U.S. v. Burns, s. 96-20873

• Citation: 162 F.3d 840
• Decision Date: 09 December 1998
• Docket Number: Nos. 96-20873,97-20288,s. 96-20873
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Willie BURNS; Martanette Alexander; Gregory Eugene August; Earline Montgomery, Defendants-Appellants. UNITED STATES of America, Plaintiff-Appellee, v. Gregory Eugene AUGUST, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 840

162 F.3d 840

UNITED STATES of America, Plaintiff-Appellee, v. Willie BURNS; Martanette Alexander; Gregory Eugene August;

Earline Montgomery, Defendants-Appellants.

UNITED STATES of America, Plaintiff-Appellee, v. Gregory Eugene AUGUST, Defendant-Appellant.

Nos. 96-20873, 97-20288.

United States Court of Appeals Fifth Circuit.

Dec. 9, 1998.

Paula Camille Offenhauser, Asst. U.S. Atty., Alice Ann Burns, Asst. U.S. Atty., Houston TX, for Plaintiff-Appellee.

Marc Christopher Carter, Houston, TX, for Willie Burns.

Kenneth Eugene McCoy, Houston, TX, for Martanette Alexander.

Roland E. Dahlin, II, Federal Public Defender, Richard O. Ely, Houston, TX, for Gregory Eugene August.

Sylvia Turner Yarborough, Houston, TX, for Earline Montgomery,

Appeals from the United States District Court for the Southern District of Texas.

Before KING, EMILIO M. GARZA and DeMOSS, Circuit Judges.

DeMOSS, Circuit Judge:

In this appeal we are asked to review the convictions of four appellants who were found guilty of defrauding the Resolution Trust Corporation ("RTC") and the Federal Deposit Insurance Corporation ("FDIC"). Two of those appellants also ask us to review the propriety of their sentences. For the following reasons we affirm the appellants' convictions and sentences.

I.

Appellant Gregory August ("August") was the owner and chief executive officer of the August Group Incorporated ("TAGI"), a privately held property-management company based in Texas. Appellant Earline Montgomery ("Montgomery") was TAGI's acting vice-president and secretary. Appellant Martanette Alexander ("Alexander") was August's former girlfriend, but was not formally employed by TAGI. Appellant Willie Burns ("Burns") was a friend of August and, like Alexander, not formally employed by TAGI. Ephraim Tennie ("Tennie"), a government witness who testified for the government at the appellants' trial, worked for TAGI as a maintenance coordinator.

In 1991 and 1992, TAGI entered four separate contracts to manage various properties that were in receivership of the RTC. TAGI entered those agreements with companies that were under contract with the RTC under "Standard Asset Management and Disposition Agreements" ("SAMDA"). Those companies, which we will refer to as SAMDA contractors, were engaged by the RTC to perform asset management and disposition services in connection with various loan assets, real estate assets, and other assets held by the RTC. In general, a SAMDA contractor's duties were to restore, maintain, market, and sell the RTC properties in accordance with federal policies and procedures. The SAMDA contractors also were authorized to select and hire property management companies, like TAGI, to carry out day-to-day management functions. The property management companies, in turn, were authorized to subcontract with other vendors to provide basic services for the properties; security, trash removal, lawn maintenance, and so on. The subcontractors' invoices were submitted for payment to the property management companies, or to the SAMDA contractors, depending on the particular arrangement in place. The SAMDA contractors paid the property-management fees, expenses, and reimbursables with money funded by the RTC.

TAGI entered four contracts with the following SAMDA contractors to manage the following RTC properties: (1) Benjamin Franklin Federal Savings Association ("BFFSA") to manage the Green Oaks Apartments in Laporte, Texas; (2) the J.E. Robert Company ("JER") to manage the Richwood Place Apartments in Houston, Texas; (3) ONTRA, Inc. ("ONTRA") to manage roughly 500 properties in Texas and Oklahoma; and (4) National Loan/CRT Joint Venture ("NL/CRT") to manage the Spring Cypress Shopping Center in Houston, Texas. In accordance with the terms of those contracts, TAGI was barred from hiring related companies to perform services at the properties without acquiring RTC approval. ¹ Additionally, TAGI was limited to the monetary compensation specifically provided under the contracts; it was forbidden from realizing additional outside profits from its management of the properties.

TAGI entered into a similar management contract with the FDIC in 1992. ² Under that agreement, TAGI promised to provide property management services for Cavender's Boot City ("Cavender's") in Houston, Texas, which was in receivership of the FDIC. That contract, like TAGI's property management contracts for the RTC properties, contained a conflict of interest provision that prohibited TAGI from transacting business with a related company.

