, his anxiety during this substantial period of time, and his actual loss of reputation and legal business as a result of attendant publicity during this period, constitutes one form of prejudice by itself. Additionally, where more than 1,000 instances occurred at trial of failure of Government witnesses to recollect matters about which they were asked, his defense was substantially impaired. Furthermore, Mr. Scheer lost exculpatory evidence by virtue of the deaths of three witnesses, particularly between the time of Jacoby's conviction in 1989 and his compelled grand jury testimony three years later.
Additionally, a delay of the sort that occurred in this case, as a result of deliberate governmental tactics, implicates additional and even unidentifiable prejudices. "Thus, we generally have to recognize that excessive delay presumptively compromises the reliability of a trial in ways that neither party can prove, or for that matter, identify." Doggett, 505 U.S. at 655. Although not the sole determinant of the inquiry, this less tangible loss of reliability of trial "is part of the mix of relevant facts, and its importance increases with the length of delay." Id. at 655-56.
The Government strategy chosen deliberately, delayed trial at least four years. The indictment in 1993 was timely only because of the fortuity of the congressional extension of the statute of limitations on August 9, 1989, a mere 21 days before the matters of which Mr. Scheer stands convicted would have been time barred by operation of the previously applicable period of limitations, five years. Compare 18 U.S.C. 3282; 18 U.S.C. 3293.
On reviewing this issue as to Mr. Scheer following the remand in Foxman, the district court erroneously overlooked the death of at least three witnesses for the defense during the period of the Government's intentional delay and erroneously found that more than 1,000 instances of memory failure by Government witnesses failed to support Mr. Scheer's position but did support Foxman's. [R. ___ - 1028 - 3; R. ___ - 1029 - 5 and n.9]. The existence of documentary evidence, cited by the district court, only magnifies the prejudicial impact on Mr. Scheer of the inability of witnesses to illuminate important circumstances surrounding the transactions and Mr. Scheer's level of involvement, knowledge and intent, undermining the reliability of the verdict. The court's finding of prejudice to Foxman prior to trial, but no prejudice to Mr. Scheer even after trial, is not only ironic but also is legal error.
The degree of actual prejudice resulting from preindictment delay can often be understood in light of evidence actually adduced during trial. See United States v. Crouch, 84 F.3d 1497, 1516-17 (5th Cir. 1996) (en banc). The Government's delay provided no additional testimony against Mr. Scheer by Skubal and little specific testimony against Mr. Scheer by Jacoby. Jacoby's testimony regarding Mr. Scheer was conclusory, yet critically, the jury's verdict as to Mr. Scheer and Mr. Treadwell precisely tracked that conclusory testimony. [R. 857 - 2388]. See also, infra at Argument III A. The witness perhaps in the best position to have observed Mr. Scheer at the relevant time was Lucy Holton, who testified, "This was 10, 11 years ago. There is not a whole lot I remember." [R. 33 - 2557]. In fact, both favorable witnesses, such as Ms. Holton and Charles Powell, and clearly hostile witnesses, particularly Wood and Berkovitz, admitted failures of memory regarding not only events that occurred in 1984, but even regarding what persons were present at certain transactions.
Additionally, Mr. Scheer was prejudiced by the unavailability of Mr. Foxman and Mr. Treadwell(2) to testify on his behalf. Clearly, Foxman, like Treadwell, could have testified to Mr. Scheer's ministerial role in the transactions at issue as an associate, and that Mr. Scheer was in no position to make any independent decisions regarding the transactions. Mr. Foxman, who also could have challenged Jacoby's veracity, was unavailable only because of the Government's duplicitous attempt to circumvent the statute of limitations and the Government's appeal of his pretrial dismissal.
Under all these circumstances, the prejudice
to Mr. Scheer is palpable. Further intangible prejudice to the reliability
of the trial must be presumed. Accordingly, the judgment should be reversed
and the indictment dismissed.
II.
THE COURT ERRED IN ITS FAILURE TO DISMISS COUNT ONE PRIOR TO TRIAL OR LIMIT TESTIMONY IRRELEVANT TO DEFENDANTS ON TRIAL.
The conspiracy count of the indictment contains a series of six allegations, involving (1) Crusader Savings and Loan, and then the Frederick matters, (2) the "Sanctuary" waterfront lot loan involving Frederick, (3) extension of credit to William Frederick through overdrafts, (4) diversion of funds for Frederick's purchase of a diamond, (5) the August 30, 1984 loan closings, and (6) the Seawalk sale in September, 1984. [R. 1 - 436]. Foxman and Gitomer were the only defendants with any connection with the Crusader matters. Foxman was dismissed prior to trial, and Gitomer severed following jury selection. The Government additionally agreed that neither Scheer nor Treadwell (nor even any other Blank, Rome lawyer) was involved with the Sanctuary transaction, the diamond transaction or the loans extended through overdrafts. The only matters left in the indictment as to Mr. Scheer related to the August 30, 1984 loans and the Seawalk sale. The other Frederick matters involved only Mr. Frame, who was on trial in 1994 because he had suffered a heart attack during the 1989 Jacoby trial. With first Foxman and then Gitomer removed from the trial by the conclusion of jury selection, the overwhelming quantum of evidence involving the conspiracy related to matters in which Scheer and Treadwell were not involved.
The court relied on the prosecutor's representations that the Government's evidence would link the Crusader and Frederick matters into a single conspiracy. The prosecutor's assurance proved conclusively false, resulting in post-trial judgment of acquittal as to the conspiracy count based on prejudicial variance and duplicity. The Government's false assurance allowed the prosecutor "to structure a trial in whatever way would produce the maximum unfair prejudice consistent with relevance" to the conspiracy count as constructed by the Government. Old Chief v. United States, 519 U.S. ___, ___, 117 S.Ct. ___, ___, 136 L.Ed.2d 574, 589-90 (1997). The Government thereby presented evidence that the trial court later found both inadmissible and highly prejudicial. [R. 4 - 817 - 35-37]. The court erred, however, in concluding that this substantial prejudice did not infect the verdict as to other counts.
