U.S. v. Kneeland

• Decision Date: 07 January 1998
• Docket Number: No. 96-2158,96-2158
• Citation: 148 F.3d 6
• Parties: UNITED STATES, Appellee, v. Thomas E. KNEELAND, Jr., Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 6

148 F.3d 6

UNITED STATES, Appellee, v. Thomas E. KNEELAND, Jr., Defendant, Appellant.

No. 96-2158.

United States Court of Appeals, First Circuit.

Heard Jan. 7, 1998.

Decided June 23, 1998.

Michael C. Bourbeau, with whom Bourbeau & Bourbeau, Bonilla, Tocchio & Floyd, LLP was on brief, for appellant.

Daniel S. Goodman, Attorney, with whom Jonathan L. Kotlier, Assistant United States Attorney, and Donald K. Stern, United States Attorney, were on brief, for appellant.

Before STAHL, Circuit Judge, CYR, Senior Circuit Judge, and SHADUR, ^* Senior District Judge.

STAHL, Circuit Judge.

Following a jury trial, defendant-appellant Thomas E. Kneeland, Jr. was convicted of conspiracy, mail fraud, wire fraud, money laundering, and criminal forfeiture for his role in a fraudulent scheme to solicit borrowers to pay "advance fees" in connection with loan transactions that defendant never intended to consummate. Kneeland appeals his convictions, asserting that the district court unconstitutionally deprived him of his Sixth Amendment right to counsel. He also challenges his sentence on various grounds. We affirm the convictions and the sentence.

I.

From 1992 until March 1994, Thomas E. Kneeland, Jr. and his partner, Brian Kelly, ran an "advance fee" scheme in which they falsely represented themselves as experienced lenders backed by Japanese and Greek investors. Under this pretense, they solicited clients needing financing for commercial real estate projects. Kneeland and Kelly furthered the scheme through a corporation named Nippon-American Funding, Inc. ("Nippon"), which Kneeland had previously formed with two other individuals, and through a Canadian corporation called Societe Kokusai Les Investissements, S.A. ("Societe Kokusai").

With the object of enticing victims to pay advance fees in the expectation of receiving commercial loans, Kneeland and Kelly advertised in major newspapers, seeking both borrowers and brokers. Potential borrowers submitted to Kneeland and Kelly or to a broker a description of the project for which they sought financing, and shortly thereafter Kneeland or one of his brokers responded, telling the would-be borrowers that they had received preliminary approval from the Nippon Board of Directors or from the Nippon Finance Committee. In fact, neither board existed. Subsequently, the borrowers met with Kneeland and Kelly. Within a few days after that meeting, Nippon (or Societe Kokusai) sent the borrowers contracts of acceptance, informing them that the only other requirements before funding were site inspections, underwriting, and due diligence reports, for which there would be a fee. If borrowers questioned the amount of the fee as unreasonably high, Kneeland and Kelly told them that part of the fee went toward "block[ing] out funds with the investor" until the underwriting process was completed.

After site inspections and due diligence had been conducted, Kneeland and Kelly issued borrowers commitment letters and charged "commitment fees," which were described in the letters as being "fully refundable at closing from the loan proceeds." The agreements also provided, however, that the fee "shall be deemed to be earned immediately by the lender in consideration of the preparation of the issuance of the commitment." In addition, if there were no closing, the commitment fee would not be refunded. Kneeland and Kelly led borrowers to believe that they would obtain funding within thirty days if they paid the commitment fee.

Kneeland and Kelly then employed various strategies to enable Nippon or Societe Kokusai to back out of the promised loan transactions without refunding the borrowers' fees. Seventeen groups of borrowers fell prey to the scheme, sending to Kneeland and Kelly thirty-eight checks totaling $593,520.71. Kneeland and Kelly did not endeavor to obtain funding for any of the borrowers until the FBI had begun an investigation of the scheme.

Kneeland was arrested on March 31, 1994, and his assets were civilly seized at the same time. Although the district court appointed an attorney to represent him, he dismissed that attorney as well as two others subsequently appointed by the court. After the third dismissal, the district court declined to appoint a fourth attorney. Appearing pro se, Kneeland was tried before a jury in the United States District Court for the District of Massachusetts, and was convicted on one count of conspiracy, in violation of 18 U.S.C. § 371; three counts of mail fraud, in violation of 18 U.S.C. § 1341; twenty-nine counts of wire fraud, in violation of 18 U.S.C. § 1343; twenty-nine counts of money laundering, in violation of 18 U.S.C. § 1956(a)(1)(A); twenty-five counts of money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B); eight counts of money laundering, in violation of 18 U.S.C. § 1957(a); and one count of criminal forfeiture, in violation of 18 U.S.C. § 982. The district court, pursuant to section 3B1.1 of the sentencing guidelines, applied a four-level enhancement to the fraud counts for Kneeland's role as a leader or organizer in the offenses and rejected Kneeland's request that the fraud and money laundering counts be grouped together under U.S.S.G. § 3D1.2. It sentenced him to ninety-seven months' imprisonment, to be followed by three years' supervised release, and ordered him to pay restitution of $576,895.71 and, pursuant to 18 U.S.C. § 3013, a special assessment of $4,750.

