Opinion
Criminal No. 01-307 (JRT/FLN)
July 26, 2002
John Marti, Assistant United States Attorney, Office of the United States Attorney, Minneapolis, MN, for plaintiff.
Peter B. Wold, Wold, Jacobs, Johnson, P.A., Minneapolis, MN, for defendant.
MEMORANDUM OPINION AND ORDER ON DEFENDANT'S POST TRIAL MOTIONS
Defendant Michael S. Czichray was tried on a six-count superseding indictment, which stemmed from a fraud investigation. On January 11, 2002, defendant was convicted of one count of making false statements on loan applications and on two counts of bank fraud. The jury acquitted defendant on three other counts. This matter is now before the Court on defendant's Renewed Motion for Judgment of Acquittal, or, in the Alternative, a New Trial, and on his Motion to Continue Sentencing.
BACKGROUND
Count One of the superseding indictment alleged that defendant made and used bank statements which falsely stated that he was an owner of certain bank accounts, when in fact he was not. Count Two alleged that defendant made and used reference letters purportedly signed by health care providers which, in fact, were not signed or authorized by those health care providers. Count Three alleged that defendant falsely represented on a loan application his ownership interests in certain businesses, and that he owned certain bank accounts. Count Four alleged that defendant made and used false invoices representing the purchase of equipment for his business. Counts Five and Six alleged that defendant devised a scheme and artifice to defraud Norwest Bank and the Small Business Administration. This scheme involved defendant's business, Twin Cities Open MRI. Defendant was acquitted on Counts One, Two, and Four, and was convicted on Counts Three, Five, and Six.
The parties requested that the jury make the forfeiture determination pursuant to 18 U.S.C. § 982(a). The government requested a determination as to two sums of money, and as to a magnetic resonance imaging ("MRI") machine. The jury determined that none of these items constituted proceeds of, or were derived from proceeds that the defendant obtained, directly or indirectly, as a result of his crimes.
ANALYSIS I. Motion for Judgment of Acquittal/New Trial
Defendant argues that he should be acquitted or granted a new trial because of several claimed inconsistencies in the verdict, and because of alleged errors by the Court at trial.
A. Inconsistency of the Verdict
Defendant argues that the verdict is inconsistent for three reasons. First, defendant claims that the verdict is internally inconsistent because it acquitted him on Counts One, Two, and Four, while convicting him on Counts Three, Five, and Six. Defendant notes that the "scheme and artifice" alleged in Counts Five and Six includes some of the crimes alleged in the counts upon which he was acquitted. He argues that the verdict is therefore inconsistent, claiming that he "remain[s] uncertain as to just what part of the scheme was proven beyond a reasonable doubt." (Def. Mot. at 2.)
This argument is flawed. Although Counts Five and Six did include elements of the counts upon which defendant was acquitted, they also included elements of Count Three, of which defendant was convicted. Under the relevant statute, a defendant can be convicted of bank fraud if the government proves "that the defendant knowingly: (1) engaged in a scheme to defraud a federally insured financial institution, or (2) participated in a scheme to obtain money under custody or control of the financial institution by means of false statements or representations." United States v. Goldblatt, 813 F.2d 619, 624 (3d Cir. 1987). See Model Jury Instructions for the Eighth Circuit § 6.18.1344, Committee Comments (2000). (See also Response to Juror Q. No. 3.)
Counts Five and Six of the superseding indictment outlined the details of an alleged scheme and artifice. The jury did not have to find that all of these allegations were true in order to convict defendant on these counts. Because the jury found defendant guilty of Count Three, the jury clearly found that at least some elements of the scheme and artifice were proved beyond a reasonable doubt. The mere fact that defendant was acquitted of other charges, which also allegedly contributed to the scheme and artifice, is not sufficient to find that the verdict is impermissibly inconsistent.
Second, defendant contends that Count Three of the superseding indictment is duplicitous, which permitted the jury to convict without unanimous agreement. The Court disagrees. A charge is duplicitous only if it alleges distinct and separate offenses within a single count. United States v. Finn, 919 F. Supp. 1305, 1345 (D.Minn. 1995). A count may charge more than one act if the acts were part of a transaction constituting a single offense. United States v. Warner, 428 F.2d 730, 735 (8th Cir. 1970). Indeed, Rule 7(c) of the Federal Rules of Criminal Procedure permits allegations, in a single count, that defendant committed an offense by one or more specified means. Finn, 919 F. Supp. at 1346. See also 1A Charles Alan Wright, Federal Practice Procedure: Federal Rules of Criminal Procedure § 142 (3d ed.). If the relevant statute creates a single offense which can be committed in a variety of ways, the charge can be laid in a single count. Wright at § 142.
