U.S. v. Vasilakos

• Decision Date: 21 November 2007
• Docket Number: No. 05-3478.,No. 05-3346.,No. 05-3166.,05-3166.,05-3346.,05-3478.
• Citation: 508 F.3d 401
• Parties: UNITED STATES of America, Plaintiff-Appellee/Cross-Appellant (05-3346/3478), v. Peter J. VASILAKOS (05-3346/3478), Defendant-Appellant/Cross-Appellee, Debbie K. Lent (05-3166), Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

508 F.3d 401

UNITED STATES of America, Plaintiff-Appellee/Cross-Appellant (05-3346/3478), v. Peter J. VASILAKOS (05-3346/3478), Defendant-Appellant/Cross-Appellee, Debbie K. Lent (05-3166), Defendant-Appellant.

No. 05-3166.

No. 05-3346.

No. 05-3478.

United States Court of Appeals, Sixth Circuit.

Submitted May 31, 2007.

Decided and Filed November 21, 2007.

ON BRIEF: James H. Banks, Dublin, Ohio, for Appellants. Deborah A. Solove, Assistant United States Attorney, Columbus, Ohio, Alan Hechtkopf, United States Department of Justice, Tax Division, Washington, DC, for Appellee.

Before: RYAN, DAUGHTREY, and ROGERS, Circuit Judges.

OPINION

RYAN, Circuit Judge.

The defendants, Peter J. Vasilakos and Debbie K. Lent, appeal their convictions for mail fraud, money laundering, and conspiracy to commit mail fraud. The district court sentenced Vasilakos to 66 months' imprisonment and Lent to 57 months. On appeal, the defendants offer a host of arguments for overturning their convictions: that prior civil proceedings in which the defendants prevailed should have precluded their criminal prosecution; that the district court, in violation of the Sixth Amendment, permitted the government to use redacted excerpts of codefendants' civil trial testimony; that the district court abused its discretion with respect to various evidentiary rulings that precluded the defendants from presenting a "good faith defense"; that the district court's bail restrictions impermissibly infringed on the defendants' ability to contact witnesses and present a defense; that the district court erred by allowing a United States postal inspector to testify about the ownership and use of the post office boxes utilized in the defendants' scheme; that the district court failed to issue a proper instruction limiting the testimony of the government's summary witness; and that the sentences imposed by the district court are unreasonable. After careful consideration of each of these arguments of error, we conclude, for reasons we shall discuss, that Vasilakos's and Lent's convictions and sentences should be affirmed.

I.

A federal grand jury in the Southern District of Ohio indicted Peter Vasilakos and Debbie Lent on eight counts of mail fraud, in violation of 18 U.S.C. §§ 1341 and 2, one count of conspiring to commit mail fraud and one count of conspiracy to commit tax fraud, both in violation of 18 U.S.C. § 371, and one count of conspiring to launder money, in violation of 18 U.S.C. § 1956(h). The government claims that from 1996 to 1998, Vasilakos and Lent defrauded the Combined Insurance Company of America (CICA), several CICA employees, and the federal government of a substantial, but indeterminate, amount of money. The government indicted four other defendants—Steven Baker, Terence Magrey, Rocky Edwards, and Jodi Hill— as part of the conspiracy. All of the indictees except Baker were tried before the same jury. This appeal concerns only Vasilakos and Lent, who were convicted on all counts and sentenced to prison.

The convictions arise from a scheme concocted by Vasilakos and Lent to steal money from their employer, CICA. The defendants worked as district managers for CICA and supervised numerous field agents who conducted door-to-door sales of disability indemnity insurance policies. CICA compensated sales agents solely by commission for sales that the district managers "called in" weekly to the regional office. District managers earned approximately four percent commission on total sales for all agents under their supervision and were eligible for additional compensation when a customer renewed an existing policy. District managers were also eligible for bonuses based on total sales and the rate of policy renewals. Finally, district managers could earn additional bonuses based on "man weeks," or weeks in which sales agents earned more than $100 in commissions.

The government contends that Vasilakos and Lent fraudulently led CICA to believe that many former agents who in fact had left the company, were still employed and selling policies for CICA. That misrepresentation generated "man week" bonuses and additional compensation for the district managers. Vasilakos instructed some of his working agents to sign blank sales reports, on which Baker, at Vasilakos's direction, filled in data reporting fictional insurance policy sales to fictional purchasers. These fictional sales also generated commission checks and other compensation payable to the ex-agents. In order to get possession of these checks, Lent contacted CICA, ostensibly on behalf of the agents, to change the agents' mailing addresses to post office boxes controlled by Vasilakos, Lent, and Baker. The conspirators then forged the "agents" signatures on the diverted checks. The fictional sales and resulting commission payments caused CICA to erroneously report to the Internal Revenue Service, commission payments to the ex-agents.

