United States v. Engelmann

• Decision Date: 30 July 2013
• Docket Number: No. 12–1343.,12–1343.
• Citation: 720 F.3d 1005
• Parties: UNITED STATES of America, Plaintiff–Appellee v. Marc Robert ENGELMANN, Defendant–Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

720 F.3d 1005

UNITED STATES of America, Plaintiff–Appellee

v.Marc Robert ENGELMANN, Defendant–Appellant.

No. 12–1343.

United States Court of Appeals,

Eighth Circuit.

Submitted: June 3, 2013.

Filed: July 30, 2013.

Steven Paul DeVolder, argued, Norfolk, IA, for appellant.

John D Keller, USA, argued, Davenport, IA, for appellee.

Before BYE, GRUENDER, and SHEPHERD, Circuit Judges.

SHEPHERD, Circuit Judge.

This case is before us after our limited remand in United States v. Engelmann, 701 F.3d 874 (8th Cir.2012). Marc Robert Engelmann was convicted of conspiracy to commit bank and wire fraud under 18 U.S.C. § 371, bank fraud under 18 U.S.C. § 1344, and wire fraud under 18 U.S.C. § 1343. The district court ¹ sentenced him to 36 months imprisonment and ordered him to pay a total of $392,937.73 in restitution to three different financial institutions. Engelmann appealed his conviction and sentence, and we ordered a limited remand for the district court to conduct an evidentiary hearing concerning one of Engelmann's arguments and to reconsider Engelmann's motion for a new trial after that hearing. See Engelmann, 701 F.3d at 879. We retained jurisdiction to address all of Engelmann's points on appeal after these further district court proceedings.²Id. The district court held the evidentiary hearing and issued an opinion. We now affirm Engelmann's conviction and sentence.

I.

Engelmann was a real estate attorney and represented a seller in nine different transactions involving a “dual price” purchasing agreement. Through these agreements, the buyers and sellers provided lenders with inflated sales prices to secure higher loan amounts, and then the buyers pocketed the difference between the inflated and actual amounts. The buyers went into first-payment default on all nine mortgages, and the properties were sold at sheriff's sales or short sales.

Engelmann's defense at trial was that he did not have the requisite intent to defraud because he thought the lenders knew of the dual pricing scheme. He requested the following jury instruction:

One of the issues in this case is whether the defendant acted in good faith. Good faith is a complete defense to the charge of conspiracy to commit bank and wire fraud (Count 1), bank fraud (Counts 2 and 3) and wire fraud (Counts 4 thru 9) if it is inconsistent with the defendant acting to conspire with one or more other persons to commit bank and wire fraud under element 1 of Count 1, or the intent to defraud under element 2 of the bank fraud counts and element 2 of the wire fraud counts.

Evidence that the defendant acted in good faith may be considered by you, together with all the other evidence, in determining whether or not he acted with intent to defraud.

Fraudulent intent is not presumed or assumed; it is personal and not imputed. One is chargeable with his own personal intent, not the intent of some other person. Bad faith is an essential element of fraudulent intent. Good faith constitutes a complete defense to one charged with an offense of which fraudulent intent is an essential element. One who acts with honest intention is not chargeable with fraudulent intent. Evidence which establishes only that a person made a mistake in judgement or an errorin management, or was careless, does not establish fraudulent intent. In order to establish fraudulent intent on the part of a person, it must be established that such person knowingly and intentionally attempted to deceive another. One who knowingly and intentionally deceives another is chargeable with fraudulent intent notwithstanding the manner and form in which the deception was attempted.

Appellant's Addendum 27–28.

The language in the first two paragraphs tracks the Eighth Circuit's model good-faith jury instruction for fraud cases. See Eighth Circuit Manual of Model Jury Instructions: Criminal 9.08 (“Model Instruction 9.08”). The language in the final paragraph is from a jury instruction that we upheld in United States v. Ammons, 464 F.2d 414, 417 (8th Cir.1972), and that the model instructions reference as potential language to include “if appropriate.” See Model Instruction 9.08; id. n. 2.

