U.S. v. Glick, 82-1375

• Decision Date: 10 June 1983
• Docket Number: No. 82-1375,82-1375
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Steven S. GLICK, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 639

710 F.2d 639

UNITED STATES of America, Plaintiff-Appellee, v. Steven S. GLICK, Defendant-Appellant.

No. 82-1375.

United States Court of Appeals, Tenth Circuit.

June 10, 1983.

Rehearing Denied July 27, 1983.

Dennis A. Fischer of Fischer & Hill, Los Angeles, Cal. (Nancy Gaynor, Fischer & Hill, Los Angeles, Cal., and Michael S. Axt, Denver, Colo., with him on the brief), for defendant-appellant.

Charles H. Torres, Asst. U.S. Atty., Denver, Colo. (Robert N. Miller, U.S. Atty., Denver, Colo., with him on the brief), for plaintiff-appellee.

Before SETH, Chief Judge, and BREITENSTEIN and SEYMOUR, Circuit Judges.

SEYMOUR, Circuit Judge.

Steven Glick was convicted after a jury trial of eight counts of mail fraud, 18 U.S.C. Sec. 1341 (1976), ¹ and two counts of travel in interstate commerce to execute a scheme to defraud, 18 U.S.C. Sec. 2314 (1976). ² On appeal, Glick argues that the court improperly instructed the jury on the issue of fraudulent intent, and that he was denied effective assistance of counsel because his attorney

failed to conduct adequate pretrial investigation. We affirm.

I. THE FACTS

Viewed in the light most favorable to the Government, see United States v. Petersen, 611 F.2d 1313, 1317 (10th Cir.1979), cert. denied, 447 U.S. 905, 100 S.Ct. 2986, 64 L.Ed.2d 854 (1980), the facts are briefly as follows. Reginald Chisholm, the mastermind of the fraudulent scheme, was described as a man of great charm and personal magnetism. He held himself out during 1975 and 1976 as a very wealthy person who could package and obtain loans for people seeking financing. He charged a nonrefundable front fee for this service. Chisholm told his victims that as part of his service he would guarantee the loans, and that his guarantee would carry weight with lending institutions because of his wealth. To support these representations, Chisholm showed his victims financial statements describing Chisholm's personal wealth and that of three corporations he owned or controlled. These statements were prepared by Glick, a certified public accountant, and included letters by Glick declaring that the statements fairly presented the subject's financial position in conformity with generally accepted auditing standards and accounting principles.

The principal asset of Chisholm and his corporations was his claim to mineral rights in limestone formations in National Forest lands. These rights had been transferred by Chisholm to one of his corporations, and then from corporation to corporation, each transfer resulting in an increased valuation of the mining claims.

Chisholm and Glick were indicted, and Chisholm pled guilty prior to trial. Chisholm had previously been convicted in a federal criminal proceeding in Portland, Oregon, on charges apparently arising from other acts involving the same fraudulent plan.

The actual value of Chisholm's mineral rights, and the nature of his title to them, were major issues at Glick's trial. The testimony of the Government's expert, a geologist with the Department of Interior, indicated that the value of the claims was far below that shown on the financial statements. He stated that Chisholm faced insurmountable obstacles in any effort to mine the limestone or to obtain the fee simple title necessary for a proposed real estate development.

Glick testified that before and during the time he had prepared the financial statements, four appraisals had been made that substantially supported the values contained in the statements. Glick was unable to remember the authors or the details of the two earliest appraisals. The third report was prepared by a real estate appraiser, Smith, who was not a geologist and had an interest in the Chisholm business enterprises. Glick testified that he had not accepted the Smith appraisal at face value because Smith was not independent. Glick stated that Smith's results had been verified by another independent real estate appraiser, Goldring, who had based his evaluation on facts and figures supplied by Smith. Although the Smith report was admitted into evidence, Glick was unable to produce the Goldring report.

Chisholm had obtained a fifth appraisal in 1978 in preparation for his Portland trial. This preliminary evaluation, from a geologist named Stickel, stated that one of the mineral claims contained sufficient limestone deposits to warrant consideration of commercial mining. This appraisal was admitted into evidence by stipulation of the parties, although Stickel himself did not testify.

