UNITED STATES OF AMERICA, Plaintiff - Appellee, v. HALLIE IRVIN, Defendant - Appellant. UNITED STATES OF AMERICA, Plaintiff - Appellee, v. F. JEFFREY MILLER, Defendant - Appellant.
No. 10-3106 (5:06-CR-40151-JAR-3); No. 10-3107 (5:06-CR-40151-JAR-1)
United States Court of Appeals, Tenth Circuit
March 22, 2012
PUBLISH
ORDER
Before MURPHY, EBEL, and TYMKOVICH, Circuit Judges.
These matters are before the court on F. Jeffrey Miller‘s Petition For Panel Rehearing, Or, In The Alternative, Rehearing En Banc, filed in appeal number 10-3107. We also have a response from the government. Upon consideration, we grant panel rehearing and direct the clerk of court to substitute the revised opinion attached to this order for the original decision issued in these appeals on August 31, 2011.
In this regard, we note that because no petition for rehearing was filed in companioned matter 10-3106, United States v. Irvin, the mandate issued in the normal course on September 22, 2011. Because the grant of rehearing in number 10-3107 necessarily impacts the Irvin opinion, however, we sua sponte recall the mandate in that case and likewise direct the clerk to file the attached new decision in that appeal. The new opinion will reflect today‘s filing date.
The suggestion for rehearing en banc filed with the petition for rehearing in number 10-3107 was circulated to all the judges of the court who are in regular active service. As no member of the panel or the court called for a poll on that request, the suggestion for en banc rehearing is denied.
Entered for the Court,
ELISABETH A. SHUMAKER
Clerk of Court
UNITED STATES OF AMERICA, Plaintiff - Appellee, v. HALLIE IRVIN and F. JEFFREY MILLER, Defendants - Appellants.
Nos. 10-3106 and 10-3107
United States Court of Appeals, Tenth Circuit
March 22, 2012
PUBLISH; APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS (D.C. Nos. 5:06-CR-40151-JAR-3 & 1)
Jeffrey D. Morris of Berkowitz Oliver Williams Shaw & Eisenbrandt LLP, Kansas City, Missouri, for Defendant-Appellant, Miller.
Richard L. Hathaway, Assistant United States Attorney (Barry R. Grissom, United States Attorney, and Christine E. Kenney, Assistant United States Attorney, with him on the briefs), District of Kansas, Topeka, Kansas, for Plaintiff-Appellee.
MURPHY, Circuit Judge.
I. Introduction
Appellants F. Jeffrey Miller and Hallie Irvin were charged in an eleven-count indictment with a variety of crimes stemming from an alleged conspiracy to defraud mortgage lenders in connection with the subprime housing market. After a month-long jury trial, Miller and Irvin were each convicted on several of the charges and sentenced. They now appeal their convictions, citing numerous evidentiary and legal errors. Miller also challenges his sentence. Exercising jurisdiction under
II. Background
Miller was a builder and developer involved in residential construction in Kansas, Missouri, and other states.1 There being many competing developers marketing their homes to well-qualified buyers, Miller chose to focus his business on the relatively untapped subprime market, i.e., buyers with low income and poor credit. The marketing of Miller‘s homes was handled by Stephen Vanatta, who would refer potential buyers to a mortgage broker named James Sparks for financing. Upon the successful closing of a home sale, Miller was paid out of the mortgage loаn proceeds while Sparks received a commission from the mortgage lender, which he shared with Vanatta. Because a prior felony conviction for passing a bad check prohibited Vanatta from maintaining a checking account, his portion of commissions were paid by checks issued to his wife, appellant Irvin.
Despite the eagerness of lenders to extend mortgage loans, Sparks often had trouble securing financing for Vanatta‘s subprime applicants. In order to ensure that otherwise unqualified buyers could obtain financing, Sparks and Vanatta enhanced such buyers’ apparent creditworthiness by, among other things, overstating the buyers’ income, altering bank statements to add deposits, and drafting false letters of employment. The mortgage
The government became aware of these fraudulent activities due to a report made by the accounting firm, Meara King & Company (“Meara King“). Meara King was monitoring Miller‘s business activities in accordance with a certain agreement entered into by Miller as a condition of his release in connection with another criminal prosecution (the “Monitoring Condition“).4 While reviewing a home sale referred to herein as the “Jordan Transaction,” Meara King noted a sizable discrepancy between the reported value of the property and the value assigned to it by Meara King‘s appraiser. It reported this discrepancy to the United States Attorney‘s Office, which began an investigation. The investigation ultimately led to Miller, Vanatta, Sparks, Irvin, and Miller‘s former employee Sandra Harris, being charged with a variety of criminal offenses including bank fraud, conspiracy to commit bank fraud, money laundering, and criminal contempt for knowingly violating the order setting Miller‘s conditions of release in Miller I.