Under the circumstances, count one should have been dismissed prior to trial for duplicity. SeeUnited States v. Ramos, 666 F.2d 469, 473 (11th Cir. 1981); United States v. Castro, 829 F.2d 1038, 1046 (11th Cir. 1987). Moreover, the district court abused its discretion in permitting evidence "involving Blank, Rome attorneys between 1979 and 1983" that the court later found, [R. 4 - 817 - 35-38], was inadmissible (other than as to the invalid count) and unfairly prejudicial. Old Chief, 517 U.S. at ___, 117 S.Ct. at ___, 136 L.Ed.2d at 589-90. These circumstances further demonstrate not only severe prejudice from the introduction of evidence irrelevant to any defendant on trial, but also further prejudice from the district court's refusal to sever at various stages of the proceeding. United States v. Levine, 546 F.2d 658 (11th Cir. 1977).
One of the three dangers of a duplicitous count in an indictment is that a trial court may have difficulty determining the admissibility of evidence. United States v. Schlei, 122 F.3d 944, 977 (11th Cir. 1997). The district court had determined the Crusader evidence admissible solely based on the Government's false promise to establish a single conspiracy. The Government's misrepresentation convinced the court not to dismiss the conspiracy charge prior to trial, and resulted in the prosecutor being "able to enter into evidence events involving Blank, Rome attorneys between 1979 and 1983, which it otherwise would not have been able to introduce." [R. 4 - 817 - 35].
The trial court further noted that the Government's construction of count one was a deliberate tactic to indict Foxman, whose prosecution otherwise was barred by the statute of limitations. [R. 4 - 817 - 36-37]. Moreover, the Government had held discussions with Jacoby for years, at least since 1991, had presented his testimony to a grand jury in 1992 and had met numerous times with him in preparation for his trial testimony in this case. After being challenged by the court, the prosecutor continued to claim that it could link the "Crusader" and "Frederick" matters into a single conspiracy, despite Jacoby's testimony that the two conspiracies were unrelated. [See R. 4 - 817 - 37]. Even after the court advised counsel that the jury would be instructed it could not consider matters regarding Crusader, the prosecutor, as the court found "could not resist the temptation to improperly and prejudicially discuss Crusader during closing argument." [R. 4 - 817 - 36, citing, R. 57 - 7776].
Clearly, under these circumstances, the Government proceeded in bad faith, and affirmatively misled the court, in order to gain admission of highly prejudicial evidence relating to the law firm at which Mr. Scheer was employed as an associate, even prior to his employment with the firm, including numerous references to alleged misconduct of the law firm in general, in an effort to taint Mr. Scheer with a broad brush of alleged misconduct in matters in which he indisputably had absolutely no involvement. [R. 4 - 817 - 33, 35-37]. Moreover, the Government to this day continues to withhold from the defense matters relating to the prosecutor's misconduct in this very case, which matters can do nothing but further bolster the strength of Mr. Scheer's arguments regarding this matter. See infra, Argument III C. Accordingly, the judgment below must be reversed.
Mr. Scheer was unfairly prejudiced on all counts. Reversal is required because the Government flatly cannot convince this Court that the evidence on the invalid count did not influence the verdict. United States v. Eason, 920 F.2d 731, 735 (11th Cir. 1990). The district court failed to apply the correct legal standard, and so the judgment should be reversed.
The prejudice as a result of the district court's failure in this regard, is much the same as the prejudice found in United States v. Pelullo, 14 F.3d 881 (3d Cir. 1994). In Pelullo, the court reversed the lower court's failure to dismiss a racketeering count and found substantial prejudice to other counts from the evidence related only to the invalid racketeering conviction. The presence of the invalid count at trial, in consideration of all of the factors on review, "caused a strong cumulative effect which resulted in the conviction" of Pelullo, and so the court reversed the judgment, vacated the convictions on 48 wire fraud counts and remanded for a new trial. 4 F.3d at 900.
In the trial of this case below, the similarity
of evidence on all counts, the similarity of the Government's allegations
of the various counts, the inadmissibility of the vast majority of evidence
on the conspiracy count against those on trial for (particularly as relates
to Scheer). The Government's repeated pejorative references, contrary to
the district court's order, to "the lawyers" or "Blank, Rome" as having
collectively committed bad acts and receiving large fees, results clearly
in this case in an overwhelming quantum of spill-over prejudice to Mr.
Scheer from the invalid conspiracy count. Accordingly, the judgment below
should be reversed.
III.
THE DISTRICT COURT ERRED IN FAILING TO DISMISS OR, IN THE ALTERNATIVE, GRANT A NEW TRIAL BECAUSE OF THE GOVERNMENT'S BRADY VIOLATIONS.
A. The Prosecutor's Threat to Jacoby.
The court below should be reversed for its failure to dismiss the indictment or, in the alternative, grant a new trial on the basis of clear Brady(3) violations committed by the Government. The Government suppressed material evidence favorable to the defense, which the defense could not possess or obtain with reasonable diligence. Indeed, the Government continues to this day to suppress evidence of the Government's misconduct during, and potentially before, trial. Accordingly, the judgment below should be reversed.
Following trial, the defense learned of allegations that the prosecutor had threatened Jacoby, his key witness, that he would be returned to prison if he did not testify as the prosecutor desired. After a post-trial evidentiary hearing, the court determined that the threat had occurred. [R. 4 - 817 - 43-45]. The court properly considered whether the threat had resulted in Jacoby altering his testimony, but the court erred in concluding that Jacoby's denial was a sufficient basis on which to deny relief. The court failed to consider that the jury, had it been informed of the prosecutor's threat, could have inferred that Jacoby's testimony was false and self-serving. The prosecutor and other agents of the Government specifically possessed this strong impeachment evidence against the most critical Government witness; the defense neither possessed nor could have obtained this evidence with reasonable diligence; the prosecution suppressed the evidence; and the evidence was material.
During a weekend break in his direct examination, Jacoby met with the prosecutor and the case agent. During the meeting, the prosecutor, Mr. Genge,
kind of turns to me and says..."Now, I
know you are going to come through for us or for me. I know you are going
to come through on that, and if you don't come through on that, Tony is
going to put the cuffs on you and you are going to be out of there in 45
seconds."