The Government presented expert testimony that the financial statements prepared by Glick contained blatant violations of basic accounting principles. Glick himself had conceded that no lending institution would furnish a loan based on the Chisholm financial statements. Glick testified that he knew Chisholm was obtaining fees by presenting the financial statements to people, claiming that the documents could be used to back up loan applications. However,

Glick testified that he believed the limestone deposits were of considerable value to Chisholm, and that he thought Chisholm's loan packaging business was bona fide when he prepared the financial statements.

II. THE INTENT INSTRUCTIONS

"Mail fraud is a specific intent crime. The government is required to prove beyond a reasonable doubt that the defendant intended to defraud." United States v. Martin-Trigona, 684 F.2d 485, 492 (7th Cir.1982). The district court gave the following instruction on deliberate ignorance as part of its charge on the type of knowledge which satisfies the requisite fraudulent intent:

"However, the element of knowledge may be established by proof that a defendant deliberately closed his eyes to what otherwise would have been obvious to him. In other words, the requirement that the defendant has acted knowingly does not mean that the defendant needed to have positive knowledge. If the defendant failed to have positive knowledge only because he conscientiously avoided acquiring it, the requirement of knowledge is satisfied."

Rec., vol. VIII, at 673. On appeal, Glick contends that this instruction is an erroneous formulation of the law because it permitted the jury to convict upon proof of a lesser degree of knowledge than that required by the statute.

In recommending the use of a deliberate ignorance instruction, this court has pointed out that "[w]hile negligence is not sufficient to charge a person with knowledge, one may not wilfully and intentionally remain ignorant of a fact, important and material to his conduct, and thereby escape punishment. The test is whether there was a conscious purpose to avoid enlightenment." Griego v. United States, 298 F.2d 845, 849 (10th Cir.1962) (footnotes omitted). Thus, the type of instruction at issue here may be given when the evidence points to deliberate ignorance and conscious avoidance of actual knowledge. See United States v. Garzon, 688 F.2d 607, 609 (9th Cir.1982); United States v. Ciampaglia, 628 F.2d 632, 642-43 (1st Cir.), cert. denied, 449 U.S. 956, 101 S.Ct. 365, 66 L.Ed.2d 221, 449 U.S. 1038, 101 S.Ct. 618, 66 L.Ed.2d 501 (1980); United States v. Brien, 617 F.2d 299, 312 (1st Cir.), cert. denied, 446 U.S. 919, 100 S.Ct. 1854, 64 L.Ed.2d 273 (1980); United States v. Batencort, 592 F.2d 916, 918 (5th Cir.1979).

Glick argues that giving a deliberate ignorance instruction was inappropriate in light of the evidence presented at trial. This argument is apparently based on Glick's assertion that the record does not contain sufficient evidence of his willful ignorance in the face of facts known to him that would have made obvious the existence of the fraudulent scheme.

In denying Glick's motion for directed verdict, the trial judge determined that the instruction was proper because a reasonable juror could find that Glick had intentionally remained ignorant despite his subjective awareness of facts plainly indicating the fraudulent nature of Chisholm's business. The court specifically noted evidence of Glick's numerous blatant violations of accounting principles and auditing standards, his belief in 1975 that the mineral claim evaluations were unrealistic, his acknowledgment that no one would give a loan on the basis of the financial statements, his knowledge that fees were obtained for packaging loans which would likely not go through, and his knowledge of the nature of the corporate financial activities. This evidence is sufficient to enable a jury to find beyond a reasonable doubt that Chisholm's loan packaging business was a fraudulent scheme from its inception, and that Glick either knew it or deliberately avoided acquiring positive knowledge. Accordingly, we conclude that an instruction on deliberate avoidance was appropriate. See Griego, 289 F.2d at 849.

Glick also argues that even if a deliberate ignorance instruction was warranted, the form of the instruction given in this case was inadequate because it failed to In response to counsel's general objection to the instruction, the district court repeatedly offered to modify the instruction if counsel wished to propose a language change. ³ Defense counsel responded that his objection was not to the language of the instruction, but to the propriety of such an instruction in any form. Because Glick failed to suggest to the trial court the language he now claims was erroneously omitted, we may reverse only if the omission constitutes plain error. Fed.R.Crim.P. 52(b).

                require the jury to find that "the defendant was subjectively aware of a high probability of the existence of the fact whose knowledge is imputed, and that knowledge of that fact may not be imputed if the defendant actually believed that such fact did not exist."    Brief of Appellant at 17.  To insure that a defendant is only convicted if his ignorance is willful, rather than negligent, the preferable form of the instruction informs the jury, in addition to the charge given in this case, "(1) that the required

...