Indeed, to use several counts under such a statute would impair the indictment by making it multiplicitous. 1A Charles Alan Wright, Federal Practice Procedure: Federal Rules of Criminal Procedure § 142 (3d ed.).
In this case, the relevant statute for Count Three is 18 U.S.C. § 1014, which prohibits knowingly making any false statement or report for the purpose of influencing the action of the Small Business Administration. Count Three of the superseding indictment alleged four different methods by which defendant violated this statute. The Eighth Circuit has explicitly held that making several false statements to a lending institution in a single document constitutes only one criminal violation under 18 U.S.C. § 1014. United States v. Sue, 586 F.2d 70, 71 (8th Cir. 1978). Indeed, § 1014 is "targeted at fraudulent loan transactions, rather than the particular falsehoods used to achieve the illegal transaction." United States v. Mangieri, 694 F.2d 1270, 1282 (D.C. Cir. 1982) (emphasis original) (adopting the Eighth Circuit's reasoning in Sue). Count Three alleges one offense, committed by four different methods. It does not allege four offenses. Therefore, Count Three is not duplicitous. The jury unanimously found defendant guilty of knowingly making a false statement or report for the purpose of influencing the action of the Small Business Administration. While there may be more than one piece of evidence to support this count, that does not impair the indictment or the verdict. United States v. Adler, 623 F.2d 1287, 1290 (8th Cir. 1980).
Specifically, Count Three alleged the defendant falsely stated that:
(1) the defendant was a joint owner of checking and savings accounts at U.S. Bank that provided money and funds used to satisfy the SBA's and Norwest Bank's owner equity investment requirement, when in truth and in fact, as the defendant well knew, the account was owned by another person;
(2) the defendant was the owner of a savings account at Nations Bank, Inc. that provided money and funds used to satisfy the SBA's and Norwest Bank's owner equity investment requirement, when in truth and in fact, as the defendant well knew, the account was owned by another person;
(3) the defendant did not have an interest in any other business as an owner, principal, or manager, when in truth and in fact, as the defendant well knew, he was a principal, owner and manger of Platinum Medical Management, Inc.; and
(4) the defendant was the sole owner or partner of Twin Cities Open MRI, when in truth and in fact, as the defendant well knew, another person had an ownership interest in the business.
(Superseding Indictment at ¶ 13.)
The jury was instructed on the need for unanimity before it retired to deliberate, and was later specifically told that "[a]ny decision you reach must be unanimous." (Response to Juror Q. No. 4.)
The Court also finds no merit in defendant's subsidiary claim that the duplicitous nature of the allegation was compounded by the Court's "instruction that the jury could pick and choose which . . . crimes within the scheme to defraud to like or dislike, accept or reject, believe or doubt." Defendant appears to be referring to the Court's response to Juror Question No. 2.
Juror Question No. 2 asked:
In order to find, under Counts 5 and 6, that scheme and artifice was committed to defraud the bank, do the jurors have to agree that all paragraphs 19-26 of the indictment are correct or just one or more of the paragraphs were proved beyond reasonable doubt? [The Court responded:]
In order to find the defendant guilty under Counts Five or Six of the superseding indictment, you must find beyond a reasonable doubt that he knowingly executed, or attempted to execute, a scheme or artifice —
(1) to defraud a financial institution; or
(2) to obtain any of the moneys, funds, 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.
(Response to Juror Q. No. 2.) (emphasis original).
Examining the Court's response together with all of the instructions shows that defendant's claim is utterly groundless. The Court never instructed the jury that it could "pick and choose" aspects of the crime to accept or reject. In response to Question No. 2, the Court simply provided the jury with the statutory language that addresses a "scheme or artifice." See 18 U.S.C. § 1344. See also Jury Ins. No. 34-35.
Third, defendant claims that the jury's guilty verdict was invalidated by its forfeiture verdict. Specifically, defendant claims that because the jury found in its forfeiture verdict that the property was not derived from the crimes, "one can only assume the jury found, for the purposes of forfeiture, that the predicate crimes had never occurred." (Def. Mot. at 3.) This claim is without merit.
Juries may return inconsistent verdicts. United States v. Madrid, 224 F.3d 757, 762 (8th Cir. 2000). Defendant claims that his case is "different" from the inconsistent verdict in Madrid, but he does not explain why. In the Court's view, the cases are analogous; as in Madrid, the forfeiture and guilty verdicts here can simply be seen as inconsistent with each other.
