UNITED STATES of America, Plaintiff-Appellee, v. Joan Marie ANDERSON (02-1662); Francis Albert Sagorski (02-1673); Rodger Bruce Yates (02-1700); Arthur Henry Modderman (02-1703); Susan Elaine Sloboda (02-1736); Robert Lee Goodwin, Jr. (02-1769); Ruth Elaine Shriver (02-1771), Defendants-Appellants.
Nos. 02-1662, 02-1703, 02-1771, 02-1673, 02-1736, 02-1700, 02-1769
United States Court of Appeals, Sixth Circuit
Argued and Submitted: Dec. 2, 2003. Decided and Filed: Dec. 23, 2003.
Lawrence J. Phelan (argued and briefed), Haehnel & Phelan, Grand Rapids, MI, for Appellant.
Before GUY and GILMAN, Circuit Judges; REEVES, District Judge.*
OPINION
PER CURIAM.
These seven consolidated appeals by defendants Joan Marie Anderson, Arthur Henry Modderman, Rodger Bruce Yates, Francis Albert Sagorski, Ruth Elaine Shriver, Susan Elaine Sloboda, and Robert Lee Goodwin, Jr., raise various challenges to
I.
The indictment alleged that beginning in late 1998 and continuing through July 2001, the defendants joined in a single conspiracy with multiple objectives: namely, to defraud the United States by impeding, impairing, obstructing, and defeating the lawful government functions of the IRS and other federal agencies; and to commit offenses against the United States with respect to both the fictitious sight drafts and the false reports of cash transactions to the IRS.1 The indictment described the “means and methods” of the conspiracy to include the creation and offering of 193 fictitious sight drafts purporting to be drawn on the United States Treasury with an aggregate face value of more than $550 million and the use of IRS Form 8300 to falsely report that 113 transactions occurred with third parties with an aggregate value of more than $490 million. In addition, defendants refused to appear before or cooperate with the grand jury, its subpoenas, or the federal district court. Defendants also filed frivolous “notices” (including criminal complaints) against prosecutors, law enforcement and judicial officers involved in the investigation and prosecution of this case.
In 1998, defendant Rodger Yates was serving a sentence in federal prison for activities involving the “Montana Freemen” at the same time that defendant Jerry Allen Chase was serving a sentence for violating income tax laws. Chase testified that Yates told him that he and Roger Elvick were perfecting a scheme using false financial instruments that appeared to be drawn on the United States. Yates enlisted the aid of individuals outside prison; namely, Joan Anderson, her common law husband Arthur Modderman, and Phillip Leroy (a.k.a. PJ) Hammond (who has not appealed). Yates, who was in prison for having used earlier forms of fictitious instruments, told Chase that the new “sight draft” theory was “more sound” than earlier schemes.
During that same time frame, defendants Ruth Shriver (Shriver) and her husband Jack Shriver (who has not appealed) were in financial trouble with the IRS. The Shrivers communicated with Elvick and his partner, Roger Knutt, both of whom had recently been released from prison and claimed to have recovered their farm using false sight drafts. In late summer 1998, PJ Hammond ordered thousands of
Sight drafts made payable to the IRS were written by all but two defendants, Sloboda and Goodwin, and formed the basis for the substantive charges in counts 2 through 24. As referenced earlier, numerous other sight drafts were presented to state and local governments, credit card companies, banks and credit unions, brokerages, and were also used for personal expenses. Part of the scheme was the hope that some financial institutions had such sloppy computer systems that at least some sight drafts would be accepted and the credits could be spent or used to eliminate other debts.
Another aspect of the conspiracy involved the filing of false returns with the IRS that reported cash transactions of over $10,000, when no transaction had in fact occurred, in order to intimidate and harass the individual identified as having participated in the nonexistent transaction. Under federal law, a return, Form 8300, must be filed with the IRS when a person engaged in a trade or business receives over $10,000 in a cash transaction.
Targets of the false 8300s included individuals who rejected sight drafts and both public officials and private individuals against whom a defendant bore a grievance. For example, four members of the Westveld family were targeted because one of them had purchased property that had once belonged to Modderman.2 Most of the false 8300s reported nonexistent transactions involving a number of judges, prosecutors, attorneys, public officials, and law enforcement and corrections officers. The forms were filled out to indicate that the target had refused to give his or her social security number, which automatically caused the IRS to send a stern form letter to the target demanding compliance with the law.
