U.S. v. Lee

• Decision Date: 05 October 2005
• Docket Number: No. 04-12485.,No. 04-13673.,04-12485.,04-13673.
• Citation: 427 F.3d 881
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Kathy Mills LEE, Defendant-Appellant. United States of America, Plaintiff-Appellant, v. Joseph Michael Wyman, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

427 F.3d 881

UNITED STATES of America, Plaintiff-Appellee, v. Kathy Mills LEE, Defendant-Appellant.

United States of America, Plaintiff-Appellant, v. Joseph Michael Wyman, Defendant-Appellant.

No. 04-12485.

No. 04-13673.

United States Court of Appeals, Eleventh Circuit.

October 5, 2005.

COPYRIGHT MATERIAL OMITTED

Thomas M. Findley, Messer, Caparello & Self, P.A., Robert Augustus Harper, Jr., Tallahassee, FL, for Defendants-Appellants.

Terry Flynn, E. Bryan Wilson, Tallahassee, FL, for U.S.

Appeals from the United States District Court for the Northern District of Florida.

Before CARNES and PRYOR, Circuit Judges, and FORRESTER^*, District Judge.

FORRESTER, District Judge:

Joseph Michael Wyman and Kathy Mills Lee challenge the judgments and sentences imposed for committing three counts of mail fraud in violation of 18 U.S.C. §§ 1341 and 1342. The grand jury returned a true bill against Wyman and Lee on February 24, 2004, and a joint trial commenced on March 1, 2004. The jury returned a general verdict of guilty on all three counts of the indictment on March 4, 2004.

Wyman and Lee contend the evidence was insufficient to convict them of mail fraud and contend that the district court improperly admitted hearsay and opinion testimony during trial. Wyman and Lee also raise sentencing objections, contending that they were sentenced in violation of United States v. Booker, ___ U.S. ___, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005),¹ and that their sentences were based upon unreliable evidence and factors not proven by a preponderance of the evidence. The appellants also object to the district court's admission of alleged opinion and hearsay evidence. Lee raises an individual objection to the district court's denial of her motion to continue sentencing until such time as she could be sentenced with Wyman.

I. Background

A. The Financial Scheme

Appellants' convictions arise out of their attempts to use a nonexistent banking channel not only to obtain goods without payment but also to retain use of those goods as long as possible. Between 2000 and 2002, Appellant Wyman attended several seminars and conferences instructing attendees in "alternative" banking channels. Through these seminars, Wyman was taught about implausible theories of private offset exchanges, a commercially unrecognized system rooted in the notion that the United States Treasury amasses moneys rightfully belonging to individuals. Private offset exchanges were claimed mechanisms for individuals to access this Treasury-held money. Using closed checking accounts, an individual would write a check to obtain a good or service. As these checks were written on closed accounts, the account on which the check was drawn could not provide the funds to pay for the goods. Instead, these offset checks were theoretically to be presented to the Treasury by the drawee bank or payee for reimbursement with the stockpiled funds.

Between the summers of 2002 and 2003, Kathy Mills Lee and Joseph Michael Wyman uttered more than one million dollars' worth of personal checks drawn upon closed bank accounts. Lee wrote checks drawn upon her account at Citizens Financial Services in Indiana. On August 29, 2002, Lee wrote to Citizens to close her account for ongoing transactions but informed Citizens that she intended her account to remain open for adjustments and setoffs. After the letter was sent, Lee wrote sixteen checks totaling $192,982.10 on the closed Citizens account. Included among these checks were a $121,914.09 check to pay off her mortgage, a check to pay off a $12,000 home equity line of credit, and $5,769 in checks written to Wyman. Wyman deposited these checks into his account at the South Trust Bank in Tallahassee, Florida, on occasion utilizing a split deposit to walk away with cash.

Wyman also did his share of check-writing, utilizing former checking accounts in Georgia and California to write more than $800,000 in offset checks on closed accounts. Among Wyman's many checks were two drafted for $110,000 and $449,000 to purchase an option on a Destin beachfront property. Further, Wyman passed a $79,077.40 check for a BMW and wrote another two checks for two Acuras in the amounts of $33,972.61 and $45,325.21. Lee was also the beneficiary of Wyman's check-writing, receiving more than $8,500 in checks written on closed accounts. Lee and Wyman also attempted to pay off the mortgage on Lee's sister's home with an offset check for $9,676.59.

