U.S. v. Dolan, 96-3554
| Citation | 120 F.3d 856 |
| Decision Date | 24 July 1997 |
| Docket Number | No. 96-3554,96-3554 |
| Parties | 47 Fed. R. Evid. Serv. 656 UNITED STATES of America, Appellee, v. Gary L. DOLAN, Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (8th Circuit) |
Robert B. Creager (argued), Lincoln, NE, for Appellant.
Steven A. Russell, Assistant U.S. Attorney (argued), Lincoln, NE, for Appellee.
Before McMILLIAN and HANSEN, Circuit Judges, and MAGNUSON, * District Judge.
Gary L. Dolan appeals his jury convictions and sentence on one count of conspiracy to commit bankruptcy fraud and one count of concealing and aiding and abetting in the concealment of property of a bankruptcy estate. On appeal, Dolan contends that the indictment was barred by the applicable statute of limitations, that there was insufficient evidence to support his convictions, that the district court 1 committed several errors at trial, and that the district court erred in applying the sentencing guidelines. We affirm.
Gary L. Dolan is an attorney who represented businessman David R. Anderson in connection with business litigation against several financial institutions in the mid-1980s. On September 16, 1987, at least two of those financial institutions filed an involuntary bankruptcy petition against Anderson. Although Dolan had never served as a debtor's counsel in a bankruptcy proceeding, Anderson retained Dolan to represent him in the involuntary proceeding. After the bankruptcy judge denied Anderson's motion to dismiss the involuntary petition in February 1988, Dolan, on Anderson's behalf, successfully moved to convert the involuntary proceeding to a voluntary proceeding under Chapter 11 of the United States Bankruptcy Code.
Dolan assisted Anderson in filing his voluntary bankruptcy petition, which included schedules listing assets and liabilities, on July 26, 1988. Anderson provided Dolan with the information to be included on the schedules, but, according to Dolan, this information was insufficient. Specifically, Dolan expressed surprise that in listing his assets, Anderson did not include any cash, household goods, or vehicles. Dolan testified at trial that he was also concerned about Anderson's failure to assert ownership of stock in a company with which Anderson was associated called Medical Devices. Dolan believed that Anderson owned a number of vehicles and either owned or controlled Medical Devices. When Dolan discussed these omissions with Anderson, Anderson told Dolan that all the vehicles he drove were titled in various corporations and that he did not own any stock in Medical Devices. Dolan testified that at the time the schedules were filed, he had no reason to believe that any information contained in the schedules was false, although he realized that they may have been incomplete.
Two omissions from Anderson's bankruptcy petition are relevant to Dolan's appeal. First, evidence at trial demonstrated that Anderson failed to disclose his ownership of a 1981 Ferrari valued at $85,000. At the time that Dolan and Anderson filed the petition and accompanying schedules, the Ferrari was securing a promissory note at Security National Bank ("Security"). Anderson obtained the related loan from Security on September 27, 1987. The original title to the Ferrari, which was in Anderson's name, had been in Security's possession since that date. Security became aware of Anderson's bankruptcy proceedings after receiving the notice of bankruptcy sent to all creditors pursuant to Chapter 11. Shortly thereafter, Security's counsel filed a proof of claim with the bankruptcy court that included a copy of Anderson's title to the Ferrari. Robert Burford, an Executive Vice President at Security, testified at trial that after the proof of claim was filed, Anderson contacted him and asked to change the name on the title to Anderson's son, Trent Anderson. When Burford refused to comply, Dolan prepared and sent to Burford a stipulation for relief from the stay of the bankruptcy proceedings that would allow Security to enforce its security interest in any collateral securing Anderson's obligations. Testimony at trial indicated that Dolan followed up on his correspondence with Security by contacting Richard Meyers, Security's counsel, to suggest a transaction that would accomplish the title transfer that Anderson sought. According to Meyers, Dolan proposed an arrangement by which Security would obtain relief from the automatic bankruptcy stay and repossess the Ferrari. Then, an individual of Anderson's choosing would buy the Ferrari from Security for the full balance that Anderson owed--$27,000-- which was significantly less than the value of the Ferrari. Meyers sent Dolan a letter, dated August 22, 1988, refusing to agree to his proposal or any other proposal that would remove equity from the bankruptcy estate.
