U.S. v. Grimes

• Decision Date: 26 June 1992
• Docket Number: 91-6330,Nos. 91-6227,s. 91-6227
• Citation: 967 F.2d 1468
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Kenneth A. GRIMES; and Diana McGlynn, a/k/a Diana Lynn Hopkins, a/k/a Diana Lynn Grimes, Defendants-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1468

967 F.2d 1468

UNITED STATES of America, Plaintiff-Appellee, v. Kenneth A. GRIMES; and Diana McGlynn, a/k/a Diana Lynn Hopkins, a/k/a Diana Lynn Grimes, Defendants-Appellants.

Nos. 91-6227, 91-6330.

United States Court of Appeals Tenth Circuit.

June 26, 1992.

Michael G. Katz, Federal Public Defender, and Jill M. Wichlens, Asst. Federal Public Defender, Denver, Colo., on the briefs, for defendant-appellant Kenneth A. Grimes.

William P. Earley, Asst. Federal Public Defender, Oklahoma City, Okl., for defendant-appellant Diana Lynn McGlynn.

Ted A. Richardson, Asst. U.S. Atty. (Timothy D. Leonard, U.S. Atty., with him on the brief), Oklahoma City, Okl., for plaintiff-appellee.

Before SEYMOUR, SNEED, ^* and MOORE, Circuit Judges.

JOHN P. MOORE, Circuit Judge.

Diana McGlynn and Kenneth Grimes appeal from convictions for conspiracy to commit malicious burning (arson), aiding and abetting each other in the commission of malicious burning, and mail fraud. Although they have brought separate appeals, the cases are joined here for disposition because the defendants were tried together. ¹ At issue is the sufficiency of the evidence, the guideline sentencing of Ms. McGlynn, and whether the district court properly ordered restitution. ² We conclude the evidence is sufficient to sustain the convictions of both defendants, and Ms. McGlynn's sentence was proper. Because the record indicates neither defendant has present financial resources nor a reasonable expectation of future financial ability to pay the restitution ordered by the district court, we vacate that order but otherwise affirm the decisions of the district court.

The convictions of both defendants arise from the malicious burning of a business they ostensibly operated in Ponca City, Oklahoma, called the Marvel Makery and their attempt to fraudulently obtain insurance payments for the destruction of that business. Both defendants contend the evidence was insufficient because the government failed to prove they knowingly agreed to ignite, or actually ignited, the fire that destroyed Marvel Makery.

The government's case was entirely circumstantial. Yet, when viewed in a light most favorable to the government, the logical inferences which can be drawn from those circumstances support the convictions.

Although married to Robin McGlynn, Diana McGlynn adopted the family name of her codefendant, Kenneth Grimes, and lived with him in the months preceding the events of this case. Not only did the couple live together and hold themselves out to be married, but they also appeared to jointly operate Marvel Makery.

While Ms. McGlynn instructed employees and made other decisions, Mr. Grimes had full access to the business, delivering keys to employees so they could open the store, regularly picking up mail, and taking cash from the "till" for his own use. Finally, the insurance policy about which this case revolves was issued in the names of both defendants.

In short, there was ample evidence from which the jury could glean that both defendants acted together in operating Marvel Makery and managing its affairs. Indeed, that fact was not seriously contested.

The evidence also establishes in the months preceding the fire, Marvel Makery was in severe financial straights. ³ Inventories were not replenished; the physical appearance of the business deteriorated; creditors called continually to collect upon unpaid accounts or worthless checks; the SBA loan was two months delinquent, and the lender threatened foreclosure; employees were required to take their wages in trade rather than cash; the rent was delinquent; and daily sales were virtually nonexistent. ⁴

The personal finances of both defendants were equally dismal. Judgments were recorded against Ms. McGlynn; her checking account was closed after months of overdrafts; her car was repossessed; and her only income was from a $2,200 monthly allowance she received from Mr. McGlynn. Tax records show Mr. Grimes' income was negligible, and he had no real source of income other than that provided by Ms. McGlynn out of her monthly stipend.

