382 F.3d 598 (6th Cir. 2004), 03-4313, United States v. Wagner
| Citation | 382 F.3d 598 |
| Party Name | UNITED STATES of America, Plaintiff-Appellee, v. Harry Herbert WAGNER, Jr., Defendant-Appellant. |
| Case Date | September 13, 2004 |
| Court | United States Courts of Appeals, U.S. Court of Appeals — Sixth Circuit |
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Argued: June 9, 2004.
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Thomas A. Karol, (argued and briefed), Asst. U.S. Attorney, for Plaintiff-Appellee.
Harland M. Britz (argued and briefed), Britz & Zemmelman, for Defendant-Appellant.
Before: BOGGS and MOORE, Circuit Judges; QUIST, District Judge. [*]
OPINION
MOORE, Circuit Judge.
Defendant-Appellant Harry Herbert Wagner, Jr. ("Wagner"), a real-estate developer in northern Ohio, appeals his conviction for fraudulently concealing property from a bankruptcy trustee in violation of 18 U.S.C. § 152(1) and filing a false document in a bankruptcy proceeding in violation of 18 U.S.C.§ 157(2). Wagner was indicted in November 2002 after allegedly making false statements to the United States Bankruptcy Court for the Northern
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District of Ohio during a Chapter 7 conversion hearing and changing the locks on several properties belonging to his estate, which the trustee was attempting to sell. A jury convicted Wagner in April 2003, and the United States District Court for the Northern District of Ohio sentenced Wagner to six months' imprisonment. On appeal, Wagner challenges his conviction, arguing that he did not "conceal" property by changing the locks and that he did not commit bankruptcy fraud because any falsifications he may have made did not deceive the bankruptcy court. Additionally, Wagner asserts that he was deprived of his constitutional right to the effective assistance of counsel and that the district court erred by not permitting expert evidence regarding Wagner's alleged hearing problems. Because there is no merit to Wagner's various arguments, we AFFIRM Wagner's conviction.
I. FACTUAL HISTORY AND PROCEDURE
The factual and procedural history of Wagner's appeal can be divided into three segments: 1) the events leading up to and the declaration of Chapter 11 bankruptcy; 2) the bankruptcy court proceedings; and 3) Wagner's indictment, trial, and conviction.
A. Wagner's Declaration of Bankruptcy and Subsequent Actions
In the mid-1970s, Wagner developed Edgewood Estates, a three-hundred acre subdivision in Lima, Ohio containing 156 rental units. Wagner also built six "smart houses," which were outfitted with electronic devices that automated various household chores. At some point after 1997, Wagner began to have difficulty with his multiple mortgage obligations, and in 1999, Wagner ceased paying several of his mortgagees. These lenders commenced foreclosure proceedings against most of Wagner's properties. At one point, Wagner was juggling over seventy-five separate foreclosure proceedings.
Seeking a way to forestall the foreclosures, Wagner contemplated declaring bankruptcy. Wagner obtained a do-it-yourself bankruptcy kit and filed a pro se Chapter 11 bankruptcy petition on April 26, 2002, which automatically stayed the foreclosure proceedings. Shortly after the filing of the Chapter 11 petition, the United States Trustee's Office contacted Wagner. Because debtors serve as their own trustees in Chapter 11 proceedings, it is standard practice for the Trustee's Office to hold an informal meeting with the debtor to advise the debtor about the timely filing of financial reports, the fiduciary duties incumbent upon the debtor, and the prohibition against selling or further encumbering disputed assets without prior approval. The Trustee's Office asked Wagner to attend such a meeting. In a bizarre letter, Wagner refused to conference with the Trustee's Office, asking, "Are you one of the good old boys and are you bonded?" and stating, "If you persist on this meeting, that I am not going to attend, I will put this in a letter that I am writing [to the bankruptcy judge] that you are not following the due process of law in bankruptcy." Joint Appendix ("J.A.") at 603 (Letter from Wagner, 05/06/02). In several instances during the early part of May 2002, Wagner repeatedly refused to meet with the Trustee's Office and failed to produce financial documents required by the court. As a result, on May 13, 2002, the Trustee's Office filed a motion to convert Wagner's Chapter 11 bankruptcy petition to a Chapter 7 petition, under which Wagner would no longer serve as his own trustee. The Bankruptcy Court scheduled a hearing to consider this motion on June 3, 2002.
