U.S. v. Day

• Decision Date: 09 May 2008
• Docket Number: No. 06-3063.,No. 06-3076.,06-3063.,06-3076.
• Citation: 524 F.3d 1361
• Parties: UNITED STATES of America, Appellee v. Brittian Perry DAY, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

524 F.3d 1361

UNITED STATES of America, Appellee v. Brittian Perry DAY, Appellant.

No. 06-3063.

No. 06-3076.

United States Court of Appeals, District of Columbia Circuit.

Argued February 25, 2008.

Decided May 9, 2008.

Appeals from the United States District Court for the District of Columbia, (No. 04cr00358-01).

John W. Karr argued the cause for appellant. With him on the briefs was Theodore S. Allison.

Sarah T. Chasson, Assistant U.S. Attorney, argued the cause for appellee. With her on the briefs were Jeffrey A. Taylor, U.S. Attorney, and Roy W. McLeese, III, Assistant U.S. Attorney.

Before: TATEL and GARLAND, Circuit Judges, and EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge EDWARDS.

EDWARDS, Senior Circuit Judge:

Appellant Brittian Perry Day was indicted on multiple counts of mail fraud, wire fraud, and theft/embezzlement in violation of federal law, and one count of first degree fraud in violation of the District of Columbia Code. He was charged with stealing more than $1.5 million by defrauding various employee benefit plans and one charity after he was retained by these institutions as an insurance broker. Day claimed that he lacked the requisite mens rea, because physical and emotional damage to his body and brain had rendered him unable to form the intent to defraud or deceive, and he proffered expert testimony to support this defense. The District Court, however, declined to admit certain of this expert testimony. United States v. Day, Crim. No. 04-0358, slip. op., 2006 WL 1216648 (D.D.C. Mar. 29, 2005); United States v. Day, Crim. No. 04-0358, slip. op. (D.D.C. Feb. 25, 2005). On April 20, 2005, after a jury trial, appellant was found guilty on six counts of mail fraud under 18 U.S.C. § 1341; ten counts of wire fraud under 18 U.S.C. § 1343; five counts of theft or embezzlement from an employee benefit plan under 18 U.S.C. § 664; and one count of fraud in the first degree under D.C.Code §§ 22-3221 and 22-3222. See United States v. Day, 433 F.Supp.2d 54 (D.D.C.2006). The District Court denied the Government's request to subject appellant to criminal forfeiture for his mail and wire fraud offenses, and refused to order a forfeiture money judgment on the theft/embezzlement offenses. United States v. Day, 416 F.Supp.2d 79 (D.D.C. 2006). Appellant was sentenced to an aggregate term of imprisonment of 108 months, after which the District Court denied his motion for release pending appeal. 433 F.Supp.2d at 55 (denying Day's motion "because his appeal . . . [did] not raise a substantial question of law or fact likely to result in reversal, a new trial, or a reduced sentence of imprisonment").

Appellant now challenges the District Court's decisions to exclude the expert testimony relating to his mental state; he also contests his sentence on the ground that the District Court incorrectly calculated his base and adjusted offense levels. The Government cross-appeals, claiming that the District Court erred in holding that the Government was not entitled to forfeiture on the mail and wire fraud charges, and also in denying entry of a money judgment on the charges to which the Government was entitled to forfeiture. We reject appellant's appeals, and uphold both the District Court's decisions to exclude the disputed expert testimony and the sentence imposed by the court. However, we reverse the District Court decisions denying the Government's requests for forfeiture and a money judgment.

BACKGROUND

Over a 10-year period starting in 1994, Brittian Perry Day caused losses of $1.5 million to multiple employee benefit plans ("the Plans") and to a charity called Food and Friends ("F & F"). Appellant was retained by the Plans and by F & F to procure insurance for them and their trustees. The Plans mailed appellant checks, payable to appellant's wholly-owned insurance company (the "A & D Insurance Agency"), to cover the cost of purchasing the policies that he recommended to them. However, instead of actually obtaining insurance policies for the Plans or F & F, appellant deposited the proceeds into an account held in the name of the A & D Insurance Agency and spent the money on himself. When the Plans asked appellant for evidence of their coverage, he faxed them fake coverage declarations. He also sent the Plans fake renewal applications and reminders to the Plans, and contacted the Plans' billing departments to request prompt payment. Appellant also created fake declaration pages by covering over the old policy terms with correction fluid and retyping them with new policy numbers. When the Federal Bureau of Investigation ("FBI") searched appellant's home, where his business was located, it found blank declaration pages, declaration pages with "wite-out" on them, and notebooks documenting his activities.

