U.S. v. Strang

• Citation: 80 F.3d 1214
• Decision Date: 10 April 1996
• Docket Number: Nos. 95-1198,95-1922,s. 95-1198
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Jeffrey C. STRANG and Fred Robyn Strang, a/k/a Robyn Strang, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 1214

80 F.3d 1214

UNITED STATES of America, Plaintiff-Appellee, v. Jeffrey C. STRANG and Fred Robyn Strang, a/k/a Robyn Strang Defendants-Appellants.

Nos. 95-1198, 95-1922.

United States Court of Appeals Seventh Circuit.

Argued Feb. 6, 1996.

Decided April 10, 1996.

Appeal from the United States District Court for the Central District of Illinois, Springfield Division. No. 93 CR 30050--Michael M. Mihm, Judge.

Estaban F. Sanchez (argued), Office of U.S. Atty., Springfield, IL, for U.S. in No. 95-1198.

George F. Taseff (argued), Peoria, IL, for Fred R. Strang.

Francis C. Hulin, Estaban F. Sanchez (argued), Office of U.S. Atty., Springfield, IL, for U.S. in No. 95-1922.

Jon G. Noll, Jeffrey T. Page (argued), Springfield, IL, for Jeffrey C. Strang.

Before ESCHBACH, KANNE, and EVANS, Circuit Judges.

TERENCE T. EVANS, Circuit Judge.

In 1981 Jeffrey C. Strang and his father, Robyn Strang, set up a phony investment company, which they called Landmark Investment Corporation. Apparently juggling as fast as they could, they kept the company going until they were indicted in 1993 on various charges of mail fraud, money laundering, securities fraud, and conspiracy. Following their convictions and sentencings in 1995, they filed this appeal, raising a plethora of issues.

The Strangs' investment scheme really took off in 1986 when Jeffrey Strang began selling what he called "certificates of deposit." He represented the certificates as safe investments, but in fact they were not collateralized or insured. Some of the funds were collected from investors and converted to his and his father's use. Other funds collected from one investor were used to pay off, when necessary, another investor.

For example, in March 1989, a man named Charles Swain invested $18,000, some of which was used by Robyn Strang personally and at Wolf Run, his farm in Greene County, Illinois. In April, the funds were also used to repay investor Dan Edwards $6,500. In October 1989, Marian Bose invested $16,000, $5,954 of which was lost on futures contracts. In June 1990, Sharon Dietzler invested $17,105.28, $13,000 of which was deposited into the Wolf Run bank account. In August 1990, Gerald Eastburn invested $30,000, which was deposited into the Landmark bank account; $15,000 of this money was used to repay Dietzler for a portion of her investment. This pattern continues as to several other investors.

The most interesting transaction involved an elderly woman whom Jeffrey befriended. Alma Jasper invested $249,292.85 with Landmark. Periodically, Jeffrey paid her what he called interest. When she died on March 14, 1990, she owned Landmark certificates totaling $131,765.62. In an event apparently unrelated to the Landmark scheme, in September 1990, Jeffrey presented for payment a check drawn on her checking account in the amount of $300,000. Despite the fact that all her other checks were handwritten, this check was typed, except for her signature, and on the memo line were the words "post dated gift to Strangs." Her check register notation for the check stated "not in" in her handwriting and the amount she entered for the check in her register was $202. On this check, Jeffrey and Robyn point fingers--at each other; each says the other endorsed the check. The bank refused to pay because Jasper's checking account was closed. Undeterred, Jeffrey filed a claim for the money against the Jasper Estate. The court disallowed the claim. Jeffrey told his father that the check was his "ace in the hole" which would get him out of trouble.

All in all, The Strangs obtained $516,213.88 from investors. The money was used as follows: approximately $100,000 to Jeffrey Strang for personal expenses; $43,000 for cash withdrawals; $29,000 for credit card purchases; $132,000 for loan payments; and $131,000 to Robyn Strang and Wolf Run.

The use of the mails was established by the mailing of an IRS form 1099 to investor Lea Ann Smith on January 24, 1991; a letter to Sharon Dietzler concerning her investments on July 8, 1992; and a February 20, 1990, certified letter that investor Eugene Wenthe mailed to Jeffrey Strang.

In August 1992, the Illinois Secretary of State Securities Division began an investigation and found that there was no registration for any securities issued by either Strang. On August 21, 1992, a temporary restraining order was issued, and on April 13, 1993, Jeffrey Strang and Landmark were permanently prohibited from selling securities except in compliance with the Illinois Securities Act.