A total of eight defendants were charged with making false declarations under penalty of perjury by signing a false IRS Form 8300, in violation of
The evidence showed that Anderson and Modderman explained the “redemption theory” and instructed others how to write the sight drafts and fill out the false 8300s. One witness, Diana Arndt-Mammen (Arndt), testified that Anderson and Modderman offered the sight-draft scheme as a way for her to resolve her severe financial problems, showed her how to fill out the
Use of the mantra was taught as part of the scheme and was recited by various defendants through all stages of the proceedings. It was part of the refusal to cooperate with the grand jury and in contempt proceedings, which resulted in obstruction of justice enhancements at sentencing. Handwriting exemplars were ultimately provided to the grand jury, but not until after defendants were held in contempt of court. At trial, each of the defendants—except for Sagorski, Dewey Metcalf, Sr., and Dewey Metcalf, Jr.—disrupted the trial by standing and reciting the mantra.
This disruption involved several defendants rising together, repeatedly reciting the mantra and being removed from the courtroom. The first time, seven defendants were removed. The next day, a total of nine defendants were removed.4 With that, the district court decided, after consulting with counsel, that the nine defendants would be allowed to return only if they gave assurances that they would not disrupt the proceedings any further. Unwilling to give any assurances, none of the nine were present in the courtroom for the rest of the trial. Although the defendants do not challenge the district court‘s handling of the situation, it was the basis for upward departures at sentencing as well as Sagorski‘s motion for severance or mistrial.
Defendants were convicted on all counts and, after sentencing, timely notices of appeal were filed on behalf of Anderson, Modderman, Yates, Sagorski, Sloboda, Goodwin and Shriver.
II.
With the exception of Sloboda and Shriver, defendants appeal from the denial of judgment of acquittal with respect to some or all of their convictions. On appeal, “the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979). This standard applies to both direct and circumstantial evidence, and all reasonable inferences must be drawn in favor of the government. United States v. Searan, 259 F.3d 434, 441 (6th Cir.2001).
A. Form 8300
Challenging their convictions for violations of
Defendants emphasize that most cases involving the currency transaction report required by
“Willfulness” for purposes of the tax laws connotes ” ‘a voluntary, intentional violation of a known legal duty.’ ” Cheek v. United States, 498 U.S. 192, 200, 111 S.Ct. 604, 112 L.Ed.2d 617 (1991) (citation omitted). The relevant duty for purposes of willfulness is the duty imposed by the provision of the statute or regulation the defendant is accused of violating. Id. at 201-02, 111 S.Ct. 604. Under
Taking a slightly different tack, Modderman argues that the falsity of the information on the 8300s was not “material” because in the absence of any reportable transaction there was no duty to file the 8300s and no tax to be computed by the IRS. Of course, the failure to report income or other items necessary to the computation of tax is material. Tarwater, 308 F.3d at 505. In general, however, “a false statement is material if it has ‘a natural tendency to influence, or [is] capable of influencing, the decision of the decisionmaking body to which it was addressed.’ ” Neder v. United States, 527 U.S. 1, 16, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999) (alteration in original) (citation omitted). We reject defendants’ contention that it is immaterial as a matter of law to falsely report a transaction on Form 8300 when no transaction has in fact occurred.
B. Sight Drafts
The convictions for violation of
Added in 1996,
any false or fictitious instrument, document, or other item appearing, representing, purporting, or contriving through scheme or artifice, to be an actual security or other financial instrument issued under the authority of the United States, a foreign government, a State or other political subdivision of the United States, or an organization[.]
The legislative history of this provision indicates that it was intended to cover “fictitious” instruments, as opposed to “counterfeit” instruments, in order to close a loophole in the criminal statutes. United States v. Howick, 263 F.3d 1056, 1066-67 (9th Cir.2001), cert. denied, 535 U.S. 946, 122 S.Ct. 1339, 152 L.Ed.2d 243 (2002). The court in Howick articulated the distinction between counterfeit and fictitious documents as follows, id. at 1067:
A “counterfeit” obligation is a bogus document contrived to appear similar to an existing financial instrument; a “fictitious” obligation is a bogus document contrived to appear to be a financial instrument, where there is in fact no such genuine instrument, and where the fact of the genuine instrument‘s nonexistence is presumably unknown by, and not revealed to, the intended recipient of the document.
