U.S. v. Seidman

• Decision Date: 09 September 1998
• Docket Number: No. 97-4075,97-4075
• Citation: 156 F.3d 542
• Parties: 159 L.R.R.M. (BNA) 2211, 136 Lab.Cas. P 10,246 UNITED STATES of America, Plaintiff-Appellee, v. Harry SEIDMAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 542

156 F.3d 542

159 L.R.R.M. (BNA) 2211, 136 Lab.Cas. P 10,246

UNITED STATES of America, Plaintiff-Appellee, v. Harry SEIDMAN, Defendant-Appellant.

No. 97-4075.

United States Court of Appeals,

Fourth Circuit.

Argued Jan. 30, 1998.

Decided Sept. 9, 1998.

ARGUED: Mark J. Biros, Proskauer Rose, L.L.P., Washington, DC, for Appellant. Ira Lee Oring, Asst. U.S. Atty., Baltimore, MD, for Appellee. ON BRIEF: Alec W.

Farr, Proskauer Rose, L.L.P., Washington, DC, for Appellant. Lynne A. Battaglia, U.S. Atty., Baltimore, MD, for Appellee.

Before WILLIAMS and MICHAEL, Circuit Judges, and KISER, Senior United States District Judge for the Western District of Virginia, sitting by designation.

Affirmed by published opinion. Judge WILLIAMS wrote the opinion. Judge MICHAEL wrote a separate opinion concurring in parts I, II and IV and the judgment. Senior Judge KISER wrote a separate opinion concurring in part and dissenting in part.

OPINION

WILLIAMS, Circuit Judge:

Harry Seidman was convicted on September 26, 1997, on one count of conspiracy to embezzle funds from a labor union, see 18 U.S.C.A. § 371 (West Supp.1998) and 29 U.S.C.A. § 501(c) (West 1985), and on twelve counts of embezzlement from a labor union, see 29 U.S.C.A. § 501(c) (West 1985), or aiding and abetting the same, see 18 U.S.C.A. § 2 (West 1969). The district court sentenced Seidman to thirty-nine months imprisonment on each count, the sentences to run concurrently, and imposed a fine of $30,000. Seidman appeals his convictions on two grounds: (1) that the district court erred in denying his motion to suppress a tape-recorded conversation; and (2) that the district court's instructions on 18 U.S.C.A. § 2 were improper. Because we conclude that the district court properly denied the suppression motion and correctly instructed the jury on aiding and abetting, we affirm Seidman's convictions.

I.

Seidman was employed by the International Organization of Masters, Mates, and Pilots (the Union), a labor union headquartered in Linthicum, Maryland, ¹ from the 1950s until December of 1993. Seidman eventually became the Comptroller for the Union. His responsibilities as Comptroller included paying the Union's bills, administering the Union office on a day-to-day basis, and obtaining annual financial audits. Seidman was personally authorized to sign checks on the Union's behalf. Although the Secretary/Treasurer, James T. Hopkins, Jr., was the chief financial officer of the Union, a major portion of the Secretary/Treasurer's time was devoted to handling contract grievances for Union members. The Secretary/Treasurer did not review invoices submitted to the Union or checks signed by Seidman on behalf of the Union.

When Timothy Brown became President of the Union in April of 1991, the Union was in poor financial condition. In 1992, Seidman informed Brown that Seidman had cashed the last of the Union's cash reserves which had been held in million dollar certificates of deposit. Approximately five to six percent of the Union's total expenditures, or $30,000 a month, were incurred by the Union-published monthly newspaper. In the fall of 1992, Brown decided to print the newspaper on a bimonthly basis to reduce costs.

Ronald Schoop was an independent contractor who provided printing services to the Union through the corporate entity "Mercury Graphics" from approximately 1978 to October 1993. Initially, Schoop provided general printing services, including business cards, envelopes, and wall calendars. During 1985, Schoop began printing the Union newspaper. In October of 1993, Schoop briefly became an employee of the Union until his resignation in December of 1993 when a scheme of embezzlement between Seidman and Schoop was discovered. ² Schoop had an office located in the Union headquarters, but no printing services were actually performed at the Union office. To obtain payment for his printing services, Schoop submitted bills to the Union which were paid by Seidman. In late May of 1993, Beverly Gutmann, the Union's Assistant Comptroller, informed Brown that there had been a potential double billing for the Union newspaper. Brown questioned Seidman about the possible double billing, and Seidman responded that the additional charges were for editorial changes that Brown had made in a recent issue of the paper. Brown did not question Seidman's answer because he had substantially rewritten large sections of that edition of the paper.

