U.S. v. Willey

• Decision Date: 27 June 1995
• Docket Number: No. 93-2930,93-2930
• Citation: 57 F.3d 1374
• Parties: 42 Fed. R. Evid. Serv. 972 UNITED STATES of America, Plaintiff-Appellee, v. Doyle Marshall WILLEY, Sr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1374

57 F.3d 1374

42 Fed. R. Evid. Serv. 972

UNITED STATES of America, Plaintiff-Appellee, v. Doyle Marshall WILLEY, Sr., Defendant-Appellant.

No. 93-2930.

United States Court of Appeals, Fifth Circuit.

June 27, 1995.

Rehearing Denied Aug. 8, 1995.

Camile F. Gravel, Alexandria, LA, William H. Jeffress, Jr., Tracey E. George, Miller, Cassidy, Larroca & Lewin, Washington, DC, for appellant.

Larry Eastepp, James L. Turner, Ms. Paula C. Offenhauser, Asst. U.S. Attys., Houston, TX, for appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before KING, GARWOOD and BENAVIDES, Circuit Judges.

GARWOOD, Circuit Judge:

Doyle Marshall Willey (Willey) appeals his convictions on thirty-one counts of bankruptcy fraud, conspiracy to commit bankruptcy fraud, aiding and abetting the making of a false statement on a loan application, aiding and abetting the concealment of assets from the Resolution Trust Corporation (RTC) and the Federal Deposit Insurance Corporation (FDIC), and aiding and abetting money laundering. We affirm in part, reverse in part, vacate the sentence, and remand for resentencing.

Facts and Proceedings Below

In January 1988, Sam Houston National Bank (Sam Houston Bank) of Huntsville, Texas, failed. Willey, a Huntsville real estate and timberland developer, was a director of Sam Houston Bank; Albert Hornaday (Hornaday) was its president from August 1987 until January 1988 and was a life-long friend of Willey's. ¹ While investigating the bank's failure, the FBI uncovered potentially fraudulent activity with respect to a piece of property in Sam Houston Bank's real estate owned portfolio (the Richards Road property). This information led investigators to inquire into the activities of Willey, Hornaday, Willey's wife, Kimberly Bacon (Bacon), ² and Shadylane Farms, Inc. (Shadylane Farms), a corporation set up by Willey and Bacon and wholly-owned by Bacon. This investigation revealed that Willey, who had declared personal and corporate bankruptcy in 1990 and thereby walked away from approximately $46 million in unsecured debt, had undertaken, with the assistance of Bacon, Hornaday, and Shadylane Farms, to shield the majority of his and his company's assets from creditors.

In June 1992, federal agents applied for and were granted warrants to search both the home in which Willey and Bacon were then living (the Sunset Lake Road house) and the Richards Road property, which Shadylane Farms had just purchased from Hornaday and into which Willey and Bacon were then in the processing of moving. The voluminous documentary evidence seized during the search revealed a labyrinthine series of financial transactions involving numerous corporate entities with which Willey was associated. ³ Although Willey and his company, MWI Land, Inc. (MWI), received significant amounts of money from these various corporations and had access to and/or control over approximately twenty corporate and personal bank accounts, Willey was not listed as an employee in state-mandated reports for any company other than MWI. ⁴ In addition, although Bacon, or Willey and Bacon, were signatories on most of the accounts, none were in Willey's name; most had been opened as "trust" accounts, ⁵ with Willey's interest undisclosed, by Bacon in her own name, or in a corporate name.

Based on this information, Willey, Bacon, Hornaday, and Shadylane Farms were charged in a 32-count indictment with bankruptcy fraud, conspiracy to commit bankruptcy fraud, aiding and abetting the making of a false statement on a loan application, aiding and abetting the concealment of assets from the RTC and the FDIC, and aiding and abetting money laundering. ⁶ The government contended that, beginning in 1986, Willey funneled money belonging to him and MWI through the corporate and personal accounts that he controlled, but with which he was not conspicuously associated, enabling him to continue to enjoy assets that should have become part of his and MWI's bankruptcy estates. Focusing on two pools of money totalling $400,000 that had been paid to MWI in July 1986, the government painstakingly traced the money through a convoluted series of transfers from the various nominee and "trustee" accounts that Willey controlled. The evidence showed that, from 1986 to 1992, Willey and Bacon used the money in these accounts to purchase various assets--land, cattle, a fur coat, vehicles, mineral interests, and most importantly, the Richards Road property and improvements thereon. We will not here recount the intricate web of transfers and transactions by which most of these assets were shown to have come into Willey's possession. Because the transactions related to the financing, improvement, and purchase of the Richards Road property were central to many of the charges in this case, however, a somewhat more detailed recounting of them is appropriate.