II.

On appeal, Kneeland argues (1) that he was denied his Sixth Amendment right to effective assistance of counsel when the district court declined to appoint a fourth attorney to represent him at trial; (2) that the district court erred in failing to group together the fraud and money laundering charges under U.S.S.G. § 3D2.1; (3) that the court erred in applying U.S.S.G. § 3B1.1, which permits a four-level enhancement if a defendant was an organizer or leader in an offense; and (4) that there was insufficient evidence as a matter of law to sustain his convictions for money laundering under 18 U.S.C. § 1956(a)(1)(B).

1. Effective Assistance of Counsel

Kneeland asserts that, because he never implicitly or explicitly waived his Sixth Amendment right to be represented by counsel, the district court denied him that right by declining to appoint a fourth attorney after he had requested the dismissal of the first three, thereby forcing him to represent himself. In particular, he asserts that the district court erred by failing to make an adequate inquiry into his desire and ability to represent himself and his awareness of the consequences of proceeding pro se. Under such circumstances, he contends, he cannot be regarded as having clearly and unequivocally waived his right to counsel. Additionally, he argues that the district court abused its discretion in refusing to delay the trial after his third attorney had been dismissed and in declining to appoint standby counsel over his own objections to such an appointment. Kneeland's arguments are without merit.

After his arrest, Kneeland at first stated that he preferred to proceed pro se, rather than through counsel appointed under the Criminal Justice Act, see 18 U.S.C. § 3006A. Apparently, after thinking better of it, he later informed the court that he wished to have appointed counsel. The court then appointed Charles P. McGinty, a federal public defender, to represent him. On October 17, 1994, three weeks prior to the scheduled trial date, Kneeland filed a motion captioned "motion to dismiss counsel, recuse judge & appoint new counsel." The following week, the district court denied the recusal motion, granted Kneeland's request for new counsel, allowed McGinty to withdraw from the case, and set a new trial date of May 22, 1995.

On December 6, 1994, the court appointed Max W. Beck, an attorney on the Criminal Justice Panel, as Kneeland's new counsel. On May 2, 1995, fewer than three weeks prior to his new trial date, Kneeland filed a motion for Beck to withdraw as his attorney, claiming that Beck had improperly "refus[ed] to file a motion for double jeopardy." The district court directed Kneeland to undergo a psychiatric examination to determine his mental competency. After a psychologist reported that Kneeland's difficulties with his counsel were not the product of a mental defect or illness and that Kneeland was competent to stand trial, the court appointed a third attorney, Roger A. Cox. Trial was rescheduled for January 2, 1996.

On August 11, 1995, Cox appeared as Kneeland's new lawyer, and, on November 15, 1995, Kneeland sought termination of Cox's services. On December 13, 1995, Kneeland requested a "Monsanto hearing" in order to obtain properties subject to the parallel civil forfeiture proceeding to pay for his own attorney. On December 19, 1995, the district court allowed Cox to withdraw as Kneeland's attorney and postponed the trial until January 22, 1996, but told Kneeland that no additional counsel would be afforded him. Although the court suggested that Cox act as standby counsel if Kneeland decided to proceed pro se, Kneeland refused that offer. The district court postponed the trial another week to allow this court to consider Kneeland's interlocutory appeal of the district court's denial of his motion on an issue unrelated to this appeal, but it denied his request for an additional continuance of 125 days. On January 25, 1996, the court denied Kneeland's motion for a so-called Monsanto hearing regarding the funds subject to civil forfeiture. Kneeland then proceeded to trial without the assistance of counsel. ¹

Because of the disadvantages to a defendant that inure from pro se representation, a defendant must "knowingly and intelligently" waive his right to counsel before he may be permitted to proceed pro se. Johnson v. Zerbst, 304 U.S. 458, 464-65, 58 S.Ct. 1019, 82 L.Ed. 1461 (1938). A defendant's decision in this regard is reasonably regarded as knowing and intelligent if he has been "made...