In July 2002, after one of the Plans incurred a claim that should have been, but was not, covered by the insurance it had obtained from appellant, it quickly discerned that it had no insurance. The Plan notified the Department of Labor, which began investigating appellant's business conduct.

In December 2003, F & F purchased what it thought was a pre-paid, three-year insurance policy through appellant. By February 2004, F & F had written $300,000 in checks to A & D Insurance Agency, unaware that appellant had obtained only a one-year policy for F & F that cost approximately $100,000. F & F did not learn until August 2004 that appellant was the subject of a criminal investigation.

The evidence at trial also indicated that appellant had taken steps to protect his ill-gained assets. In July 2002, appellant directed his sister to open a bank account under the name of a fictitious company called Northern Cape Insurance Associates, because he was afraid the FBI was going to seize his other accounts. Thereafter, appellant did business through that bank account. Appellant asked another individual to conceal the existence of his ownership of several beach homes in Rehoboth Beach, Delaware by hiding documents revealing his ownership interests in the homes and saying nothing to the FBI about his interests. The Government contended that these actions "helped appellant hide his assets from forfeiture, minimized his civil liability to the Plans, and gave the appearance of impoverishment, which, in his mind, might persuade the Government not to take significant criminal action against him." Br. for Appellee at 6.

Appellant's defense was that "the depression that followed his [business and domestic] partner's death [in 1990], coupled with business reverses . . . and severe physical and emotional damage to his body and brain associated with the depression, vascular dementia, three strokes, in 1996, 1999 and 2001, left him sufficiently impaired that he lacked the mens rea to form the specific intent to commit the crimes of which he was convicted." Br. for Appellant at 5. To bolster his defense, appellant proffered the testimony of four expert witnesses who he claimed would attest to his inability to form the requisite mens rea to commit the crimes as charged. On February 24, 2005, after a three-day Daubert hearing, see Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), to determine whether the proffered expert testimony was relevant and reliable enough to be admitted as evidence, the District Court excluded the first three witnesses—Drs. Abbas Alavi, Arthur Horton, and Edgar Garcia-Rill. On March 25, 2005, after a two-day Daubert hearing, the District Court excluded the testimony of the final expert witness, Dr. Michael Spodak. However, the trial judge allowed some friends, relatives, and associates of appellant to testify at trial about "their observations of [appellant's] physical, mental and emotional deterioration over the decade following his partner's death and the apparent changes in his capacity to deal with routine business and social activities after his strokes began in 1996." Br. for Appellant at 17. On April 20, 2005, the jury found appellant guilty on all counts.

The Government's superseding indictment filed on August 27, 2004 included forfeiture allegations; the Government originally sought forfeiture of appellant's primary residence in Washington, D.C., his beach home in Rehoboth Beach, Delaware, and his Mercedes-Benz automobile. The Government also sought entry of a money judgment against appellant in the amount of $1.5 million—the total sum of money allegedly constituting or derived from proceeds of appellant's crimes. After the jury rendered its guilty verdict on the substantive charges, appellant waived his right to a jury trial on the Government's forfeiture claims. The Government asked the District Court to enter the money judgment of $1.5 million and to order the forfeiture of appellant's primary residence as a substitute asset under 21 U.S.C. § 853(p) in satisfaction of the money judgment. Counsel for Mr. Day did not challenge the total amount sought by the Government in forfeiture, arguing instead that there was no basis in criminal forfeiture law for the Government to obtain a personal money judgment against appellant, and that the mail and wire fraud statutes cited in support of the Government's forfeiture claim did not apply to the offenses of which appellant had been convicted.

On February 22, 2006, the District Court ruled in appellant's favor on the forfeiture issues, holding that the mail and wire fraud statutes did not support a criminal forfeiture action against appellant for his crimes, and that although criminal forfeiture was appropriate for the money stemming from the theft/embezzlement charges, the applicable statutes did not allow the District Court to enter a money judgment. 416 F.Supp.2d at 87, 91. On April 6, 2006, the District Court sentenced appellant to an aggregate term of 108 months' imprisonment. This appeal and cross-appeal followed. Day appeals the District Court's decisions to...