In this case, there was testimony that although there is a legitimate financial instrument known as a sight draft, the United States Treasury has not used sight drafts in modern history. Moreover, the United States Treasury maintains no depository accounts against which an individual could draw a check, draft, or any other financial instrument. The sight drafts at issue here were properly charged as fictitious instruments under
Yates asserts, without elaboration or citation to authority, that it was obvious from the face of the sight draft that it was not an “actual” financial instrument within the meaning of
Recognizing the infinite range of financial instruments, both genuine and fictitious, the court in Howick interpreted the phrase “actual security or other financial
Finally, defendants assert that there was insufficient evidence of an intent to defraud because they made no attempt to obtain a refund from the IRS. As the government points out, however, it was not necessary to prove defendants requested a refund in order to establish that the sight drafts were presented with intent to defraud. Intent may be proven through circumstantial evidence, and there was evidence from which the jury could infer that defendants knowingly sent worthless sight drafts drawn on the United States Treasury with the intention that they be accepted for value.
C. Sufficiency
Defendants Goodwin and Sagorski argue that the evidence was insufficient to support their convictions under
In addition to the expert witness testimony, the jury was entitled to consider both circumstantial evidence as well as the rebuttable presumption afforded by
Next, defendants Sagorski and Goodwin challenge the sufficiency of the evidence tying them to the charged conspiracy. Both defendants argue first that they never joined the conspiracy to defraud the United States by obstructing the IRS. Not only does this ignore that the conspiracy had multiple objectives, but also disregards the evidence concerning their participation. Goodwin‘s name was signed on 11 false 8300s directed at judicial officers, police, and attorneys that collectively reported over $140 million in financial transactions which never occurred. Goodwin also refused to cooperate with the grand jury, sent notices to court officers, and joined with those who acted to disrupt the trial.
Sagorski signed 34 false sight drafts totaling $49 million and filed 16 false 8300s reporting nonexistent transactions with employees of financial institutions, as well as judges, lawyers, and court officers. Special Agent Robert Walker testified that Sagorski admitted to having
Finally, Goodwin argues that it was error to have admitted another piece of evidence, the only sight draft purportedly written by him, because it preceded the conspiracy. To the contrary, the sight draft was dated May 21, 1999, and was endorsed on the reverse side to Jerry M. Beurkens on July 13, 1999; well within the period of the conspiracy. Beurkens, a city attorney, testified that he had prosecuted Goodwin on a traffic ticket several years earlier; received several documents from Goodwin, including the sight draft; and was the target of a false Form 8300 filed with the IRS.9
III.
Sagorski claims error in the denial of his motion for severance or mistrial on the grounds that he was prejudiced by the disruptive behavior of his codefendants. Whether properly articulated as a question of prejudicial joinder requiring severance, or a motion for mistrial resulting from prejudicial joinder, the record reflects that the district court addressed the appropriate considerations for determining whether the defendant could demonstrate he was prejudiced. See United States v. Moore, 917 F.2d 215, 220 (6th Cir.1990). Our review of a district court‘s decision on a motion for severance or for mistrial is for abuse of discretion. United States v. Lloyd, 10 F.3d 1197, 1215 (6th Cir.1993) (prejudicial joinder); United States v. Chambers, 944 F.2d 1253, 1263 (6th Cir.1991) (mistrial).10
Relief from prejudicial joinder is required “only if there is a serious risk that a joint trial would compromise a specific trial right of one of the defendants, or prevent the jury from making a reliable judgment about guilt or innocence.” Zafiro v. United States, 506 U.S. 534, 539, 113 S.Ct. 933, 122 L.Ed.2d 317 (1993). A trial court‘s limiting instructions may “cure” such prejudice. Id. The defendant bears the burden of making a “strong showing of factually specific and compelling prejudice resulting from a joint trial.” Moore, 917 F.2d at 221. We adhere to the view that the jury must be presumed capable of sorting out the evidence against each defendant separately. Id. at 220.