The district court essentially gave the first two paragraphs of Engelmann's requested good-faith instruction but omitted the third paragraph. R. at 77. The other instructions on the elements of the underlying conspiracy and fraud offenses explained Engelmann could be convicted only if he “voluntarily and intentionally joined in the agreement or understanding” while knowing “the purpose of the agreement or understanding,” R. at 59; that “[a] person who has no knowledge of a conspiracy but who happens to act in a way which advances some purpose of one, does not thereby become a member,” R. at 60; and that Engelmann must have acted “knowingly” and with “intent to defraud,” R. at 66–67.

After the jury began deliberating, it asked the court to define good faith. The court denied the jury's request over Engelmann's objection and directed them to review the jury instructions they already had available. The jury ultimately found Engelmann guilty on all counts.

At Engelmann's sentencing hearing, Engelmann argued that the court could not enhance his base sentencing level due to the amount of loss involved in the crimes because the complexity of the sub-prime mortgage market precluded any accurate loss calculation. The district court rejected this argument and increased Engelmann's base offense level by 12 for the amount of loss.

Engelmann also argued at sentencing that the court could not award restitution under the Mandatory Victims Restitution Act because the lending institutions were not real “victims” under the statute and because the government could not prove restitution amounts. The district court rejected each of these arguments and ordered Engelmann to pay restitution to three companies in the following amounts: New Century Liquidating Trust ($226,537.34), JP Morgan Chase ($108,560.48), and Lehman REO–ALS ($57,839.91).

Meanwhile, after the jury's verdict, a trial observer contacted the district court to report that he had seen two of the government's witnesses, FBI Special Agents Jeff Huber and Jim McMillan (collectively “the Agents”), speaking outside the courtroom about testimony that Agent Huber had given at trial. ³ A witness sequestration order was in place throughout the trial. Agent Huber was the government's designated case agent and consequently remained in the courtroom throughout the trial. Agent McMillan was called as a rebuttal witness following Engelmann's trial testimony. Both Agents testified that Engelmann essentially confessed to the fraud when they jointly interviewed him during their investigation. During closing arguments, the government emphasized that Agent McMillan's testimony about Engelmann's confession was especially credible because he had not heard Agent Huber's testimony before giving his own.

Engelmann moved for an evidentiary hearing concerning the Agents' conversation and for a new trial, arguing that the conversation violated the court's witness sequestration order and prejudiced him. Without holding an evidentiary hearing, the district court denied the motion for a new trial. We vacated and remanded for the court to hold an evidentiary hearing on this issue, make supplemental findings of fact, and then reconsider Engelmann's motion for a new trial. See Engelmann, 701 F.3d at 879.

At the evidentiary hearing following remand, three trial observers testified that they saw the Agents speaking outside the courtroom during a trial recess. Two testified that they could not hear anything that was said. The third witness, the individual who originally contacted the district court, testified that he could only remember overhearing someone in the Agents' vicinity say, “We had Engelmann at his office.”

The Agents and one of the government's trial attorneys, who was with the Agents during the conversation in question, also testified at the evidentiary hearing. All three testified that Agent Huber did not disclose details of his trial testimony to Agent McMillan during this conversation. Agent McMillan testified that Agent Huber did tell him generally that “Engelmann denied making certain statements during our interview,” but Agent McMillan said that Agent Huber never disclosed details of any witness's testimony or tried to influence Agent McMillan's upcoming testimony. Agent Huber and the government's trial attorney further testified that they never disclosed details of any witness's trial testimony to Agent McMillan at any other point during the trial.

Additionally, Agent McMillan testified that no one initially informed him that he should not observe other witnesses' trial testimony. As a result, he entered the courtroom on several occasions before his own testimony on rebuttal and observed brief portions of the testimony of one of Engelmann's co-conspirators and of an expert witness called by the defense. He also observed a minute or less of Engelmann's trial testimony before Agent Huber approached him and told him to leave the courtroom because he might be called as a rebuttal witness. According to his testimony, this was the first time that anyone informed him he should not be in the courtroom during other witnesses' testimony.

The district court found that Agent McMillan violated the sequestration order by being in the courtroom during portions of three witnesses' testimony. District Ct. Order 11, Mar. 6, 2013, ECF No. 149. However, the court found that the violation did not prejudice Engelmann because the testimony that McMillan overheard “bore no direct relationship to” and was not “in any way pivotal to” to the testimony that he ultimately gave. Id. The district court further held that because there was no evidence that the out-of-court conversation between the Agents involved disclosure of specific trial testimony, and because Agent McMillan's testimony was on the discrete topic of his...