U.S. v. Lanas
| Decision Date | 04 April 2003 |
| Docket Number | No. 01-3491.,No. 01-3248.,No. 01-3580.,01-3248.,01-3491.,01-3580. |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Clifford J. LANAS, Richard A. Hendershot, and James A. Battista, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
David E. Bindi (argued), Office of the U.S. Atty., Crim. Div., Chicago, IL, for Plaintiff-Appellee United States.
Susan Bogart (argued), Chicago, IL, for Defendants-Appellants Clifford J. Lanas and Richard A. Hendershot.
Susan Bogart (argued), Sheldon Sorosky, Kaplan & Sorosky, Chicago, IL, Joseph N. DiNatale, North Riverside, IL, for Defendant-Appellant James Battista.
Before FLAUM, Chief Judge, and COFFEY and DIANE P. WOOD, Circuit Judges.
Richard Hendershot, James Battista, and Clifford Lanas were convicted on mail fraud charges stemming from a scheme to defraud Hendershot's former employer, Alexsis Risk Management, Inc. ("Alexsis"), of its intangible right to his honest services. See 18 U.S.C. §§ 1341, 1346. The defendants now challenge their convictions and sentences on numerous grounds. We affirm in all respects.
We provide just a general description of the facts here; where additional facts are relevant to particular arguments, we mention them later. Alexsis is engaged in the business of third-party claims administration, handling mostly workers' compensation claims for large corporations. Defendant Hendershot worked in Alexsis's Chicago office from 1988 to 1994 as a claims adjuster. In this capacity he was responsible for evaluating workers' compensation claims filed against Alexsis clients and determining whether and to what extent the claims were compensable. This sometimes entailed hiring outside vendors, such as private investigators, to conduct surveillance on a given claimant.
The charges in this case stemmed from a scheme made possible by the free hand Hendershot had in selecting the vendors to perform Alexsis work. Basically, the scheme worked like this: Hendershot sent surveillance work to a number of vendors who in exchange agreed to give him a cash kickback for each job. Per agreement with Hendershot, these vendors oftentimes billed for two investigators when only one was used or billed for services that were never performed at all. Also, as an additional ploy, Hendershot frequently hired multiple investigators to perform surveillance on the same claimant. Then, Hendershot approved the invoices submitted by the vendors and sent the information necessary to process payment to Alexsis's headquarters in Michigan. Alexsis, totally unaware of the scam, cut and mailed checks from its headquarters; the vendors then deposited the checks while withdrawing enough cash to pay Hendershot the agreed-upon kickback.
According to Count 1 of the three-count indictment, from 1988 to 1994, Hendershot received kickbacks from the following six private investigation or security firms: John Herley and Associates, Thomas Herley and Associates, Professional Protection Services ("PPS"), Megco, Inc., Three Star Detective and Security Agency ("Three Star Detective Agency"), and Park Investigations and Detective Agency ("Park Investigations"). Count 1 also alleged that Hendershot tried to solicit kickbacks from the law firm of Stevenson, Rusin & Friedman ("the Rusin law firm"), though his attempts were ultimately unsuccessful. Defendant Battista, a political associate of Hendershot, was alleged to be the "bagman"—collecting the kickbacks for Hendershot while retaining a portion for himself—with respect to all the named vendors except John and Thomas Herley. Defendant Lanas was the owner of both Three Star Detective Agency and Park Investigations.
Counts 2 and 3 incorporated by reference the description of the scheme in Count 1, but each count listed a different mailing that was allegedly used to further the scheme. Count 1, which charged only Hendershot, alleged the mailing of an Alexsis check to Thomas Herley on July 7, 1994. Count 2 also charged Hendershot alone and claimed that a second Alexsis check was mailed to Thomas Herley on July 7, 1994. Finally, Count 3 charged all three defendants and alleged the mailing of an Alexsis check to Park Investigations on July 22, 1994.
Prior to trial Battista and Lanas moved to sever Counts 1 and 2 from Count 3, claiming that the scheme to defraud as it pertained to Lanas's Three Star Detective Agency and Park Investigations was separate from the scheme as it pertained to the other vendors named in the indictment. In addition all three defendants moved to strike as surplusage any references to transactions not involving Lanas or Thomas Herley-the vendors alleged to have received the mailings charged in the respective counts. The district court, however, agreed with the government that the indictment recited a single overarching scheme to defraud, which was not limited to the mailings specifically identified in the indictment, and so denied the motions.
