U.S. v. Adams

• Decision Date: 12 February 1996
• Docket Number: 94-3261,Nos. 93-3058,s. 93-3058
• Citation: 74 F.3d 1093
• Court: U.S. Court of Appeals — Eleventh Circuit
• Parties: UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Goldean ADAMS, Bruce Raybon Jones, Warren E. Adams, Defendants-Appellants, Cross-Appellees. UNITED STATES of America, Plaintiff-Appellee, v. $22,264.90 IN UNITED STATES CURRENCY, Defendant, Warren E. Adams; Goldean Adams, Claimants-Appellants.

Page 1093

74 F.3d 1093

UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Goldean ADAMS, Bruce Raybon Jones, Warren E. Adams,

Defendants-Appellants, Cross-Appellees.

UNITED STATES of America, Plaintiff-Appellee, v. $22,264.90 IN UNITED STATES CURRENCY, Defendant, Warren E. Adams; Goldean Adams, Claimants-Appellants.

Nos. 93-3058, 94-3261.

United States Court of Appeals, Eleventh Circuit.

Feb. 12, 1996.

George E. Tragos, Clearwater, FL, for Warren E. Adams.

Tamra Phipps, Susan H. Raab, Robert Monk, Asst. U.S. Attys., Tampa, FL, for Appellee in No. 93-3058.

Tamra Phipps, David P. Rhodes, Robert Monk, Asst. U.S. Attys., Tampa, FL, for Appellee in No. 94-3261.

Appeals from the United States District Court for the Middle District of Florida.

Before EDMONDSON, Circuit Judge, HILL, Senior Circuit Judge, and MILLS ^*, District Judge.

RICHARD MILLS, District Judge:

All parties appeal--including the Government.

A jury convicted Warren Adams, Goldean Adams and Bruce Raybon Jones of conspiring to commit an offense against or to defraud the United States (18 U.S.C. Sec. 371).

The Adamses were also convicted of making false statements to the Resolution Trust Corporation (RTC) (18 U.S.C. Sec. 1001), misapplying funds belonging to the RTC (18 U.S.C. Sec. 657), impeding the lawful functions of the RTC (18 U.S.C. Sec. 1032(2)), and money laundering (18 U.S.C. Secs. 1956(a)(1)(A)(i) & 1957).

The district court sentenced Warren Adams to 46 months in prison, Goldean Adams to 27 months imprisonment, Jones to 1 month in prison, and all three to 3 years of supervised release and payment of restitution. In a later proceeding, the district court ordered $22,264.09 previously belonging to Warren and Goldean Adams forfeited.

Asserting numerous errors, the Adamses and Jones challenge their convictions and the forfeiture. And the Government appeals the sentences given to Warren and Goldean Adams.

We affirm all three convictions, Jones' sentence, and the forfeiture, but we vacate the Adamses' sentences and remand for further sentencing proceedings.

I. FACTS

On June 1, 1990, the failed Investors Federal Savings and Loan Association (IFS) was placed under the conservatorship of the RTC which then assumed responsibility for managing IFS assets, including the Palma Ceia Apartments and the Briarwood Apartments (The RTC properties).

Warren and Goldean Adams owned and operated a property management business known as Golco Management Company (Golco). In December of 1990, the RTC entered into an agreement with Golco to manage the RTC properties. Pursuant to the agreement, Golco handled the day-to-day operations of the properties, including collecting rents and paying general operating expenses. The agreement also authorized Golco--with the Adamses having signatory authority--to open and maintain two bank accounts (RTC accounts) which were the property of the RTC. The contracts also required Golco to submit detailed monthly statements accounting for expenses and income.

Unfortunately, the Adamses failed to abide by the agreements and used Golco to defraud the RTC. Specifically, the record shows that Warren and Goldean Adams altered invoices in order to have the RTC pay for goods and services that were not used to maintain the RTC properties, used a dormant company--SWAT Development Corporation (SWAT)--as a vehicle for billing the RTC for work that was never performed or performed prior to the RTC contract, and improperly profited by falsifying bids on projects paid by the RTC.

The record also shows that the Adamses laundered money. Specifically, on April 8, 1991, Warren Adams withdrew the balance of one account at the Fortune Savings Bank (Fortune) that contained funds fraudulently induced from the RTC and purchased a cashier's check paid to the order of Golco in the amount of $11,798.09. After purchasing the check, Adams deposited it in an account at the Great Western Bank (Great Western). Fortune, however, refused to honor the check because it was not endorsed by Golco. Thereafter, Great Western debited the $11,789.09 and returned the check to Adams. Undaunted, Adams then deposited the check in another account at Fortune and wrote a new check on that account for $11,789.09. He then deposited that check in the Great Western account.