Sparks pled guilty to one count of conspiracy pursuant to an agreement whereby he agreed to testify against his co-defendants as a cooperating witness. The remaining defendants were tried on the following charges: conspiracy (Count 1); two counts of bank fraud (Counts 2 & 3); two counts of money laundering, each count tied to one of the substantive bank fraud charges (Counts 4 & 5); destroying records in a federal investigation (Count 6); corruptly influencing a witness (Count 8); and four counts of criminal contempt, for either violating the Monitoring Condition set in Miller I, or for aiding and abetting in those violations (Counts 9-12).5 Following a lengthy trial, the jury acquitted Harris of all charges. Miller, Vanatta, and Irvin were each found guilty of Counts 1, 5, 9, and 10. Vanatta and Irvin were additionally found guilty of Counts 2 and 4.
Prior to sentencing, Miller, Vanatta and Irvin moved for entry of judgments of acquittal, alleging insufficient evidence to sustain a conviction. Alternately, the defendants requested a new trial based upon
III. Discussion
A. Challenges to Admitted Evidence
1. Admission of Exhibit 1-2
The testimony of cooperating defendant Sparks formed much of the govеrnment‘s case against Miller and Irvin. Over the course of four days, Sparks described the various forgeries, misrepresentations, and other fraudulent activities he allegedly engaged in with Vanatta to obtain financing for unqualified buyers. In all, Sparks related the particulars of twenty-two separate transactions involving Miller-built homes. During this testimony, continual reference was made to government Exhibit 1-2, a chart displayed before the jury that purported to summarize the relevant details of these transactions. This chart was entitled “Summary of Fraud for JEFF MILLER et al., Fraud That Can Be Identified By James Sparks.” It included information identifying the date, location, and buyer for each transaction, as well as a column labeled “False Statements to Lenders,” which listed the various specific fraudulent representations and actions described by Sparks.
Exhibit 1-2 was initially offered by the government under
Miller and Irvin argue the loan files purportedly summarized in Exhibit 1-2 constituted hearsay that was not shown to qualify for any exception to the prohibition on hearsay evidence. When this same challenge was raised before the district court, the government attempted to show the loan files were admissible under the business records exception established by
Before ruling on the admissibility of Exhibit 1-2, the district court acknowledged the documents summarized by a Rule 1006 chart must themselves be admissible. Nevertheless, it reasoned that, while Sparks‘s testimony had not established admissibility of the loan files under
Thе materials summarized by Rule 1006 evidence must themselves be admissible because a contrary rule “would inappropriately provide litigants with a means of avoiding rules governing the admission of evidence such as hearsay.” Samaniego, 187 F.3d at 1224. Accordingly, just as the proponent of hearsay evidence bears the burden of establishing the applicability of a hearsay exception, Ary, 518 F.3d at 786, so too must the proponent of a Rule 1006 summary based on hearsay evidence establish that the materials summarized are admissible. Samaniego, 187 F.3d at 1224. Contrary to the district court‘s ruling, Miller and Irvin were under no obligation to affirmatively disprove the applicability of the business records exception. The burden was on the government alone. By not requiring the government to lay the foundation necessary under
The government seeks to avoid this conclusion by explaining that, contrary to its representations before the district court, Exhibit 1-2 summarized not only the aforementioned loan files, but also the trial testimony of Sparks and other government witnesses.6 Therefore, the government reasons, Exhibit 1-2 constituted a “hybrid” summary chart, admissible under
This analysis, however, does not conclude the inquiry, because “this court applies a harmless error standard when reviewing trial courts’ rulings on hearsay objections resting solely on the Federal Rules of Evidence.” United States v. Collins, 575 F.3d 1069, 1073 (10th Cir. 2009) (quotation and аlteration omitted). “A harmless error is one that does not have a substantial influence on the outcome of the trial; nor does it leave one in grave doubt as to whether it had such effect.” Id. (quotation omitted). In evaluating whether the district court‘s erroneous admission of Exhibit 1-2 was harmless, “we review the record de novo to determine whether the evidence . . . had a substantial influence on the jury‘s verdict in the context of the entire case against [the defendants].” United States v. Wilson, 107 F.3d 774, 785-86 (10th Cir. 1997) (quotation omitted).
