U.S. v. Chilingirian

• Citation: 280 F.3d 704
• Decision Date: 13 February 2002
• Docket Number: No. 99-2376.,No. 99-2276.,99-2276.,99-2376.
• Parties: UNITED STATES of America, Plaintiff-Appellee/Cross-Appellant, v. Jack CHILINGIRIAN, Defendant-Appellant/Cross-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

280 F.3d 704

UNITED STATES of America, Plaintiff-Appellee/Cross-Appellant, v. Jack CHILINGIRIAN, Defendant-Appellant/Cross-Appellee.

No. 99-2276.

No. 99-2376.

United States Court of Appeals, Sixth Circuit.

Argued June 13, 2001.

Decided and Filed February 13, 2002.

COPYRIGHT MATERIAL OMITTED

Jennifer J. Peregord (argued and briefed), Office of the U.S. Attorney, Detroit, MI, for Plaintiff-Appellee/Cross-Appellant in Nos. 99-2276, 99-2376.

Kenneth H. Karam (argued and briefed), Peralta, Johnston & Karam, St. Clair Shores, MI, Jack Chilingirian, McKean Federal Correctional Institution, Bradford PA, for Defendant-Appellant/Cross Appellee in Nos. 99-2276, 99-2376.

Before: JONES, SUHRHEINRICH, and DAUGHTREY, Circuit Judges.

OPINION

NATHANIEL R. JONES, Circuit Judge.

Defendant Jack Chilingirian appeals his federal conviction and sentence on money laundering charges. On April 23, 1997, a grand jury of the Eastern District of Michigan returned a multiple count indictment against Chilingirian, an attorney, and three of his clients, Jack, Charles, and George Rashid. The Rashids were indicted on the basis of fraudulent business ventures concerning the development, manufacture, and sale of automobile radar-braking systems to avoid collisions. At a bench trial, Chilingirian was convicted of conspiracy to commit money laundering. He was sentenced to 37 months imprisonment, two years supervised release, and restitution in the amount of $335,167.50. Chilingirian now appeals his conviction, citing inadequacies in the indictment and inconsistencies in the verdicts, and challenging the Bail Reform Act. The government cross-appeals, contending that the defendant was sentenced under the wrong guideline. We agree with the government's contention and therefore AFFIRM the defendant's conviction, but REMAND the case to permit re-sentencing under the appropriate provisions of the Sentencing Guidelines.

I. FACTS

On April 23, 1997, a grand jury in the Eastern District of Michigan returned a multiple count indictment against three brothers, Jack, Charles, and George Rashid, and their attorney, Jack Chilingirian. The indictment arose out of a scheme largely carried out by Jack and Charles Rashid to defraud investors in fraudulent business entities, based on actual or nearly-completed multi-million dollar contracts for the sale of automobile radar braking systems and related radar technology.¹

Chilingirian served as the attorney for the Rashids and the Rashid family's company, Vehicle Radar Safety Systems, Inc. ("VRSS") from 1988 or 1989 through the date of the indictment. He held a fifteen percent share in VRSS.

In 1992, Chilingirian represented VRSS when it filed a Chapter 11 bankruptcy reorganization petition, which was later converted into a Chapter 7 liquidation proceeding. During the pendency of the bankruptcy proceedings, a group of investors, referred to as the "Rudder Group," entered the picture. In August 1992, Charles Rudder met the Rashids when he was working for Gencorp Aerojet ("Aerojet"), which was discussing with VRSS the possibility of buying its radar braking technology, or perhaps the company. In December of 1992, Aerojet informed the Rashids that they would not go forward with any deals. Nevertheless, Rudder and other people who knew Chilingirian also invested in VRSS.

In early 1995, in light of the bankruptcy, the Rudders began taping telephone conversations with the Rashids and Chilingirian. In one of these conversations, Chilingirian said that he had been working on something that was going to be fabulous. Chilingirian also reassured others that he was working on several deals.

In mid-1995, Chilingirian attempted to settle all of the bankruptcy claims against VRSS and the Rashids with money available from a group of investors known as the "Tindall Group." Paul Tindall, and his wife Ann Louise, lived in Canada and were related to Jack Rashid's wife. The Tindalls met with Jack Rashid in January 1995. In late June 1995, the Rashids went to Toronto to present their technology to, and seek investments from, a group of over thirty people who learned of this opportunity through Paul Tindall.

In December 1995, Advanced Radar Systems ("ART") was incorporated in Canada in order to take in the money from the Canadian investors. Neither the Rashids nor Chilingirian informed the Canadian investors about VRSS's bankruptcy or their plan to use the investors' money to pay creditors. The Canadians invested heavily, but the money was put into VRSS. According to the government's summary, the records of Chilingirian's client trust fund show that $2.48 million in checks was given to Jack Rashid by ART-Canada investors. Chilingirian endorsed $2.267 million of those checks into his trust account. Chilingirian then wrote $275,000 worth of checks to himself, gave $1.473 million to Jack Rashid, and disbursed $480,000 to settle various investors' claims against Rashid. Aside from Peter Tindall, none of the Canadian investors have ever recouped any money invested with the Rashids.