Although Marvel Makery's previous fire insurance policy in the face amount of $113,000 was cancelled for nonpayment of premiums, about nine days prior to the fire, Ms. McGlynn contacted her insurance agent to obtain a new policy. When the agent questioned her request to increase the coverage to $300,000 with a $250 deductible, Ms. McGlynn replied she was expecting a large delivery of merchandise for Christmas. She also stated her father was investing in the business and he requested the increase. Both reasons were proven untrue. Moreover, the agent testified the request of the low deductible was unusual because, with the coverage so high, most business people would have opted for the significant saving in premium that could be achieved with a higher deductible. He reasoned for most people the risk of loss would be low so the benefit of a higher deductible would be attractive.

Thereafter, a series of remarkable events took place. Within one week of the fire, the following occurred:

1. Ms. McGlynn obtained the policy and made a payment in cash for approximately one-sixth of the first year's premium;

2. Three to five days before the fire, Ms. McGlynn called the insurance agent to confirm the coverage;

3. Ms. McGlynn called a customer who was buying a piece of equipment on time and told her to remove the equipment from the store even though a substantial balance remained on the purchase price;

4. Bolts of fabric, boxes of yarn, and craft books previously located in the store were seen in the home of Ms. McGlynn's mother;

5. The day before the fire, a TV set and a copier were removed from the store;

6. The night before the fire, Mr. Grimes removed merchandise racks and boxes containing heavy material from the store, and Ms. McGlynn stated to a neighbor she and her mother were on the premises at a late hour because they were "cleaning out" the building.

Ponca City fire fighters responded to a fire call at Marvel Makery between 4:00 and 5:00 a.m. on September 8, 1989. At approximately 6:00 a.m., Mr. Grimes' mother went to defendants' home to inform them about the fire, but, when she did so, they did not seem surprised. On the next evening, Ms. McGlynn opined to a neighbor that the fire was started by her landlord's son who poured methanol though the ceiling and ignited it with a slowly burning candle.

Expert testimony established that the fire had an incendiary origin and was ignited by a "light" accelerant similar to alcohol or methanol. The accelerant could not be identified because it was totally consumed by combustion, leaving no traces.

Five days after the fire, Ms. McGlynn told an investigating insurance agent that the SBA loan was up-to-date and, because the business was so nice, several people had inquired about buying it. When questioned why she requested coverage in the amount of $300,000, she replied the figure was based on an estimate of the value of the store's inventory, equipment, and fixtures. She further claimed that the agent who sold her the policy suggested the coverage. ⁵ Ms. McGlynn also told the agent the business had been growing over the previous four to five years. These statements were all blatantly false.

On September 21, the same agent met with Mr. Grimes. He represented to the agent that the business was in satisfactory condition.

On November 10, 1989, an insufficient proof of loss for the Marvel Makery was received through the mail by the insurance company. Although signed by both defendants, the document was returned because it did not have incorporated an itemization of the lost inventory.

On January 19, 1990, a second proof of loss, again signed by both defendants, was received through the mail. The return address on the mailer included the name, "K. Grimes." A written inventory was attached to the document which later proved to be identical to the store's 1986 inventory. The total claim was in the amount of $159,676.99 for inventory, equipment, fixtures, and personal property.

An investigation of the proof of loss was initiated during which Ms. McGlynn gave a sworn deposition. She reiterated her previous claims that the SBA loan was current immediately before the fire and that the business had been in good financial condition. She also stated she had received regular deliveries of merchandise; she had not been having personal financial difficulties; and she believed the fire had been caused by an electrical problem. She claimed that she chose to pay her suppliers with cash on delivery and that her creditors had not forced her to do so. All these representations were patently untrue.

Approximately a month later, the deposition of Mr. Grimes was taken. He again claimed the business appeared to him to be growing. When questioned, he added he had taken cash from the register only once or twice. Although he was not asked whether he had removed anything from the premises the night before the fire, he admitted removing trash and a belonging of Ms. McGlynn's mother the day before the fire. These statements constituted a substantial dissembly.

In sum, it was established that both defendants, living on the largess of Ms. McGlynn's husband, in substantial debt, with a business that barely existed with unsalable inventory and facing foreclosure, schemed to obtain almost $160,000 after the business was destroyed in a malicious fire. From this, the jury was justified in inferring the fire was set to obtain the insurance proceeds. It was...