479 F.3d 546 (8th Cir. 2007), 06-2584, United States v. Pierce

Docket Nº:06-2584, 06-2585.
Citation:479 F.3d 546
Party Name:UNITED STATES of America, Appellee, v. William D. PIERCE, Appellant. United States of America, Appellee, Shirley Best Pierce, Appellant.
Case Date:March 08, 2007
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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479 F.3d 546 (8th Cir. 2007)

UNITED STATES of America, Appellee,

v.

William D. PIERCE, Appellant.

United States of America, Appellee,

Shirley Best Pierce, Appellant.

Nos. 06-2584, 06-2585.

United States Court of Appeals, Eighth Circuit.

March 8, 2007

Submitted: Jan. 12, 2007.

Page 547

Deborah Kay Ellis, argued, St.Paul, Minnesota, for appellant in 06-2584.

Katherine Menendez, argued, Minneapolis, Minnesota, for appellant Attorney Federal Public Defender in 06-2585.

John Richard Marti, argued, Minneapolis, Minnesota, for appellee Asst. U.S. Attorney.

Before WOLLMAN and MELLOY, Circuit Judges, and NANGLE, 1 District Judge.

NANGLE, District Judge.

After a jury trial, Defendant-Appellants William Pierce and Shirley Pierce, husband and wife, were convicted of one count of conspiracy against the United States, in violation of 18 U.S.C. § 371; three counts of filing false tax returns, in violation of 26 U.S.C. § 7206(1); four counts of mail fraud, in violation of 18 U.S.C. § 1341; and, five counts of wire fraud, in violation of 18 U.S.C. § 1343. The district court 2 sentenced Shirley Pierce to a thirty-month term of imprisonment, to be followed by three years of supervised release, and sentenced William Pierce to a thirty-seven month,term of imprisonment, to be followed by three years of supervised release. The court further ordered Appellants to pay $489,239.65 in restitution to the State of Minnesota.

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Appellants jointly appeal their convictions and the amount of the restitution order, raising three points of error. Appellants allege the court erred in: (1) instructing the jury that it "should," rather than "may," find each defendant vicariously liable for the substantive crimes of his/her co-conspirator, if certain circumstances were proven, under Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946); (2) denying the Appellants' request for a special verdict form; and (3) ordering Appellants to pay $489,239.65 in restitution. Appellants urge this Court to remand the case for a new trial and a new restitution hearing. We affirm.

I. BACKGROUND

The convictions at issue in this appeal arise out of the Pierces' management of a not-for-profit charter school, Right Step Academy, which William Pierce established in June 1995 by entering into a charter agreement with St. Paul Public Schools. 3 William Pierce was the executive officer of Right Step Academy, and Shirley Pierce served on the Board of Directors. Pursuant to the charter agreement, William Pierce was to operate the school in accordance with Minnesota state charter law; as officers and directors, the Pierces were subject to fiduciary duties. Minn.Stat. Ann. §§ 317A.251, 317A.361(2006). Right Step Academy was funded by the state and federal governments, and was subject to the same financial audits, audit procedures, and audit requirements as a public school district.

In their operation of Right Step Academy, the Pierces engaged in a number of self-dealing activities, which defrauded the state of Minnesota, as well as the federal government. For over four years, the Pierces diverted funds from Right Step Academy, either directly or indirectly through sham invoices for services allegedly provided by Right Group. 4 Furthermore, the Pierces failed to include the diverted funds as income in their joint tax returns, and falsely characterized personal expenses as business expenses.

In addition to the fraudulent transactions conducted between Right Step Academy and Right Group, and the falsehoods and omissions in their tax preparation, the Pierces committed numerous other acts which comprised the heart of the conspiracy charged in the indictment. For instance, they spent school funds on personal items such as car and credit card payments. They also failed to properly operate the school in accordance with the charter agreement, as revealed by an audit of the school performed by St. Paul Public Schools in early 2000. The audit found that the school had many issues with regard to its operation. These issues included a lack of textbooks, educational materials and curriculum, the failure to provide safe transportation, the maintenance of irreconcilable financial records, and the accumulation of debt. As a result of the delinquencies exposed by the audit, in August 2000, St. Paul Public Schools refused to renew Right Step Academy's charter, and Right Step Academy ceased operations.

The grand jury issued an indictment charging the Pierces with a number of counts arising out of their scheme to divert

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money from Right Step Academy for their own use and benefit, and their failure to report this additional income on their federal tax returns. The Pierces pled not guilty to each charge, and the case went to trial.

Before the case was submitted to the jury, the parties jointly submitted proposed jury instructions. The Pierces unsuccessfully objected to the government's proposed Pinkerton instruction on co-conspirator vicarious liability, Jury Instruction No. 9. The Pierces also requested that a special verdict form be submitted for the conspiracy charge, which would require the jury to specify which object offense(s) the Pierces conspired to commit. However, the district court denied the request and instead gave a specific unanimity instruction.

The jury convicted both defendants of all counts. The district court sentenced Shirley Pierce to thirty months in prison and three years of supervised release, and William Pierce to thirty-seven months in prison and three years of supervised release. The court also ordered the Pierces to jointly and severally make restitution to the State of Minnesota Department of Education ("DOE") in the amount of $489,239.65.

II. DISCUSSION

A. Pinkerton Instruction

Appellants allege that the trial court committed reversible error in its instructions to the jury regarding the vicarious liability of co-conspirators under Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946). We review jury instructions for abuse of discretion, and "[i]n so doing, we do not consider portions of a jury instruction in isolation, but rather consider the instructions as a whole to determine if they fairly and adequately reflect the law applicable to the case." United States v. Turner, 189 F.3d 712, 721 (8th Cir.1999).

The Pierces were charged with conspiring to commit offenses against the United States or defraud the United States in violation of 18 U.S.C. § 371. 5 They were also charged in counts two through thirteen with the substantive offenses of filing false tax returns, mail fraud, and wire fraud. In addition to instructing the jury with respect to each substantive offense charged against each defendant individually, the court delivered a Pinkerton instruction which provided:

A defendant who has entered into a criminal conspiracy is responsible for offenses committed by fellow conspirators if the defendant was a member of the conspiracy when the offense was committed and if the offense was committed in furtherance of and as a foreseeable consequence of the conspiracy. Therefore, if you find a defendant guilty of the conspiracy charged in Count 1 and if you find beyond a reasonable doubt that while the defendant was a member of the conspiracy, a fellow conspirator committed an offense charged in Counts 2 through 13 in furtherance of and as a foreseeable consequence of that conspiracy, then you should find the defendant guilty of that offense as well.

Jury Instructions, Instruction No. 9. Appellants assert that the court's use of the word "should," rather...

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