[R. 64 - 81; R. 4 - 817 - 43-44]. "Tony" is FBI Agent Tony Yanketis. [R. 4 - 817 - 44]. Jacoby's account of the incident is uncontroverted; neither the prosecutor nor the case agent testified at the hearing on this issue. Jacoby had told Skubal that Genge had said at the meeting that "if he did not start cooperating, shaking his finger at Jacoby, that he would have FBI Agent Yanketis take him back to Eglin or take him back to prison." [R. 64 - 27; R. 4 - 817 - 44]. Jacoby also told Skubal that Genge's statement "scared" him. In Jacoby's mind, the statement was not made as a joke. [R. 64 - 25].
At the post-trial hearing, Jacoby, while still on probation, attempted to minimize the impact of the threat, stating that the threat did not cause him to change his testimony. [R. 64 - 83]. The district court was "understandably concerned by what appears to be an instance of prosecutorial intimidation of a witness." [R. 4 - 817 - 45]. The court further found that the testimony of those convicted in 1989 "was presented under circumstances which now suggest that such testimony may be suspect." [R. 4 - 817 - 27]. However, the court denied relief because Jacoby testified that he did not lie because of the threat and ignoring that Jacoby otherwise would be admitting perjury. Moreover, the court believed other evidence sufficient to sustain Mr. Scheer's conviction even if Jacoby's trial testimony was false. In so concluding, the district court applied the wrong legal standard by utilizing a single judge's view of the other evidence against Mr. Scheer, rather than having evaluated the likelihood that a jury apprised of Genge's threat could have reached a different result in the case when Genge had told the jury that Jacoby had no motive to lie. See Kyles v. Whitley, 514 U.S. ___, 115 S.Ct. 1555, 131 L.Ed.2d 490 (1995).
A strong inference arises from the prosecutor's threat that either the prosecutor reasonably believed that Jacoby had lied earlier, or that the prosecutor believed that Jacoby's truthful testimony would be insufficient for the prosecutor to obtain the conviction he wanted of Mr. Scheer and his co-defendants. Under either scenario, the Government clearly suppressed this favorable evidence from the defense. Had the jury been apprised of this incident, the jury would have been entitled to discredit Jacoby's testimony, which was critical to each count of conviction. The jury would also have been entitled to infer that Jacoby changed his testimony in response to the threat, notwithstanding Jacoby's self-serving denial. Accordingly, the judgment below should be reversed for this reason alone.
The district court, in stating its belief in the sufficiency of other evidence to sustain Mr. Scheer's conviction, clearly overlooked the decisive nature of Jacoby's testimony. The verdict identically tracked the testimony of Jacoby. On re-direct examination, Jacoby was asked specifically about the involvement of Messrs. Treadwell and Scheer, respectively, in the August 30th closings and the Seawalk transaction.
Q: Were you assisted in the carrying out
of these wrongful actions by the defendant Kenneth Treadwell?
A: He was involved in the transactions,
yes. Some of them...
Q: Well, in which transactions was he involved?
A: He was involved, to some extent, in
the August 30th. To a greater extent in Seawalk.
Q: Were you assisted in the carrying out
of these wrongful acts by the defendant Dana Scheer?
A: He was involved in them, yes. More so
as to the August 30th. I am not certain at all as to Seawalk.
[R. 4 - 857 - 2388]. As to substantive counts, the jury found Treadwell guilty, and Scheer not guilty, with respect to the Seawalk matter. Conversely, the jury found Scheer guilty (as to the Valosin and Wood loans), and Treadwell not guilty, with respect to the August 30, 1984 transactions. In closing argument, the prosecutor sought to bolster the credibility of Jacoby, who admitted lying in his own trial, by telling the jury that he would not, and had no motivation to, lie. [R. 57 - 7758-59].
As a result, Jacoby's credibility, or lack thereof, was determinative of the verdict. The Government's suppression of Genge's threat to Jacoby, precluding the jury from evaluating Jacoby's credibility in that light, not only rises to the level of a reasonable probability of a different outcome, absent the error, but compels the conclusion that the error did in fact affect the outcome of trial.
Materiality, as factually discussed above, describes a reasonable probability of a different outcome at trial absent the error; in other words, merely a probability sufficient to undermine confidence in the outcome. United States v. Arnold, 117 F.3d 1308, 1315 (11th Cir. 1997) (citations omitted). The scenario that occurred below in this case, however, suggests that the prosecutor either knowingly presented false testimony or failed to correct testimony he learned to be false, resulting in application of an even less stringent standard, that of a reasonable likelihood that Jacoby's false testimony could have affected the verdict. Id. This type of misconduct works "a corruption of the truth-seeking function of the trial." United States v. Alzate, 47 F.3d 1103, 1110 (11th Cir. 1995). In either event, the threat at the very least establishes the existence of inconsistent statements by Jacoby, which have never been produced.
Moreover, the Government's failure to disclose this incident materially prejudiced the ability of the defense to confront the single most important prosecution witness in the case. Regardless of the standard to be applied, the standard is met in this case. The court below failed to apply the United States v. Bagley, 473 U.S. 667, 682 (1985), standard of materiality. The district court's failure to apply this standard resulted in its erroneous conclusion with respect to this issue. Accordingly, because of this single error, and in particular when considered cumulatively with all of the other Brady violations and additional Government misconduct in this case, the judgment below should be reversed.
The prosecutor also threatened witness Charles Powell with indictment and other adverse consequences if he failed to testify that his August 30 transactions constituted a sham. [R. 4 - 807 (Exh. A); R. 49 - 6397-6414]. Notwithstanding the prosecutor's threats, Powell testified that the transactions were legitimate, and the jury acquitted as to all of the Powell matters.
This matter not only constitutes a Brady
violation but further constitutes witness tampering. The jury certainly
was entitled to believe that this tampering materially affected Jacoby's
testimony. Particularly insofar as the verdict precisely tracked Jacoby's
conclusory testimony, no confidence in the outcome of the trial can remain.
Accordingly, the judgment below should be reversed.
B. Failure to Produce Exculpatory Grand Jury Testimony.
The court entered a standing discovery order on February 16, 1993, requiring the Government to timely produce certain materials. Among the matters required to be produced early in the litigation was Brady material ultimately including the grand jury testimony of Powell, Jacoby and Edward Fitzgerald. However, the Powell testimony was not disclosed to the defense until a pretrial hearing on September 26, 1994, shortly prior to commencement of trial, and the Jacoby transcript was not provided to the defense until after all defense counsel in the case had presented their opening statements, on October 25, 1994. The Fitzgerald testimony was produced late in the Government's case.