Dolan testified that he learned about the Ferrari from Meyers after the schedules were filed and before the first meeting of Anderson's creditors. He stated that when he asked Anderson about the Ferrari, Anderson told Dolan that the vehicle was no longer titled in his name. Contrary to the trial testimony of Burford and Meyers, Dolan claimed to believe that Anderson transferred the automobile title to a third party before the bankruptcy schedules were filed on July 26, 1988. However, evidence presented at trial established that Anderson transferred the title to the Ferrari to his son, Trent Anderson, on September 2, 1988. Neither Dolan nor Anderson informed the bankruptcy court or Anderson's creditors of Anderson's ownership and transfer of the Ferrari. Moreover, the jury heard Dolan's prior testimony that he and Anderson discussed the value of the Ferrari as well as various means of using the car's value to fund a bankruptcy plan. The prior testimony also revealed Dolan's knowledge that the automobile was still titled in Anderson's name in August 1988.
The second crucial omission from Anderson's bankruptcy petition concerns a lawsuit that Anderson filed against Intermedics, Inc. ("Intermedics") in the District Court of Brazoria County, Texas on September 14, 1988. The suit, which included Anderson and Medical Devices as plaintiffs, sought, among other things, compensation for personal injuries suffered by Anderson as a result of business dealings between Medical Devices and Intermedics. Anderson was represented primarily by Texas attorney Michael Phillips. Anderson did not include the existence of this personal claim in his bankruptcy schedules. Although Dolan was not the primary attorney on the Texas case and did not draft the petition, he was listed as additional counsel and was aware that the lawsuit was filed during the course of the bankruptcy proceeding.
Dolan testified that he did not believe that Anderson had a legally cognizable personal claim against Intermedics, but he deferred to attorney Phillips's decision to file the claim. Anderson and Phillips negotiated a settlement of the Texas suit in November 1988. Shortly thereafter, Dolan received a letter explaining the settlement, which provided that Anderson, not Medical Devices, was to receive most of the settlement proceeds. Anderson asked Dolan to approve the settlement, which Dolan did after expressing his uneasiness to Anderson. On November 29, 1988, as a result of the settlement, Anderson received two checks totaling approximately $1.9 million. Dolan signed an acknowledgment for this disbursement. The settlement agreement also provided that Dolan was to receive $50,000 as a personal bonus. When Dolan expressed concern about removing the $50,000 from the bankruptcy estate, Anderson told Dolan that Medical Devices, not Anderson himself, would make the payment, thus avoiding a conflict with the bankruptcy proceeding. At no time did Dolan or Anderson notify the bankruptcy court or amend Anderson's bankruptcy schedules to reflect the existence of Anderson's personal claim or any of the payments in conjunction with that claim. A unique opportunity to amend the schedules arose on May 26, 1989, when the bankruptcy court entered an order requiring Anderson to amend the schedules to reflect the receipt of stock that had been listed as collateral on one of Anderson's bank debts. While Anderson filed amended schedules that listed 100,000 shares of stock as directed by the bankruptcy court, neither Anderson nor Dolan included the Ferrari or the proceeds from the Intermedics settlement on the new document.
Dolan testified that after more closely reviewing the settlement, he had serious concerns about its propriety. He told Anderson that either the settlement was a wrongful conversion of the assets of Medical Devices by Anderson or that Anderson had misrepresented his interest in Medical Devices or other personal claims when he filed the bankruptcy schedules. According to Dolan, he proposed that Anderson either unwind the settlement with Intermedics, since the settlement would have to be approved by the bankruptcy court if it were a personal claim, or issue a disclosure indicating that the payment to Anderson, rather than Medical Devices, was in error. He also recommended that Anderson place the settlement proceeds into a separate Medical Devices bank account until the issue was resolved. 2 When Dolan told Anderson that he could not assure Anderson that he would be safe from criminal prosecution for fraud if he issued a disclosure, Anderson directed Dolan not to disclose any information about the settlement or settlement proceeds that would subject him to civil or criminal liability. After reviewing the Code of Professional Responsibility, Dolan concluded that he could not disclose the settlement if it would subject Anderson to criminal prosecution. Dolan also decided that while he was permitted to withdraw from representation under the Code, he was not required to do so and thus continued to represent Anderson.
Although Dolan knew that Anderson had personally received approximately...
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