United States v. Keith Churn
800 F.3d 768
| 6th Cir. | 2015Background
- Keith Churn, owner of C&M Construction Management, arranged two modular-home projects (2408 Clarksville Pike and 956 Green Street) in 2006–07; investors Rief and Thomas obtained construction loans from BancorpSouth Bank (BSB).
- BSB disbursed initial purchase funds and multiple construction "draws" based on invoices and representations from Churn; little or no construction work was completed despite several draws totaling substantial sums.
- Bank inspections and communications with All American Homes (AAH) undermined Churn’s representations: AAH had no record of Churn’s orders, the invoices Churn submitted were not from AAH, and site inspectors reported minimal progress.
- Churn was indicted on 13 counts of bank fraud (one count per draw); jury convicted him on seven counts, acquitted/dismissed the rest. District court sentenced him to 33 months and ordered $237,950.50 restitution.
- On appeal Churn challenged several evidentiary rulings (emails, county-permit testimony, admission of an uncharged but related transaction), argued cumulative error, contested use of acquitted/dismissed conduct at sentencing, and contended the restitution order violated Apprendi principles under the MVRA.
Issues
| Issue | Churn's Argument | Government's Argument | Held |
|---|---|---|---|
| Admission of March 3 email quoting AAH representative (hearsay) | Admission was impermissible hearsay; statements from "Bob" required exclusion or an exception | Email was admitted to show Campsey’s state of mind and its effect on her actions, not for the truth of Bob’s statements | Admission was proper — statements were offered to show effect on the listener (not hearsay); limiting instruction given |
| Campsey’s statement that county records showed no permit (hearsay) | Testimony conveyed out-of-court county statements without foundation or exception and prejudiced convictions on certain counts | Bank officer’s observation and other evidence supported lack of completed work; any error harmless | Statement was hearsay but any error was harmless given corroborating evidence; no relief granted |
| Admission of testimony about another transaction (North 24th Ave) as res gestae | Testimony was improper extrinsic evidence and unfairly prejudicial; not sufficiently connected to charged counts | Testimony was intrinsic/background evidence showing the same scheme and business relationship; probative value outweighed prejudice | Admission did not abuse discretion — transaction was closely related in time and nature and admissible as res gestae/intrinsic evidence |
| Cumulative evidentiary error | Combined evidentiary errors deprived him of a fair trial | Errors were limited or harmless and did not undermine verdict | No cumulative-error reversal; errors (if any) were harmless |
| Sentencing based on acquitted/dismissed conduct | Use of acquitted/dismissed conduct to increase sentence violated right to jury finding | Court may consider dismissed/acquitted conduct at sentencing if proved by preponderance (Watts and circuit precedent) | District court correctly followed binding precedent allowing consideration of such conduct for sentencing |
| Restitution under MVRA and Apprendi challenge | Restitution amount exceeded statutory maximum tied to convicted counts; facts increasing punishment must be found by a jury | MVRA does not have an Apprendi-limited statutory maximum for restitution; district court may order restitution for losses caused by the entire scheme | Court affirmed: Apprendi does not apply to MVRA restitution here; restitution for scheme-wide losses was proper under controlling circuit precedent |
Key Cases Cited
- United States v. Talley, 164 F.3d 989 (6th Cir.) (statements offered to show their effect on the listener are not hearsay)
- United States v. Watts, 519 U.S. 148 (1997) (acquittal does not bar consideration of underlying conduct at sentencing if proved by a preponderance)
- Apprendi v. New Jersey, 530 U.S. 466 (2000) (any fact increasing the penalty beyond statutory maximum must be submitted to a jury)
- Southern Union Co. v. United States, 132 S. Ct. 2344 (2012) (Apprendi principles applied to statutory fines with defined maxima)
- United States v. Sosebee, 419 F.3d 451 (6th Cir.) (MVRA restitution not constrained by Apprendi; restitution statutes do not specify a statutory maximum)
- United States v. Freeman, 640 F.3d 180 (6th Cir.) (discussion of restitution limits and causal linkage to offense of conviction)
- Biegas v. Quickway Carriers, Inc., 573 F.3d 365 (6th Cir.) (statements showing listener’s knowledge or reason for action are admissible)