The government bears the burden of proving the error was harmless. United States v. Velarde, 214 F.3d 1204, 1211 (10th Cir. 2000). It has not adequately carried this burden. Exhibit 1-2 was displayed before the jury throughout Sparks‘s direct testimony, listing the government‘s allegations using suggestive terminology (e.g., referring to commission payments as “kickbacks“) and organizing them into a simple and comprehensible chart beneath condemnatory section headings (e.g., “Summary of Fraud for JEFF MILLER et al.” and “False Statements to Lenders“). The district court itself later acknowledged the prejudicial influence of the exhibit‘s rhetorical aspects and ordered several redactions to the chart‘s accusatory terminology before sending it into jury deliberations. Although these revisions were appropriate, they came too late. More importantly, they did not address the core prejudicial impact of this inadmissible exhibit, i.e., the compelling simplicity with which Exhibit 1-2 reduced weeks of complex testimony and inadmissible hearsay into an easily digested summary.
The government itself confirmed this was the primary benefit of the summary chart. In advocating the propriety of Exhibit 1-2 before the district court, the government highlighted its significance: “The more that this document is challenged the more it emphasizes the importance, and particularly in a fraud case where we have a cooperating individual, of having a document that in one comprehensive format identifies the various kinds of frauds and the patterns.” Focusing on the usefulness of Exhibit 1-2 in jury deliberations, the government further explained: “[I]t‘s more significant than ever that the jury
In contrast to the litany of direct evidence indicating Vanatta‘s and Sparks‘s illegal activities in furtherance of the conspiracy charged in Count 1, Miller‘s and Irvin‘s connections with the conspiracy were primarily supported by circumstantial evidence, such as Miller‘s admitted desire to sell his houses at the highest possible price and Irvin‘s preparation of invoices for “construction management fees” that secretly represented Vanatta‘s real estate marketing commissions. Although the evidence is sufficient to sustain the jury‘s verdict on Count 1 as a purely legal matter,7 we are left in grave doubt that the verdict would have been the same had the objection to Exhibit 1-2 been sustained. Miller‘s and Irvin‘s convictions on Count 1 are therefore reversed.
Nevertheless, the admission of Exhibit 1-2 was harmless error in relation to Counts 2, 4, 5, 9 and 10, which are discussed in greater detail below. Those counts—each of which alleged a discrete instance of criminal activity—did not present the factual complexity characteristic of the conspiracy in Count 1, and were therefore less susceptible to the summarization of the evidence in Exhibit 1-2. The bank fraud and money laundering charged in Counts 2 and 4, moreover, were not reflected on Exhibit 1-2 at all, and the government‘s case on those counts was supported by a wholly separate body of evidence. Counts 5, 9, and 10, by contrast, centered on criminal conduct committed in connection with the so-called Jordan Transaction, which was summarized on Exhibit 1-2. Each allegation concerning the Jordan Transaction contained in Exhibit 1-2, however, was independently supported by sufficient properly admitted evidеnce and witness testimony. Furthermore, while the majority of the transactions summarized on Exhibit 1-2 received only passing mention during the trial, the Jordan Transaction upon which Count 5 was premised was discussed repeatedly and at great length during trial. Any influence that Exhibit 1-2 might have had upon the jury‘s verdict on Counts 5, 9, and 10 was, therefore, minimal.
2. Admission of Exhibit 2009
Exhibit 2009 is a review appraisal prepared by Pinnacle Appraisal Group LLC at the request of Meara King, the accounting firm monitoring Miller. The appraisal concerned the property sold by Miller in connection with the Jordan Transaction. It concluded the property was worth approximately $185,000, and that an earlier appraisal of $220,000 reflected an inflated valuation. Stephen Browne, a partner at Meara King, was called upon to provide the necessary foundational showing and testified that he and his firm regularly ordered, received, and relied upon such appraisals as a protocol in monitoring businesses, including Miller‘s. He further testified that Meara King routinely worked with Pinnacle in obtaining appraisals and that Exhibit 2009 was prepared by Pinnacle shortly after a request was made. Browne also explained that Meara King
The following are not excluded by the rule against hearsay, regardless of whether the declarant is available as a witness:
. . . .