When Chilingirian incorporated ART in Canada on behalf of Jack Rashid, he opened a new client trust account as well. According to the government, this account was used to launder money received from the last group of investors, the "Kraft Group." James Kraft was a long time friend of Jack Rashid. He was solicited for money in April 1996, and invested money from his retirement account. He also brought in contributions from over thirty other investors.

In 1996, Chilingirian and members of the Rudder Group discussed settlement of the investors' claims against the Rashids/VRSS. Some investors did get a portion of their money back, but they had to sign affidavits exculpating Jack Rashid. Similarly, despite numerous complaints from investors, Chilingirian continued to deposit money from the Kraft Group into his client trust account, then withdraw some for Jack Rashid and a lesser amount for himself.

On April 23, 1997, Chilingirian was indicted on charges of conspiracy in violation of 18 U.S.C. § 371, mail fraud in violation of 18 U.S.C. § 1341, wire fraud in violation of 18 U.S.C. § 1343, aiding and abetting the interstate transportation of funds taken by fraud in violation of 18 U.S.C. § 2314, tampering with a witness in violation of 18 U.S.C. § 1512, and conspiracy to launder money instruments in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i), 1956(a)(1)(B)(i), and 1956(h).

On April 29, 1999, the district court convicted Chilingirian of conspiracy to commit money laundering. On October 8, 1999, Chilingirian filed a Motion and Brief requesting bail pending appeal. On October 18, 1999, Chilingirian's request for bail was denied and he was sentenced to 37 months imprisonment, 2 years supervised release, and restitution in the amount of $335,167.50. On appeal, Chilingirian argues that the district court's denial of his motion for bail violated his constitutional rights. He also argues that the district court's acquittal of him on certain offenses was inconsistent with the court's verdict of guilty on the conspiracy to commit money laundering charge. Further, Chilingirian alleges that certain counts within the indictment charged the same offense and, thus, the indictment was multiplicitous. On cross-appeal, the government alleges that the district court erred by sentencing Chilingirian according to the fraud guidelines.

II. STANDARD OF REVIEW

This court reviews a district court's denial of bail under an abuse of discretion standard. Lee v. Jabe, 989 F.2d 869, 871 (6th Cir.1993). The Bail Reform Act, 18 U.S.C. § 3143(b), creates a presumption against release pending appeal. United States v. Vance, 851 F.2d 166, 168 (6th Cir.1988).

This Court reviews for clear error a district court's factual findings in its application of the Sentencing Guidelines. See United States v. Jones, 159 F.3d 969, 980 (6th Cir.1998) (citing United States v. Winston, 37 F.3d 235, 240 (6th Cir.1994)). However, the district court's legal application of the guidelines is reviewed de novo. See United States v. Moses, 106 F.3d 1273, 1277 (6th Cir.1997). This Court reviews the question of whether there was an amendment to the indictment de novo. United States v. Robison, 904 F.2d 365, 368 (6th Cir.), cert. denied, 498 U.S. 946, 111 S.Ct. 360, 112 L.Ed.2d 323 (1990).

III. ANALYSIS

A. Bail Reform Act

The district court denied Chilingirian's motions for release on bail pending appeal. The lower court found that although the defendant did not pose a risk of flight or danger, his appellate issues were not substantial. The Supreme Court also subsequently denied Chilingirian's application for release pending bail. Chilingirian v. United States, 531 U.S. 1064, 121 S.Ct. 752, 148 L.Ed.2d 656 (2001).

Title 18 U.S.C. § 3143(b) [The Bail Reform Act of 1984] requires a district court to make two findings before granting bail pending appeal. To establish entitlement to release pending appeal, defendant must show 1) by clear and convincing evidence, that he is not likely to flee or pose a danger to the safety of another person or the community, and 2) that the appeal is not for delay and raises a substantial question of law or fact likely to result in reversal, an order for new trial, or a sentence that does not include a term of imprisonment. 18 U.S.C. §§ 3143(b); United States v. Pollard, 778 F.2d 1177, 1181 (6th Cir.1985).² In this case, release on bail was denied because defendant failed to show that the appeal raised a substantial question of law.

On appeal, Chilingirian argues that 18 U.S.C. § 3143(b) violates the Due Process Clause of the Fifth Amendment and the Eighth Amendment. Chilingirian argues that denying a convicted incarcerated defendant's bail motion and forcing the defendant to wait for the hearing panel's decision is a violation of an individual's due process rights under the Fifth Amendment. In addition, he argues that denial of bail for the primary purpose of punishing the...