786 F.2d 1278 (5th Cir. 1986), 85-4838, United States v. Lewis

Docket Nº:85-4838.
Citation:786 F.2d 1278
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Herbert J. LEWIS and Vernon Abrahams, Defendants-Appellants.
Case Date:April 15, 1986
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 1278

786 F.2d 1278 (5th Cir. 1986)

UNITED STATES of America, Plaintiff-Appellee,

v.

Herbert J. LEWIS and Vernon Abrahams, Defendants-Appellants.

No. 85-4838.

United States Court of Appeals, Fifth Circuit

April 15, 1986

Page 1279

Robert R. Race, New York City, for Lewis and Abrahams.

Vernon Abrahams, pro se.

Joseph S. Cage, Jr., U.S. Atty., Dosite H. Perkins, Jr., Asst. U.S. Atty., Shreveport, La., for the U.S.

Appeals from the United States District Court for the Western District of Louisiana.

Before GEE, REAVLEY, and HILL, Circuit Judges.

ROBERT MADDEN HILL, Circuit Judge:

Herbert J. Lewis and Vernon Abrahams appeal convictions related to their involvement in a fraudulent investment scheme. We hold that they were not deprived of their rights under the Sixth Amendment, notwithstanding their claims that their counsel was inadequate and was subject to a conflict of interest, nor was there error in the government's use of redacted portions of Lewis' grand jury testimony against him during the trial. Thus, we affirm in all respects.

I. FACTS

Lewis and Abrahams were each indicted and later convicted on four counts relating to their participation in a fraudulent investment scheme. 1 According to the indictment

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and evidence adduced at trial, Lewis and Abrahams held themselves out to the public as partners in a financial consulting enterprise named Security Financial Consultant, Inc. ("Security Financial"). During 1983 and early 1984 they met with several individuals, some of whom were seeking loans for various business or financial projects. Lewis and Abrahams obtained funds from these individuals, but they did not invest these funds as contemplated, instead diverting them to their personal use.

Although never providing any actual return, the investment scheme offered by Lewis and Abrahams was a shadowy but supposedly very lucrative opportunity for the investor. They would convince a prospective investor that they knew of a source of "prime bank promissory notes," which could, for a fee, be used as collateral for loans. They would then propose a partnership with the investor, who contributed a sum of money ranging from $10,000 to $25,000 to be deposited to a sinking fund at a Georgia bank. After Lewis and Abrahams were to add their own funds, the prime bank promissory notes were to be purchased as collateral. Lewis and Abrahams were then to use this collateral to negotiate low interest loans to the partnership in sums of $100,000,000 from overseas or Canadian lenders. The partnership would then somehow repay the loans with the prime bank promissory note, producing a "fallout" or profit to the partnership of millions of dollars. Instead of placing the investors' money in the sinking fund as promised, Lewis and Abrahams would divide it and use it for their own purposes.

One such investor was Earl Martin. According to his testimony at trial, Martin was a former employer of Lewis' who was seeking financing for an apartment construction project. Lewis and Abrahams persuaded Martin to invest $25,000, which was to yield an eventual return of $2,500,000 to $3,500,000. They promised Martin that they "had turned a lot of deals" successfully, and Lewis promised to return Martin's investment if the plan failed. Abrahams told Martin that he had a Swiss bank account with over $100,000 in it to reimburse Martin. At their request, Martin brought $25,000 in cash from his home near Houston, Texas, to Lake Charles, Louisiana. They informed Martin that the $100,000,000 loan would come from a source in Quebec, Canada. They persuaded him to create and use stationery for a fictional company, "Martin Enterprise," to draft loan requests and other documents. A Georgia attorney wrote to "Martin Enterprise" and confirmed that $100,000,000 in collateral was assigned by a Georgia trust fund for his use. The attorney received $5000 from Lewis and Abrahams. When Martin later was unable to receive an accounting or repayment of his money, he went to federal law enforcement authorities.

A grand jury issued a subpoena to Lewis requesting his appearance and the production of various documents. Lewis retained an attorney, Eddie L. Stephens, to represent him. Lewis testified before the grand jury, admitting his and Abrahams' roles in the schemes but insisting that no fraud occurred. According to Lewis, Martin and the other investors knew that the venture entailed a high risk of failure. During his testimony Lewis was advised of his right not to incriminate himself, and he was allowed to consult with Stephens outside the presence of the grand jury. Lewis continued his testimony, admitting that he and Abrahams received $25,000 from Martin. The grand jury later issued an indictment naming Lewis and Abrahams.

After a brief period when he was also represented by Stephens, Abrahams retained his own counsel, Steven Hale. Five and one-half weeks before trial commenced, another group of retained lawyers filed a notice of appearance for the joint representation of both defendants. The district court conducted a hearing to determine whether Lewis and Abrahams both agreed to joint representation, not withstanding any potential conflicts of interest.

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Satisfied that they understood the potential conflict of interest and agreed to joint representation, the court permitted the substitution of counsel. The new group of lawyers, composed of three other attorneys, conducted their joint defense at trial. Lewis and Abrahams now have a different attorney representing them on appeal.

At trial, the government produced a number of witnesses to link Lewis and Abrahams to the fraudulent schemes. Among these were the Georgia attorney involved and officials from the Georgia Bank. Also testifying were Martin and Jerry Stephens of Barter Systems, who had lost $10,000 to Abrahams and Lewis in a similar scheme. The government put on other witnesses who had lost money to Lewis and Abrahams, including a real estate investor and a railroad switchman. The government successfully introduced redacted portions of Lewis' grand jury testimony and extensive documentary evidence. The defense called three witnesses, placed supplementary documents in evidence, but neither Lewis or Abrahams testified. The jury found both of them guilty on all counts.

Lewis and Abrahams challenge their conviction on two major grounds. First, they claim that they were denied the effective assistance of counsel, both because their representation was poor and because their defense team was tainted by a conflict of interest. Second, they contend that Lewis' grand jury testimony was improperly admitted at trial, both because the government did not furnish the defense with a copy during discovery and because the redacted version impermissibly implicated Abrahams.

II. EFFECTIVE ASSISTANCE OF COUNSEL

  1. Inadequacy

    "A convicted defendant's claim that counsel's assistance was so defective as to require reversal of a conviction ... has two components." Strickland v. Washington, 466 U.S. 668, 687, 104 S.Ct. 2052, 2064, 80 L.Ed.2d 674, 693 (1984). First, "The defendant must show that counsel's representation fell below an objective standard of reasonableness." Id. at 688, 104 S.Ct. at 2065, 80 L.Ed.2d at 693. Second, "The defendant must show that there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different. A reasonable probability is a probability sufficient to undermine confidence in the outcome." Id. at 694, 104 S.Ct. at 2068, 80 L.Ed.2d at 698. Thus, both a deficiency and resulting prejudice must be shown. Alexander v. McCotter, 775 F.2d 595, 602 (5th Cir.1985). Since we believe that Lewis and Abrahams have not demonstrated prejudice, we need not determine the magnitude of the alleged deficiency.

    Lewis claims that his pretrial representation by Stephens was deficient in several respects. 2 First, Lewis claims that at the time he retained him, Stephens was not admitted to practice in federal court, had only one year of experience practicing law, and was unfamiliar with local court rules and the Federal Rules...

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