(6) Records of a Regularly Conducted Activity. A record of an act, event, condition, opinion, or diagnosis if:
(A) the record was made at or near the time by—or from information transmitted by—someone with knowledge;
(B) the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit;
(C) making the record was a regular practice of that activity;
(D) all these conditions are shown by the testimony of the custodian or another qualified witness . . . ; and
(E) neither the source of information nor the method or circumstances of preparation indicate a lack of trustworthiness.
Relying on United States v. Carranco, 551 F.2d 1197, 1200 (10th Cir. 1977), the government contends Exhibit 2009 was admissible through the testimony of Browne as an “adoptive” business record. The government reads Carranco as holding a record prepared by one company and “incorporated and adopted into the records of the witness‘s company” satisfies the requirements of the business records exception to the hearsay rule. Carranco does not so hold. To the contrary, Carranco expressly recognized such an argument could have been made on the facts of that case, but declined to separately consider it because the necessary objections had not been made before the trial court. Id. at 1199. Carranco did concern the admissibility of a freight bill prepared by one party, Admiral Merchants, and used by another party, ICX. Id. The objection at issue, however, was limited to whether notations made by ICX on the freight bill precluded its admissibility because they were not made in the regular course of business. Id. At best, Carranco can be read as assuming, without deciding, that one company can “adopt” the business records of another company for purposes of Rule 803(6).
This court has therefore never decided whether “adoptive business records” are admissible under
As to Irvin, the record shows the government did not rely in any way on Exhibit 2009 to prove she participated in the Jordan Transaction and therefore its admission is harmless as to her convictions
B. Challenges to the Sufficiency of the Evidence
1. Legal Standards
Following the close of the government‘s evidence, and again following the close of all evidence at trial, Miller and Irvin moved for entry of judgments of acquittal pursuant to
In reviewing the sufficiency of the evidence and denial of a motion for judgment of acquittal, this court reviews the record de novo to determine whether, viewing the evidence in the light most favorable to the government, any rational trier of fact could have found the defendant guilty of the crime beyond a reasоnable doubt. United States v. Wood, 207 F.3d 1222, 1228 (10th Cir. 2000). This court does not “weigh conflicting evidence or consider witness credibility, as these duties are delegated exclusively to the jury. Instead, we presume that the jury‘s findings in evaluating the credibility of each witness are correct.” United States v. Evans, 318 F.3d 1011, 1018 (10th Cir. 2003) (quotation and citation omitted).
2. Count 2 – The Lake Ozark Transaction
In contrast with the majority of the charges, Count 2 alleged bank fraud by
Bank fraud is defined as the knowing execution, or attempted execution, of “a scheme or artifice (1) to defraud a financial institution; or (2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises.”
The record is, in fact, clear that the fraudulent financial information Irvin submitted to First National Bank had no impact on the ultimate issuance of the loan. As Mr. Niedergerke explained, his repeated successful dealings with Miller provided the sole basis of decision to recommеnd issuance of the mortgage loan to First National‘s loan committee. Consequently, Irvin‘s credit information was not even included in Niedergerke‘s presentation to the loan committee, in which he explicitly stated that “[n]o financial emphasis [had been] placed on Hallie Irvin” in forming his recommendation. None of this, however, forecloses the jury from rationally concluding that Irvin‘s representations were material.
“In general, 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 (1999) (quotation and alteration omitted); see also Akers, 215 F.3d at 1102 (citing United States v. Rodriguez, 140 F.3d 163, 168 (2d Cir. 1998), for the proposition that a material misrepresentation is one “capable of influencing a bank‘s actions“). This definition, in referring to natural tendencies and capabilities, establishes materiality in the bank fraud context as an objective quality, unconcerned with the subjective effect that a defendant‘s representations actually had upon the bank‘s decision. Defining materiality in this way accords with the thrust
3. Count 4 – Money Laundering
Count 4 charged the defendants with laundering the proceeds they received from the act of bank fraud charged in Count 2. As with Count 2, Irvin was found guilty while Miller was acquitted. The money-laundering statute under which Irvin was tried and convicted,
Irvin first argues that because there is insufficient evidence of materiality to support her conviction for the predicate bank fraud charged in Count 2, there is necessarily insufficient evidence to support the derivative crime of money laundering charged in Count 4. See United States v. Lake, 472 F.3d 1247, 1260-61 (10th Cir. 2007) (reversing conviction for money laundering where predicate act of wire fraud unsupported by sufficient evidence). As explained above, however, the record provides sufficient evidence of materiality to support the jury‘s verdict against Irvin on Count 2. Irvin‘s argument therefore rests on a mistaken premise and must be rejected.