In denying Sagorski‘s motion, the district court observed at the outset that
Finally, in considering the impact of the disruptive behavior, the court indicated that the outbursts were short and the defendants were quickly escorted out of the courtroom. In fact, the court suggested that Sagorski‘s good behavior may have served to impress the jury and differentiate him from the disruptive defendants. No further disruptions occurred, as the nine defendants were unwilling to give the necessary assurances. Moreover, the jury was properly instructed to separately consider the evidence as to each defendant. United States v. Stull, 743 F.2d 439, 447 (6th Cir.1984). We find no abuse of discretion in the denial of Sagorski‘s motion for severance or mistrial.
IV.
Several evidentiary claims are raised by defendants Anderson, Modderman, Sagorski, and Goodwin. We review the district court‘s decisions concerning the admission of evidence for abuse of discretion. United States v. Middleton, 246 F.3d 825, 836 (6th Cir.2001). Even if an abuse of discretion has occurred, “[a]ny error, defect, irregularity, or variance that does not affect substantial rights must be disregarded.”
Anderson, joined by Modderman, claims error occurred when Agent Jon Street was allowed to testify concerning a box of documents which consisted of correspondence received from the defendants and addressed to individuals including judges, prosecutors, and IRS investigators (the “Gateway” box). The essence of Anderson‘s claim on appeal is twofold: that it was an abuse of discretion to allow testimony concerning the entire collection of documents without admitting all of the documents; and that it was unfairly prejudicial because it allowed the jury to speculate about the voluminous “collective misdeeds” of the defendants. We reject these contentions as meritless.
The record reflects that Street testified generally concerning the contents of the box to explain how the documents were accumulated and organized, but did not include specifics about documents that were not admitted into evidence. In addition, the box was present so that it would be available for defense counsel to use in cross-examination. From the box, Street selected documents sent by various defendants that contained the same or very similar captions or verbiage. Those selected documents were offered as exhibits to show the existence of and participation in the conspiracy. To the extent that the voluminous number of documents reflected badly on defendants, it was not unfairly prejudicial. There was no claim that the box did not contain the kind of documents that the exhibits represented. At least one defendant was able to clarify on cross-examination that none of the selected documents were sent by him.
Anderson and Modderman contend that it was an improper plea for sympathy to mention that defendants directed notices and other harassing correspondence to the prosecutor personally. In overruling objections to such evidence, the district court observed that to exclude the evidence would allow a defendant to thwart prosecution by sending damaging material to the
Sagorski claims that the district court erred in allowing Agent Steven Baker to testify concerning items seized from the Anderson-Modderman residence. Specifically, defendant points to testimony about a letter from a bank in response to correspondence from Sagorski; a copy of the alert from the Comptroller‘s Office to financial institutions about the fictitious sight drafts; excerpts from a book called “Accepted for Value“; portions of pamphlets outlining the use of the mantra; and literature referencing the “Kingdom of Heaven” group and other teachings. Defendant argues that the evidence was hearsay, and claims it was irrelevant and highly prejudicial because it branded the defendants as “anti-government” and because some of the references might have called to mind similarly named cults. There is no indication, however, that an objection was made on either basis. As such, our review is for plain error. United States v. Thomas, 11 F.3d 620, 629-30 (6th Cir.1993).
This evidence was relevant to the question of the defendants’ knowledge and intent and would not have been offered for the truth of the matter asserted. Moreover, this was hardly the only evidence of “anti-government” sentiment on the part of the defendants. Finally, it would be pure speculation to conclude that references to the “Kingdom of Heaven” group might have led the jurors to associate defendants, specifically Anderson and Modderman, with a cult known by a similar name. We find no reversible error.
V.
Five defendants—Anderson, Shriver, Sloboda, Goodwin, and Sagorski—appeal from certain aspects of the district court‘s calculation of their adjusted offense level under United States Sentencing Guidelines Manual (USSG) § 2F1.1 (2000). This guideline applies to both the group of offenses relating to the sight drafts and those relating to the false 8300s, and provides for a base offense level of 6.
