United States v. George R. Cavallo
790 F.3d 1202
| 11th Cir. | 2015Background
- From 1997–2008 Cavallo, Hornberger, Streinz and others ran a large mortgage-fraud conspiracy that used falsified loan applications and friendly “flips” to obtain loans on 30+ residential properties; many co-conspirators pled guilty but these three went to trial.
- A jury convicted all three of conspiracy to commit wire fraud/false statements (18 U.S.C. § 371); Cavallo and Hornberger were also convicted on one substantive count under 18 U.S.C. § 1014; sentences ranged from 12 months+ to 120 months; large restitution orders were entered.
- Key factual roles: Craig Adams led the scheme; Richard Bobka recruited Cavallo and Hornberger; Cavallo managed bookkeeping/bank accounts; Streinz participated as a friendly buyer on two properties.
- Major contested post-trial issues on appeal included (1) Streinz’s claim the court denied him access to counsel while testifying, (2) allegations of grand-jury and juror misconduct, (3) sufficiency of the evidence against Cavallo for the § 1014 count, (4) sentencing calculations (loss, relevant conduct, disparities) and restitution amount for Cavallo and Hornberger.
- The Eleventh Circuit affirmed Cavallo and Hornberger’s convictions and most sentencing rulings but vacated and remanded restitution; it reversed Streinz’s conviction and remanded for a new trial based on the Sixth Amendment error.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Streinz was denied Sixth Amendment right to counsel by court order barring consultation with counsel during two overnight recesses while he was testifying | Streinz: court’s ban deprived him of critical-stage assistance in violation of Geders; he objected and sought to consult about seized documents and trial strategy | Government: Perry permits short recess restrictions; no clear prejudice and restriction was limited ("constitutional rights" carve-out) | Court reversed Streinz’s conviction: two overnight bans fell on the Geders side of the line and deprived him of assistance of counsel; remanded for new trial |
| Whether alleged perjury by an FBI agent before the grand jury (re: signature verification) required dismissal of indictment | Cavallo/Hornberger: agent falsely testified that every signature was verified; this was material and prejudicial | Government: agent’s answer reasonably read as limited to Count 37 and did not knowingly mislead; any imprecision was not willful perjury | District court not an abuse of discretion; Eleventh Circuit affirmed denial of motions to dismiss (no knowing falsehood that substantially influenced indictment) |
| Whether juror-extrinsic information (juror learned via internet that a cooperating witness received lenient sentence) or improper contact warranted new trial | Defendants: extrinsic prejudicial info influenced hold-out juror; additional investigation required | Government & court: evidence of extrinsic influence came from proof obtained in violation of local rule (defendant Cavallo contacted juror); Rule 606(b) largely bars inquiry into deliberations; excluded tainted evidence; any extrinsic info was not prejudicial | Court affirmed denial of new trial; excluded evidence obtained by Cavallo’s improper juror contact and found no prejudice to defendants |
| Sufficiency of evidence and sentencing issues for Cavallo (§ 1014 substantive count; loss/restitution; disparities) | Cavallo: insufficient proof he signed/knowingly adopted misstatements and didn’t intend to influence FDIC bank; sentencing: challenged inclusion of acquitted conduct, loss valuation timing/foreseeability, disparities, alleged impermissible consideration of sex | Government: presented signatures and documentary proof; reasonable expectation statements would reach lender; Guidelines allow inclusion of relevant acquitted conduct by preponderance; sentencing calculations and downward variance proper | Court affirmed conviction on Count 28 and affirmed sentence (120 months) except vacated restitution: loss calculations for Guidelines upheld but restitution order (raw loan amounts without credits/market-value offsets) vacated and remanded to calculate actual victim loss |
Key Cases Cited
- Geders v. United States, 425 U.S. 80 (1976) (overnight ban on defendant consulting counsel during recess violates Sixth Amendment)
- Perry v. Leeke, 488 U.S. 272 (1989) (short recess restrictions may be permissible; Geders still controls for long overnight recesses)
- United States v. Cronic, 466 U.S. 648 (1984) (denial of counsel at a critical stage renders trial unfair)
- Bank of Nova Scotia v. United States, 487 U.S. 250 (1988) (grand-jury misconduct requires dismissal only if it substantially influenced indictment or raises grave doubt)
- United States v. Venske, 296 F.3d 1284 (11th Cir. 2002) (district court may exclude evidence obtained by parties’ improper juror contact; strong interest in protecting jurors)
- United States v. Watts, 519 U.S. 148 (1997) (acquittal does not preclude sentencing court from considering underlying conduct proven by preponderance)
- United States v. Huff, 609 F.3d 1240 (11th Cir. 2010) (MVRA restitution must reflect victims’ actual loss and offset proceeds/value of collateral)
- Crutchfield v. Wainwright, 803 F.2d 1103 (11th Cir. en banc 1986) (discusses preservation and scope of right to consult counsel during recesses)