The case proceeded to a joint trial, after which the jury found the defendants guilty as charged. Though the trial concluded in March 2000 and the presentence investigation reports were filed four months later, the defendants were not sentenced until August and September 2001. Still, the district court relied on the 1998 version of the Sentencing Guidelines, which gives courts discretion "in the atypical case" to sentence a defendant under a guideline other than the one referenced in the Statutory Index. Then, after determining that the commercial bribery and kickbacks guideline, U.S.S.G. § 2B4.1, was a better fit than the fraud and deceit guideline, id. § 2F1.1, the court sentenced the defendants as follows: Hendershot to 48 months', Battista to 27 months', and Lanas to 5 months' imprisonment. In addition all three defendants were ordered to serve 36 months of supervised release and to pay $233,720, $162,300, and $39,900 in restitution, respectively.
The defendants claim on appeal that they should not have been joined in a single indictment because they were not "alleged to have participated in the same act or transaction or in the same series of acts or transactions constituting an offense or offenses." Fed.R.Crim.P. 8(b). Whether there was misjoinder under Rule 8 is an issue we review de novo. United States v. Todosijevic, 161 F.3d 479, 483 (7th Cir.1998). Further, in assessing whether joinder was proper, we look solely to the face of the indictment and not to the evidence adduced later at trial. United States v. Alexander, 135 F.3d 470, 475 (7th Cir.1998).
We have interpreted the language "same series of acts or transactions" to mean "acts or transactions that are pursuant to a common plan or common scheme." Todosijevic, 161 F.3d at 484. The defendants maintain that the transactions involved here were not part of a common plan or scheme because "the evidence at trial demonstrated the evidentiary and temporal connections of the various `offenses' listed in the indictment ... ranged from moderate to quite slim." But as we have already said, whether there was misjoinder under Rule 8 is determined by looking solely at the allegations in the indictment; it is thus irrelevant what was shown by the proof at trial. Alexander, 135 F.3d at 475. And the allegations in this indictment demonstrate that joinder was proper. Each count recites facts that establish one unified scheme to defraud the same victim (Alexsis) through (1) the solicitation and receipt of kickbacks by Hendershot and Battista, (2) fraudulent tactics on the part of the six vendors named in the indictment, such as over-billing and billing for services that were never performed, and (3) Hendershot's hiring of each of the six vendors to conduct surveillance on the same claimant. See Todosijevic, 161 F.3d at 484 (). Hendershot was at the core of the scheme, and Battista was involved in every transaction except for those pertaining to John and Thomas Herley. Lanas's involvement was more minimal, but this does not, as the defendants would have us believe, negate the existence of a single scheme; all it means is that Lanas's liability is limited to the extent of his participation in the scheme. See United States v. Polichemi, 219 F.3d 698, 706 (7th Cir.2000) ().
The defendants also contend that Count 3 was misjoined with Counts 1 and 2 under Fed.R.Crim.P. 8(a), which permits joinder of offenses if they "are of the same or similar character or are based ... on two or more acts or transactions connected together or constituting parts of a common scheme or plan." This argument is a nonstarter—one, because the indictment does allege a common scheme or plan, and two, because the defendants concede in their appeal brief that all three counts are "the same or similar in type." Despite this concession the defendants seem to believe that the joinder can still be deemed improper because the "overall temporal proximity between [the offenses] was slight." But the case the defendants cite in support of their position, United States v. Coleman, 22 F.3d 126 (7th Cir.1994), holds precisely the opposite. According to Coleman, "the similarity of character of different offenses does not significantly depend on their separation in time," id. at 133, so counts of like class may be joined even if they are not temporally or evidentially related. Id. at 133-34; accord Alexander, 135 F.3d at 476.
Finally, to the extent the defendants are claiming that the district court should have severed their trials under Fed.R.Crim.P. 14, their argument fails. See United States v. Rollins, 301 F.3d 511, 517 (7th Cir.2002) (...
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