16 F.3d 1313 (2nd Cir. 1994), 1737, United States v. Knoll

Docket Nº:1737, 1738, Dockets 92-1580, 92-1586.
Citation:16 F.3d 1313
Party Name:UNITED STATES of America, Appellee, v. David R. KNOLL and Ted W. Gleave, Defendants-Appellants.
Case Date:February 14, 1994
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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16 F.3d 1313 (2nd Cir. 1994)

UNITED STATES of America, Appellee,


David R. KNOLL and Ted W. Gleave, Defendants-Appellants.

Nos. 1737, 1738, Dockets 92-1580, 92-1586.

United States Court of Appeals, Second Circuit

February 14, 1994

Argued June 17, 1993.

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[Copyrighted Material Omitted]

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Lawrence Vilardo, Buffalo, New York (Connors & Vilardo, Buffalo, New York, of counsel), for Defendant-Appellant David R. Knoll.

Philip Halpern, State University of New York, Buffalo, New York, for Defendant-Appellant Ted W. Gleave.

Denise E. O'Donnell, Assistant United States Attorney for the Western District of New York, Buffalo, New York (Dennis C. Vacco, United States Attorney for the Western District of New York, Buffalo, New York, of counsel), for Appellee.

Vincent L. Briccetti, filed a brief on behalf of Amicus Curiae New York State Association of Criminal Defense Lawyers, White Plains, New York.

Before: CARDAMONE and MAHONEY, Circuit Judges, and CEDARBAUM, District Judge. [*]

CARDAMONE, Circuit Judge:

David R. Knoll and Ted W. Gleave appeal from judgments of conviction entered on September 28, 1992 in the United States District Court for the Western District of New York (Skretny, J.). A jury found Gleave guilty on two counts of bankruptcy fraud in violation of 18 U.S.C. Secs. 152 and 2, and found Knoll guilty on one count of violating 18 U.S.C. Secs. 152 and 2, for assisting Gleave, and one count of violating 18 U.S.C. Secs. 1001 and 2, for aiding Gleave in allegedly making false statements to the probation service. The jury acquitted Gleave and Knoll on 42 other charges that were brought against them in a lengthy indictment, and Gleave was acquitted on one other charge brought solely against him. On September 25, 1992 appellants were each sentenced to two concurrent 27-month terms of imprisonment. All but three months of each appellant's sentence was suspended and the remainder was to be served on probation. In addition, Gleave was fined $5,000 and his term of imprisonment was to be served in a halfway house.

This appeal requires us to examine whether a search and seizure of a client's papers taken from his lawyer's office may violate the Fourth Amendment to the United States Constitution. That amendment guarantees "[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated...." U.S. Const. amend. IV. The Supreme Court teaches that "[a] 'search' occurs when an expectation of privacy that society is prepared to consider reasonable is infringed. A 'seizure' of property occurs when there is some meaningful interference with an individual's possessory interests in that property." United States v. Jacobsen, 466 U.S. 109, 113, 104 S.Ct. 1652, 1656, 80 L.Ed.2d 85 (1984). One of the principal questions raised is whether appellants' Fourth Amendment rights were violated by an unlawful intrusion.

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  1. The Cayman Islands Accounts

    The parties to this appeal cast the relevant factual background in vastly different lights. We set forth only those facts pertinent to the issues presented. Appellants tell us that defendant Knoll, an attorney, went to the British-owned Cayman Islands, found in the Caribbean, south of Cuba and east of Mexico, in 1981 to establish a relationship with Barclays Bank. Knoll had hoped to open an account for an overseas company, Atlantis International, Ltd., and to use it to become involved in international trade. But due to prior financial problems he could not obtain a reference letter that Barclays required from a United States bank. Knoll thus sought out Ted Gleave, a friend and former client, to have him establish accounts with Barclays.

    The government portrays the Cayman Islands banking connection differently. It says Gleave was the person who initiated overseas banking relationships. It suggests he did so to hide profits allegedly reaped from the sale of gasoline stolen from Ashland Oil, which sought treble damages in a civil RICO suit against him, and that Knoll was the lawyer that represented Gleave in the suit.

    There is no disagreement that in February 1982 Gleave and Knoll went together to the Cayman Islands and there opened two bank accounts: a personal account in Gleave's name with an opening balance of $9,000 and a corporate account in the name of the soon-to-be-formed Atlantis International. They allegedly instructed Barclays that Gleave's personal account was to be closed as soon as Atlantis was formed. Atlantis International was incorporated on March 4, 1982, but for some reason Gleave's private account was never closed. Gleave asserts that though he was the president of the corporation, it was a nominal title and he resigned the position before his August 1982 filing for individual bankruptcy. The government points out, to the contrary, that in a September 1984 power of attorney issued in connection with the Atlantis International account Gleave was listed as the "principal" of Atlantis.