The Government did not comply with the discovery order but rather provided the transcripts only after being compelled by the district court to do so. [R. 4 - 817 -23 and n.11]. The district court found the delay "certainly inexcusable." [R. 4 - 817 - 39]. Although the defense was deprived of the use or even knowledge of the content of the Jacoby and Fitzgerald testimony at the time of opening statements, prejudicing the defense's ability to prepare and present opening statement, the district court concluded that its confidence in the verdict was not undermined by this clear instance of Brady violations and prosecutorial misconduct. The district court erred as to the legal standard it applied to the inquiry, particularly in failing to consider the cumulative effect of the various errors perpetrated by the Government throughout the course of this litigation, including cumulative Brady violations. The Government, which is responsible for identifying and disclosing Brady material, Kyles 514 U.S. at ___, 115 S.Ct. at ___, 131 L.Ed.2d at 508-09, disclosed that in this case it had employed a blatantly wrong legal standard in determining its Brady obligations. The prosecutor admitted that the Fitzgerald grand jury testimony was exculpatory but claimed it was not Brady. [R. 44 - 4698-4704]. The prosecutor also contended that he had no obligation to make timely disclosure of Powell's grand jury testimony because the prosecutor did not believe his exculpatory testimony was truthful. [R. 4 - 817 - 25]. As the district court concluded,
[T]he justifications advanced here for
non-disclosure are strange, indeed.... The statement of this proposition
hardly requires an answer; its practical effect would be to emasculate
Brady beyond usefulness. The Government may not, as it did here, make a
credibility determination concerning relevant evidence and then disclose
only that which it believes.
[R. 4 - 817 - 25]. Significantly, while the Government did not believe Powell, the jury did. [R. 4 -817 - 25 n. 12]. The Government's Brady standard used in this case further caused the district court "to question whether the prosecution has been entirely forthcoming with [other] Brady material" in its possession. [R. 4 - 817 - 16, n.13]. To this day, only the Government knows the answer to this question.
The Government's inexcusable Brady violations
also prejudiced Mr. Scheer in a dimension that cannot be quantified on
the basis of the trial record. Absent the Government's failure to disclose
the Powell and Jacoby grand jury testimony at the time of Treadwell's Kastigar
hearing in June and July 1993, [R. 5-23], the district court would have
dismissed Treadwell from the entire case prior to trial on the basis of
the Government's breach of its immunity agreement with Treadwell. [R. 4
- 817 -23-27]. The government thereby rendered Mr. Scheer unable to compel
Treadwell's favorable testimony at trial. Indeed, the district court should
have dismissed Treadwell from the case prior to trial, rendering him available,
but did not do so solely because of the Government's
Brady violation. All
of the circumstances demonstrate that the favorable evidence suppressed
by the Government is material. Accordingly, the judgment below should be
reversed.
C. Failure to Produce Result of Investigation of Professional Misconduct by Prosecutor.
The district court erred in denying disclosure of the results of an investigation into matters of professional misconduct by the prosecutor in this case, conducted following trial by the Department of Justice Office of Professional Responsibility (OPR). During the pendency of post-judgment proceedings in light of this Court's decision in United States v. Foxman, supra, counsel for Mr. Scheer became aware of the OPR investigation of the prosecutor's conduct in this case, and requested disclosure of the results of the investigation pursuant to 1-2.12B, Department of Justice Manual, which disclosure was refused. [R. ___ - 1030]. In response, the Government admitted the existence of this material but denied that the material was discoverable under Brady, again demonstrating an erroneous understanding of the Brady doctrine. [R. ____ - 1031]. The district court denied production of the material, referring Mr. Scheer to the Government's administrative process. [R. ___ - 1037]. This was error.
The Brady doctrine requires disclosure of material favorable evidence to an accused. See Kyles v. Whitley, 514 U.S. ___, ___, 115 S.Ct. 1555, ____, 131 L.Ed.2d 490, 505 (1995). Favorable evidence is material regardless of whether it is directly exculpatory or is impeaching, if the favorable evidence is capable of undermining "confidence in the verdict." Id. at ___, 115 S.Ct. at ___, 131 L.Ed.2d at 506.
The district court's error in this regard is established by United States v. Espinosa-Hernandez, 918 F.2d 911 (11th Cir. 1990). In that case, post-trial discovery was compelled by this Court where a critical player in the Government's case was accused of serious and material misconduct in the proceedings, even though the matter at issue was not necessarily dispositive of the case in a vacuum and even where the person involved was not the most significant factor in the Government's case. Id. at 913-14.
In this case, the person at issue is the
lead prosecutor himself, who was involved in the investigation and prosecution
of matters relating to Sunrise for almost a decade and left Government
employ after the OPR investigation. This prosecutor made the tactical decisions
giving rise to preindictment delay; violated orders of the district court
in his conduct of the trial; inexcusably violated his Brady obligations;
threatened to imprison the single most important witness in the trial should
he fail to testify as the prosecutor desired; misrepresented to the court
that the evidence would link two conspiracies into one; breached Treadwell's
immunity agreement; and otherwise engaged in inexcusable excesses in order
to prosecute as many lawyers as possible. [See generally, R. 4 - 817 -
3-42]. Clearly, matters uncovered during the OPR investigation of this
very conduct can reasonably be expected to cast a light on the trial below
sufficient to undermine confidence in the outcome. Accordingly, the district
court's order in this regard, and the judgment, should be reversed.
D. Brady Violations are Reviewed for Cumulative Effect on the Verdict.
The trial court erred in failing to consider the cumulative effect of the Brady violations in this case. Even where Brady material was disclosed, the disclosures were untimely in violation of court orders, and other instances of non-disclosure of Brady material occurred only after trial and even persist to this day. Error under Brady and United States v. Bagley, 473 U.S. 667 (1985), is reviewed for its collective impact. Kyles v. Whitley, 514 U.S. ___, ___, 115 S.Ct. 1555, ___, 131 L.Ed.2d 490, 507 (1995).
Where the Brady violation was material
under Bagley, it simply cannot be found harmless. Id. at ___, 115 S.Ct.