Over the next several years TAGI hired more than a dozen subcontractors to perform various functions at its contracted properties. Unbeknownst to the RTC, FDIC, and SAMDA contractors, however, many of those companies were affiliated with August and TAGI. For example, Guardco Security Company ("Guardco"), Evergreen Lawn Care, and Alexander Plumbing Company, were started by Alexander, who filed assumed name certificates and opened new bank accounts for the three companies. CQ&S Enterprise Company ("CQ&S") operated with a bank account that August had opened with TAGI's address and an assumed name certificate filed years earlier by Charles Newton, August's deceased lodge brother. Capital City Contractors ("Capital Contractors"), Capital City Management ("Capital Management"), and Pro-Lawn Service ("Pro-Lawn"), operated under assumed name certificates filed by Nathaniel Gordon ("Gordon"), a TAGI employee who also assisted in the management of those companies.

The appellants never advised the RTC, FDIC, or SAMDA contractors that TAGI had hired related companies to perform services on the contracted properties. When federal authorities finally grew suspicious, and searched TAGI's offices in May 1993, they found blank invoices of various TAGI-affiliated companies, checkbooks of these companies, and blank insurance certificates. The next day, August, Montgomery, Burns, Tennie, and Gordon met at Club Reflections, a bar owned by August, where they sorted through a box of incriminating documents that had escaped detection. They then burned those documents in an alley outside the club.

On November 2, 1994, the appellants were charged in a multi-count indictment charging them with conspiracy to defraud the United States in violation of 18 U.S.C. § 371, in combination with other fraud-related offenses. The appellants were then jointly tried to a jury on November 17, 1995. Over the course of that trial, which lasted for nearly three months, the government came forward with a mountain of evidence demonstrating that for roughly two and a half years the appellants conspired to bilk the government. False invoices were generated for work that was never done. Valid invoices from legitimate vendors were altered, falsified, and inflated to show greater amounts of monies owed. False bids were submitted to boost claimed reimbursables.

Evidence also showed that the appellants took active measures to conceal their fraud. August, for example, terminated the services of "Guardco, Inc." a properly licensed company that had been providing security services for the Green Oaks Apartments, and surreptitiously replaced it with the Guardco that Alexander had created. Montgomery instructed Tennie on numerous occasions to generate fake invoices and alter valid ones. Alexander, who was employed at an unrelated bank, assisted in hiding August's involvement by filing assumed name certificates, and establishing bank accounts, for several of the related companies. Burns, on August's instructions, would negotiate and sign contracts as the sole proprietor of CQ&S, even though August was the actual owner.

On February 16, 1996, a jury convicted August of one count of conspiracy (Count 1), four counts of illegal participation (Counts 2--5), 18 U.S.C. § 1006(2); seven counts of making false claims to the RTC (Counts 6--11 & 13), 18 U.S.C. § 287; four counts of making false statements to FDIC (Counts 14--17), 18 U.S.C. § 1007; and one count of money laundering (Count 20), 18 U.S.C. § 1956(a)(1)(B)(i). August subsequently was sentenced to 96 months imprisonment.

Montgomery was found guilty of one count of conspiracy (Count 1), four counts of illegal participation (Counts 2--5), 18 U.S.C. § 1006(2); seven counts of making false claims to the RTC (Counts 6--11 & 13), 18 U.S.C. § 287; and four counts of making false statements to FDIC (Counts 14--17). She received a sentence of 37 months imprisonment.

Alexander was convicted of one count of conspiracy (Count 1), and two counts of illegal participation (Counts 2, 3 & 5), 18 U.S.C. § 1006(2). The court sentenced Alexander to 15 months imprisonment.

Burns was found guilty on one count of conspiracy (Count 1), and one count of illegal participation (Count 4), 18 U.S.C. § 1006(2). He was ordered to serve a 24-month term of imprisonment. Each of the appellants now appeal their respective convictions. Montgomery and Burns also challenge their sentences.

II.

On appeal August challenges the sufficiency of the evidence supporting his convictions under Count 20 for money laundering, 18 U.S.C. § 1956(a)(1)(B)(i), and aiding and abetting in the commission of that crime, 18 U.S.C. § 2. He does not dispute the evidentiary basis for any of his other convictions. August moved for judgment of acquittal at the close of the government's case, and at the end of trial, thus preserving his sufficiency claim for appellate review. United States v. Pankhurst, 118 F.3d 345, 351 (5th Cir.), cert. denied, --- U.S. ----, 118 S.Ct. 630, 139 L.Ed.2d 609 (1997). The district court denied those motions.

We review de novo a district court's denial of a motion for judgment of acquittal. United States v. Myers, 104 F.3d 76, 78 (5th Cir.), cert. denied, --- U.S. ----, 117 S.Ct. 1709, 137 L.Ed.2d 834 (1997). In evaluating the sufficiency of the evidence we must affirm the verdict "if a reasonable trier of fact could conclude from the evidence that the...