    Knoll deposited roughly $600,000 in the Atlantis account with Barclays, ostensibly without Gleave's knowledge. Appellants claim the money did not belong to Gleave and was not fraudulently procured. According to them this large sum was given to Knoll by one Anthony Korobellis. Although Gleave was the official signatory on the corporate Atlantis International checking account, the money in the account was allegedly managed solely by Knoll, who also managed all transactions in the personal account that remained in Gleave's name. Thus, appellants insist Knoll fully controlled Atlantis International and its Cayman Islands accounts.

  2. Gleave's Bankruptcy Petition

    Meanwhile, Gleave was a party to a divorce proceeding in Indiana. Knoll, acting as Gleave's attorney, recommended that Gleave file Chapter 11 bankruptcy to protect himself from the possibility that his wife would be awarded his assets thereby foreclosing his ability to satisfy his many creditors. Taking this advice, Gleave filed for bankruptcy on August 2, 1982. Knoll prepared and Gleave signed a "Statement of Financial Affairs" that was filed in the bankruptcy court. Question 1.d. of the Statement asked where and under what names Gleave had conducted business during the last six years. In his response Gleave did not list his relationship with Atlantis International. Question 7.a. then asked what bank accounts he had maintained alone or with others in the last two years; Gleave did not mention either his $9,000 personal account or the Atlantis corporate account at Barclays Bank.

    Count three of the indictment subsequently charged Gleave with concealing property in a bankruptcy proceeding in violation of 18 U.S.C. Sec. 152. In finding Gleave guilty on that count, the jury found his Cayman Islands personal account should have been disclosed on the bankruptcy petition. Count four of the indictment charged Gleave with making a false declaration in a bankruptcy proceeding in violation of 18 U.S.C. Secs. 152 and 2; it also charged Knoll with aiding and abetting Gleave to that end, in violation of 18 U.S.C. Secs. 152 and 2. The jury found under count four that Gleave should have disclosed that he was "carrying on business" in the

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    name of Atlantis International and that Knoll assisted him in the nondisclosure.

  3. Gleave's Financial Statement

    As an additional matter related to the current convictions, in June 1987 the U.S. Department of Justice sought to collect an outstanding $6,000 criminal fine imposed on Gleave in the Ashland Oil case. In response to a financial statement questionnaire dated June 2, 1987, Gleave answered "No" to questions asking whether in the last two years he had a savings account or a checking account. The jury convicted Knoll on count eight for aiding and abetting Gleave's false answer to the question regarding a savings account.

    Appellants maintain the jury's verdict raises a question of consistency because Gleave himself was acquitted on count eight. They also stress that the Barclays account was a checking account, not relevant to the question concerning a possible savings account. The government explains this by pointing to Knoll's intrusive role in Gleave's affairs and the extent of Gleave's reliance on Knoll to complete the financial statement. The government notes that the signature card on the personal account at Barclays listed the account as a "Personal Current Savings/Deposit Account" and contends that the jury properly considered its status.

  4. The Burglary of Knoll's Law Office

    We come now to the heart of this case: the burglary of attorney Knoll's law office. The government concedes that they first began investigating Knoll and Gleave after obtaining documents stolen from Knoll's law office on the last weekend of June 1986. The burglary of Knoll's law office, planned by one Timothy Ernle while incarcerated in a federal prison on bank robbery charges, was instigated for the purpose of locating incriminating evidence to be used against Knoll, which Ernle could exchange for favorable treatment on the robbery charges he faced. Ernle solicited Albert Hintenberger to break into Knoll's office and steal material. After the break-in was accomplished, Ernle contacted Assistant United States Attorney (AUSA) Anthony Bruce and a delivery of documents and tapes stolen from Knoll's law office was made to AUSA Bruce by Patricia Devany, Ernle's girlfriend.

    Conflicting evidence was presented as to whether Ernle had contacted FBI agents prior to the burglary. The evidence showing earlier contact was discredited by the trial court, which found the government had no prior knowledge of the burglary. AUSA Bruce conceded however that after each of the first two deliveries of documents and tapes by Devany, he told Ernle he was disappointed with the material. As a result, Devany under instructions given her by Ernle brought more...

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