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During the interlude, Wagner visited a branch office of the United States Small Business Administration ("SBA") in Columbus, Ohio on May 22, 2002. Wagner requested a loan application, but the SBA officials informed Wagner that the SBA does not distribute loan applications because the SBA does not make direct loans. Indeed, the SBA works primarily with institutional lenders, such as banks, to guarantee loans, and the application for SBA assistance is usually completed by the financial institution making the loan. One of the SBA officials attempting to assist Wagner suggested that Wagner explore the SBA's website, which fully described the SBA's program and its role in making loans. Wagner responded that he understood that the SBA did not make direct loans and that he had already looked at the website, but he persisted in asking for the loan forms, and eventually the SBA officials relented.
On Friday, May 24, 2002, and with neither authorization for a loan from the SBA nor approval from the Trustee's Office to further encumber property belonging to his estate, Wagner filed a mortgage against several of his properties. Wagner recorded with the Allen County Recorder's Office a mortgage which listed close to ninety-five properties and included Wagner and his wife as mortgagors. Wagner attached a loan note to the mortgage, which claimed that the SBA had granted Wagner a $10.75 million loan.
The following Tuesday (Monday was Memorial Day), Wagner returned to the Recorder's Office and asked for the return of the mortgage. The Recorder informed Wagner that the mortgage could not be rescinded unless the mortgagee authorized a release, which SBA had not done, given that it was not yet aware of the purported loan's existence. Wagner then recorded a second mortgage, which listed only himself as the mortgagor. On May 30, several days after publicly recording an SBA mortgage that did not exist, Wagner submitted his "loan package" forms to the SBA. Wagner contends that the SBA accepted the loan forms, time-stamping the package, but that no individual ever informed him that his forms were improperly filed. The SBA did not formally reject Wagner's "application" until June 11, 2002.
B. The Bankruptcy Court Proceedings and Chapter 7 Proceedings
The bankruptcy court heard the Trustee's conversion motion as scheduled on June 3. The morning of the hearing, Wagner filed a "Plan of Arrangements," a layman's stab at what is more technically known as a "Plan of Reorganization," which serves as the outline of how a debtor intends to pay his or her creditors. The document, signed by Wagner, read:
Harry Herbert Wagner, Jr.'s Plan of Arrangement is to pay all legitimate Creditors a 100 cents on the Dollar of exactly what they are actually owed. The Note Mortgage is in Place, and Harry Herbert Wagner, Jr. is ready to Commence, but there are no Certified Proof of Claims to pay at the moment. Judge Mary Ann Whipple, you are letting people move this Court, who have no interest in any Claim. "Enough is Enough". If there is not a Verified Proof of Claim submitted to the Court within 30 days from the date of this letter, they are deemed not to be a Creditor and will forfeit any right to a Claim. Upon further examination with council [sic], the amount that Harry Herbert Wagner, Jr owes may decrease. If there are any disagreements with the Verified Proof of Claims, Harry Herbert Wagner, Jr is ready to use mediation, arbitration if both parties agree, or litigation to resolve them.
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J.A. at 514 (Plan of Arrangements) (emphasis added). Wagner attached three items to the Plan of Arrangements. First, he attached the second mortgage filed with the Allen County Recorder's Office, which purported to be worth $10.75 million and which listed the SBA as the mortgagee. Second, he included a mortgage note, written on an SBA form, which listed the SBA as a lender of $10.75 million at an interest rate of 6.5%. Third, Wagner included a letter from Investt Acura Cal S.A. ("IAC"), allegedly located in Kent, Washington, which expressed IAC's intent to loan Wagner up to $10.75 million. Wagner claimed that he paid $18,000 for this loan guarantee, and he characterized the IAC loan commitment as a "backup" to the SBA loan.
There were several problems with the alleged mortgage and note attached to the Plan of Arrangements. First, and most obviously, the SBA was not capable of making a loan to Wagner. Second, the SBA did not guarantee loans exceeding $1 million, so that even if Wagner had received a $10.75 million loan from a lending institution, the SBA could only guarantee a small portion of the loan amount. Third, the note referenced the alleged SBA loan as "SBA Loan 0001," which was clearly false, because the SBA employs eleven-digit loan numbers. Fourth, the 6.5% interest rate listed on the note was fabricated. Fifth, the IAC "backup" loan commitment was unverified. The IAC loan commitment filed with the plan was not written on IAC letterhead, and the government alleges that no such loan commitment ever truly existed.
At the hearing, Wagner openly testified to his recalcitrance. Wagner admitted to his refusal to meet with the Trustee's Office and further confirmed that he had not assisted the Trustee's Office in any meaningful fashion. During the hearing, Wagner initially testified...
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