U.S. v. Kunzman

• Decision Date: 26 April 1995
• Docket Number: No. 94-1084,94-1084
• Citation: 54 F.3d 1522
• Parties: 42 Fed. R. Evid. Serv. 115 UNITED STATES of America, Plaintiff-Appellee, v. Charles William KUNZMAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1522

54 F.3d 1522

42 Fed. R. Evid. Serv. 115

UNITED STATES of America, Plaintiff-Appellee, v. Charles William KUNZMAN, Defendant-Appellant.

No. 94-1084.

United States Court of Appeals, Tenth Circuit.

April 26, 1995.

John M. Haried, Asst. U.S. Atty. (Henry L. Solano, U.S. Atty., with him on the brief), Denver, CO, for plaintiff-appellee.

Philip L. Dubois of Philip L. Dubois, P.C., Boulder, CO, for defendant-appellant.

Before ANDERSON, McWILLIAMS, and ALARCON, ^** Circuit Judges.

ALARCON, Senior Circuit Judge.

Charles William Kunzman appeals from a judgment of conviction following a trial by jury. Kunzman seeks reversal of the conviction on multiple grounds. In the alternative, he seeks remand of the case for resentencing on the ground that the district court's order requiring him to pay $331,756.09 in restitution constitutes an abuse of discretion.

Kunzman was charged along with his wife, Murleen Kay Kunzman (Kay Kunzman), and his stepson, Randall Lee Meyers (Randy Meyers), in multiple counts with fraud and money laundering stemming from a real estate investment scheme. The defendants established K & K Mortgage Company and began offering limited partnership investments in Real Estate Mortgage Investment Conduits (REMICs) in October, 1987. Rather than investing REMIC monies in mortgages secured by real estate, the monies were used by the Kunzmans to pay personal and business expenses. The defendants conducted a Ponzi scheme, in which money from later investors was used to pay monthly interest and principal payments to earlier investors. The scheme eventually collapsed and the Kunzmans filed bankruptcy on July 10, 1990. Kay Kunzman and Randy Meyers pled guilty prior to trial. The jury convicted Kunzman of 22 counts of securities fraud, mail fraud, wire fraud, money laundering, and bank fraud.

We affirm the conviction because we conclude that none of Kunzman's grounds for reversal are meritorious. We also affirm the district court's restitution order because we find no abuse of discretion.

I. PRETRIAL MOTIONS

A. Motion for Bill of Particulars

Kunzman joined in his co-defendants' pretrial motions for bills of particulars as to each securities fraud count. In addition, he submitted his own motion for a bill of particulars requesting additional specificity as to the money laundering and bank fraud counts in which he was named. The district court denied the motions for bills of particulars.

Kunzman contends that the district court erred in denying his motion for a bill of particulars because the second superseding indictment did not specify sufficiently the acts allegedly performed by him. He argues that this lack of specificity hindered his ability to prepare his defense as well as his ability to limit the evidence admitted at trial.

We review a district court's denial of a motion for a bill of particulars for abuse of discretion. United States v. Dunn, 841 F.2d 1026, 1029 (10th Cir.1988). "The purpose of a bill of particulars is to inform the defendant of the charge against him with sufficient precision to allow him to prepare his defense...." United States v. Levine, 983 F.2d 165, 166-67 (10th Cir.1992). The denial of a motion for a bill of particulars "will not be disturbed unless the defendant shows 'that he was actually surprised at trial and thereby incurred prejudice to his substantial rights.' " Id. at 166 (citations omitted).

The second superseding indictment described the defendants' scheme in detail and provided dates, places and the persons involved in various transactions. Kunzman does not dispute that he was provided with full discovery of the government's materials prior to trial. This was sufficient to inform Kunzman of the charges against him and to enable him to prepare his defense. See id. at 167 (no abuse of discretion where indictment described scheme in detail and set forth instances of mail fraud and defendant had access to government's file prior to trial). Moreover, Kunzman has not demonstrated, or even argued, that he was actually surprised at trial and therefore incurred prejudice to his substantial rights. See United States v. Sturmoski, 971 F.2d 452, 460 (10th Cir.1992) (court affirmed denial of motion for bill of particulars where government provided full disclosure and defendant failed to show actual surprise at trial). Accordingly, we find that the district court did not abuse its discretion in denying Kunzman's motion for a bill of particulars.

B. Motion to Dismiss for Lack of Interstate Nexus and Jurisdiction

Prior to trial, Kunzman moved to dismiss the money laundering and securities fraud counts of the indictment as insufficient on the ground that the government failed to allege sufficiently an effect on interstate commerce. ¹ Kunzman contends that the district court erred in denying the pretrial motion to dismiss.

