U.S. v. Fitzpatrick, 89-1551

Decision Date08 November 1989
Docket NumberNo. 89-1551,89-1551
Citation892 F.2d 162
PartiesUNITED STATES, Appellee, v. Michael J. FITZPATRICK, Defendant, Appellant. . Heard
CourtU.S. Court of Appeals — First Circuit

Daniel R. Marlowe, for defendant, appellant.

Margaret E. Curran, Asst. U.S. Atty., with whom Lincoln C. Almond, U.S. Atty. for the Dist. of R.I., Providence, R.I., was on brief for appellee.

Before BOWNES and BREYER, Circuit Judges, and VAN GRAAFEILAND, Senior Circuit Judge *.

BOWNES, Circuit Judge.

This is an appeal by defendant-appellant Michael J. Fitzpatrick from a conviction by jury of a substantive violation of the Travel Act, interstate travel in aid of bribery, 18 U.S.C. § 1952, and conspiracy to violate the Travel Act, 18 U.S.C. § 371. Defendant's indictment for violations of the Travel Act was consolidated for trial with a subsequent indictment for income tax evasion and conspiracy to obstruct the government in its computation and assessment of defendant's income taxes. This appeal concerns only the Travel Act convictions. Defendant raises two issues: that the assistant United States attorney engaged in misconduct during the trial that prejudiced the defendant and prevented him from getting a fair trial, and that the Travel Act indictment, which issued October 1, 1987, was barred by the five year statute of limitations, 18 U.S.C. § 3282.

Our careful review of the record reveals no misconduct by the assistant United States attorney that would require a new trial. In fact, defendant's allegations of misconduct are either without support in the record or the type of misconduct that exists only in the eyes of the beholder. We, therefore, confine our discussion to the statute of limitations issue.

I. FACTS
A. Background

We state the facts, as we must, in the light most favorable to the government. United States v. Bruckman, 874 F.2d 57, 59 (1st Cir.1989); United States v. Drougas, 748 F.2d 8, 15 (1st Cir.1984).

Appellant Michael J. Fitzpatrick was a loan officer for the Bank of New York (Bank). His responsibilities included servicing construction loans for projects in the Newport, Rhode Island area. In that capacity, Fitzpatrick was the loan officer in charge of a construction loan for a residential condominium to be built and marketed by a limited partnership known as Brenton's Cove Development Company (Brenton's Cove). The general partners of Brenton's Cove were a real estate broker, Herbert L. Finley and a real estate consultant, Radcliffe L. Romeyn, Jr. After becoming acquainted with Fitzpatrick through the Brenton's Cove project, Finley and Romeyn sought and obtained his approval for two other construction loans as well as modifications to the terms of those loans. These are the loans that spawned the Travel Act violations.

The two loans were for "condominium hotels" 1 in Newport, Rhode Island. Landing Development Company (Landing), a limited partnership formed in January, 1980, was to build "Inn on the Harbor." Finley, Romeyn, and William R. Wing were its general partners. Long Wharf Development Company (Long Wharf), a general partnership formed in August, 1980, was to build "Inn on Long Wharf." Finley, Romeyn, Wing, and Timothy M. Dwyer were its general partners.

Early in 1981, Finley and Romeyn approached Fitzpatrick with a request for a package construction loan from the Bank for the two projects. In March they received a commitment letter from the Bank for $6,170,000 in construction funds for Landing and Long Wharf. The two companies were to be jointly and severally liable on the loan and the money was to be advanced to the two companies collectively. The construction was to proceed in three phases: Landing was responsible for Inn on the Harbor (Phases I and II); Long Wharf was responsible for Inn on Long Wharf (Phase III). The construction loan from the Bank to Landing for $3,055,000 closed in New York on April 16, 1981. The loan to Long Wharf was delayed by problems in getting the necessary building permit.

B. Travel Act--Conspiracy Evidence

In the spring of 1981 Fitzpatrick made it clear to Finley that he wanted a J-24 sailboat. Finley agreed to get him one. On March 25, 1981, Romeyn made out a check for $1,000 to Pirate's Cove Marina as a down payment on a J-24. On April 15, 1981, a sales contract was entered into between Pirate's Cove and Romeyn for a J-24. On June 10, 1981, Romeyn issued a check for $16,253.00 to Pirate's Cove; this was the balance due on the purchase of the J-24. A short time later, Fitzpatrick picked up the boat at Portsmouth, Rhode Island and took it to his home on City Island, New York. Finley testified that the J-24 was given to defendant in the hope that it would result in favorable financial arrangements for future projects.

