807 F.2d 1299 (6th Cir. 1986), 85-3361, United States v. Gorman
|Citation:||807 F.2d 1299|
|Party Name:||UNITED STATES of America, Plaintiff-Appellee, v. Paul G. GORMAN, Defendant-Appellant.|
|Case Date:||December 23, 1986|
|Court:||United States Courts of Appeals, Court of Appeals for the Sixth Circuit|
Argued Sept. 16, 1986.
Rehearing and Rehearing En Banc Denied Feb. 6, 1987.
[Copyrighted Material Omitted]
Paul G. Gorman, (argued), Maumee, Ohio, pro se.
James M. Cole (argued), Ellyn Marcus Lindsay, Washington, D.C., for plaintiff-appellee.
Before MILBURN and BOGGS, Circuit Judges, and HARVEY, [*] Senior District Judge.
JAMES HARVEY, Senior District Judge.
Following a jury trial in the United States District Court for the Northern District of Ohio, appellant Paul G. Gorman was convicted on one count of conflict of interest, in violation of 18 U.S.C. Sec. 208, and one count of asking for or receiving illegal gratuities, in violation of 18 U.S.C. Sec. 201(g). The district court sentenced Gorman to a term of imprisonment of one year and one day on each count, the sentences to run concurrently. Gorman now appeals. We affirm the trial court.
Gorman was an Economic Crime Specialist and an Assistant United States Attorney assigned to the United States Attorney's Office for the Northern District of Ohio in Toledo. From August of 1982 through February or April of 1983, he was the lead prosecutor investigating a check kiting scheme which involved a bankrupt, James Hartley, and several banks with which Hartley had dealt. Gorman worked closely on the case with Merle Weber, (later indicted with Gorman) a creditors' representative from Phoenix, Arizona who was hired by a number of Hartley's creditors to recover his outstanding debts. Weber was to receive 10% of the funds recovered by those creditors.
The trustee of this bankruptcy was Quentin Derryberry of Wapakoneta, Ohio. He was assisted by a law clerk named Christine DeSanctis. In November of 1981, Weber contacted Derryberry and began to work with him on the case. As time went on, Weber took control of the case, and DeSanctis began to work for him.
In the course of his work, Weber concluded that Hartley engaged in a massive check kiting and illegal bank stock transfer scheme related to the bankruptcy. In all, it appeared that as much as $12.5 million in assets might be available for creditors in the bankruptcy, potentially resulting in a huge fee for Weber.
Expert testimony at trial indicated that any money a criminal bankrupt earns subsequent to bankruptcy is subject to creditors' claims. If others, including banks, are convicted of participating in criminal activity which harmed the creditors, creditors could seek recovery from such parties. In civil suits, a bank's criminal conviction could be introduced under the doctrine of collateral estoppel, thus making the only remaining issue that of damages. Thus, threats of criminal action against a bank are an effective lever in forcing a settlement in a civil bankruptcy suit, as a bank may choose to settle in order to avoid a measure of culpability, or just in an attempt to avoid the adverse publicity associated with a criminal investigation.
In the summer of 1982, Weber sought to expedite matters by seeking the criminal investigation of various banks and individuals associated with hartley. He, Derryberry, and DeSanctis first met with Gorman in the U.S. Attorney's Office in Toledo on August 10, 1982. Gorman indicated he would pursue the case.
During a later conversation, DeSanctis told Gorman she and Weber were planning on forming a creditors' representative business when she left law school, and that the funds to start it would come from the proceeds of the Hartley case. On August 27, 1982, Gorman met DeSanctis at her apartment and stated that he would like to
work with her and Weber. He further stated that, as a condition of employment, he would need $300,000.00 put in an escrow account to guarantee him two years salary. Gorman indicated that either Weber could provide the money, or that two Hartley creditors with potential criminal liability could provide it. He stated that if the creditors provided the money, he would write his report on the Hartley case so as to discourage their prosecution.
Gorman made frequent inquiries to Weber and DeSanctis concerning employment with them, and indicated his position with the U.S. Attorney's Office would be of great benefit in doing creditor representative work across the country. Furthermore, shortly after his initial meeting with Weber, Gorman prepared a document outlining the number of people involved in the Hartley matter and the charges which could be brought against them, and forwarded the document to Weber. Gorman also kept Weber apprised of grand jury proceedings in the Hartley case, and discussed how to time grand jury subpoenas to put extra pressure on banks to settle, as well as numerous other unsavory tactics.
On February 12, 1983, Gorman and Weber met for breakfast in Maumee, Ohio. During this time, Gorman wrote down what his conditions for employment with Weber would be. These conditions were similar to those he previously outlined to DeSanctis. Weber allowed Gorman to believe these conditions would be established. Gorman continued to press the issue, however, and Weber stalled. This eventually led to a falling out between the two on March 30, 1983. The Hartley file was closed in April, 1983.
At all relevant times, Gorman was in dire financial straits having, among other things, gone over $25,000 over budget in the construction of his new home, in which he acted as general contractor. In early November of 1982, Gorman agreed to accept a $25,000 loan from Weber. As the money was not immediately forthcoming, Gorman flew to Phoenix unannounced around Christmas of 1982 to demand the money personally. He eventually contacted Weber, who was in Montana at the time, by phone. Gorman told Weber he needed $2,000 that day to pay contractors' bills, and that if he did not receive the money he would lose his job and the Hartley investigation would stop. On December 27, 1982, Weber arranged for $2,000 cash to be taken from the account of a Mr. Huffman, the Chairman of the Board of the People's Bank of McComb, Ohio, and delivered to Gorman's wife at a motel in Findlay, Ohio. This was a loan from Huffman to Weber for the purpose of making a loan to Gorman.
On December 28, 1982, another loan was made using a similar procedure. This loan was for $3,500.
On January 3, 1983, Gorman demanded another $10,000 from Weber, again under threat that his job would be lost and the Hartley investigation stopped if he did not receive the money. Weber again called Huffman and arranged for Gorman to receive immediately a $10,000 unsecured personal loan from the McComb bank.
Testimony at trial showed the extent of Gorman's financial difficulties. His monthly income was $2,515, and his monthly liabilities were $3,428, exclusive of outstanding construction debts. Despite this, Gorman repaid Weber and the bank in full, with interest (although without late fees) on May 6, 1983. In order to do so, he obtained a loan from Huntington Bank in Toledo. The loan was very reluctantly granted on the conditions that Gorman give a third mortgage on his home, tear up his credit cards, develop a financial recovery plan and review it periodically with the bank, attempt to sell his house, and agree to have his wife go back to work.
Gorman was convicted on one count each of violation of 18 U.S.C. Sec. 208 and 18 U.S.C. Sec. 201(g). On appeal, he claims the trial court erred in denying his motion for judgment of acquittal on both counts, and that the government's proofs varied prejudicially from the indictment.
I. The "Conflict of Interest" Count
Gorman claims the trial court erred in denying his motion for judgment of acquittal as to his indictment under 18 U.S.C. Sec. 208. Section 208(a) states as follows:
Except as permitted by subsection (b) hereof, whoever, being an officer or employee of the executive branch of the United States Government, ... participates personally and substantially as a Government officer or employee, through decision, approval, disapproval, recommendation, the rendering of advice, investigation, or otherwise, in a judicial or...
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