The sufficiency of an indictment is a question of law which we review de novo. United States v. Brady, 13 F.3d 334, 338 (10th Cir.1993). An indictment is sufficient if it contains the elements of the offense and apprises the defendant of the charges he must meet. Id. at 337. Counts 19 and 26 allege that securities fraud was accomplished "by the use of the means and instrumentalities of interstate commerce." Count 22 alleges that Kunzman "... did knowingly ... conduct ... a financial transaction affecting interstate commerce" in violation of 18 U.S.C. Sec. 1956. Counts 15, 27 and 32 allege that Kunzman "... did knowingly engage ... in a monetary transaction, affecting interstate and foreign commerce ..." in violation of 18 U.S.C. Sec. 1957. The indictment also specifically alleges an effect on interstate commerce through the use of interstate highways, the use of telephone and mails, and transactions involving banks and financial institutions engaged in interstate commerce. This is sufficient to allege an effect on interstate commerce.

Kunzman also contends that the district court should have granted his Rule 29 motion for judgment of acquittal on these counts because the evidence at trial was insufficient to establish the required interstate nexus. Although Kunzman did not argue this point before the district court, we address the merits of this contention because an interstate nexus is essential to confer jurisdiction. See United States v. Kelley, 929 F.2d 582, 586 (10th Cir.), cert. denied, 502 U.S. 926, 112 S.Ct. 341, 116 L.Ed.2d 280 (1991) (requirement under section 1957 that the transaction be "in or affecting interstate commerce" must be met to confer jurisdiction on federal courts); Kerbs v. Fall River Indus., Inc., 502 F.2d 731, 737 (10th Cir.1974) (interstate nexus is required to confer subject matter jurisdiction over securities fraud actions).

1. Money Laundering Counts

a. Jurisdiction under 18 U.S.C. Sec. 1956

In Count 22, Kunzman was charged with knowingly conducting a financial transaction involving the proceeds of specific unlawful activity in violation of 18 U.S.C. Sec. 1956(a)(1)(A)(i). Evidence of transactions involving financial institutions insured by the Federal Deposit Insurance Corporation (FDIC) is sufficient to meet the interstate commerce requirement under section 1956. United States v. Peay, 972 F.2d 71, 75 (4th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 1027, 122 L.Ed.2d 172 (1993).

The government introduced as evidence of the financial transaction a check drawn on an account at the Central Bank of Greeley. The parties stipulated that the accounts of the Central Bank of Greeley were insured by the FDIC during the time the transactions took place. The stipulated facts were sufficient to confer jurisdiction under section 1956.

b. Jurisdiction under 18 U.S.C. Sec. 1957

In Counts 15, 27, and 32, Kunzman was charged with money laundering in violation of 18 U.S.C. Sec. 1957. A charge of money laundering under section 1957 must be "in or affecting interstate or foreign commerce" in order to confer jurisdiction on the trial court. United States v. Lovett, 964 F.2d 1029, 1038 (10th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 169, 121 L.Ed.2d 117 (1992). A "minimal effect" on interstate commerce is sufficient to meet this requirement. Id.

The evidence at trial included numerous checks drawn on or deposited into federally insured banks. The government also introduced evidence that some of the money involved in these counts was used by Kunzman to pay for services from an out of state company. This evidence was sufficient to confer jurisdiction under section 1957. See id. at 1038 (evidence that defendant purchased items in interstate commerce with funds traceable to the transactions sufficient to confer jurisdiction); Kelley, 929 F.2d at 586 (evidence that automobile purchased by defendant was sold to her by local car agency involved in interstate commerce sufficient to confer jurisdiction).

2. Securities Fraud Counts

In Counts 19 and 26, Kunzman was charged with securities fraud in violation of 15 U.S.C. Sec. 78j(b). To establish federal jurisdiction under section 78j, it "is sufficient that a device or contrivance be employed in connection with the use of the instruments of interstate commerce or the mails." Kerbs, 502 F.2d at 737 (emphasis in original). As long as the instrumentality used is itself an integral part of an interstate system, Congress may regulate intrastate activities involving the use of the instrumentality under the federal securities laws. Id. at 738 (use of the telephone system involving intrastate communications sufficient to confer jurisdiction under section 78j); see also Reyos v. United States, 431 F.2d 1337, 1348 (10th Cir.1970) (use of mails and use of checks deposited into banks engaged in interstate commerce sufficient to confer jurisdiction under section 78j).

The evidence at trial included testimony that victims of the fraudulent scheme used interstate highways and flew into Colorado from other states. The evidence also included numerous checks drawn and deposited in banks involved...