Irvin‘s second argument challenges the sufficiency of the evidence supporting the jury‘s required finding that her money laundering transaction involved “criminally derived property.” In the context of money
The government identified the criminally obtained proceeds laundered in Count 4 to be the loan funds disbursed by First National Bank in connection with the Lake Ozark Transaction. The testimony of two witnesses at trial, however, indicated without contradiction that these loan funds did not constitute profit to the defendants because they were immediately used to purchase property. That is, the Lake Ozark Transaction loan funds did not accrue to Irvin or Miller, but rather flowed away from them as payment for the Lake Ozark house. Because nothing else in the record indicates whether these loan funds constituted profits, and because the jury was instructed that “‘proceeds’ means profits,” Irvin contends no rational jury could have found she was involved in a transaction involving proceeds obtained from a criminal offense.
Contrary to the Santos Instruction given by the district court, the term “proceeds,” as used in the version of
Although the jury instructions given below defined the crime of money laundering more stringently thаn necessary, they do not direct our consideration of the sufficiency of the evidence. The government‘s timely objection to the “proceeds
Properly considered, the crime of money laundering requires proof beyond a reasonable doubt that (1) the defendant engaged in or attempted to engage in a monetary transaction; (2) in criminally derived property worth at least $10,000; (3) with knowledge that the property was derived from unlawful activity; and (4) the property was, in fact, derived from specified unlawful activity. Lake, 472 F.3d at 1260. “‘[C]riminally derived property’ means any property constituting, or derived from, proceeds obtained from a criminal offense,”
4. Count 5 – Money Laundering
Just as Counts 2 and 4 formed a linked pair (bank fraud and money laundering), so too did Counts 3 and 5. Count 3 charged defendants with bank fraud in connection with their efforts to obtain a mortgage loan for Ms. Kerrie Jordan from First Horizon Home Loan Corporation (“First Horizon“), in violation of
To convict Miller and Irvin of money laundering in Count 5, the jury was required to find beyond a reasonable doubt that (1) the defendants knowingly engaged in a monetary transaction affecting interstate commerce; (2) knowing, at the time,
Miller contends that because the jury found him not guilty on Count 3, his conviction on Count 5 cannot stand. It is well-settled, however, that an inconsistent verdict is not a sufficient reason for setting a verdict aside. United States v. Powell, 469 U.S. 57, 64-66 (1984); United States v. Harris, 369 F.3d 1157, 1168 (10th Cir. 2004). “[C]onsistency in verdicts is not required because, where truly inconsistent verdicts have been reached, the most that can be said is that the verdict shows that either in the acquittal or the conviction the jury did not speak their real conclusions, but that does not show that they were not convinced of the defendant‘s guilt.” United States v. McCullough, 457 F.3d 1150, 1161 n.2 (10th Cir. 2006) (quotations omitted) (concluding defendant‘s acquittal on conspiracy charges did not require reversal of his conviction for using a telephone to facilitate the conspiracy). For this very reason, other courts have upheld convictions for money laundering even where there was an acquittal on the predicate offense. See, e.g., United States v. Richard, 234 F.3d 763, 768 (1st Cir. 2000) (concluding defendant‘s acquittal on predicate offense of bankruptcy fraud did not require reversal of his conviction for money laundering). Miller‘s acquittal on Count 3 does not impact his conviction on Count 5.
Miller also challenges the evidence supporting the second required element of Count 5; namely, that he knew the transaction in question involved criminally derived property. He contends the only evidence he was aware of any wrongdoing in connection with the Jordan Transaction came from Ms. Jordan‘s testimony, in which she stated she complained to Miller about the increase in her sales price after the closing. Therefore, Miller reasons, the jury had no rational basis to conclude he had knowledge of the criminally derived nature of the loan proceeds prior to the laundering transaction. Miller understates the contents of the record. The government presented evidence the defendants surreptitiously increased the sales price for Ms. Jordan‘s home from $200,000 to $220,000 after it became apparent Ms. Jordan‘s original submissions would not be sufficient to obtain financing. Other evidence indicated the $220,000 sales price was supported by an inflated appraisal which Miller had contributed to by providing the appraiser with Miller-built comparables. Finally, testimony indicated that Miller set the final sales price for his homes and otherwise “controlled everything” about his business. Viewing the evidence in the light most favorable to the government, a rational jury could conclude Miller was aware the proceeds from
Irvin‘s attack on the sufficiency of the underlying bank fraud count is more nuanced. The government elected to submit Count 3 to the jury solely under the second prong of
The evidence adduced at trial indicates First Horizon was a wholly owned operating subsidiary of First Tennessee. To fund residential single-family mortgage loans, like the one extended to Ms. Jordan, First Horizon would draw on a $5 billion line of credit made available to it by First Tennessee. First Horizon would then bundle such loans into mortgage-backed securities within thirty to forty-five days of their origination and sell them to investment banks on the secondary market. The proceeds from these sales were then used to repay First Horizon‘s debts to First Tennessee. In deciding whether or not to issue a certain loan, First Horizon followed its own internal loan application process and underwriting guidelines, and maintained its own team of due-diligence officers to confirm the security of its loans. First Tennessee played no role in First Horizon‘s loan-issuance decisions. Finally, the evidence specific to Ms. Jordan‘s mortgage loan identified First Horizon as the lender, and indicated First Horizon held the deed of trust on the Jordan property.
