U.S. v. Cherry
| Citation | 330 F.3d 658 |
| Decision Date | 30 May 2003 |
| Docket Number | No. 02-4306.,02-4306. |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Billie J. CHERRY, Defendant-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
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v.
Billie J. CHERRY, Defendant-Appellant.
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COPYRIGHT MATERIAL OMITTED
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ARGUED: Nathan A. Hicks, Jr., Charleston, West Virginia, for Appellant. Susan Marie Arnold, Assistant United States Attorney, Charleston, West Virginia, for Appellee. ON BRIEF: Kasey Warner, United States Attorney, Charleston, West Virginia; John A. Michelich, Senior Trial Attorney, Fraud Section, Criminal Division, United States Department Of Justice, Washington, DC, for Appellee.
Before MICHAEL, TRAXLER, and KING, Circuit Judges.
Affirmed in part and vacated in part by published opinion. Judge KING wrote the opinion, in which Judge MICHAEL and Judge TRAXLER joined.
KING, Circuit Judge:
On October 12, 2001, a jury in Parkersburg, West Virginia, convicted Billie J. Cherry of multiple counts of conspiracy, bank embezzlement, mail fraud, and money laundering. The jury also determined that Cherry should be ordered to forfeit property derived from, involved in, or traceable to her criminal activities. The court entered judgment on the jury verdict, but it later vacated Cherry's convictions for bank embezzlement because the indictment had failed to allege an essential element of that offense. United States v. Cherry, No. 1:01-CR-92, Order (S.D.W.Va. Feb. 1, 2002) (the "Order"). Cherry has appealed her money laundering convictions and the judgment of forfeiture. As explained below, we affirm Cherry's convictions for money laundering, but we vacate the judgment of forfeiture to the extent that it is premised on the vacated embezzlement convictions.
The First National Bank of Keystone (the "Bank") operated for many years in the southern West Virginia mining community of Keystone. In 1977, J. Knox McConnell purchased a substantial interest in the Bank and began to operate it. At that time, the Bank held approximately $17 million in assets, and it served as the area's community bank. In the early 1990s, the Bank began a profitable business of purchasing loans from other loan originators, bundling similar loans together, and reselling the bundled loans as securities. By the mid-1990s, the Bank had acquired a reputation as one of the most profitable community banks in the country, with assets reportedly in the realm of $1 billion.
Rumors of the Bank's financial success were, however, greatly exaggerated. In truth, Bank employees had doctored the Bank's books to create a false appearance of profitability. In late 1999, following an onsite examination, the Office of the Comptroller of the Currency (the "OCC") — the federal agency that regulates national banking practices — declared the Bank insolvent and appointed the Federal Deposit Insurance Corporation (the "FDIC") as the Bank's receiver. When bank examiners were subsequently unable to verify more than $515 million of loans — reflected as assets on the Bank's books — the Bank was closed.
Thereafter, the federal authorities in southern West Virginia commenced an extensive investigation of the Bank's failure. That investigation culminated in the prosecution of several of the Bank's officers and employees for criminal activities in the Bank's operations. These activities included bank fraud, money laundering, obstruction of justice, and tax and securities offenses. The investigation also led to the
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indictment of Billie J. Cherry and her co-defendant, Terry L. Church, for their activities in looting the estate of J. Knox McConnell.
From 1977 until his death in 1997, J. Knox McConnell served as the President of the Bank and as an active member of its Board of Directors. At the time of his death, McConnell owned significant assets, including: (1) four savings accounts at the Bank containing the aggregate sum of $4,282,588; (2) 146,619 shares of stock in the Bank, valued at approximately $109 per share; (3) two condominiums, one in Pittsburgh, Pennsylvania, and the other in Orlando, Florida; and (4) a business known as Marbil, Inc., which held a $1.8 million certificate of deposit at the First State Bank and Trust of Rainelle ("First State").1
Cherry was McConnell's longtime companion, having maintained a close relationship with him since 1957. In 1977, Cherry moved from Pennsylvania to Keystone (located in West Virginia's McDowell County), and she thereafter held numerous positions with the Bank, including Cashier, Controller, and Executive Vice-President. Cherry's co-defendant, Terry L. Church, met McConnell through Cherry in 1975. Like Cherry, Church moved to Keystone in 1977 and began working at the Bank. Church worked her way through the Bank's chain of authority and ultimately became its Senior Executive Vice-President and its Chief Operations Officer. She also served as a member of the Bank's Board of Directors.
