U.S. v. Kemp

• Decision Date: 27 August 2007
• Docket Number: No. 05-3561.,No. 05-3477.,No. 05-4717.,No. 05-4846.,No. 05-4623.,05-3477.,05-3561.,05-4623.,05-4717.,05-4846.
• Parties: UNITED STATES of America v. Corey KEMP, Appellant United States of America v. Janice Renee Knight, Appellant United States of America v. Lavan Hawkins, Appellant United States of America v. Stephen M. Umbrell, Appellant United States of America v. Glenn K. Holck, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

500 F.3d 257

UNITED STATES of America v. Corey KEMP, Appellant United States of America v. Janice Renee Knight, Appellant United States of America v. Lavan Hawkins, Appellant United States of America v. Stephen M. Umbrell, Appellant United States of America v. Glenn K. Holck, Appellant.

No. 05-3477.

No. 05-3561.

No. 05-4623.

No. 05-4717.

No. 05-4846.

United States Court of Appeals, Third Circuit.

Argued June 5, 2007.

Filed August 27, 2007.

Lloyd G. Parry, Esq., Davis, Parry & Tyler, William R. Spade, Jr., Esq., Philadelphia, PA, for Appellant Corey Kemp.

Nino V. Tinari, Esq., Philadelphia, PA, for Appellant Janice Renee Knight.

Timothy K. Lewis, Esq. (Argued), Schnader, Harrison, Segal & Lewis, Washington, DC, Elizabeth K. Ainslie, Esq., Nancy Winkelman, Esq., Bruce P. Merenstein, Esq., Schnader Harrison, Segal & Lewis, Philadelphia, PA, Nathaniel E. Jones, Esq., James H. Fields, Esq., Jones & Associates, Baltimore, MD, for Appellant Lavan Hawkins.

Lawrence S. Lustberg, Esq. (Argued), Kevin McNulty, Esq., Gibbons, P.C., Newark, NJ, for Appellant Stephen M. Umbrell.

Kevin H. Marino, Esq. (Argued), John D. Tortorella, Esq., Marino Tortorella, Chatham, NJ, for Appellant Glenn K. Holck.

Robert A. Zauzmer, Esq. (Argued), Office of the United States Attorney, Philadelphia, PA, for Appellee United States of America.

BEFORE: SMITH and COWEN, and SILER^*, Circuit Judges.

OPINION

COWEN, Circuit Judge.

After a wide-ranging investigation into corruption in Philadelphia city government, the federal government obtained convictions against Corey Kemp, the former treasurer of Philadelphia; Glenn G. Holck and Stephen M. Umbrell, former executives of Commerce Bank; La-Van Hawkins, a businessman from Detroit; and Janice Renee Knight, the nominal owner of a printing company named RPC Unlimited. The appellants challenge their judgments of conviction on a variety of fronts. For the reasons discussed below, we will affirm.

I.

A. The Charges

On November 2, 2004,¹ a grand jury in the Eastern District of Pennsylvania returned a 63-count indictment against Kemp, Holck, Umbrell, Hawkins, Knight, Ronald White, a Philadelphia-based lawyer with close ties to city government,² and four others whose cases proceeded separately. The centerpiece of the indictment charged Kemp, White, Holck, Umbrell, Knight, and Hawkins with conspiracy to commit honest services fraud in violation of 18 U.S.C. § 371. According to the indictment, White acquired control over Kemp's decision-making by making corrupt payments and gifts to Kemp, and then used that control to direct city contracts to companies that he favored. The indictment alleged that Hawkins aided this arrangement by funneling bribe money from White to Kemp, and that Knight, White's girlfriend, took advantage of White's control over Kemp by accepting a steady stream of city business through RPC Unlimited. Moreover, the indictment charged Holck and Umbrell with participating in the conspiracy by extending, through Commerce Bank, otherwise-unavailable loans to Kemp in exchange for preferential treatment from Kemp on official matters.

In addition to the conspiracy charge, the indictment also charged the defendants with numerous counts of honest services mail fraud, honest services wire fraud, extortion, and perjury. Of these charges, four groups are relevant to this appeal. First, Kemp was charged with two counts of honest services mail fraud for his role in an asset-locator business that he created and operated with his friend, Rhonda Anderson. Second, Holck and Umbrell were charged with eight counts of honest services wire fraud concerning their role in corrupting Kemp. Third, Hawkins was charged with two counts of aiding and abetting wire fraud, concerning his transfer of money to Kemp. Fourth, Hawkins was charged with four counts of perjury stemming from false statements that Hawkins allegedly made while testifying before a grand jury investigating this case.³

B. The Government's Evidence⁴

Kemp, Hawkins, Knight, Holck, and Umbrell proceeded together to trial. Opening statements began on February 22, 2005, and the government presented its case over the next six weeks. Central to the government's case were tape recordings of scores of conversations between the defendants.

