U.S. v. Brockman

Citation183 F.3d 891
Decision Date15 June 1999
Docket NumberNo. 98-4127,N,98-4127
Parties(8th Cir. 1999) UNITED STATES OF AMERICA, APPELLEE, v. KENNETH G. BROCKMAN, APPELLANT. UNITED STATES OF AMERICA, APPELLEE, v. CAROLYN A. KRUGER, APPELLANT. o. 98-4128 Submitted:
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Appeals from the United States District Court for the District of Nebraska. [Copyrighted Material Omitted]

[Copyrighted Material Omitted] Alan G. Stoler, Omaha, Nebraska, argued (Jerry M. Hug, on the brief), for appellant Kenneth Brockman. James J. Regan, Omaha, Nebraska, argued, for appellant Carolyn Kruger.

Jan W. Sharp, Asst. U.S. Atty., Omaha, Nebraska, argued, for appellee.

Before Richard S. Arnold and Loken, Circuit Judges, and BYRNE,1 District Judge.

Byrne, District Judge.

Kenneth G. Brockman and Carolyn A. Kruger appeal their convictions for multiple counts of mail fraud and wire fraud, and conspiracy to commit mail fraud and wire fraud, in violation of 18 U.S.C. §§ 371, 1341, 1343. Kruger also appeals her sentence. We affirm.

I. BACKGROUND

Kruger was the President of Biologically Guided Life Systems, Inc. (" BGLS"), and Brockman has been variously described as the founder of BGLS and, at times, as a consultant to the company. BGLS was represented to be a research, development, and marketing company working in the field of alternative health care. Between 1984 and 1997, Brockman, Kruger, and others working at their direction represented that they were in the process of developing numerous business projects that would result in broader availability of alternative health resources and would be quite lucrative for those who assisted in bringing the projects to fruition. Among the proposals were projects involving the development of motivational tapes, infomercials, health resorts, diagnostic centers, treatment clinics, and health depots.

Over a thirteen-year period, appellants solicited more than $5,000,000 from lenders and investors while representing that their business projects were close to completion. Appellants told lenders that funds were needed for a very short period of time, until "major funding" was obtained from large-scale individual and institutional investors. Appellants further represented that funds lent to BGLS or its principals would be repaid in a matter of weeks or months at interest rates ranging from 16% to 300% per annum. In fact, not one of the projects described to potential lenders and investors was ever developed to the point that it made money, no major funding was ever obtained, and less than $500,000 was ever repaid.2

Appellants also made other misrepresentations to raise money. Some lenders and investors were told, for instance, that they would be provided stock in certain companies in exchange for providing monies to BGLS and its principals. Other lenders and investors were given specific assurances that they would be repaid within thirty days upon request. Brockman told some lenders that he had multimillion dollar job offers which he could always accept as a means of paying off lenders if his projects failed. Kruger told at least one lender that she would take a job to pay back a loan if the projects did not succeed. Finally, certain lenders were told that they would be allotted area manager positions or sales territories which would allow them to participate in the marketing of BGLS' products and services. Appellants never delivered on any of these promises.

In the spring of 1996, search warrants were executed on the business premises and home of appellants. Seized during the searches were several statements prepared by Brockman and signed by Kruger in which Kruger confessed to various acts of fraud. In one, entitled "Confession of Guilt, Admission to Criminal Activity," Kruger admitted defrauding investors by failing to disclose to them the true risks associated with their loans and stated that when she convinced people to become lenders, she did so "without any intention of seeing them repaid."

Appellants were indicted on April 23, 1997. Kruger moved to dismiss her indictment for unreasonable pre-indictment delay. The motion was denied, and Kruger was convicted following a jury trial of conspiracy to commit mail fraud and wire fraud, five counts of mail fraud, and one count of wire fraud. The court deemed Brockman, who was initially represented by a federal public defender, to have the financial ability to retain counsel and thus directed the public defender to withdraw from the case. Brockman proceeded to trial pro se and was convicted along with Kruger on the same counts.

The court enhanced Kruger's sentencing range under U.S.S.G. § 3B1.1 based upon her leadership role in the conspiracy and sentenced her to 39 months imprisonment. Brockman, who also received an enhancement for his role in the offense, was sentenced to 78 months imprisonment.