On May 5, 1993, the Strangs were indicted, and also on that date, the court entered an ex parte restraining order prohibiting them from dissipating assets subject to forfeiture, including substitute assets. Robyn Strang obtained a release of $25,000 of the restrained funds to retain attorney Howard Feldman to represent him. An attorney named Bruce Locher was appointed as counsel for Jeffrey. Both defendants were released on a $10,000 unsecured bond.

Jeffrey Strang got into hot water while on pretrial release. On April 7, 1994, the government petitioned to revoke his bond because he had allegedly written bad checks and committed mail fraud in connection with an organization called the Children's Rights Coalition of which he was president. During the bond revocation hearing, he asked to be allowed to proceed pro se. He was allowed to do so, and on April 29 his bond was revoked and he was ordered detained.

Jeffrey was also allowed to proceed pro se during trial. However, he expressed no dissatisfaction with attorney Locher, who remained as his standby counsel. The court made clear that his representing himself would not be grounds for a continuance.

On May 2, 1995, pursuant to a written plea agreement, Robyn Strang pled guilty to three money laundering counts pursuant to 18 U.S.C. § 1957(a) and to the forfeiture count pursuant to 18 U.S.C. § 982. On January 20, 1995, he was sentenced to 42 months imprisonment plus three years supervised release. He was ordered to pay $40,156 in restitution. He also agreed, as part of the deal, to testify at his son's jury trial.

At his trial Jeffrey Strang did, in fact, represent himself despite a warning from the judge that it was a mistake. He was convicted on counts 1-16 (mail fraud pursuant to 18 U.S.C. § 1341, conspiracy pursuant to 18 U.S.C. § 371, money laundering pursuant to 18 U.S.C. §§ 1956(a)(1)(A) and 1957(a)) as well as the forfeiture count pursuant to 18 U.S.C. § 982. The securities fraud counts were dismissed on the motion of the government. On April 6, 1995, he was sentenced to 60 months on counts 1-4; 108 months on counts 5-16, all to run concurrently; 3 years supervised release, $295,586.65 in restitution, and a forfeiture. Because $202,761.28 of the forfeiture could not be located, the court ordered the forfeiture of certain substituted assets.

Robyn Strang raises three issues in his appeal: whether the district court erred in giving him a two-level increase in his base offense level for obstruction of justice for committing perjury; whether it was error to deny him a two-point adjustment for acceptance of responsibility; and whether he should have been given a downward adjustment for being either a minimal or minor participant in the conspiracy.

Robyn Strang contends that under § 3B1.2 of the United States Sentencing Guidelines he should have been considered a minimal or minor participant in the offense and thus entitled to a decrease of his base offense level. The denial of the reduction is reviewed for clear error, which we do not find.

Even though his role was less than that of his son, the evidence, nevertheless, showed that he was the president of Landmark for years and had the authority to sign checks. He was aware that investors' funds were being diverted to his son's personal use. He, himself, used Wolf Run accounts to divert funds to his and his son's personal use. He secured $16,000 from a man named Henry Ruyle to obtain cattle and then used $10,000 of the money to pay off Landmark investors.

The other two issues raised are somewhat intertwined. Strang contends that pursuant to U.S.S.G. § 3E1.1 he was entitled to a decrease in his offense level for acceptance of responsibility. He contends that entering a guilty plea and testifying at his son's trial show that he accepted responsibility for his conduct. The government points out that a guilty plea does not automatically entitle one to the adjustment, and that furthermore his testimony was not truthful. Which leads us to the other issue: was it proper to enhance Robyn Strang's sentence under U.S.S.G. § 3C1.1 for obstruction of justice?

The enhancement was imposed based on allegedly perjurious testimony at Jeffrey Strang's trial. Specific instances of false testimony include Robyn Strang's statements that there was never any intent to defraud anyone or to scheme to defraud investors, but rather that the Strangs intended to protect investors. Robyn testified that he did not sign a $15,000 check that he later admitted signing. He testified that he did not know that two specific people had invested in Landmark when later he admitted that he knew they did. After testifying on direct examination that the government had not made any promises to him in return for his guilty plea, on cross-examination he said that he understood that a recommendation would be made that he would get "parole."

Acceptance of responsibility certainly implies a coming clean on the facts of the case or, at the minimum, avoiding falsehoods. Given Robyn's testimony at Jeffrey's trial, which appears to be false, the district court did not abuse its discretion in declining to grant Robyn an adjustment for acceptance of responsibility. The enhancement for obstruction, however, cannot stand.

The obstruction enhancement, § 3C1.1, calls for a twolevel increase in offense level if a defendant "willfully obstructed or impeded ... the administration of justice during the...