When Brown later inquired about the expenses associated with producing the newspaper during the summer of 1993, Seidman responded that the cost of the newspaper had not decreased even though the paper was being published bimonthly instead of monthly. Brown was not satisfied with Seidman's explanation of the expenses associated with publishing the newspaper. He became even more suspicious in November of 1993 when Gutmann approached him again about double charges for Schoop's printing services for the December 1992/January 1993, February/March 1993, and May/June 1993 editions of the Union newspaper. Gutmann told Brown that she believed Seidman and Schoop were embezzling funds from the Union.

Because of these mounting suspicions of financial impropriety, Brown hired an outside forensic auditor, Gunther Borris, to perform an audit. On December 24, 1993, Borris met Brown and Hopkins, the Secretary/Treasurer, at the Union office. Borris spent the entire day reviewing the Union's financial records, particularly the potential double billings for the Union newspaper. As a result of Borris' investigation, Brown learned for the first time that checks had been issued to Ronald Schoop personally for invoices submitted by Mercury Graphics and that 1099 forms had not been issued to Schoop. ³ Borris also confirmed that there had been at least two double billings for the Union newspaper.

On December 28, 1993, Borris submitted his financial report at a meeting of the International Subcommittee, a group of five individuals charged with managing the affairs of the Union during time peri ods between meetings of the General Executive Board. During the meeting, Seidman and Schoop were questioned about the allegations of double billings. As a result of Borris' audit and the December 28 meeting, the Subcommittee asked Seidman for his resignation. Seidman signed a resignation letter on December 28, 1993. Ronald Schoop, who was at that time a salaried employee of the Union, resigned one day later.

In March of 1995, Schoop confessed to agents of the Department of Labor's Office of Labor Racketeering to conspiring with Seidman to embezzle funds from the Union and agreed to participate as a government informant. In that capacity, Schoop made two recorded telephone calls to Seidman, on March 9, 1995, and March 21, 1995. Schoop agreed to go to Seidman's residence wearing an electronic recording device and record a conversation with Seidman on May 23, 1995. Upon arriving at Seidman's residence, Schoop knocked on Seidman's door approximately ninety times. When he received no answer, Schoop opened the unlocked door and saw Seidman in the hallway near the door. When Schoop asked Seidman what he was doing, Seidman responded that he had been riding his exercise bicycle in the basement and closed the door to the basement, as if he had just come upstairs. Seidman led Schoop to the kitchen where the two proceeded to have a conversation for the next forty-five minutes. ⁴

II.

On May 14, 1996, Seidman was charged in a thirteen count indictment with one count of conspiracy to embezzle funds from a labor union and twelve counts of embezzlement from a labor union or aiding and abetting the same. The indictment alleged that Seidman conspired with Schoop from approximately 1987 to July 1993 to embezzle approximately $800,000 in a complicated kickback scheme by "directing" or "causing" Schoop to submit fraudulent invoices for services from Mercury Graphics and other corporate entities.

A two-week trial was held in September of 1996. Schoop testified that he and Seidman participated in a kickback scheme. ⁵ Schoop testified that he submitted fraudulent invoices to the Union from his corporation, Mercury Graphics, and that Seidman issued checks on the Union's checking account to Schoop personally. ⁶ Schoop explained that he cashed the checks and gave approximately eighty percent of the proceeds to Seidman. Schoop also testified that he gave Seidman and his family gifts and made payments for expenses incurred by Seidman and his family. The Government contended that the gifts and payments were part of the kickback scheme.

Seidman's version of events was that he received gifts and payments from Schoop because he and Schoop were close friends for many years. Seidman also claimed that Schoop gave him cash to be held in trust for Schoop's son because Schoop was addicted to gambling and alcohol. In a letter to Schoop dated March 21, 1994, Seidman stated that he was returning the money to Schoop because Seidman had retired from the Union: "I am returning to you all the assets you entrusted to me, including all interest earned thereon." (J.A. at 1046.) In conjunction with the letter, Seidman gave Schoop a check for $265,000.00. At Seidman's request, Schoop signed the March 21 letter. Schoop also accepted and cashed the check for $265,000.00. Schoop testified at trial, however, that he was shocked when Seidman gave him the money and that he had never asked Seidman to hold any money in trust for him.

The jury found Seidman guilty on all thirteen counts of the indictment. Seidman appeals his conviction, arguing that the district court erred in denying his motion to suppress the tape-recorded conversation and that a portion of the district court's jury instructions constituted reversible error. We address each argument in turn.

III.

On appeal, Seidman first claims that Schoop, acting as a government agent, entered his home illegally. As a result, Seidman contends that the recorded...