II. DISCUSSION

On appeal, Kruger contends that the district court erred by failing to dismiss her indictment for unreasonable pre-indictment delay and by enhancing her sentencing range under U.S.S.G. § 3B1.1. Brockman contends that the district court erred when it discharged the public defender prior to trial, failed to advise him of his Fifth Amendment right not to testify, and permitted jurors to question witnesses.

A. Pre-indictment delay

Kruger filed a motion to dismiss the April 23, 1997 indictment for unreasonable pre-indictment delay under the Fifth Amendment. Kruger argued that the government should have brought an indictment no later than 1992 and suggested that the government's five-year delay prejudiced her through the loss of crucial witness testimony and other evidence. Kruger specifically identified four witnesses as unavailable. The first, a lender who had been substantially repaid, had passed away. The second, an investor and staunch supporter of BGLS, had been incapacitated by a stroke. The third and fourth witnesses, a lender and a strong supporter of appellants' businesses, respectively, had also passed away.

While "[s]tatutes of limitation provide the primary guarantee against prosecution of a defendant on overly stale charges," the due process clause does have "a 'limited role to play in protecting against oppressive delay. '" United States v. Bartlett, 794 F.2d 1285, 1289 (8th Cir. 1986) (quoting United States v. Lovasco, 431 U.S. 783, 789 (1977)). Pre-indictment delay is sufficiently "oppressive" to warrant dismissal of an indictment where the delay is unreasonable and the defendant is actually and substantially prejudiced in the presentation of her case. See id. The actual and substantial prejudice issue is ordinarily considered first. See United States v. Benshop, 138 F.3d 1229, 1234 (8th Cir. 1998).

A defendant bears the burden of proving actual and substantial prejudice attributable to pre-indictment delay. See Lovasco, 431 U.S. at 789-90; Bartlett, 794 F.2d at 1289. "To prove actual prejudice, a defendant must specifically identify witnesses or documents lost during delay properly attributable to the government." Bartlett, 794 F.2d at 1289. It is not sufficient for a defendant to make speculative or conclusory claims of possible prejudice as a result of the passage of time. See id. at 1289-90; see also United States v. Marion, 404 U.S. 307, 325-26 (1971). Nor may a defendant establish actual prejudice without "relat[ing] the substance of the testimony which would be offered by the missing witnesses or the information contained in lost documents in sufficient detail to permit a court to assess accurately whether the information is material to the accused's defense." Bartlett, 794 F.2d at 1290. Finally, it is defendant's burden to show that the lost testimony or information is not available through another source. See id.

The district court found no actual and substantial prejudice from the pre- indictment delay. The court emphasized that the lenders who were unavailable to testify represented only four of approximately 260 lenders to BGLS and its principals. As recently as 1994, defendants had received more than sixty lender statements in which individuals who had provided funds to BGLS stated that they were not fraudulently induced to loan money and that they knew that their funds were to be used for "personal and business expenses." Finally, the district court noted that appellants had retained impeccable documentary evidence of their business transactions that could establish the fact of repayment to lenders who were no longer available to testify.

The district court's finding was not clearly erroneous. See id. at 1291 n. 7 (district court's findings with respect to prejudice from pre-indictment delay reviewed for clear error). Even assuming that Kruger offered sufficiently detailed allegations of what the four unavailable witnesses would have said had they testified, Kruger did not sustain her burden of establishing actual and substantial prejudice from the delay. Specifically, Kruger failed to show that any of the lost testimony was not available through other sources. The fact that one or more of the unavailable lenders had been repaid could be established through documentary evidence, and several hundred other lenders, including approximately sixty lenders who had expressed satisfaction with appellants' handling of their loans, remained available to testify.3

On appeal, Kruger also suggests a second type of prejudice that stemmed from the pre-indictment delay, that being the higher sentence she faced as a result of increasing amounts of loss throughout the period of delay. This allegation of prejudice is more creative, but ultimately no more meritorious, than the first. It is questionable whether an increased sentence is the type of prejudice against which the Fifth Amendment is intended to protect, i. e., prejudice to a defendant "in the presentation of his case." Id. at 1289. Moreover, while we have not addressed claims of sentencing...

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