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United States v. Fraza, 106 F.3d 1050, 1st Cir. (1997)
United States v. Fraza, 106 F.3d 1050, 1st Cir. (1997)
3d 1050
James Fraza and his son Scott ("James" and "Scott," collectively "defendants")
were indicted on various counts of fraud, 18 U.S.C. 2, 1041, 1341, 1344,
1346, and violations of the Taft-Hartley Act, 18 U.S.C. 371, arising from a
scheme to defraud a credit union. After a four day jury trial, both defendants
were found guilty on all counts and now appeal their convictions and sentences.
We affirm, with a minor exception.
I. Background
In April of 1990, James met with officers of the Coventry Credit Union
("CCU"). During this meeting he told the officers that the purchase price of the
property was $205,000 and that he was seeking to finance $160,000. They
informed him that due to his prior bankruptcy, no such loan could be granted.
James then suggested that his son Scott purchase the property and take the
loan. The CCU officers agreed to consider the request, but cautioned that Scott
would likely require a co-signer due to his youth and short credit history.
In May of 1990, James and Dupont attended an informal "closing" in the back
seat of the car of Leo Dailey ("Dailey"), an attorney whose firm had
represented CCU for over twenty years. Dupont signed two closing statements-one reflecting the actual purchase price of $120,000 and the other blank.
Dailey told Dupont he needed the blank form to make a correction to a tax
computation. At the same time, Dupont endorsed a deed conveying the
property to Scott's construction company. No money or financial instruments
changed hands at this time. After two abortive attempts, James found a cosigner
and CCU approved a $160,000 loan based on the inflated purchase price of
$205,000. CCU's appraisal of the fair market value of the property came in at
$225,000.
The "formal" closing was held on June 15. Present were James, Scott, Scott's
co-signer, a CCU loan officer and Dailey who was acting as CCU's attorney.
Dailey explained that Dupont was unavailable and produced the signed blank
closing form. He then filled in the purchase price as $205,000. After Scott
signed, the loan officer disbursed $160,000 to Dailey who then paid the closing
costs, the existing $58,740 mortgage on the property and gave the remaining
approximately $95,000 to Scott who in turn paid Dailey $5,000 for his work. A
short time later Dupont received Scott's signed promissory note and mortgage
in the amount of $60,000 in the mail. Dupont was not informed that CCU held
a $160,000 first mortgage on the property.
Within six months of the sale, Scott filed for bankruptcy. As part of bankruptcy
proceedings, both defendants, represented by Dailey, gave deposition testimony
that they had given CCU an inflated price for the Dupont property. At
approximately the same time, Dailey's law firm mailed Dupont a tax form
indicating that Dupont had received $205,000 from Scott for the property. In
Also about this time, the loan to Scott became delinquent and CCU discovered
that the actual purchase price of the property was $120,000 instead of $205,000
and the existence of two different closing statements. Dailey's law firm,
wanting to keep CCU as a client, arranged for its pension fund to pay CCU
$160,000 and take over the mortgage.
In October 1993, James, Scott and Dailey were indicted on charges of bank
fraud, mail fraud, making false statements to a federally insured lending
institution, aiding and abetting, and conspiracy under the Taft-Hartley Act to
commit these offenses. Dailey died prior to trial. James and Scott were found
guilty on all counts and sentenced to 37 months and 24 months respectively.
Both were also sentenced to identical terms of supervised release, joint and
several restitution of $54,000 to Dupont, $200 in special assessments and
reimbursement of all attorney's fees and expert witness fees paid pursuant to the
Criminal Justice Act ("CJA").
II. Discussion
9
10
11
Our analysis begins with application of the test laid out in Blockburger v.
United States, 284 U.S. 299, 52 S.Ct. 180, 76 L.Ed. 306 (1932), which provides
that double jeopardy is not implicated if, when comparing two offenses arising
out of the same transaction, each offense "requires proof of an additional fact
which the other does not." Id. at 304, 52 S.Ct. at 182. This analysis is
sometimes referred to as the Blockburger "elements test."
12
In United States v. Norberg, 612 F.2d 1 (1st Cir.1979), we set forth the
Id. at 3. More recently, in United States v. Brandon, 17 F.3d 409 (1st Cir.), cert.
denied, 513 U.S. 820, 115 S.Ct. 80, 130 L.Ed.2d 34 (1994), we construed the
elements of bank fraud under 18 U.S.C. 1344 as:
Id. at 424.
22
23
Corbin, 495 U.S. 508, 110 S.Ct. 2084, 109 L.Ed.2d 548 (1990) id. at 711-12,
113 S.Ct. at 2864, and reaffirmed the mandatory application of Blockburger
statutory analysis. Id. at 696, 113 S.Ct. at 2855-56; cf. United States v.
Wolfswinkel, 44 F.3d 782, 785 (9th Cir.1995) (finding Seda non-viable in the
wake of Dixon ). Although the Blockburger elements test is mechanistic and
often criticized, we are already bound by it. Rossetti v. Curran, 80 F.3d 1, 6 (1st
Cir.1996); United States v. Black, 78 F.3d 1, 4 (1st Cir.), cert. denied, --- U.S. ---, 117 S.Ct. 254, 136 L.Ed.2d 180 (1996). Because it is possible to violate
either statute without violating the other, we believe the best view is that these
two counts are not multiplicitous.
