426 F.3d 431 (1st Cir. 2005), 02-2436, United States v. Epstein

Docket Nº:02-2436, 03-1133.
Citation:426 F.3d 431
Party Name:UNITED STATES of America, Appellee, v. S. Joel EPSTEIN, Defendant, Appellant. United States of America, Appellee, v. John F. Handel, Defendant, Appellant.
Case Date:October 18, 2005
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

Page 431

426 F.3d 431 (1st Cir. 2005)

UNITED STATES of America, Appellee,


S. Joel EPSTEIN, Defendant, Appellant.

United States of America, Appellee,


John F. Handel, Defendant, Appellant.

Nos. 02-2436, 03-1133.

United States Court of Appeals, First Circuit.

October 18, 2005

Heard April 6, 2005.


Page 432

[Copyrighted Material Omitted]

Page 433

[Copyrighted Material Omitted]

Page 434

Syrie D. Fried, Assistant Federal Public Defender, for appellant Handel.

John J. Barter, for appellant Epstein.

Kirby A. Heller, Attorney, Department of Justice, with whom Michael J. Sullivan, United States Attorney, and Carmen M. Ortiz, Assistant United States Attorney, were on brief, for appellee.

Before Boudin, Chief Judge, Torruella and Selya, Circuit Judges.

TORRUELLA, Circuit Judge.

Defendants-appellants S. Joel Epstein and John Handel were convicted after a jury trial in the United States District Court for the District of Massachusetts for offenses related to a scheme to defraud the owners of timeshare units. They now appeal, challenging both their convictions and their sentences. We affirm.

I. Background

The scheme that led to the appellants' convictions involved companies located in various parts of the country. Resort Investment Trust (RIT) and Swiss American Bank, called "buyers," were Florida-based telemarketing companies that solicited timeshare owners to sell their units and buy appraisals. Employees for these companies called timeshare owners with offers to buy their units, provided that the owners submitted certain documents related to their timeshares, including a recent appraisal. The owners were led to believe that their units would be purchased once they provided an appraisal, and that they

Page 435

would be reimbursed for the costs of the appraisal. The telemarketer then informed the owner that the appraisal must be performed by an independent company, and offered to refer the owner to Multiple Listing Service (MLS).1 An employee from MLS then contacted the owner, provided the names and prices of four different appraisal companies, and asked the owner to choose one. The appraisal companies included Resort Condominiums International (RCI), based in Hyannis, Massachusetts, and International Appraisals (IA), based in Rhode Island. The MLS employee stressed that the appraisal companies were highly experienced and had personnel in the area of the timeshares who would perform on-site inspections of the properties. In fact, all of the recommended companies were part of the scheme, and there was no relation between the location of the companies and that of the timeshare. The telemarketers merely rotated the names of these companies and the prices they charged, typically $399. MLS employees repeated that the buying company would reimburse the owner for the cost of the appraisal.

Owners were then contacted by an employee of an Appraisal Referral Center (ARC), called a "closer", who introduced himself as an employee of the appraisal company that the victim had previously selected. The ARC telemarketer took the owner's credit card number and told the owner that an appraiser would be assigned to the property, that the buying company would be notified of the appraisal, which would trigger a letter of intent to buy the timeshare, and that the letter would not commit the owner, but would commit the buying company. The ARC telemarketer then faxed the owner's information to the appraisal company that the owner had previously selected, which charged $399 to the owner's credit card and sent information about the unit to Comparative Research (an unaffiliated firm), which prepared a market analysis report for $7.50. Comparative Research sent the report back to the appraisal company, where a licensed real estate appraiser signed it. The appraisal company then sent the purported appraisal to the owner.

At this point, the fraud was complete. The companies neither reimbursed the appraisal fee nor bought the timeshares. Owners who complained had to call repeatedly, found that numbers had been disconnected, and were told to resubmit paperwork. In the event that an offer was actually made, it was for considerably less than what was promised.