Bruce Raybon Jones' role in the scheme was less direct. In March 1991, Warren Adams gave to Charles McGuire, his son-in-law, and Jones the dormant SWAT. Following the transaction, McGuire and Jones each owned 50 percent of the company. Thereafter, Jones and McGuire opened a bank account on behalf of SWAT. SWAT then performed services at various properties--including but not exclusive to the RTC properties--that were managed by the Adamses. For these services, the Adamses paid SWAT by checks drawn on the RTC accounts.

On December 10, 1991, after two disgruntled Golco employees--Ronald and Karen Pyle--told law enforcement officers about what was occurring at Golco, Federal authorities executed a search warrant of the Adamses' home. ¹ Following the search, Warren Adams, McGuire and Jones held a meeting at which Adams told McGuire and Jones that he had been billing the RTC for SWAT work that was never performed. ² Adams also asked McGuire and Jones to lie to law enforcement investigators regarding how SWAT operated. On March 2, 1992, Jones followed Warren Adams' instructions. McGuire, however, after initially going along with the scheme, broke down and confessed. ³

II. ANALYSIS

The Adamses and Jones raise a total of eight issues on appeal. The first four assert prosecutorial misconduct, the second two challenge the validity of the money laundering convictions, and the final two contest the forfeiture and Jones' conviction. On cross-appeal, the Government maintains that the district court erred when it refused to sentence Warren and Goldean Adams based upon their money laundering convictions.

A. Prosecutorial Misconduct

The Adamses and Jones claim that the prosecutor and one of the Government's witnesses made improper comments that denied them a fair trial. Specifically, they maintain that: (1) the prosecutor improperly referred to statements made by Karen Pyle; (2) the prosecutor deliberately violated the trial judge's instruction not to refer to Warren Adams' military record; (3) the prosecutor allowed Special Agent Wayne Lewis of the Office of Inspector General of the RTC to violate the district court's Bruton instruction during direct examination; and (4) even if none of the three errors standing alone denied them a fair trial, that combined, the cumulative effect of the errors created enough prejudice to deny them due process.

1. Karen Pyle

During opening statements, closing arguments, and during the course of the trial, the prosecutor and prosecution witnesses on a number of occasions referred to statements made by Karen Pyle. Karen Pyle, however, was never called as a witness. ⁴ Defendants assert that this prejudiced them because it improperly established guilt by association and because it turned the prosecutor into an unsworn witness. In response, the Government maintains that in the opening and closing statements the prosecutor only referred to evidence that was properly presented at trial, and that all references by witnesses at trial to out-of-court statements made by Karen Pyle were admissible because the statements were not presented for the truth of the matter asserted. The Government also argues that Defendants failed to timely object. ⁵

A prosecutor's remarks mandate a new trial only if they are improper and prejudicially affect the defendant's substantial rights. United States v. Thomas, 62 F.3d 1332, 1343 (11th Cir.1995). A defendant's substantial rights are prejudiced if there is a reasonable probability that, but for the remarks, the outcome would be different. Kennedy v. Dugger, 933 F.2d 905, 914 (11th Cir.1991), cert. denied, 502 U.S. 1066, 112 S.Ct. 957, 117 L.Ed.2d 124 (1992). "A reasonable probability is a probability sufficient to undermine confidence in the outcome." Strickland v. Washington, 466 U.S. 668, 694, 104 S.Ct. 2052, 2068, 80 L.Ed.2d 674 (1984).

In this case, both in her opening statement and during the questioning of Agent Lewis, the prosecutor referenced statements made by Karen Pyle that the Adamses were engaging in fraud. ⁶ These statements were improper because they went beyond what was needed to establish why Agent Lewis commenced an investigation. See United States v. Novak, 918 F.2d 107, 109 (10th Cir.1990) (prosecutor's statement that a citizen informant had reported and provided information to the police that the defendant was selling cocaine was improper hearsay that went beyond the scope of " 'routine testimony' used by police officers to establish why they commenced an investigation."). Moreover, even if the statements were not hearsay, during opening statements prosecutors should avoid referring to evidence that is even of questionable admissibility. United States v. Hernandez, 779 F.2d 456, 459-60 (8th Cir.1985).

Nevertheless, because the record contains sufficient independent evidence establishing guilt, we conclude that the improper references to statements made by Karen Pyle do not raise a reasonable probability that, but for the remarks, the outcome would be different.

2. Warren Adams' Military Record

Shortly before trial the Government filed a motion in limine asking that the district court exclude evidence of Warren Adams' acts of heroism in Vietnam. Because the motion was filed just prior to trial, the issue was deferred until after opening statements. In the meantime, in their opening statements, both parties agreed to limit remarks regarding Adams' military service to the fact that he had served in the Army.

Nevertheless, in her opening, the prosecutor made the following remark:

Mr. Adams spent 20 years in the United States Army some 25 years ago. He retired from the United States Army some 25 years ago. But the...