U.S. v. Wilkinson

• Citation: 137 F.3d 214
• Decision Date: 25 February 1998
• Docket Number: Nos. 96-4530,95-4556,s. 96-4530
• Parties: 49 Fed. R. Evid. Serv. 14 UNITED STATES of America, Plaintiff-Appellee, v. Thomas A. WILKINSON, III, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Edward M. CONK, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

Page 214

137 F.3d 214

49 Fed. R. Evid. Serv. 14

UNITED STATES of America, Plaintiff-Appellee, v. Thomas A. WILKINSON, III, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Edward M. CONK, Defendant-Appellant.

Nos. 96-4530, 95-4556.

United States Court of Appeals Fourth Circuit.

Argued Oct. 2, 1997.

Decided Feb. 25, 1998.

ARGUED: Paula Marie Junghans, Martin, Junghans, Snyder & Bernstein, P.A., Baltimore, MD, for Appellants. David T. Maguire, Assistant United States Attorney, Richmond, VA, for Appellee. ON BRIEF: Gerald T. Zerkin, Gerald T. Zerkin & Associates, Richmond, VA, for Appellant Wilkinson. Helen F. Fahey, United States Attorney, Andrew G. McBride, Assistant United States Attorney, William L. Finch, Department of Justice Trial Attorney, Richmond, VA, for Appellee.

Before WIDENER, NIEMEYER, and HAMILTON, Circuit Judges.

Affirmed by published opinion. Judge HAMILTON wrote the opinion. Judge WIDENER wrote a separate opinion concurring in part and dissenting in part. Judge NIEMEYER wrote a separate opinion concurring in part and dissenting in part. Judge HAMILTON also wrote a separate opinion, with respect to Part VI.

OPINION

HAMILTON, Circuit Judge:

Thomas Wilkinson, III (Wilkinson) and Edward Conk (Conk) (collectively the Defendants) appeal their convictions and sentences following a jury trial on conspiracy charges, money laundering charges, and various related fraud charges, including wire fraud and bank fraud, stemming from their operation of a company purportedly in the business of financing the accounts receivable of physicians. Conk was also convicted on one count of perjury.

With respect to their money laundering convictions, the Defendants seek reversal on two grounds: (1) the district court committed plain error under Federal Rule of Criminal Procedure 52(b) by failing to instruct the jury that the government had to prove an interstate commerce nexus, and (2) the evidence is insufficient to support the jury's findings as to several essential elements. Conk seeks reversal of his perjury conviction on two grounds: (1) the district court committed plain error by instructing the jury on the wrong perjury statute, and (2) the district court committed plain error by removing the element of materiality from the jury. Conk seeks reversal of his bank fraud conviction on the basis of insufficiency of the evidence. The Defendants both seek reversal of their conspiracy and wire fraud convictions on the ground that the district court erroneously admitted two portions of a summary chart exhibit known as "Exhibit MF-4." Finally, the Defendants challenge their sentences on two grounds: (1) the district court committed error by refusing to grant them down ward departures in their sentences, and (2) the district court failed to make specific findings with respect to its application of the United States Sentencing Guidelines to some of their convictions. For reasons that follow, we affirm the Defendants' convictions and sentences.

I.

Because the Defendants challenge the sufficiency of the evidence on numerous counts for which they were convicted, we present the facts in the light most favorable to the government, drawing all reasonable inferences in its favor. See United States v. Burgos, 94 F.3d 849, 862 (4th Cir.1996), cert. denied, --- U.S. ----, 117 S.Ct. 1087, 137 L.Ed.2d 221 (1997). The evidence at trial focused on the Defendants' operation of Medical Payment Systems, Inc. (MPS) in Richmond, Virginia, primarily from the fall of 1988 to the summer of 1991. The Defendants, who were both educated and experienced businessmen, started MPS in the fall of 1988 with the purported objective of lending money to physicians in exchange for a perfected security interest in the physicians' accounts receivable.

To fund this purported objective, the Defendants borrowed money from a Maryland company named Health Line, Inc. (HLI), a subsidiary of Blue Cross Blue Shield of Maryland. Based on representations by the Defendants that MPS was in the business of financing the accounts receivable of physicians, HLI granted MPS a five million dollar line of credit in November 1988. The written loan agreement between MPS and HLI specified that MPS could only use draws on the line of credit to make loans to physicians and that the loans had to be secured by security interests in the accounts receivable of those physicians.

