U.S. v. Mikolajczyk

• Decision Date: 10 March 1998
• Docket Number: No. 96-50384,96-50384
• Citation: 137 F.3d 237
• Parties: 148 Fed. R. Evid. Serv. 1410 UNITED STATES of America, Plaintiff-Appellee, v. Clarence Ray MIKOLAJCZYK, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 237

137 F.3d 237

148 Fed. R. Evid. Serv. 1410

UNITED STATES of America, Plaintiff-Appellee, v. Clarence Ray MIKOLAJCZYK, et al., Defendants-Appellants.

No. 96-50384.

United States Court of Appeals, Fifth Circuit.

March 10, 1998.

Rehearing and Suggestion for Rehearing En Banc Denied May 6, 1998.

Richard L. Durbin, Jr., Asst. U.S. Atty., Diane D. Kirstein, San Antonio, TX, for Plaintiff-Appellee.

Michael James O'Connor, San Antonio, TX, Shirley A. Ehrlich, San Antonio, TX, for Defendant-Appellant.

Appeal from the United States District Court for the Western District of Texas.

Before JONES and SMITH, Circuit Judges, and FITZWATER, ^* District Judge.

JERRY E. SMITH, Circuit Judge:

Appellants, convicted of mail fraud following a jury trial, raise several issues on appeal. Finding no reversible error, we affirm. In so doing, we find it necessary to discuss only a few issues and affirm on the remaining issues without discussion.

I.

Between October 1993 and May 1995, the defendants made several attempts to pass off fraudulent "Certified Money Orders" (CMO's) as legitimate money orders. The scheme was initiated by Billy Mack O'Neill and his partners in USA First, an alleged non-profit organization, who put together packets each containing six CMO's and information on how to use them. In exchange for the $300 price of the packet, buyers could write six CMO's, in any amount. Buyers were asked to provide almost no information upon receiving or using the CMO's, although most were asked for their name, and some gave their phone numbers.

The packets contained the following statement: "Warning. Just like the children's story about the emperor's new clothes, do not mention that your current credit money, the negotiable instrument, is pretend money. Only speak of the bank's negotiable instruments as being pretend money." It warned that the money orders would not "work for everyone" and that there was no "guarantee of a win against thieves and robbers dressed in bankers' or even judicial clothing."

The scheme apparently was designed to express dissatisfaction with the banking system and to obtain cash from buyers of the CMO's. In addition to the comment about thieves and robbers, the packet said "In God we trust, in banksters we bust!" and contained a cartoon about the banking system in which bankers stated, "With our system, it is easy to rob the people. All we have to do is lend paper credit and charge interest."

There is no indication that O'Neill, First USA, or the fictitious business they created under the name of O.M.B. W.D. McCall ever intended to make payment on any of the CMO's. The instructions in the packet and on the CMO's required the individual who received a CMO as payment to send it to W.D. McCall's post office box. Upon receiving the CMO, First USA would send out a fake "Certified Banker's Cheque" (CBC). W.D. McCall never paid any of the obligations created by the CMO's.

The indictment named eight individuals: Billy O'Neill (who initiated the scheme), Michael Kearns, Earl Forrester, Wayne Slater, Vicki Slater, Patricia Koehler, Oliver Paulson and Clarence Mikolajczyk. Kearns, Forrester, and Paulson do not appeal their convictions. Except for the first count, which referred to the entire scheme of mailing fraudulent CMO's, each count of the indictment involved a separate incident in which a CMO was used. Several defendants used CMO's to purchase motor vehicles from individuals, using CMO's to pay off existing bank loans on those vehicles; others used the instruments to pay off credit card balances at various banks.

Appellants allege they were not aware that use of the CMO's was illegal. They claim they thought the CMO's were a credit-for-credit exchange. Their claim lacks support in the evidence, because they never provided financial information similar to that generally provided to a lending institution upon establishing a line of credit. Nor did they sign or receive any documentation about this alleged line of credit. Furthermore, the statements in the information packet strongly suggested the CMO's were not a legitimate form of payment.

Appellants' expert testified that these instruments were not intended to be used to obtain anything of new or current value, and that attempts to do so "come pretty close to fraud." He stated that with instruments like these CMO's, there should be full disclosure by the user of the fact that the CMO is backed by private money, so that the recipient can make a determination of its worth. Yet, none of the appellants disclosed any kind of credit-for-credit exchange.

II.

A.