In the summer of 1981, Finley and Romeyn were approached by Perry Harris, an old friend of Finley and a limited partner in the Brenton's Cove project. Harris wanted to buy the Landing and the Long Wharf properties and convert the planned condominium hotels into time-share resorts. He proposed forming a limited partnership called Inn Group Associates (Inn Group) to buy the properties. The principals of Landing and Long Wharf were to have fifty percent ownership of Inn Group. Finley and Romeyn testified that a lot more money could be made with time-shares; a unit which would have sold to one person for $100,000 under the original plan could be sold as a time-share to 25 people for $400,000. For the time-share conversion to go through, the Bank would have to approve the sale of the Landing and Long Wharf properties and approve the assumption of the mortgage and commitments by Inn Group. In addition, the Bank would have to modify the repayment terms of the existing construction loan to Landing. Landing's loan called for a payback to the Bank on the basis of roughly 95 percent of the net proceeds from the sale of each condominium hotel unit. When one unit was sold, the Bank was to receive what it was owed on that unit. Under the time-share arrangement, there would have to be several sales of the unit before Inn Group would have enough proceeds to pay the Bank what was owed on the unit.

Finley spoke to Fitzpatrick about the proposed sale of the two properties and their conversion into time-shares. Fitzpatrick's initial response was that the Bank would not agree to the sale and conversion. Finley persisted, however, and persuaded Fitzpatrick to agree to the conversion by cutting him in on the profits.

James Hamilton, a former Bank employee who had been the vice president of construction loans and Fitzpatrick's supervisor at the time, testified that any major modification to an existing loan had to have the approval of the Bank's credit committee. He also testified that a Bank attorney and the loan officer should be present at any closing; the attorney's presence was to assure compliance with the loan documents. On August 3, 1982, a memo from the Bank's senior executive vice president stated that the actual loan closing documents must comport with what the credit committee approved and that a group head would have to certify such compliance on the closing of all loans. Hamilton was a group head. He did not become aware of the modified terms in the Landing and Long Wharf loans authorized by Fitzpatrick until November or December of 1982, long after the fact.

On December 17, 1981, Inn Group was created for the purpose of acquiring the Landing and Long Wharf properties and converting them to time-shares. The purchase price for both properties was $10,000,000. Finley, Romeyn, Wing, and Dwyer were made 50 percent owners and general partners of Inn Group. Upon the execution of the purchase and sale agreement, a $1,000,000 nonrefundable deposit was paid by Inn Group to Landing. Within a day or two following Landing's receipt of that deposit, Finley and Romeyn each withdrew $250,000 from that account. Fitzpatrick received a pay-off of $200,000. He instructed Finley to make the payments to the order of R & S Corp., a Panamanian company that Fitzpatrick had set up to hide income from the IRS. Finley relayed that instruction to Romeyn, and on December 18, 1981, Romeyn wrote a Landing check payable to R & S in the amount of $50,000. On January 5, 1982, Romeyn wrote another Landing check payable to R & S in the amount of $150,000.

On August 19, 1982, the closing on the sale of Inn on the Harbor from Landing to Inn Group took place in Newport. Fitzpatrick was present, but there was no attorney representing the Bank. Acting on behalf of the Bank, Fitzpatrick assented to the sale from Landing to Inn Group of the property and to Landing's assignment of the mortgage and the other documents to Inn Group. He executed, on behalf of the Bank, a release agreement which restructured the repayment terms of the Landing loan and also signed an assignment and estoppel agreement.

The closing on the loan for Long Wharf had not yet taken place. Long Wharf had not satisfied the requirements of the Bank's commitment letter that it obtain approval from Coastal Resources, 2 and a building permit, prior to closing. On September 16, 1982, Romeyn, Finley, and Fitzpatrick met at Fitzpatrick's home on City Island, New York and reviewed documents for the Long Wharf loan. There was no attorney present for the Bank. Finley and Romeyn signed the construction loan agreement between Long Wharf and the Bank. Despite the fact that Coastal Resources had not approved construction and a building permit had not been obtained by Long Wharf, Fitzpatrick approved the loan for the Bank.

At some point during this meeting, Fitzpatrick requested that Romeyn send a construction crew from Rhode Island to work on his house on City Island. Finley testified that this work was done for business purposes. Romeyn testified that the home improvements were a quid pro quo for Fitzpatrick's bypassing the requirements of the Bank's commitment letter and approving the loan. Renovations to Fitzpatrick's...

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