B. Trial
24
First, defendants contend that as regards Count IV, Mail Fraud, there was no
evidence that co-conspirator Dailey mailed, or caused to be mailed, the
mortgage to Dupont. The evidence, however, shows that when Dupont received
the mortgage in the mail, the return address on the envelope was that of
Dailey's law firm. In addition, the jury heard evidence that Dailey acted as
closing attorney in this transaction and recorded the mortgage. From this
testimony a reasonable jury could infer that Dailey mailed the mortgage to
Dupont.
25
26
rights. See Colorado v. Connelly, 479 U.S. 157, 170, 107 S.Ct. 515, 523, 93
L.Ed.2d 473 (1986) ("The sole concern of the Fifth Amendment ... is
governmental coercion."). Once the answer was given, we know of no
authority suggesting that the government could not use it.
C. Sentencing
1. Calculation of the Loss
27
Defendants next challenge the court's seven level enhancement under U.S.S.G.
2F1.1(b)(1),1 based on its calculation of a $124,000 loss to the victims of
defendants' fraud.2 They maintain that because Dailey's pension fund
"purchased" Scott's mortgage from CCU for the full $160,000, this figure
should not enter into the loss calculation. This was not a purchase for value,
however, but a form of laundering.
28
29
Defendants also contend that the court erred in including the $60,000 Dupont
mortgage in the loss calculation because the amount of the loss attributed to
Dupont was speculative. We agree with the government, however, that with an
appraised value of only $96,000 at the time of discovery and a first mortgage to
the pension fund of $160,000, Dupont's second mortgage was worthless.
2. Obstruction of Justice
30
Defendants next complain of the two level enhancement each received for
obstruction of justice under U.S.S.G. 3C1.1. We review factual
determinations of whether a defendant obstructed justice only for clear error.
United States v. Thomas, 86 F.3d 263, 263 (1st Cir.1996) (citing United States
v. St. Cyr, 977 F.2d 698, 705-06 (1st Cir.1992)). The record contains evidence
of several independent acts by the defendants supporting these enhancements,
including submitting a false affidavit by James (later admitted to be untrue),
witness intimidation, albeit after the fact, and false objections to the PreSentence Report. See U.S.S.G. 3C1.1, Application Notes 3(a),(f),(h). Faced
with multiple reasons supporting the enhancement, we cannot say that the 2
level enhancement for obstruction of justice was error, clear or otherwise.
3. Role in the Offense Determinations
31
James contests his two level enhancement for being a manager or organizer of
the criminal activity, seeking instead to award that role to Dailey. We can
dispose of this contention forthwith. Reviewing again only for clear error,
United States v. Voccola, 99 F.3d 37, 44 (1st Cir.1996), we find that James'
admission in his response to the Pre-Sentencing Report that "to the extent that
his son Scott Fraza is involved in this case, it is solely due to James Fraza's
fault and not Scott Fraza," is enough to allow us to say again that we discern no
error here.
32
Scott complains of the court's refusal to grant a downward adjustment for his
minor role in the offense, a position which was not opposed by the government.
Apparently, at sentencing this brass ring was within reach when the Probation
Officer interrupted the proceeding and engaged in an ex parte communication
with the court some time after which the downward adjustment was denied.
According to Scott, "the Probation Officer discarded his role as ... an impartial
'arm of the Court' and donned the mantle of an advocate for rejection of the
requested 2-point deduction...."
33
Defendant's moral outrage regarding this issue was evident at oral argument,
but we are perplexed as to his expectations of the Probation Officer's proper
behavior. We would expect the officer to exercise his independent judgment as
to the application of the guidelines and we see no error in his interruption of the
proceedings to make his judgment known. See United States v. Belgard, 894
F.2d 1092, 1097 (9th Cir.1990) (observing that a probation officer's duty is to
"provide the trial judge with as much information as possible in order to enable
the judge to make an informed decision"). Anything less would be a dereliction
of duty. Scott's attempt to condemn the officer for doing his job is misplaced
and can not act as a basis for overturning a ruling that is not clearly erroneous.
4. Reimbursement
34
35
Our difficulty is that the court conducted no hearing, and made no findings as
to either defendant's financial viability. See United States v. Santarpio, 560 F.2d
448, 455 (1st Cir.1977); cf. United States v. Chorney, 63 F.3d 78, 83 (1st
Cir.1995). We must remand that that be done.
5. Restitution
36
Finally, defendants protest the court's order that they jointly and severally pay
restitution to Dupont in the amount of $54,000, citing the second mortgage still
held by Dupont. Restitution orders are subject to clear error review. United
States v. Hensley, 91 F.3d 274, 277 (1st Cir.1996). As we noted ante, Dupont's
mortgage is essentially worthless. If circumstances were to change, i.e, the first
mortgage to disappear or land values increase to the point of validating
Dupont's mortgage, defendants would be free to apply for relief from the
restitution order.
III.
37
The convictions and sentences are affirmed in all respects, except that the
reimbursement orders are vacated. The cases are remanded for further
proceedings on the matter of reimbursement in accordance herewith.
The court calculated the loss as of the time of discovery of the fraud as
$160,000 for the CCU mortgage plus $60,000 for Dupont's mortgage, less
$96,000, the appraised value of the property on that date