1555, ___, 131 L.Ed.2d at 507. This cumulative evaluation requires reversal
where a reasonable probability of a different result exists absent the
error. Id. at ___, 115 S.Ct. 1555, ___, 131 L.Ed.2d at 506. Accordingly,
where, as in this case, the Brady violations both individually and cumulatively
"undermine confidence in the verdict," id. at ___, 115 S.Ct. at ___, 131
L.Ed.2d at 506, the judgment below should be reversed.
IV.
THE COURT ERRED IN FAILING TO SEVER COUNTS AND DEFENDANTS.
Mr. Scheer and the conspiracy count should have been severed from the trial in this case. The failure of the district court to grant him severance resulted in prejudicial spill-over from evidence admissible only as to the conspiracy count against which he prevailed following trial, and as a result of evidence of transactions as to which evidence was admissible solely against Frame. As noted above, the conspiracy count should have been dismissed prior to trial based on the district court's conclusion that the Government had no viable theory to sustain its single conspiracy theory, yet it relied on the Government's false representations in allowing the conspiracy count to proceed to trial. Accordingly, the judgment below should be reversed.
At trial, the Government deliberately introduced evidence that was allowed only based on the Government's representation, which the prosecutor knew or should have known to be false, that it could establish the existence of a single conspiracy. "Urging [ ] error upon the trial court still violates the United States Attorney's obligation to the court and the public." United States v. Eason, 920 F.2d 731, 737 (11th Cir. 1990). While a prosecutor is obliged to pursue a case vigorously, he has a duty not to deprive a criminal defendant of his right to due process of law and a fair trial by using foul tactics to secure a conviction. Id. at 735-36 and n. 8 (collecting cases). "Where a defendant is tried on several counts in one trial, highly prejudicial evidence is wrongfully introduced regarding some of those counts and the jury convicts on those counts, we cannot know whether the jury was able to compartmentalize the evidence and the counts." Id. at 737.
The district court should not have relied on the Government's representation in denying both dismissal of count one and severance prior to trial. However, where the events transpired as they did below, the issue of prejudicial spill-over is properly addressed at this stage. The Second Circuit has described appellate review of this issue as involving a concept of "retroactive misjoinder." United States v. Vebeliunias, 76 F.3d 1283, 193 (2d Cir. 1996). The principle applies where joinder "was proper initially, but later developments -- such as a district court's dismissal of some counts for lack of evidence or an appellate court's reversal of less than all convictions -- render the initial joinder improper. Id. (citations omitted). Compelling prejudice exists where counts of conviction left standing on their own suffer a prejudicial spill-over flowing from evidence to obtain a conviction on a count subsequently reversed. Id. at 1294. Where the evidence on the vacated counts has a tendency to influence the jury to convict on the remaining counts, such prejudicial spill-over is shown. Id. Only where the prejudicial evidence on the vacated count would otherwise have also been admissible to support the other counts is a lack of prejudice demonstrated. Id. Furthermore, a general assessment of the strength of the Government's case on the remaining counts is considered. Id.
In this case, the evidence the Government was permitted to introduce to support the conspiracy count, and the evidence and argument the Government placed in front of the jury before objections could be made and sustained, had a strong tendency to influence the jury to convict Scheer on the basis of alleged misconduct by his former law firm, generally, and by others not on trial specifically. Second, this evidence would not have been admissible, as noted by the court below, had the Government not crafted the indictment as it did in a misguided attempt to charge Foxman. Third, the district court found substantial prejudice resulting from the improper evidence. [R. 4 - 817 - 35-37]. Finally, the Government's case was clearly not so strong as to demonstrate an absence of prejudice to Mr. Scheer.
United States v. Castro, 829 F.2d 1035
(11th Cir. 1987), modified, 837 F.2d 441 (11th Cir. 1988), requires reversal
on this issue. In Castro, one conspiracy was alleged, yet the evidence
established more than one conspiracy. Extensive evidence was presented
of "crimes in which Castro took no part and of which he had no knowledge,"
yet the other evidence was "not overwhelming" against Castro. 829 F.2d
at 1046. Even where the jury acquitted on some counts and convicted on
others, this Court could not find an absence of "substantial and injurious
effect or influence" on the verdict from spill-over prejudice. Id. at 1047
(citations omitted). Accordingly, for the same reasons, the judgment below
should be reversed.
V.
THE COURT ERRED IN JURY SELECTION AND EXCUSAL AND FAILING TO GRANT A MISTRIAL.
The trial below was infected with jury irregularities that the trial court failed to remedy. First, the prosecution exercised a peremptory challenged to exclude the only remaining potential juror of the same ethnic group as Mr. Scheer. [R. 30 - 36-43; R. 32 - 358-63]. Second, the entire panel was infected by the comment of one potential juror to his cohorts that rich people should be hanged. [R. 32 - 364]. See United States v. Heller, 785 F.2d 1524 (11th Cir. 1986). Finally, error also occurred in the removal of a juror who was erroneously arrested during trial. [R. 44 - 4743-48, 4759, 4771-79, 4794-96].
The Government's challenge of the prospective Jewish juror was explained by the prosecutor as justified because her husband was a retired attorney, yet the prosecutor did not strike juror Torres, whose sister practices law. As a result, the obvious insufficiency of the prosecutor's justification demonstrates that his proffered reason was a mere pretext for intentional discrimination. See Purkett v. Elem, 514 U.S. ___, ____, 115 S.Ct. 179, ___, 131 L.Ed.2d 834, 839 (1995). Such improper dismissal of even a single juror is grounds for reversal of a conviction. See e.g., United States v. Horseley, 864 F.2d 1543 (11th Cir. 1989).
The jury could not have been unaffected
by the prospective juror's statement of animus to people of wealth, particularly
in a case where the Government, in violation of court order, erroneously
infected the jury with matters relating to large fees earned by the Blank,
Rome law firm. Additionally, where the juror was excused after being erroneously
arrested, in circumstances that would have resulted in no appreciable delay
of the trial to allow his return, confidence in the very fact-finding process
in the jury room clearly is undermined in this case. Additionally, when
considered in conjunction with the Government's pretextual challenge to
the lone remaining Jewish potential juror, is itself sufficient for reversal,
and in view of the numerous other instances of error and misconduct in
a case lacking in evidentiary weight, there can be no confidence in the
outcome. Accordingly, the judgment below should be reversed.
VI.
THE COURT ERRED IN PERMITTING THE CASE TO BE INCURABLY INFECTED WITH PROSECUTORIAL MISCONDUCT.