Irvin concludes from these facts that Ms. Jordan‘s mortgage loan was strictly the property of First Horizon, and was never owned by, or under the custody or control, of First Tennessee. Her reasoning in this regard appears correct, and First Tennessee‘s corporate ownership of First Horizon does not change the analysis for “[a] corporate parent which owns the shares of a subsidiary does not, for that reason alone, own or have legal title to the assets of the subsidiary.” Dole Food Co. v. Patrickson, 538 U.S. 468, 475 (2003). Count 3, however, did not charge the defendants with scheming to obtain the financial instrument representing Ms. Jordan‘s mortgage loan. Instead, the government charged them with “[s]ubmitting false loan application information for Kerrie Jordan, borrower, to First Horizon to obtain proceeds from First Tennessee Bank.” (emphasis added). The single relevant fact, then, is that the loan proceeds disbursed from First Horizon upon its decision to fund Ms. Jordan‘s mortgage indisputably
Miller‘s and Irvin‘s convictions on Count 5 are supported by sufficient evidence and are affirmed.
5. Counts 9 & 10 – Criminal Contempt
Counts 9 and 10 charged the defendants with violating
Miller first contends his conviction on Count 9 must fail because it was specifically linked to the crime chargеd in Count 3. Because the jury acquitted him of the bank fraud charged in Count 3, he reasons, the government failed to prove a necessary element for conviction on Count 9. As discussed in the context of Miller‘s challenge to Count 5, however, “consistency in verdicts is not required,” and an inconsistent verdict provides no reason for setting a conviction aside. Powell, 469 U.S. at 64-66. His conviction on Count 9 is affirmed.
Miller also contends his conviction on Count 10 must fall because it was specifically linked to the crime charged in Count 5, which he believes was unsupported by sufficient evidence for the reasons discussed in Section III(B)(4), supra. That argument is, as demonstrated by the above analysis, flawed. Miller‘s conviction on Count 5 was supported by adequate evidence, and Miller‘s conviction on Count 10 is therefore affirmed.
Irvin contends nothing in the record indicates she was even aware of Miller‘s conditions of release from Miller I, and that without proof of such knowledge the jury could not rationally have found that
This evidence, without more, is insufficient to support the jury‘s conclusion that Irvin knew of Miller‘s conditions of release. “While the jury may draw reasonable inferences from direct or circumstantial evidence, an inference must be more than speculation and conjecture to be reasonable, and caution must be taken that the conviction not be obtained by piling inference on inference.” United States v. Jones, 44 F.3d 860, 865 (10th Cir. 1995) (quotations omitted). Both routes to proving Irvin‘s knowledge proposed by the government go beyond the realm of “reasonable inferences” and into impermissible speculation. The conclusion that “if Vanatta told Sparks, he must have told Irvin” rests on no logical basis whatsoever. Similarly, although Browne‘s presence in the office and review of the Lake Ozark Transaction might have been noticed by Irvin,17 there is no logical basis to infer she was also made aware of the reasons for his activities. Furthermore, because there is no evidentiary basis for concluding that Irvin was aware of Miller‘s conditions of release, Irvin‘s convictions for Counts 9 and 10 cannot be supported on the alternative basis of co-conspirator liability. The doctrine of co-conspirator liability operates to hold a defendant responsible for the crimes of his co-conspirators, if those crimes are committed to help advance the conspiracy and are within the reasonably foreseeable scope of the conspiracy. Pinkerton v. United States, 328 U.S. 640, 646-48 (1946). Here, because there is no basis to conclude Irvin was even aware of Miller‘s conditions of release, she could not reasonably have foreseen that Miller would violate them, or that their violation was necessary to advance the conspiracy to which she had agreed. Irvin‘s convictions for Counts 9 and 10 are not suppоrted by sufficient evidence and are reversed.