When the payees of these offset checks complained that the checks were being dishonored, Wyman and Lee employed a range of responses to the complaints. The first response to merchant complaints was typically to ignore the situation. In some cases this strategy proved effective, as several merchants and banks simply wrote off their losses. For example, ABC Liquors eventually wrote off Lee's $1,154.70 purchase as a bad debt after several phone calls and an attempt to negotiate the check as an offset check failed. Similarly, Sam's Club gave up on collecting payment for $584.77 in merchandise purchased by Lee with an offset check, and Bank of America and Capital City Bank wrote off the negative balances in Wyman's and Lee's accounts as losses. To more persistent payees, Wyman and Lee would send paperwork which they claimed would facilitate redemption of these offset checks. The papers informed merchants that while the closed checking accounts were not open for public transactions, they were open for private offset or exchange transactions. Wyman and Lee urged the payees to negotiate these offset checks with banks or, alternatively, directly with the Treasury. Unsurprisingly, the record does not reveal any successful negotiations of these offset checks by merchants or banks.

While some of the check recipients and banks simply wrote off their debts, other payees pursued legal action. Vanderbilt Mortgage, mortgage lender for Lee's sister's home, threatened legal action to recover its losses after discovering the offset check meant to pay off the loan balance was written on a closed account. Although it served legal notice of the default on Lee's sister, Vanderbilt eventually charged off the unpaid balance as a loss. A BMW dealership, Quality Imports, repossessed a vehicle it sold to Wyman after discovering the offset check used to fund the purchase was a bad check. Fortunately, Quality Imports was able to repossess the car a few days after the original sale. Community First, the lender on a car owned by Wyman, also turned to repossession to recoup its losses. Community First was less fortunate than Quality Imports, however, as the sale of the repossessed car was insufficient by approximately $9,000 to cover the full amount of the loan. Similarly, Ford Motor Credit obtained a civil judgment against Lee for the debt remaining after Lee's attempt to pay for her Explorer failed. Lee had written checks to both Ford Motor Credit and then later to a local dealership in an attempt to pay off and purchase her leased car, but these transactions fell through once the offset checks were dishonored.

First South, Lee's mortgage company, resorted to foreclosure after checks written by Lee to pay off her mortgage and home equity loans were dishonored. For approximately $1,000, Lee and Wyman purchased from Cindy Beers, an exchange transaction proponent, a package of documents meant to discharge a mortgage. (Wyman testified that he thought the package had worked in achieving the write-off of Lee's sister's mortgage.) Following Beers' mortgage-discharge package, which involved ten to twelve different steps of paperwork, Wyman and Lee first sent First South a request for payoff and then sent an offset check to redeem the debt. The bank failed to verify whether the payoff check was valid, and consequently First South erroneously sent a notice of satisfaction on both the mortgage and line of credit, even sending a refund for overpayment on the line of credit. Upon discovering its mistake, First South sent Lee notices of nonpayment. Wyman and Lee ignored these notices, instead sending in more paperwork from the Beers package. Eventually, First South filed a foreclosure motion. Wyman and Lee responded to the lender and its counsel with still more documents from the Beers package. Two of the documents in the indictment, a "Notice of Acceptance" and a "motion to dismiss," were part of this attempt to achieve satisfaction of the mortgage and retention of the house. Due to these delaying tactics, it took First South almost a year from receipt of the bad check to recoup its losses.

Some recipients of offset checks, however, fared relatively better at the hands of Wyman and Lee. Bert Moore, the attorney handling the Destin property deal, as well as Affiliated Travel, a coin dealer, had refused to allow Wyman to take receipt of any goods until his checks cleared and so did not sustain any losses. Similarly, Proctor & Proctor, at which enterprise Wyman attempted to purchase two Acuras, never sustained actual losses as Proctor's bank refused to act as fiduciary and process the offset check Wyman offered in payment. Wyman also made good a $950.68 debt to Hair Options, a provider of hair replacement services; after discovering the offset check had been dishonored, Hair Options' threat to stop providing its services to Wyman mid-treatment proved effective. South Trust Bank also found threats of legal action to be effective, as Wyman reimbursed the negative balance in his account with that institution when the bank threatened to call law enforcement.

B. Challenged Evidence at Trial

In detailing the operation of Wyman and Lee's financial scheme, the trial court admitted several pieces of evidence that are now one basis for these appeals. First, the district court allowed the government to introduce into evidence a letter written by Citizens' counsel to Lee, in which Lee was informed by the bank that she had to stop writing checks on a closed account. The...