The prosecutor's misconduct in this case, ranging from preindictment delay to Brady violations to violation of court orders and misrepresentations to the court and the jury simply vitiate the verdict, particularly in a case such as this where the evidence was not strong. Reversal is required where the conduct of the prosecutor is improper and the conduct prejudicially affects the substantial rights of a defendant. United States v. Eyster, 948 F.2d 1196, 1206 (11th Cir. 1991). The court must consider the cumulative effect of all instances of the prosecutor's misconduct, rather than viewing each instance in isolation from others. United States v. LeQuire, 943 F.2d 1554, 1571 (11th Cir. 1991).
During the course of trial, the prosecutor inquired of witnesses regarding the total legal fees earned by Blank, Rome from Sunrise, suggesting that such fees became the personal income of the Blank, Rome attorneys in West Palm Beach, violating the Court's pretrial order, particularly with respect to Mr. Scheer, who simply was paid a salary of approximately $60,000.00 per year as an associate of the law firm. The court sustained the objections to these references and to the prosecutor's generalized pejorative references to "the attorneys." [R. 31 - 201; R. 4 - 851 - 1074-89; R. 53 - 7134, 7140]. The Government also repeatedly engaged in improper questioning throughout the trial, including some 250 questions to which objections were sustained and a blatant attempt to suggest that the jurors themselves had lost money in the transactions. [E.g., R. 4 - 856 - 2226; R. 4 - 857 - 2431-33; R. 4 - 871 - 40-41].(4)
In addition to the matters set forth elsewhere in this brief, the Government's misconduct continued during its closing argument to the jury. The prosecutor improperly argued about Blank, Rome's desires to have a captive client, which related only to individuals not on trial. [R. 57 - 7756]. United States v. Blakey, 14 F.3d 1557 (11th Cir. 1994); United States v. Morris, 568 F.2d 396 (5th Cir. 1978). He also argued that Jacoby would not lie in order to convict innocent people, despite knowledge of the threat that he himself had made to Jacoby, and Jacoby's false denials to the grand jury that his testimony could benefit him. [R. 57 - 7758-59; R. 3 - 708].
He referred to Blank, Rome earning "substantial fees every time they closed one of these" loans, despite the district court's orders regarding such matters and the fact that the August 30th loans resulted in minimal income for the law firm. [R. 57 - 7763; R. 58 - 8140]. He argued that Mr. Scheer was treated lavishly by the developers, despite an utter absence of such evidence. [R. 57 - 7771-72]. He continued to argue matters relating to the Crusader transactions, [R. 57 - 7776], and argued that matters relating solely to civil regulations should give rise to criminal liability as to Mr. Scheer. [R. 57 - 7777-80]. The prosecutor also violated the principle against a golden rule argument, [R. 57 - 7788-90], and repeatedly engaged in flagrant and substantial misstatements of fact and law in his arguments. [R. 57 - 7803-08, 7814-15, 7818, 7823, 7824-25, 7826, 7827, 7831-32; R. 58 - 8146, 8149-51, 8152, 8154, 8156, 8168, 8170, 8180, 8189-90].
Additionally, in opening statement, the prosecutor repeatedly stressed generalizations regarding Blank, Rome and the alleged plan of the firm as an entity, unrelated to Mr. Scheer, to derive wealth from Sunrise. [R. 31 - 182-85, 191]. He further made other falsely generalized assertions in opening, alleging efforts to attack and undermine the regulators. [R. 31 - 227-28]. He also continued to generalize regarding "Blank, Rome attorneys." [R. 31 - 229-30]. As a result, Mr. Scheer's convictions in this case are the result of an unfair trial and based unlawfully on suspicion and innuendo. See United States v. Hardy, 895 F.2d 1331, 1335 (11th Cir. 1987); United States v. Skillern, 947 F.2d 1268, 1274 (5th Cir. 1991).
In opening statement, the prosecutor read a memorandum from Foxman to Gitomer regarding Blank, Rome's intention to operate a "benevolent dictatorship" over Sunrise, and the Government never even attempted to present evidence of the matter. [R. 2 - 174; R. 4 - 817 - 36]. In the same vein, the Government also violated a pretrial court order by referring to Sunrise Savings and Loan as Blank, Rome's "$5 million client," and subsequently improperly questioned a witness as to the annual fees received by Blank, Rome from Sunrise. [R. 2 - 201, 7134-40]. As noted by the district court, the specific reference to the firm's legal fees constituted a "direct violation of the Court's prior order." [R. 4 - 817 40]. The record in this case demonstrates instances of prosecutorial misconduct which, even considered individually, would warrant reversal. Clearly, the cumulative effect of all of the instances of misconduct in this case simply requires reversal. Accordingly, the judgment below should be reversed.
Mr. Scheer was heavily prejudiced by the Government's repeated attempts to introduce substantial evidence and argument of improper acts by the large unindicted law firm at which he was an associate in 1984. The district court discussed that the Government's repeated references to "Blank, Rome" were prejudicial to Scheer because of their tendency to improperly suggest to the jury that acts and intent of other persons were attributable to him. [R. 4 - 817 - 30].
The prosecutor, despite the district court's admonitions, continued in his closing argument to violate the court's orders by continuing to focus on alleged misconduct of the Blank, Rome firm in general, and the fees it received in particular. [R. 57 - 7756, 7763; R. 58 - 8140]. By referring to Blank, Rome fees in questions and argument, the prosecutor not only violated the district court's order but also attempted not only to mislead the jury factually but also made "a persistent appeal to class prejudice" that cannot be countenanced, particularly where proof of guilt was neither overwhelming nor attempts at curative instruction sufficient. United States v. Stahl, 616 F.2d 30, 33 (2d Cir. 1980). The Government further expounded on Jacoby's efforts to influence politicians and regulators, in which Mr. Scheer was not involved. [R. 4 - 850 - 1062-63].
The Government improperly was permitted to convey to the jury in the trial below that the prior fact-finding of the jury in the Jacoby case was correct. The Government exceeded permissible questioning to elicit that Jacoby and Skubal had been convicted, a matter permissible for consideration of their credibility, but rather went further by emphasizing that they were represented by counsel at trial, challenged their convictions on appeal, suffered affirmance of their convictions and, as to Skubal, sought certiorari in the Supreme Court of the United States. [See R. 46 - Tr. 5382-83]. Although the trial court noted the Government's apparent impermissible purpose, [R. 46 - 5388], the court failed to prevent what would adequately cure the error.