McConnell unexpectedly passed away on Sunday, October 26, 1997. In the ensuing days, Church directed Bank employees to secure McConnell's safe deposit boxes, to search bank records in order to identify all of his accounts, and to obtain his savings account passbooks and signature cards. In a flurry of fraudulent activity, Cherry and other Bank employees added Cherry's name to McConnell's accounts, creating joint ownership of the funds held in those accounts. Cherry then closed those accounts and transferred the funds into three newly created accounts owned exclusively by her. After the new accounts were opened, Cherry made no other deposits into them, but she frequently withdrew large sums of money.2
In the course of these events, Cherry and Church also executed a fraudulent codicil to McConnell's will (the "fake codicil"). McConnell's will, at the time of his
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death, devised the majority of his estate to Waynesburg College, located in Waynesburg, Pennsylvania. In order to thwart discovery of the ongoing fraud at the Bank, Cherry and Church decided to alter McConnell's will to prevent Waynesburg College from obtaining control of McConnell's stock in the Bank. Thus, the day after McConnell's funeral, Cherry, Church, and other Bank employees met in Church's office at the Bank, where Church proceeded to draft the fake codicil. Church forged McConnell's signature on the document, which was backdated to May 7, 1996, a date specifically selected because McConnell and the witnesses to the fake codicil had been present in the Bank that day. Another Bank employee notarized the fake codicil, which purported to change McConnell's will and bequeath part of his stock in the Bank to Cherry and Church.
Shortly after the creation of the fake codicil, Cherry advised Church that she also wanted McConnell's condominiums. In an attempt to give Cherry ownership of these properties, Church created a second fraudulent codicil entitled "Disposition of Properties Owned" (the "condominium document"), which provided that McConnell was leaving the condominiums to Cherry. In order to create the appearance that the condominium document had been properly executed, a Bank employee signed as a witness, and Church forged McConnell's signature. Church and Cherry failed, however, to have this document notarized. The condominium document was backdated to August 16, 1996, Cherry's birthday.
On November 17, 1997, Cherry, Church, and other Bank employees offered three writings for probate — McConnell's will, the fake codicil, and the condominium document — delivering them to the Clerk of the County Commission of Mercer County in Princeton, West Virginia. Because the condominium document had not been notarized, the Clerk declined to probate it, and it was returned to Church. McConnell's will and the fake codicil were probated in Mercer County, and Church was appointed by the County Commission to serve as executrix of McConnell's estate. Although the notarization problem precluded Cherry from inheriting the two condominiums under McConnell's will, she later purchased them from his estate for $184,000, using monies she had taken from McConnell's savings accounts at the Bank.
Cherry and Church also obtained $1.8 million from the certificate of deposit (the "CD") owned by Marbil, Inc., a company wholly owned by McConnell. Within two weeks of McConnell's death, Cherry and Church attempted to have First State redeem the CD and transfer the resulting funds to an account at the Bank, but First State refused to do so without the proper corporate resolutions.3 Thus, Cherry and Church created false corporate records making themselves members of Marbil's Board and giving themselves an ownership interest in the company. Cherry then wrote to First State, representing herself to be President of Marbil and directing First State to redeem the CD and transfer the resulting funds to Marbil's account at the Bank. On December 29, 1997, First State issued a cashier's check, payable to Marbil, Inc., in the sum of $1,838,650.89, which was deposited in Marbil's account at the Bank. The account name was then altered to give Church control of those funds.
On March 21, 2001, Cherry and Church (collectively, the "defendants") were
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charged in a twenty-five count indictment returned by a grand jury in the Southern District of West Virginia. Count One charged the defendants with conspiracy to commit bank embezzlement and mail fraud, in violation of 18 U.S.C. § 371. Counts Two through Five charged them with four separate acts of bank embezzlement, in contravention of 18 U.S.C. § 656 (the "Bank Embezzlement Counts"). Counts Six through Nine charged them with mail fraud, in violation of 18 U.S.C. § 1341. Counts Ten through Twenty-Five charged Cherry with money laundering, in contravention of 18 U.S.C. § 1957 (the "Money Laundering Counts").
On September 28, 2001, Cherry filed a motion seeking the disqualification of the presiding judge. The disqualification motion, filed pursuant to ...
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