C. Closing Arguments
In its closing argument, the government made the following statements to the jury:
There‘s no question, ladies and gentlemen of the jury, that these folks targeted the subprime market, people who really had no ability to qualify for these homes. And they didn‘t help society. They didn‘t help the home buyer by
putting them into a house that the buyer was unqualified for. They did just the opposite. They‘re not responsible for everything that‘s going on in the subprime market right now, but they are a portion of that.
(emphasis added). Miller and Irvin contemporaneously objected to the emphasized language as unduly inflammatory, and cited it as grounds for a mistrial. The district court overruled this objection and denied the mistrial, reasoning that (i) the government‘s commentary was justified in light of the evidence that Miller and Irvin were involved in the subprime mortgage market; (ii) the government had qualified its statement by indicating that defendants were not the sole cause of the subprime crisis; and (iii) any possible impact of the government‘s commentary was mitigated by cautionary instructions. It later reminded the jury during final instructions that statements of counsel were not to be viewed as evidence.
Miller and Irvin now repeat their contention that the government‘s statements during closing arguments were improper commentary, designed to arouse the prejudice and passion of the jurors against them. They claim the government‘s commentary was particularly prejudicial in light of the economic crisis gripping the nation at the time of the trial, and that there is sufficient reason to conclude it may have influenced the jury‘s verdict, despite the cautionary jury instructions. Accordingly, Miller and Irvin request reversal of their convictions and a new trial.
“Where the defendant contemporaneously moves for a mistrial on the basis of prosecutorial misconduct, we review the denial of such a motion for abuse of discretion.” United States v. Taylor, 514 F.3d 1092, 1095 (10th Cir. 2008). This review requires determinations whether (1) the prosecutor‘s statements were improper and (2) if so, whether the statements were “harmless beyond a reasonable doubt.” United States v. Martinez-Nava, 838 F.2d 411, 416 (10th Cir. 1988). Miller and Irvin cannot show the district court‘s ruling constituted an abuse of discretion on either aspect of this inquiry. First, the government‘s statements were not improper. Miller himself testified that his use of “creative financing” to obtain financing for unqualified buyers was helpful to society, and the government is entitled to considerable latitude in responding to such arguments during its closing. See, e.g., United States v. Villa-Chaparro, 115 F.3d 797, 803 (10th Cir. 1997); United States v. Janus Indus., 48 F.3d 1548, 1558 (10th Cir. 1995). Even if the challenged statements were improper, however, they did not deprive Miller and Irvin of a fair trial because they were harmless. In evaluating the harm or prejudiсe of an improper statement, this court must consider the extent of the misconduct; whether the district court took steps to mitigate the impact of the misconduct; and the role of the misconduct within the case as a whole. Martinez-Nava, 838 F.2d at 416. The conduct complained of here comprises two sentences made over the course of a month-long trial, in response to Miller‘s own testimony. The district court took pains, during closing arguments and again during final instructions, to ensure the jury understood that statements of counsel did not constitute evidence. And the government‘s case was otherwise devoid of any suggestion the defendants were responsible for the subprime mortgage crisis. The government‘s closing argument was therefore neither improper nor prejudicial, and the district court‘s denial of a mistrial is affirmed.
D. Cumulative Effect of Errors at Trial
Miller contends that, to the extent none of the above-described allegations of error provide sufficient grounds for reversal
E. Sentencing Challenges
Miller challenges the sentence imposed upon him by the district court. He contends the district court improperly calculated the intended loss attributable to his criminal conduct and improperly applied sentencing enhancements for his use of sophisticated means and role as organizer or leader of the criminal enterprise. Because Miller‘s conviction for conspiracy to commit bank fraud has been reversed, and because the conspiracy count was used to determine Miller‘s offense level, his sentence must be recalculated on remand. See U.S.S.G. § 3D1.3(b) (directing the application of the “offense guideline that produces the highest offense level” in the case of counts grouped together pursuant to § 3D1.2(d) and involving offenses of the same general type). We therefore decline to pass upon the district court‘s methodology in determining the intended loss flowing from his crimes. Similarly, the sophisticated means enhancement constituted a specific offense characteristic of the reversed conspiracy charge, and Miller‘s challenge to its applicability need not be addressed at this time. See id. § 2B1.1(b)(9)(C).