Wayne Slater, Vicki Slater, and O'Neill (the "represented defendants") argue that they were prejudiced by the actions of their pro se codefendants, Koehler and Kearns, and did not have the opportunity for a fair trial. The defendants moved to sever on numerous occasions, but each request was denied. Their argument is plausible, but ultimately fails the strict requirements imposed by abuse-of-discretion review.

The rule that persons indicted together should be tried together carries great weight where, as here, persons are charged with committing the same conspiracy. United States v. Archer, 733 F.2d 354, 360 (5th Cir.1984). Joinder is the rule rather than the exception, United States v. Chagra, 754 F.2d 1186, 1188 (5th Cir.1985), and in fact, the defendants have failed to cite a single case in which this court reversed a conviction for failure to sever.

The denial of a motion to sever is reviewed only for abuse of discretion. Zafiro v. United States, 506 U.S. 534, 539, 113 S.Ct. 933, 938, 122 L.Ed.2d 317 (1993); United States v. Faulkner, 17 F.3d 745, 758 (5th Cir.1994). Reversal is warranted only when the defendant demonstrates that the denial resulted in compelling prejudice against which the trial court was unable to afford protection. United States v. Thomas, 12 F.3d 1350, 1363 (5th Cir.1994).

B.

The pro se defendants, Kearns and Koehler, argued that their conduct was not illegal. They asserted that the CBC's were "backed by liens," and they offered an expert witness who testified that this was an appropriate form of negotiable instrument. This line of defense differed substantially from that offered by the represented defendants, all of whom conceded that the CMO's were worthless instruments, but argued that they believed them to be legal tender.

In addition to their technical argument about the legality of CMO's, Kearns and Koehler attempted to justify their conduct by attacking the monetary system. Koehler complained in her opening statement that "I asked the United States Attorney to explain what he meant by money, and he wouldn't explain it to me." Kearns continued this line of defense when cross-examining Postal Inspector Butler, taking issue with Butler's characterization of the CMO's as "fraudulent" and asking questions about the definition of money and the value of federal reserve notes. Defendants' attorneys observed that the jury found this line of defense irrelevant and annoying; one juror allegedly rolled her eyes every time Kearns spoke.

In addition, the pro se defendants may have alienated the jury through their hostile attitudes at trial. Kearns badgered Butler while he was on the stand, complaining that "it doesn't appear [Butler] knows too much," and "I'm asking you a simple question about your employer [ (whether the Postal Service is a corporation) ] and you don't even know the status." Kearns also accused Norman Summers, a former employee of USA First, of testifying "out of a vindictive heart." He asked Linda Hultgren, an employee of Capital One Financial Corporation, whether she was "looking to [the prosecutor] for him to answer the question for you." Objections to the argumentative nature of Kearns' questioning were made and sustained frequently during the part of the trial he attended.

Kearns did not limit his attacks to witnesses. He also interrupted the prosecutor's direct examination to tell the judge that a particular juror was asleep, an assertion the juror denied.

C.

After six days of disruptive trial tactics, Kearns disappeared. Given his active participation in the early days of the trial, his absence was conspicuous. He was tried and convicted in absentia.

The Sixth Circuit has held that severance is particularly appropriate when the evidence against an absent codefendant is much greater than that against a present defendant. See United States v. Davidson, 936 F.2d 856, 861 (6th Cir.1991). We need not consider adopting that reasoning, however, because Davidson is distinguishable. There, the defendant tried in absentia was charged with ten counts, while his present codefendant was charged with only one. The court believed that Davidson was prejudiced by the introduction of an overwhelming amount of uncontested incriminating evidence, even if that flood of evidence pertained to his codefendant and not to himself.

Here, in contrast, while Kearns was named in more counts than were the other defendants, and the evidence of his guilt was slightly stronger, plenty of factual and legal issues remained for the other defendants to dispute. The jury was not overwhelmed with uncontested, incriminating evidence, but instead witnessed a normal trial in which the prosecutor's case received no rebuttal with respect to one of several nearly equivalent defendants. Finally, the district court gave an instruction designed to neutralize any negative effects of Kearns' departure on the jury's view of the case:

Members of the jury, Michael Kearns is not with us. It appears that he has decided to voluntarily not continue to participate in the proceeding. So, I have decided that we will go forward with the trial without Mr. Kearns being here. The trial will continue as to all eight accused. The fact that Mr. Kearns has decided not to be present and participate any further should not be interpreted by you, in any way, as to effect [sic ] or to prejudice any of the...