United States v. Sigillito

• Decision Date: 15 September 2014
• Docket Number: No. 13–1027.,13–1027.
• Citation: 759 F.3d 913
• Parties: UNITED STATES of America, Plaintiff–Appellee v. Martin T. SIGILLITO, also known as Marty, also known as Bishop Sigillito Defendant–Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

759 F.3d 913

UNITED STATES of America, Plaintiff–Appellee

v.Martin T. SIGILLITO, also known as Marty, also known as Bishop Sigillito Defendant–Appellant.

No. 13–1027.

United States Court of Appeals,

Eighth Circuit.

Submitted: Jan. 13, 2014.

Filed: July 18, 2014.

Rehearing and Rehearing En Banc Denied Sept. 15, 2014.

Douglas P. Roller, Roller Law Office, LLC, St. Louis, MO, argued, for appellant.

Richard E. Finneran, Spec. Atty. to U.S. Atty. Gen., St. Louis, MO, argued, Jess E. Michaelsen, Spec. Atty. to U.S. Atty. Gen., Kansas City, MO, argued (Eric H. Holder, Jr., U.S. Atty. Gen., Washington, D.C., Tammy Dickinson, U.S. Atty., Kansas City, MO, Steven E. Holtshouser, Spec. Atty. to U.S. Atty. Gen., St. Louis, MO, on the brief), for appellee.

Before LOKEN, MURPHY, and SMITH, Circuit Judges.

SMITH, Circuit Judge.

Martin Sigillito was convicted of multiple counts of wire fraud, mail fraud, conspiracy to commit wire and mail fraud, and money laundering, because of his involvement in a Ponzi scheme known as the “British Lending Program” (BLP). Sigillito also forfeited certain properties as a result of these convictions.

On appeal, Sigillito challenges several district court ¹ decisions that span from indictment through sentencing. Sigillito's pre-trial challenges include the district court's (1) denial of his motion to suppress evidence found pursuant to a search warrant that allegedly failed to state with sufficient particularity the items to be seized, failed to contain statutory notices related to forfeiture, and was the product of an unlawful private search; (2) purported lack of jurisdiction because the government proceeded with allegedly interested Assistant United States Attorneys (AUSAs); (3) denial of a motion for new trial despite the government's alleged failure to disclose Brady² materials; and (4) denial of Sigillito's motion for new trial based on the government's alleged investigative misconduct. Sigillito also asserts that errors occurred during trial, including the district court's (1) failure to submit the maximum amount of forfeitable property to the jury; (2) failure to grant a motion for new trial where the government allegedly commented improperly on Sigillito's credibility; (3) cross-examination restrictions of certain witnesses that thwarted the potential to show witness bias or Sigillito's lack of intent; and (4) giving of a willful blindness instruction. Finally, Sigillito asserts sentencing errors, including (1) the district court's miscalculation of the amount of loss, (2) the district court's erroneous application of the vulnerable-victim enhancement, and (3) the substantive reasonableness of the sentence. We affirm.

I. Background

Sigillito is an attorney and Anglican bishop who has lived in greater St. Louis for many years. According to Sigillito, he met J. Scott Brown, a Kansas City attorney, while in England attending a legal conference in 1988. He and Brown remained professional acquaintances throughout the 1990s. In 1999, Brown called Sigillito about a program that would be “something that [Sigillito] and [Sigillito's] clients might be interested in.” Sigillito testified that he received information and assurances about the program from Brown as well as legal advice about the program from others. Sigillito agreed to get involved.

This program became known as the BLP. Under the BLP, Sigillito and Brown recruited lenders in the United States to make loans to Derek Smith, a real estate investor in the United Kingdom. These loans were one-year, unsecured loans that paid exorbitant interest—often between 15 and 48 percent. Smith was not the only borrower at the BLP's inception, but Sigillito and Brown concealed various defaults by other borrowers by transferring their debt to Smith, who became the only borrower by 2003. Beginning in 2004, Sigillito operated the BLP from his solo law firm in St. Louis. By 2010, Smith owed investors approximately $70 million from BLP loans; however, Smith rarely received any of the loan proceeds. Instead, Sigillito and Brown used most of the money supposedly loaned to Smith to repay prior lenders. They also retained much of the lenders' money as loan fees (up to 32 percent of the loan).