The evidence at trial showed that at the time the Defendants secured the line of credit from HLI, the Defendants intended to use most of the money to fund several of their own separate non-medical businesses that were in poor financial health. The Defendants acted on their illicit intent, ultimately obtaining in excess of three million dollars from HLI through wire transfers by submitting dummy loan requests to HLI via facsimile. The dummy loan requests falsely showed that the funds requested would be secured by certain accounts receivable of particular physicians. These wire transfers and facsimile transmissions were the predicates for seven counts of wire fraud. See 18 U.S.C. § 1343. The Defendants' transfers of line of credit funds through MPS to their separate businesses were the predicates for five counts of money laundering (the Promotion Counts). See 18 U.S.C. § 1956(a)(1)(A)(i).

In order to conceal their fraudulent scheme on MPS's accounting records, the Defendants gave their separate non-medical businesses bogus names that sounded like the names of actual medical practices. For example, the Defendants gave Day Dream Publishing Company (Day Dream Publishing) the name "American Surgical, Inc." Conk was a substantial part owner of Day Dream Publishing, which was headquartered in California. For a second example, the Defendants gave Hawthorne Construction Excavators, Inc. the name "Health Emergency, Inc." Hawthorne Construction Excavators, Inc. was a Virginia construction company owned by Wilkinson.

By December 1989, the Defendants had nearly exhausted the five million dollar line of credit, and, under the terms of the loan agreement, MPS needed to make substantial interest payments. Thus, in order to continue to promote their scheme to defraud, the Defendants caused their various separate businesses to transfer funds into MPS's bank account at Sovran Bank in Richmond, Virginia. MPS would then use the money to make interest payments to HLI. The transfers from the separate businesses to MPS's account at Sovran Bank were the predicates for six additional money laundering counts (the Concealment Counts). See 18 U.S.C. § 1956(a)(1)(B)(i).

Conk was charged with one count of bank fraud premised on the following facts and circumstances. See 18 U.S.C. § 1344. Conk managed Day Dream Publishing directly and through his son, Chip Conk. The company began having cash flow problems in the latter part of 1988. By early March 1989, the cash flow problems had not improved and, as a result, the Defendants funneled $80,000 from MPS to Day Dream Publishing.

On March 27, 1989, the Bank of Montecito, a federally insured bank in the State of California, extended credit to Day Dream Publishing in the amount of 1.65 million dollars through a line of credit, evidenced by a note (the Note). The Note had an expiration date of May 1, 1989. The Note was secured by a blanket but revolving security interest in all of Day Dream Publishing's property, including purchase orders, accounts receivable, and the proceeds thereof. The terms of the agreement creating the blanket security interest provided that Day Dream Publishing would not, without the prior written consent of the Bank of Montecito, encumber or otherwise dispose of any collateral or any interest in the collateral. The Bank of Montecito did not bear the entire risk of loss on the Note, because a man named Mr. Tobes purchased half of the Note from the Bank of Montecito.

May 1, 1989 came and went without Day Dream Publishing satisfying the Note. The Bank of Montecito, however, did not call the loan in hopes of repayment in the near future. The Bank of Montecito continued to monitor the financial health of Day Dream Publishing by reviewing the financial reports submitted by Day Dream Publishing.

In August 1989, Day Dream Publishing landed a large purchase order from the Big B drug store chain to print calendars containing coupons. Unfortunately, Day Dream Publishing did not have sufficient funds to pay for the design and production of the order. Conk came to the rescue by borrowing an additional $316,000 for Day Dream Publishing from MPS, $116,000 of which went from MPS's account with Sovran Bank straight to the printer that Day Dream Publishing had hired to print the calendars. In early September 1989, the Bank of Montecito expressly extended the maturity date of the Note to January 3, 1990.

After receiving the calendars, Big B issued Day Dream Publishing a check, dated November 15, 1989, for $410,425.56 as payment for the calendars. Rather than depositing the check into Day Dream Publishing's account, Conk caused Day Dream Publishing's comptroller to endorse the check in favor of MPS as repayment on the loans from MPS. Conk did not obtain permission from the Bank of Montecito to divert the proceeds of the Big B account receivable to MPS or otherwise inform the Bank of Montecito that it was in receipt of the "Big B check." Day Dream Publishing eventually paid the Note in full. ¹

Turning back to HLI's relationship with MPS, in December 1990, HLI hired an outside auditing firm to evaluate the integrity of its collateral. HLI took this step only after it tried for several months without success to obtain certain information from MPS regarding the condition of its collateral. The Defendants stonewalled the efforts of the auditing firm by refusing it access to MPS's books and records. HLI became suspicious and called the loan approximately six months later. When MPS failed to satisfy the outstanding amount of the loan, HLI filed a civil suit...