The Richards Road property was a 61-acre tract of land with a house. ⁷ When Sam Houston Bank hired Hornaday in August 1987, it gave him, as part of his compensation package, a lease purchase agreement on the property under which he paid $200 a month in rent. After Sam Houston Bank failed, the FDIC, in its capacity as receiver, decided to advertise the property for public bids. Two bids were submitted, one from Willey, acting as broker for D.E. Hughes, for $200,000 and one from Sam Dominey (Dominey) for $200,100; the appraised market value of the property was $244,000. The FDIC accepted Dominey's bid, but Hornaday filed an affidavit in the county property records asserting the priority of his purchase option, and Dominey refused to close the purchase with this cloud on the title. Thereafter, Hornaday submitted a bid on April 21, 1988, ⁸ in the amount of $200,100, and the sale was closed May 31, 1988. ⁹

From the time Hornaday purchased the Richards Road property in May 1988 until June 1989, when Shadylane Farms entered into a lease with an option to purchase the property, Willey, through various of his nominee accounts, advanced Hornaday money to pay the mortgage on the property; after June 1989, Shadylane Farms made the payments. ¹⁰ Nevertheless, Hornaday continued to live on the property until Shadylane Farms bought it outright in June 1992. In addition, the government introduced substantial evidence that Willey was making improvements on the Richards Road house long before Shadylane Farms actually purchased it in June 1992. ¹¹ Payments for these improvements came from various of the accounts to which Willey had access. ¹² Willey characterized the payments to Hornaday for the mortgage and improvements on the Richards Road property as loans, but was forced to admit that there were no promissory notes memorializing these alleged loans and that he had not listed the loans on his bankruptcy petition as a debt owed him.

Following ten days of testimony, a jury found Willey guilty on all counts. ¹³ The district court sentenced Willey to 60 months' imprisonment on the conspiracy, bankruptcy fraud, and concealment from federal agency counts (counts 1 and 3-24), 24 months' imprisonment on the false statement count (count 2), and 97 months' imprisonment on the money laundering counts (counts 25-31), all sentences to run concurrently. In addition, the district court imposed a 3-year term of supervised release on counts 1 and 3-31, a 1-year term of supervised release on count 2, a fine of $15,000, and special assessments totalling $1500.

In his timely appeal, Willey contests the sufficiency of the evidence to support the "conceal or disguise" element of his money laundering convictions under 18 U.S.C. Sec. 1956(a)(1)(B)(i). In this same vein, he claims that the opinion testimony of IRS Special Agent Lana Stone respecting the conceal or disguise element was highly prejudicial and therefore improperly admitted. He further claims that, even if the government's evidence was sufficient to prove money laundering, the district court erred in sentencing him under the Sentencing Guidelines' money laundering provisions because his conduct is not within the "heartland" of criminal behavior that the provisions were meant to address. With respect to the other offenses, he claims that the search of his two homes grossly exceeded the scope of the warrant and that therefore the fruits of the search should have been suppressed. Even if the search was appropriate and the evidence seized was therefore admissible, Willey challenges the sufficiency of the evidence of intent to commit the bankruptcy fraud and transfer and concealment crimes. He claims that the evidence was likewise insufficient to support his conviction on the false statement count because, he alleges, the statement at issue was neither false, material, nor known to him. Lastly, he argues that the district court erred in failing to resolve a factual dispute regarding the Presentence Report's (PSR) calculation of certain moneys said to have been laundered by him.

Discussion

I. Bankruptcy Fraud and Transfer and Concealment Counts

A person commits the crime of bankruptcy fraud when he "transfer[s] or conceal[s] property (1) knowingly, (2) fraudulently, and (3) in contemplation of a case under title 11 or with intent to defeat the provisions of title 11." United States v. West, 22 F.3d 586, 589 n. 8 (5th Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 584, 130 L.Ed.2d 498 (1994); see 18 U.S.C. Sec. 152. Under 18 U.S.C. Sec. 1032, it is a crime to "knowingly conceal[ ] or endeavor[ ] to conceal an asset or property from the Federal Deposit Insurance Corporation, acting as conservator or receiver or in the Corporation's corporate capacity with respect to any asset acquired or liability assumed by the Corporation ..." 18 U.S.C. Sec. 1032(1). This section also criminalizes concealing assets from the RTC or any conservator appointed by an enumerated agent of the United States. Id. This Court has held that a transfer made with the requisite intent may be prosecuted...