Consequently, the district court categorically excluded the value of all the 8300s, leaving a base offense level of 6 for the
A. Intended Loss and § 514(a)(2) Offenses
At the outset, Anderson argues that no sight drafts should have been included as intended losses because they were so obviously bogus that it was impossible for the scheme to succeed in causing a loss. In Khan, we explained that the incremental increases for intended losses “assume a fraudulent scheme that would have created some actual loss but for the interruption of the scheme by detection or failure to carry out all the steps necessary to succeed.” 969 F.2d at 221. This limitation applies when the impossibility of pecuniary loss is “entirely unrelated to the fraud or its discovery.” Id. at 220. See United States v. Ly, No. 98-3783, 1999 WL 196573 (6th Cir. Mar.29, 1999) (unpublished decision). While no sight drafts were accepted for value in this case, it is because the fraud was detected.13
Anderson and Sagorski both claim the district court erred by holding them accountable for sight drafts written by others. To be considered “relevant conduct,” the conduct must have been (1) reasonably foreseeable to the defendant and (2) undertaken in furtherance of the jointly undertaken criminal activity.
Sagorski does not contest the amount of losses representing sight drafts he wrote himself, to the tune of about $820,000, but only disputes the inclusion of sight drafts written by Arndt and her son, Chad Boerma, on the grounds that the court failed to make particularized findings concerning the foreseeability of their conduct and the scope of the joint activity.
The district court found that Sagorski recommended the scheme to Arndt, and arranged for Anderson and Modderman to teach her. Arndt explained the theory to her son, who, with prompting from Sagorski, wrote a series of sight drafts. The district court concluded that Sagorski should be found culpable for the conduct of Arndt and Boerma because “one can say without a shadow of a question that he knew what [Arndt] and her son Boerma were doing, and the amounts that they defrauded and intended to defraud are culpable to him as a co-conspirator because it was clearly foreseeable within that portion of the conspiracy.” Because Sagorski has not demonstrated that the district court‘s findings were either inadequately individualized or clearly erroneous, we find no error in the 12-level adjustment in the offense level under
Anderson was held accountable for intended losses of $2,205,749, of which only $31,000 was attributable to sight drafts she wrote herself. This resulted in a 12-level increase in the offense level for the
We find no error in the finding that it was reasonably foreseeable to Anderson that her coconspirators would write the sight drafts in question. She explained how the sight drafts could be used to escape debts and secure credit, showed them how to fill out the sight drafts, and encouraged the filing of false 8300s against those who rejected the sight drafts. The only coconspirator Anderson did not personally instruct was Boerma. Not only did Anderson fail to object to those sight drafts, but any error in the inclusion of the $156,000 in sight drafts written by Boerma would be harmless because even without it the intended losses would still greatly exceed $1.5 million.15
B. Enhancements under USSG § 3B1.1 and § 3A1.2
Shriver received a two-level enhancement under
Anderson appeals from the 3-level enhancement imposed under
C. Upward Departures under USSG § 5K2.0 and § 5K2.7 16
We have reviewed a district court‘s decision to depart upward or downward from the sentencing guideline range under an abuse of discretion standard. United States v. Chance, 306 F.3d 356, 393 (6th Cir.2002). Recent amendments to
The applicable guidelines allow for upward departures when “there exists an aggravating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines.”
Once the district court excluded all of the false 8300s and many of the sight drafts from the loss calculations, the offense level could not be increased under
In addition, the district court provided defendants with notice of its intention to consider upward departure under
1. Shriver
Convicted of one count each of conspiracy and violating
Turning then to the question of departure under
2. Anderson
The district court granted a 6-level upward departure under
Taking issue with the
Appealing the 4-level upward departures under
The district court considered this possibility, but found it inappropriate because to bring criminal contempt charges at trial could have “anointed these people with martyrdom.” The district court also explained that “this is not all about contempt. This whole trial, this whole issue, redemption theory, ... was illustrative of contempt for all authority. Not just judicial authority, but all authority. This con-
In a related “piling on” argument, Anderson suggests the departures were not necessary because removing her and the others from the trial was punishment enough. That was a question of courtroom management, with defendants being invited to return to the courtroom twice every day, and was not adequately reflected in the sentencing calculations absent the departure. Finally, Anderson challenges the extent of the departures as unreasonable. We cannot say that the 4-level departures under
AFFIRMED.