Also, the Government took diametrically opposed positions in the trial below in the Jacoby trial in 1989. In the 1989 trial of Jacoby and Skubal, the Government favorably characterized the conduct of the lawyers involved. However, the Government reversed its field in the trial below.
The district court found this reversal of positions significant and prejudicial. [R. 4 - 817 - 11-12, 42]. In Thompson v. Calderon, 120 F.3d 1045 (9th Cir. 1997) (en banc), the court was confronted with a habeas corpus petition that presented, inter alia, a case of a "prosecutor's pursuit of fundamentally inconsistent theories" evident from the record of two trials of co-defendants. Id. at 1056. The Calderon court found:
The prosecutor manipulated evidence and
witnesses, argued inconsistent motives, and at Leitch's trial, essentially
ridiculed the theory he had used to obtain a conviction and death sentence
at Thompson's trial.
Id. at 1057. As the Thompson court held:
From these bedrock principles, it is well
established that when no new significant evidence comes to light a prosecutor
cannot, in order to convict defendants at separate trials, offer inconsistent
theories and facts regarding the same crime.
Id. at 1058.
The Thompson court adopted the due process conclusion reached by Judge Clark in his concurring opinion in Drake v. Kemp, 762 F.2d 1449 (11th Cir. 1985) (en banc), in which the concurrence found the inconsistent theories advanced in separate trials of co-defendants "inherently unfair" and violative of "the fundamental fairness essential to the very concept of justice." Id. at 1479 (Clark, J., concurring). "Such actions reduce criminal trials to mere gamesmanship and robbed them of their supposed search for truth.... This distortion rendered Henry Drake's trial fundamentally unfair." Id. (Clark, J., concurring).
The result is that Mr. Scheer was denied the right to have his own jury decide the facts without influence of the Government's portrayal that the fact-finding of a previous jury had any bearing at all, or must have been found factually correct by higher courts. See United States v. Eason, 920 F.3d 731, 734 (11th Cir. 1990). Particularly insofar as the Government below sought to use the prior jury's verdict as substantive evidence of guilt of alleged co-conspirators on trial in the present case, id. at 734-35, and the Government seeks to bolster the prior jury's fact-finding with evidence of affirmance on appeal, a curative instruction simply is insufficient. Accordingly, the judgment below should be reversed.
VII.
THE COURT ERRED IN DENYING MOTION FOR JUDGMENT OF ACQUITTAL.
The evidence was insufficient as to a matter of law to sustain the four counts of conviction in this case. Two of the counts of conviction arose under 18 U.S.C. 657 (misapplication of bank funds), and the remaining two counts of conviction under 18 U.S.C. 1014 (false statements to a bank). As to the 18 U.S.C. 1014 counts, even in the light most favorable to the Government and the jury's verdict, the statements at issue were not false. In light of the prejudice to Mr Scheer from the other errors in this case, the evidentiary insufficiency in this case is clear because the verdict was based on this prejudice, not on the evidence.
Review for sufficiency of the evidence to sustain a criminal conviction constitutes a determination of whether a reasonable juror could find that the evidence establishes guilt beyond a reasonable doubt, viewing the evidence in a most favorable light to the Government and drawing all reasonable inferences in favor of the verdict. United States v. Brown, 79 F.3d 1550, 1555 (11th Cir. 1996). However, if the proof at trial fails to show the necessary specific intent to commit a crime necessary to sustain the verdict in this case, or otherwise fails to establish a scheme to defraud, the evidence is insufficient as a matter of law. Id. at 1556.
The similarity between Brown and the present case is the Government's reliance at trial on arguments as to the 657 counts that the value of real estate used to secure the August 30th loans was insufficient to do so. The evidence is undisputed that Mr. Scheer's role as closing attorney did not involve ascertaining, or even attempting to ascertain, the actual value of these real properties. As in Brown, even if the properties were not worth as much as represented, the properties still had considerable value, and the line between legal and illegal conduct simply cannot be drawn on "as uncertain a test as whether prices are reasonable." Id. at 1561-62, quoting, United States v. Trenton Potteries Co., 273 U.S. 392, 398 (1927). Particularly in this case, where Mr. Scheer ensured that the August 30th loans were secured by real property, guaranteed by Frederick and cross-collateralized to other existing loans, no reasonable jury could find that his actions, as ordered by his superiors, carried any specific intent to violate the law or to injure or defraud Sunrise.
Additionally, the evidence demonstrates that the bank examiners were not misled by any conduct of Mr. Scheer, who ensured that the August 30th transactions were fully documented, and the encumbrances of real properly recorded. See United States v. Grossman, 117 F.3d 255, 260 (5th Cir. 1997). Even if Mr. Scheer "knew of and participated in the structuring of the nominee loans [,] [s]uch loan structure is not illegal." Id. at 261. No illegality attaches to parties "who can economically benefit each other, getting together and constructing a mutually beneficial bargain." Id. (citations and internal quotations omitted). Further, given Mr. Scheer's affirmative "lack of concealment, the evidence i[s] insufficient to support the mens rea element of conspiracy or [ ] fraud." Id.
The Government relied substantially on Valosin's testimony that, at the time of the August 30th transactions, she only had $1,000.00 in the bank. Mr. Scheer, though, was not even present at the Valosin closing, [R. 40 - 3878], and the Government produced no evidence that connected him to the Valosin closing. Mr. Scheer knew that Valosin was Frederick's cousin and employee in circumstances in which Frederick lavished his wealth on those surrounding him, and that she owned an interest in real estate used to secure the loan.
Particularly relevant to this issue is the Court's finding in United States v. Schuchmann, 84 F.3d 752, 755 (5th Cir. 1996), that:
Even if Schuchmann knew Bentley's income
information was incorrect, however, the evidence shows that Bentley's family
wealth provided Schuchmann a legitimate reason for approving the loan.