Sigillito actively marketed the BLP to friends and church acquaintances. Sigillito made several fraudulent misrepresentations about the BLP to potential lenders. For example, he stated that Smith would receive the loan proceeds to make real estate purchases in the United Kingdom; however, Smith received little. Sigillito also represented that the loans were safe and virtually risk-free. He did this by regularly assuring lenders that Smith's asset-to-debt ratio was at least 2:1, or even as high as 3.7:1. These ratios convinced lenders that they could satisfy any potential default from Smith's abundant assets. Sigillito greatly inflated Smith's alleged assets in this ratio by including speculative future values in unrealized real estate options. Meanwhile, the liabilities were deflated by, most notably, the failure to include Smith's BLP obligations. In reality, Smith was insolvent during much of the time that the BLP operated, and emails confirmed that Sigillito was aware of Smith's insolvency. Sigillito, Brown, and Smith warranted these misleading asset-to-debt ratios in each of the loan agreements that the various lenders signed.

Additionally, when Smith tried to leave the program, Sigillito demonstrated how he could alter the loan numbers to make Smith appear solvent. Sigillito then persuaded Phil Rosemann, the BLP's largest lender, to loan a significant amount to the BLP; however, Rosemann sought acceleration of the loan after the BLP made late payments to him. Sigillito continued to market the BLP actively in an effort to satisfy Rosemann's demands, including misrepresenting the extent of Smith's liabilities and the safety of the BLP, among other things. Sigillito also claimed that he regularly reviewed Smith's financial statements as part of his due diligence to the lenders, further misrepresenting Smith's purported worth.

The BLP began to crumble when Rosemann filed suit against Smith for repayment of the loan. Smith responded by asserting that he never received any of Rosemann's money. Rosemann then turned to Sigillito for an explanation. During this time, Sigillito's secretary, Elizabeth Stajduhar, who admitted to embezzling over $300,000 from Sigillito from 2004 to 2010 and over $80,000 in investor money from the BLP, contacted the Federal Bureau of Investigation (FBI) about the BLP. The FBI then initiated a criminal investigation, which led to Sigillito's arrest and indictment. In all, the BLP claimed approximately 150 victims. Records indicate that the BLP received at least $52 million in investor funds. Approximately $28 million went toward repayment of prior loans. Sigillito profited more than any other member of the BLP, making about $6.2 million.

On April 28, 2011, the government filed a 22–count indictment against Sigillito. He was charged with nine counts of wire fraud, in violation of 18 U.S.C. § 1343; six counts of mail fraud, in violation of 18 U.S.C. § 1341; one count of conspiracy to commit wire and mail fraud, in violation of 18 U.S.C. § 371; and six counts of money laundering, in violation of 18 U.S.C. § 1957. The district court conducted a four-week jury trial beginning on March 19, 2012. After accepting plea deals, Stajduhar, Smith, and Brown all testified for the government. Brown and Smith admitted that the BLP was a Ponzi scheme. Brown testified that it existed just to generate fees and that Sigillito knew that the BLP became a Ponzi scheme as early as 2003. Smith testified that the loan agreements into which he entered were untruthful and contained misrepresentations.

On April 13, 2012, the jury found Sigillito guilty of 20 counts. ³ The district court denied Sigillito's motions for judgment of acquittal and for new trial. The district court also granted the government's motion for preliminary order of forfeiture. On December 28, 2012, the district court sentenced Sigillito to “240 months on each of Counts 1–13; 60 months on Count 16; and 120 months on each of Counts 17–22, with the terms imposed on Counts 2–13 and 16–22 to run concurrently with each other but consecutively to the term imposed on Count 1.” Thus, the district court sentenced Sigillito to 40 years' imprisonment, which the district court expressly intended to be a life sentence.

II. Discussion

A. Pre–Trial Challenges

Sigillito avers on appeal that the district court committed several pre-trial errors. He contends that the district court erred in denying his motion to suppress evidence obtained at his law office because the warrant did not state with particularity the items to be seized, failed to contain requisite statutory notices related to forfeiture, and resulted from an unlawful private search. Sigillito also contends that the district court lacked jurisdiction over his case where the government proceeded with allegedly interested AUSAs. Additionally, Sigillito challenges the government's denial of his motion for new trial based on the government's alleged failure to disclose Brady materials. Finally, Sigillito avers that the government committed investigative misconduct, rendering erroneous the district court's denial of his motion for a new trial.

1. Motion to Suppress

Based on the information that Stajduhar provided the FBI, the government obtained a search warrant targeting Sigillito's law office. Sigillito voluntarily left his office when agents arrived to perform the search. Officers seized a variety of records, valuables, and potential evidence in connection with the BLP.

a. Particularity

The search warrant described the property to be seized by reference to “Attachment A.” Attachment A included 13 paragraphs describing the property to be seized. Sigillito argues that Attachment A authorized only a general search because it lacked the requisite...