The defendants concealed their scheme by depositing CICA checks and large amounts of cash into multiple bank accounts. The government argued that Vasilakos also maintained bank accounts in other persons' names in order to show a small balance in his own account and to prevent the IRS from collecting on a tax lien filed against him.

II.

Vasilakos and Lent first argue that the district court erred by refusing to give preclusive effect to earlier civil court proceedings in which the defendants prevailed in a civil suit brought against the defendants by CICA to recover fraudulently obtained sums. We review the district court's application of the doctrines of res judicata and collateral estoppel de novo. Knox County Educ. Ass'n v. Knox County Bd. of Educ., 158 F.3d 361, 371 (6th Cir. 1998).

In Montana v. United States, the Supreme Court stated that under the res judicata doctrine, "a final judgment on the merits bars further claims by parties or their privies based on the same cause of action." 440 U.S. 147, 153, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979). Res judicata precludes future claims when there is: "(1) a final decision on the merits by a court of competent jurisdiction; (2) a subsequent action between the same parties or their `privies[';] (3) an issue in the subsequent action which was litigated or should have been litigated in the prior action; and (4) an identity of the causes of action." Saylor v. United States, 315 F.3d 664, 668 (6th Cir.2003) (quoting Becherer v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 193 F.3d 415, 422 (6th Cir.1999) (en banc)).

Collateral estoppel precludes relitigation of issues between parties or their privies previously determined by a court of competent jurisdiction. Montana, 440 U.S. at 153, 99 S.Ct. 970.

Judgments are preclusive only as to parties and their privies. Id. Privity is limited to "a successor in interest to the party, one who controlled the earlier action, or one whose interests were adequately represented." Sanders Confectionery Prods., Inc. v. Heller Fin., Inc., 973 F.2d 474, 481 (6th Cir.1992).

Because the United States was not a party to the civil litigation between the defendants and CICA and is not in privity with the insurance company, neither res judicata nor collateral estoppel is available to Vasilakos or Lent. The government is not a successor in interest to CICA and its interest in prosecuting the defendants for federal crimes was not adequately represented by CICA in the civil case. Manifestly, the government had no control over CICA's litigation strategy. Becherer, 193 F.3d at 423.

III.

Next, Vasilakos and Lent argue that the district court erred by admitting in evidence, over the defendants' objection, deposition statements made by their codefendants in the prior civil proceedings between CICA and the defendants. When the deposition statements were introduced in this case, the court instructed jurors to consider each deposition statement as evidence only against the specific defendant who made the statement. The government redacted names of other defendants before proffering the statements. Vasilakos and Lent contend, however, that the statements constituted inadmissible hearsay and that their admission violated their rights under the Confrontation Clause of the Sixth Amendment.

The Supreme Court has instructed us to review all evidentiary rulings, even those under the Federal Rules of Evidence, for abuse of discretion. Gen. Elec. Co. v. Joiner, 522 U.S. 136, 141-42, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997). Reversal is appropriate only if the "abuse" was not harmless "error." Error is harmless if we are satisfied "`that the outcome of a trial was not affected by evidentiary error.'" United States v. Johnson, 440 F.3d 832, 847 (6th Cir.) (quoting McCombs v. Meijer, Inc., 395 F.3d 346, 358 (6th Cir.2005)), cert. denied, ___ U.S. ____, 127 S.Ct. 48, 166 L.Ed.2d 49 (2006). Confrontation Clause claims are questions of law that are reviewed de novo. Johnson, 440 F.3d at 842.

The defendants argue that the district court abused its discretion by refusing to exclude the codefendants' deposition statements as inadmissible hearsay. This contention is without merit. Federal Rule of Evidence 801(d)(2)(A) establishes that a statement is not hearsay if it "is offered against a party and is . . . the party's own statement." The deposition excerpts are not hearsay because each statement was offered and received only against the party who made it.

The defendants also claim that the deposition statements of their codefendants, even though admitted only against the declarant-codefendants at the joint trial, violated the defendants' Confrontation Clause rights. The Sixth Amendment guarantees that "[i]n all criminal prosecutions, the accused shall enjoy the right . . . to be confronted with the witnesses against him." U.S. Const. amend. VI (emphasis added). The "principal evil" the confrontation right seeks to eliminate is the "use of ex parte examinations as evidence against the accused." Crawford v. Washington, ...