1. Evidence Concerning Kemp

The government overwhelmingly proved that White showered Kemp with gifts⁵ and that Kemp permitted White to wield an untoward influence in selecting which companies would be selected for⁶ or excluded from⁷ bond teams.⁸ Kemp and White's relationship was accurately encapsulated by Kemp's statement, after informing White that White would be paid $35,000 to $40,000 for a city contract, "[Y]ou got your boy sitting in the Treasurer's seat, man!" (App. at 12473.)

The government also presented evidence concerning the asset-locator business that Kemp operated with his friend Anderson. Anderson testified that in November 2002, Kemp told Anderson that the treasurer's office had received a request from a company for a list of bondholders whose bonds had matured but who had not collected their money. Kemp told Anderson that the two of them should create a business offering the same service. Kemp and Anderson hoped to get paid by the bondholders for facilitating their recovery; Kemp and Anderson agreed that Kemp would receive 40% of the proceeds. Kemp "said that he would have to be paid in cash and that no one could really know about his interest in it because he was treasurer." (App. at 9006.) According to Anderson, Kemp would receive his share for providing the list of bondholders and generating the forms that had to be filed to permit the banks to pay on the bonds. Anderson ultimately initiated this business, using a company that she co-owned with another friend. She collected fees of $3,700 and $1,000, and paid Kemp, in cash, a total of $1,300 for his services.

2. Evidence Concerning Holck and Umbrell

The government showed that Holck and Umbrell, as executives of Commerce Bank, worked mightily to earn contracts and increase cash deposits from Philadelphia.⁹ At the same time that they were soliciting this business, Holck and Umbrell extended five different loans to Kemp. The government contrasted Commerce's amenability to Kemp once he became treasurer to the fact that just before Kemp took that position, in September 2001, Commerce rejected Kemp's application for a $2,000 line of credit with a form letter. It was the government's position that Holck and Umbrell extended these loans to Kemp for the purpose of influencing his decision-making, while Holck and Umbrell claimed that the loans were made in the ordinary course of business. The government's evidence concerning these loans may be summarized as follows:

First, the government presented testimony demonstrating that Kemp introduced Paul Schnapp, a member of his family, to Umbrell, and requested a $10,000 loan for Schnapp. Schnapp had filed for bankruptcy two years earlier, and his application for a similar loan had recently been rejected by Wachovia. Commerce required Schnapp's wife, Teresita, a recent immigrant to the United States with almost no credit history, to co-sign the loan. Schnapp's loan application indicated that his income was $10,000 a month, but the only supporting documentation demonstrated income in the past month of $1,800. The branch manager wrote to a colleague that "this comes from the top" and was an "easy one," and Schnapp was approved for an unsecured $10,000 loan days after applying. (App. at 16548.)

Second, Commerce provided Kemp with mortgages that allowed him to purchase a $225,000 house with no money down. On November 4, 2002, Umbrell reported to the chairman of Commerce that Kemp had requested a mortgage and that Umbrell and a Commerce mortgage representative would meet with Kemp the following day. Umbrell did meet with Kemp; however, instead of a mortgage representative, the third member of the group was White. The next day, Umbrell approved Kemp's request to be pre-qualified for a $227,000 mortgage. However, Commerce Bank's policy was only to provide letters of pre-qualification to those individuals with credit scores of at least 680, and Kemp's scores ranged from 456 to 526. The government presented evidence that this was not an official Commerce pre-qualification form, but was a singular letter created by Umbrell to benefit Kemp.

The initial mortgage was formally approved on November 18, 2002 — before Kemp had even completed an application. Commerce submitted Kemp's application to its underwriting process, and the application was rejected by the program that Commerce used to rate loans. The report indicated that Kemp's and his wife's credit scores ranged from 440 to 528, that Kemp had a past-due liability to Wachovia of over $13,000, and that Kemp owed other creditors an additional $20,000. Thomas Conte, who was the operations manager of Commerce's mortgage department at the time Kemp's loan was processed, reviewed the underwriting results and also rejected the application. However, on December 3, 2002, Holck and Umbrell reversed Conte's decision and approved the loan. While the loan was initially contingent upon Kemp's repaying the $33,000 that he owed to creditors, a week later, Holck and Umbrell waived that condition. Conte testified that this process deviated from Commerce Bank's standard underwriting procedures.

On December 18, 2002, Commerce's consumer loan department began processing Kemp's second mortgage loan, for the additional 20% of the purchase price. Commerce's usual policy was to advance 100% financing only to individuals with a credit score of at least 650 and no charge-offs in the past seven years. Kemp clearly did not meet those requirements — his credit score, as calculated by this underwriting program, was 433, and his charge-off with Wachovia originated within the previous year — and the underwriting program rejected the application. Nevertheless, Umbrell authorized the loan on the...