The reversal of Miller‘s conviction on the conspiracy count does not, however, prevent the court from reviewing the applicability of the four-level Organizer/Leader enhancement provided under U.S.S.G. § 3B1.1(a), as that enhancement need not be linked to a specific crime of conviction. See id. § ch. 3, pt. B, introductory cmt.
In evaluating the application of a Guidelines enhancement, we review factual findings for clear error, but to the extent the defendant asks us to interpret the Guidelines or hold that the facts found by the district court are insufficient as a matter of law to warrant an
enhancement, we must conduct a de novo review.
United States v. Hamilton, 587 F.3d 1199, 1222 (10th Cir. 2009) (quotation omitted). In its written order ruling on the parties’ objections to the Presentence Report, the district court listed what it considered to be the relevant conduct for purposes of the Organizer/Leader enhancement:
Without Miller‘s participation, there would have been no fraudulent loan transactions. Moreover, . . . testimony established that Miller was the organizer and leader, and described his business operations and motives . . . . Miller directed and led others to set prices based on false and inflated appraisals based solely on Miller-built homes, obtain loan approvals with false documentation that buyers were coached to create or that co-conspirators created for them, use mortgage brokers who participated in the fraudulent creation of loan applications and documentation . . . and that builders or Miller fronted down payment in cash or on paper, taking back a secret second mortgage that Miller made little effort to collect, preferring that buyers get it rolled into a new refinance later on.
Miller contends that these findings are insuffiсient to support the district court‘s application of the Organizer/Leader enhancement, a contention we review de novo.
Sentencing Guidelines § 3B1.1(a) prescribes the application of a four-level increase to a defendant‘s offense level “[i]f the defendant was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive.” A defendant may be ruled an organizer or leader upon consideration of
the exercise of decision making authority, the nature of participation in the commission of the offense, the recruitment of accomplices, the claimed right to a larger share of the fruits of the crime, the degree of participation in planning or organizing the offense, the nature and scope of the illegal activity, and the degree of control and authority exercised over others.
Id. § 3B1.1, cmt. n.4. Furthermore, the determination of a defendant‘s leadership role should be premised on “all conduct within the scope of § 1B1.3 (Relevant Conduct),” id. ch. 3, pt. B, introductory cmt. Such conduct includes “all acts and omissions committed, aided, abetted, counseled, commanded, induced, procured, or willfully caused by the defendant . . . that occurred during the commission of the offense of conviction [or] in preparatiоn for that offense.” Id. § 1B1.3(a)(1)(A). The factual findings listed as the basis for the Organizer/Leader enhancement, although cited by the district court as conduct relevant to Miller‘s conspiracy conviction, are equally relevant to Miller‘s money laundering conviction on Count 5, which rested upon a predicate offense of bank fraud perpetrated in the same manner as the bank fraud charged in the conspiracy count. They are now adopted by this court as the conduct relevant to his money laundering conviction on Count 5 for purposes of determining whether Miller was an organizer or leader.20 See United States v. Caldwell, 585 F.3d 1347, 1350 (10th Cir. 2009) (“[W]hen determining whether certain activity qualifies as relevant conduct under the Guidelines, similarity, regularity, and
So defined, Miller‘s relevant conduct justifies the application of the four-level Organizer/Leader enhancement of § 3B1.1(a). The district court‘s findings support the conclusion that the criminal activity involved five or more participants (Vanatta, Irvin, Sparks, Sandra Harris, and Miller himself) and that Miller (1) played a central role in the commission of their criminal activities; (2) recruited accomplices to the criminal activity, such as Vanatta; and (3) directed the criminal activity to the extent he retained final authority over sales prices. Rather than offer any argument negating the preceding conclusions, Miller merely complains that neither Sparks nor Middleton directly testified that he was their leader, and that Sparks admitted engaging in bank fraud independent of Miller‘s involvement. Nevertheless, the indicia of leadership listed in the commentary to § 3B1.1(4) are present, and the district court did not err in applying the Organizer/Leader enhancement.
IV. Conclusion
For the foregoing reasons, Miller‘s conviction on Count 1, and Irvin‘s convictions on Counts 1, 9, and 10 are REVERSED. Their remaining convictions are AFFIRMED. Furthermore, the district court‘s application of the Organizer/Leader enhancement to Miller‘s sentence is AFFIRMED. The matters are remanded to the district court for further proceedings not inconsistent with this opinion.