U.S. v. Kennard

• Decision Date: 15 December 2006
• Docket Number: No. 05-12742.,05-12742.
• Citation: 472 F.3d 851
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Laboyce KENNARD, Abraham L. Kennard, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

472 F.3d 851

UNITED STATES of America, Plaintiff-Appellee, v. Laboyce KENNARD, Abraham L. Kennard, Defendants-Appellants.

No. 05-12742.

United States Court of Appeals, Eleventh Circuit.

December 15, 2006.

COPYRIGHT MATERIAL OMITTED

Mildred Geckler Dunn and Stephanie Kearns, Fed. Pub. Defenders, Atlanta, GA, Janice Kristin Jenkins (Court-Appointed), Roswell, GA, for Defendants-Appellants.

Amy Levin Weil, John Russell Phillips, Atlanta, GA, for U.S.

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

Before CARNES, MARCUS and KRAVITCH, Circuit Judges.

CARNES, Circuit Judge:

This case grows out of the intersection of two truths. One, articulated by the Apostle Paul, is that "the love of money is the root of all evil," 1 Timothy 6:10(KJV), and the other, often attributed to P.T. Barnum, is that "[t]here's a sucker born every minute," see A.H. Saxon, P.T. Barnum: The Legend and the Man 1 (1989). Fraudulent investment schemes are likely as old as the truths reflected in those observations, but the one involved in this case has a twist. A man of the cloth defrauded more than a thousand churches and other non-profit organizations out of millions of dollars by promising them miraculous returns on their investments. The law of economic reality dictates that all promises of wildly extravagant investment returns will be broken, and legal realities mandate that litigation must follow.

I.

With the help of his brother Laboyce, Rev. Abraham Kennard bilked hundreds of churches and other non-profit organizations out of millions of dollars. A jury convicted him of nine counts of mail fraud in violation of 18 U.S.C. § 1341, seventy-seven counts of conducting a monetary transaction involving over $10,000 in criminally derived property in violation of 18 U.S.C. § 1957, twenty-seven counts of engaging in monetary transactions to promote criminal activity in violation of 18 U.S.C. § 1956(a)(1)(A)(i), one count of conspiring to launder money in violation of 18 U.S.C. § 1956(h), and one count of income tax evasion in violation of 26 U.S.C. § 7201. The same jury found Laboyce Kennard guilty of one count of conspiring to launder money in violation of 18 U.S.C. § 1956(h). The two Kennard brothers now appeal their convictions, and Laboyce challenges the calculation of his 38-month prison sentence. (For the sake of simplicity and to avoid needless repetition, we will distinguish between the Kennard brothers by using their first names without repeating their last one.)

Abraham ran his scheme using a corporation he set up named Network International Investment Corp. Targeting churches and other nonprofit organizations seeking funds for capital improvement projects, Abraham made his victims a simple offer. In exchange for every $3,000 in "membership fees" that the organizations paid into the Network corporation, they would receive $500,000 in grants. Abraham told prospective Network members that the grants were possible because he had lined up "investors" — including Evander Holyfield's brother, Bernard — who would provide tens of millions of dollars. Moreover, Abraham and Network had plans to build a number of profit-generating Christian resorts around the country. These, too, would help him fund the grants.

Unfortunately for his victims, they believed Abraham's plan and accepted his offer. All told, Network raised more than $8.7 million from more than 1,600 churches and other nonprofits around the United States.

As Network "membership fees" poured in, Abraham deposited them in the escrow account of his attorney, Scott Cunningham. From there, Abraham could send the funds to any number of destinations. One place they went was into a bank account of Promotional Time International, Inc., a company which Laboyce controlled. Laboyce deposited into that account checks from both Cunningham's escrow account and from Abraham himself. From that account, Laboyce later wrote checks to Abraham.

Abraham fled after learning of his initial indictment in January 2004, leading authorities on a five-week manhunt before being captured in Okolona, Mississippi. By the time of trial a year later, the government had reached plea agreements with several other players in the scheme, and attorney Cunningham — who was eventually convicted for his role in all of this — was granted a separate trial. After a four-week trial, a jury found both Kennard brothers guilty of all of the counts remaining against them after the government had dismissed several mail fraud counts against Abraham. Abraham and Laboyce were sentenced to 210 months and 38 months, respectively.