Inconsistent verdicts are not, on their own, sufficient grounds for reversal or a new trial. A jury may acquit a defendant as to one or more charges for any number of reasons, including an inclination to be merciful, and yet come to the reasonable conclusion that the defendant was guilty of other related charges.
United States v. Whatley, 133 F.3d 601, 606 (8th Cir. 1998).
When considering inconsistent verdicts, the Court need only decide whether enough evidence was presented to support the conviction. Id. Defendant does not argue that there was insufficient evidence to convict him of Counts Three, Five, or Six. He simply argues that these verdicts are inconsistent with the forfeiture verdict. Because defendant has not made the necessary showing, the Court finds that his claims of inconsistency are not enough to overturn his conviction.
B. Errors at Trial
Defendant argues that several alleged errors at trial are grounds to grant his motion. These claims are examined for plain error. In order to find plain error, the Court must find that if an error occurred, it was "clear and obvious," and affected defendant's substantial rights. See United States v. Sickinger, 179 F.3d 1091, 1093 (8th Cir. 1999).
First, defendant claims that FBI Agent Bisswurm's testimony that his duties included "health care fraud" pre-disposed the jury to believe that defendant was investigated for health care fraud, rather than for the charges in the Superseding Indictment. Defendant presents absolutely no evidence for this assertion. Bisswurm did mention that his duties included investigating health care fraud. However, this statement was made as part of Bisswurm's introduction, at the outset of his testimony. It was brief, and neither the prosecutor nor defense counsel lingered on the information. Defendant's allegation in this regard is purely speculative, and does not present a clear and obvious error that affected his substantial rights.
Next, defendant argues that the prosecutor improperly implied in his closing argument that the defendant was required to testify at trial. Defendant moved for a mistrial on this basis. (See Minutes, Docket No. 65.) The Court denied this motion, explaining that the Jury had already been instructed that the defendant was not required to testify. The Court also reminded the jury of this fact later, during the final jury instructions. Therefore, the Court finds that if permitting the prosecutor's statements was error, it was harmless, and that the defendant's substantial rights were not affected.
Finally, defendant argues that the Court erred in restricting his theory of the defense instruction, and in restricting evidence that the loan at issue in this case was current. These arguments merely restate those made on defendant's motions in limine and on the Court's draft jury instructions. For his theory of defense, defendant submitted a proposed instruction dealing with "good faith." Although the Court did not adopt defendant's precise wording, it did include an instruction explaining defendant's good faith defense. (See Jury Instr. No. 40.) The Court's instruction accurately reflects the law, and the Court finds no error in choosing to include that language instead of defendant's formulation.
Defendant also claims the Court erred by granting the government's motion to exclude evidence that Czichray was current in his loan payments. The Court found that this evidence was not relevant to whether defendant committed the crimes charged. The Court finds that this fact has not changed. Defendant was granted an instruction on "good faith," which explained the circumstances in which good faith could be inconsistent with the required mental state for the crimes charged. (See Jury Instr. No. 40.) Moreover, the jury heard testimony that the loan was not recalled by the bank. The Court reaffirms its earlier ruling that evidence of repayment is not relevant to whether defendant committed the crimes charged in the indictment. Therefore, the Court finds no error in its decision to exclude the evidence.
II. Motion to Continue Sentencing
Defendant also has moved to continue the date of sentencing. Defendant argues that his sentencing date should be continued pending a related health care fraud investigation. This motion presumes that defendant will be indicted in that investigation.
The Court is not aware whether any indictments have been handed down in that investigation, nor whether defendant will be indicted in that matter. On that basis alone, defendant's motion appears to be premature, if not wholly speculative. However, if the investigation yields indictments, and if defendant is indicted and convicted, the sentencing court in that case would have the discretion to consider those factors. Defendant's other concerns regarding the government's "unfair" advantage in a possible future trial are equally groundless. Defendant was tried and convicted in this case. The Court need not consider potential future convictions when scheduling defendant's sentencing. Defendant's motion to continue sentencing will be denied. If any new indictments are returned prior to sentencing, the Court will reconsider this motion.
ORDER
Based on the foregoing, all the records, files, and proceedings herein, IT IS HEREBY ORDERED that:
1. Defendant's Renewed Motion for Judgment of Acquittal, or in the Alternative, for a New Trial [Docket Nos. 81 82] is DENIED.
2. Defendant's Motion to Continue Sentencing [Docket No. 85] is DENIED.