Id. at 755. In this case, Mr. Scheer had no role in assessing creditworthiness of borrowers and no actual knowledge of their financial status. The defendant in Schuchmann, who had exactly such a role, was entitled to rely on Bentley's family's wealth in assessing her credit worthiness. Id. In other words, the evidence "provides equal circumstantial support to a theory of innocence." Id. Additionally, as in Schuchmann, Valosin admitted her liability on the loan, which was secured by real property, and Frederick executed a guarantee to repay the loan if it could not be paid by Valosin. Wood also testified that he entered the transaction intending to develop his property. [Tr. 4450-52, 4458-59].
The result in this case is that Mr. Scheer, ordered to perform the August 30th closings, did so while also ensuring that the loans were not only collateralized and guaranteed by Frederick but also cross-collateralized with the security of substantial additional real estate. This demonstrates the opposite of intent to injure or defraud. In other words, Mr. Scheer did his utmost to ensure that the transactions planned and directed by others, and ordered by them to be performed by Mr. Scheer, resulted in Sunrise being secured against the otherwise unsecured overdrafts of Frederick and Moye. Because Valosin and Wood became the real parties in interest on both the loans and the real estate, no 657 misapplication occurred as a matter of law. Ultimately, the August 30th transactions resulted in, not a loss to Sunrise, but rather a substantial profit. The verdict below leaves Mr. Scheer in the colloquial position of having no good deed go unpunished. Accordingly, the judgment below should be reversed.
The August 30th transactions all were accounted in the calculus of Frederick's loan to one borrower status with Sunrise. Expert witness Charles Harris testified that the borrowers were actually not nominees, [R. 50 - 6490], so the alleged false statements simply were not false. Where the transactions circumvented no legal prohibition, the evidence fails to show that either Mr. Scheer's conduct or intent was criminal, particularly where he ensured that the loans were secured. Additionally, where Valosin and Wood affirmed their obligations on the notes, and also affirmed that the matters were secured with real property that they in fact purchased, [R. 40 - 3920-22; R. 39 - 3721-31; R. 43 - 4450-52, 4458-59], the loans to one borrower's statements were not false.
The Government's ultimate contention in this case is that losses resulted by conduct of Mr. Scheer, and others, intended to injure or defraud. Mr. Scheer, however, was convicted only of the August 30th transactions, which ultimately resulted in a total profit to Sunrise. See United States v. Baker, 61 F.3d 317, 322 (5th Cir. 1995) (defendants "disputed the Government's contention that cornerstone's assets were given away, because of the overall effect of the transactions was a substantial profit to cornerstone. We agree." See also, United States v. Martel, 792 F.2d 630, 637 (7th Cir. 1986). As in Baker, no evidence exists in this case that the transactions were in any manner either concealed or performed in a manner to disguise what occurred, and so the result in this case must be the same as to the 657 counts. Furthermore, as to the 1014 counts, the result also must be the same as in Baker because of the absence of concealment or injury, and the absence of even intent to injure or defraud, particularly where Mr. Scheer clearly undertook efforts to cross-default and cross-collateralize the August 30th transactions and secure them with real property. [R. 50 - 6534].
As to the 1014 counts, the district court
should have granted judgment of acquittal because the statements at issue
simply were not false. Falsity is an essential element of such an offense.
18 U.S.C. 1014. Expert testimony presented at trial by Charles Harris demonstrates
that one having the obligation to repay a loan which is secured with real
estate legally owned by the borrower simply do not comport with the characterization
of such a borrower as a nominee. [R. 50 - 6490]. See also, Braxton v. United
States, 858 F.2d 650, n.6 (11th Cir. 1988). Valosin clearly testified that
she was actually borrowing the funds loaned and that the loan was guaranteed
by real property that she held in her name. [R. 40 - 3920-22].(5)
Likewise, Wood admitted that he was buying a shopping center site that
he planned to develop and that he was a wiling participant in the transactions
for his own benefit in conjunction with his good client and friend, Frederick.
[R. 39 - 3721-31]. As a result, Valosin and Wood not only were obligated
in fact for the loans but also were the owners of the real estate used
as security. The statements at issue were not false, and judgment of acquittal
should have been, and now should be, entered as to both the 657 and 1014
counts. The legal inadequacy of the evidence was overwhelmed by the prejudicial
impact of the other substantial errors in this case. Accordingly, the judgment
below should be reversed and judgment of acquittal granted.
CONCLUSION
Reversal in this case is required because the entire case was infected with errors of the most grave and substantial import and prejudice before, during and even after trial. As the prosecutor himself told the district court, "a certain injustice" is presented in a case that "end[s] up with Mr. Scheer, the associate, going down...and the partners' [prosecutions] being overruled by this Court." [R. 63 - 141-42]. In the face of this injustice, created by serious and prejudicial errors causing verdicts of conviction notwithstanding insufficient evidence, the judgment below cannot stand. Cumulatively, the errors clearly deprived Mr. Scheer of a fair trial. United States v. Preciado-Cordobas, 981 F.2d 1206 (11th Cir. 1993). Accordingly, for all of the foregoing reasons, the orders and judgment below should be reversed and the indictment dismissed or judgment of acquittal entered, or, in the alternative, the case remanded for a new trial.
Respectfully submitted,
______________________________
Wm. J. Sheppard, Esquire
Florida Bar No.: 109154
D. Gray Thomas, Esquire
Florida Bar No.: 956041
Sheppard and White, P.A.
215 Washington Street
Jacksonville, Florida 32202
Telephone: (904) 356-9661
Facsimile: (904) 356-9667
ATTORNEY FOR APPELLANT
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of the foregoing
has been furnished to Thomas M. Gannon, Esquire, Appellate Section, Criminal
Division, Criminal Division, Department of Justice, Patrick Henry Building,
Room 6206, 601 D. Street, N.W., Washington, D.C. 20044, by Fedearl Express
Delivery, this _____ day of February, 1998.
_____________________________
ATTORNEY
1. Kastigar v. United States, 406 U.S. 441 (1972).
2. 0 Treadwell was unavailable because he was indicted in breach of his immunity agreement with the Government. [R. 4 - 817 - 23-27]. See infra at Argument III B.
3. Brady v. Maryland, 373 U.S. 83 (1963).
4. 0 The prosecutor also knowingly presented to the grand jury Jacoby's false testimony that he had nothing to gain by cooperating with the Government. [R. 857 - 2272-2344].
5. 0 Also of importance, Mr. Scheer could not be characterized as having caused Valosin's false statement because he had no contact with her regarding the closing. [R. 40 - 3919].