On appeal, the brothers raise a total of seven issues. We consider first the only issue relating to Abraham alone. We then consider an issue the brothers raise jointly before concluding with consideration of the five issues relating to Laboyce alone.

II.

Abraham contends that the district court erred by admitting evidence of — and instructing the jury on — his post-indictment flight. We review a district court's evidentiary rulings only for an abuse of discretion. United States v. Word, 129 F.3d 1209, 1212 (11th Cir.1997). District courts also "have broad discretion in formulating jury instructions provided that the charge as a whole accurately reflects the law and the facts." United States v. Prather, 205 F.3d 1265, 1270 (11th Cir. 2000) (quotation omitted).

The jury could have inferred from the evidence that Abraham learned of his indictment the day it was issued and he began evading authorities on that day and continued to do so until he was arrested five weeks later. During that period, Abraham used only pre-paid phone cards and payphones instead of the cell phone he owned. He used a rental car that someone else had rented. He took evasive measures such as parking several blocks away from a given destination. And he never attempted to contact the FBI agent with whom he had been speaking about Network's activities before the indictment and who had called Abraham's mother attempting to locate him. See United States v. Blakey, 960 F.2d 996, 1000-01 (11th Cir.1992) (noting that the probative value of evidence of a defendant's flight stems from (1) the similarity among the crimes with which the defendant is charged and (2) the timing of the supposed flight). Furthermore, as Abraham admits, the evidence of his fraud was "tremendous."

In this case, as in United States v. Borders, 693 F.2d 1318 (11th Cir.1982), the district court "correctly cautioned the jury that it was up to them to determine whether the evidence proved flight and the significance, if any, to be accorded such a determination." Id. at 1328. The fact that Abraham presented jurors with his own explanation of the post-indictment events in no way alters the propriety of that instruction. It was a jury issue.

Abraham argues that the court should not have admitted evidence of flight because it was more prejudicial than probative. As for the evidence being prejudicial, the idea seems to be that it was truly prejudicial because it made Abraham look so guilty. Of course it did. People, including jurors, realize that while "[t]he wicked flee when no man pursueth," Proverbs 28:1(KJV), they really flee when law enforcement is looking for them. That is why evidence of flight is admissible and probative. Probative force is not the same as legal prejudice. If it were, the stronger the evidence of flight the less admissible it would be. Abraham's argument amounts to a general attack on any use of flight evidence and is inconsistent with our decisions on the issue, such as those we issued in the Blakey and Borders cases. The district court did not abuse its discretion in admitting the evidence of flight, and there was no error in the instruction the court gave on the subject.

III.

Abraham and Laboyce both contend that the district court erred in excluding the deposition testimony of Abraham's attorney, Cunningham, which, they say, is the only evidence that they lacked the necessary criminal intent to commit the money laundering crimes for which they were convicted. The Securities and Exchange Commission took Cunningham's deposition in the fall of 2002 during civil proceedings the Commission had filed against Abraham and Network.

Deposition testimony from a prior civil proceeding is not admissible in a criminal case unless the declarant is unavailable as a witness and the party against whom the testimony is offered in the criminal case "had an opportunity and similar motive to develop the testimony by direct, cross, or redirect examination" in the prior civil proceeding. Fed.R.Evid. 804(b)(1). The parties agree that Cunningham was "unavailable" as a witness at the Kennards' criminal trial because of his intention to invoke his Fifth Amendment right to avoid self-incrimination. The question, then, is whether the district court abused its discretion in excluding the deposition after finding that the SEC's motive in deposing Cunningham was dissimilar from that of the United States Attorney in prosecuting the brothers.

The brothers note that the subject of Cunningham's deposition by the SEC overlaps with that of their criminal trial to the extent that the deposition concerns activity involving the escrow account. They also point out that there are occasions during the deposition in which the SEC lawyers "challenged" Cunningham's explanations.

The record is insufficient, however, to permit us to conclude that the district court erred in finding that the Kennards had not established a sufficient similarity of motives — it actually went further and found that there was a dissimilarity of motives. "[T]his inquiry is inherently factual, depending in part on the similarity of the underlying issues and on the context of the questioning." United States v. Miles, 290 F.3d 1341, 1353 (11th Cir.2002) (per curiam) (citing United States v. Salerno, 505 U.S. 317, 326, 112 S.Ct. 2503, 2509, 120 L.Ed.2d 255 (1992) (Blackmun, J.,...