The appraisal companies sent some of the collected funds to American Investment Monitoring Services (AIMS), which was a bill-paying operation that took in and disbursed funds to the other companies. At some point, AIMS stopped operating and Consolidating Consortium International (CCI) took over. The appraisal companies also sent $35 per appraisal to MLS, and transferred funds to an account in the Bahamas held by Donald Gonzcy, the mastermind of the scheme. During the course of the scheme, approximately 38,600 appraisals were sold at a cost of $399 each, for a total of over $15 million. Although Epstein started as a buyer for RIT in 1998, he quickly assumed a significant role in the overall operation. Working under the alias Joe Kelley, he ran another buying company based in Texas called Global Referral Service. Epstein was also the president of ARC, the vice president of AIMS, and the president of CCI. His duties in these various capacities

Page 436

included hiring and supervising telemarketers, providing them scripts for the calls, devising responses to common customer complaints, and tracking financial transactions and data related to the companies.

Handel began working for RCI, run by Gonzcy's future son-in-law Michael Upton, in 1998. Handel came to the office every seven to ten days to sign the purported appraisals, usually signing between 100 and 150 appraisals at a time. These reports, generated by Comparative Research, contained the number of bedrooms and bathrooms in a unit, the amenities on the property, the unit's condition, and a comparison to three other properties in the area. They also provided an estimate of the market value of the unit, and a blank that purported to be the date of the inspection and of the report. Handel spent a few seconds per report and inserted the date that he signed as the date of inspection. RCI paid him five dollars for each appraisal that he signed. At some point during his employment, Handel allegedly became concerned with the volume of appraisals RCI dealt with and asked Upton about the legitimacy of the operation and whether any timeshares were being bought. Upton assured him that Gonzcy was buying many of the timeshares. At some point Handel asked RCI to begin issuing his checks in his wife's name.

As part of his duties at RCI, Handel was responsible for responding to customer complaints. These complaints were placed in a file folder and contained phone messages and letters from owners, often dissatisfied with mistakes in the appraisal or because no on-site inspection had been done.2

Handel performed similar work for IA, which was based in Rhode Island and owned by Gonzcy's son Scott. Handel, who was not a licensed real estate agent in Rhode Island, met Scott in a Burger King parking lot and signed the IA appraisals with the name "James Rose" .

On February 7, 2001, a grand jury issued a fifty-count indictment charging Epstein, Handel, Gonzcy, and several others with various counts. On July 18, 2001, a grand jury issued a superseding fifty-nine count indictment. On June 24, 2002, a jury trial commenced against Epstein, Handel, and Gonzcy in the United States District Court for the District of Massachusetts. On July 2, 2002, Gonzcy pleaded guilty to the charges against him, and trial proceeded against Epstein and Handel. On July 12, 2002, the district court dismissed nineteen of the counts in the superseding indictment pursuant to a motion by the government.

On July 18, 2002, the jury convicted Epstein of one count of conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 371; seven counts of mail fraud, in violation of 18 U.S.C. § 1341; five counts of wire fraud, in violation of 18 U.S.C. § 1343; and five counts of money laundering, in violation of 18 U.S.C. § 1956 (a) (1) (A) (i) . The jury convicted Handel of five counts of mail fraud. The district court sentenced Epstein to 108 months of imprisonment, 36 months of supervised release, and a special assessment of $1,700. The district court sentenced Handel to 36 months of imprisonment, 36 months of supervised release, a fine of $98,500, and a special assessment of $500. Both defendants appealed, arguing that their convictions should be overturned or that they should be re-sentenced.

Page 437

II. Discussion

A. Evidentiary Issues

Epstein and Handel argue that the district court erred in admitting certain evidence during trial. In order to preserve a claim of evidentiary error for appeal, "a timely objection . . ., stating the specific ground of objection," must appear in the record. Fed.R.Evid. 103(a)(1). We review the district court's decisions on the admissibility of evidence as to preserved claims for abuse of discretion. See United States v. Mercado Irizarry, 404 F.3d 497, 500 (1st Cir. 2005). If we find an error, "[i]t is settled that a non-constitutional evidentiary error is harmless (and, therefore, does not require a new trial) so long as it is highly probable that the error did not influence the verdict." United States v. Flemmi, 402 F.3d 79, 95 (1st Cir. 2005) (internal quotations and modifications omitted).

For unpreserved errors, the standard of review is that of plain error. United States v. Barone, 114 F.3d 1284, 1294 (1st Cir. 1997) . The plain error standard requires the appellate court to "find [1] that there is error [2] that is plain and [3] that affects substantial rights. When these three elements are satisfied, an appellate court may exercise its discretion to correct the error . . . only if the forfeited error seriously affects the fairness,...

To continue reading