U.S. v. Montgomery

• Decision Date: 15 September 2004
• Docket Number: No. 03-30275.,No. 03-30269.,03-30269.,03-30275.
• Citation: 384 F.3d 1050
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. James MONTGOMERY, Defendant-Appellant. United States of America, Plaintiff-Appellee, v. Mary O'Connor, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1050

384 F.3d 1050

UNITED STATES of America, Plaintiff-Appellee, v. James MONTGOMERY, Defendant-Appellant.

United States of America, Plaintiff-Appellee, v. Mary O'Connor, Defendant-Appellant.

No. 03-30269.

No. 03-30275.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 13, 2004.

Filed September 15, 2004.

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Mark Bennett Weintraub, Assistant Federal Public Defender, Eugene, OR, for defendant-appellant James Montgomery.

Ronald H. Hoevet, Per C. Olson, Hoevet & Boise, Portland, OR, for defendant-appellant Mary O'Connor.

William E. Fitzgerald, Assistant United States Attorney, Eugene, OR, for the plaintiff-appellee.

Appeal from the United States District Court for the District of Oregon; Michael R. Hogan, Chief District Judge, Presiding. D.C. Nos. CR-99-60106-HO, CR-99-60106-3-HO.

Before: GOODWIN, FLETCHER, and TALLMAN, Circuit Judges.

GOODWIN, Circuit Judge.

Defendants James Montgomery and Mary Lou O'Connor were convicted by a jury of conspiring to commit mail fraud and committing mail fraud in violation of 18 U.S.C. §§ 371 and 1341. Montgomery challenges the district court's denial of his claim that the marital privilege excludes evidence of his wife's communications to him. Both defendants also challenge the indictment, the sufficiency of the evidence, the district court's admission of a summary exhibit and their sentences.

I.

In 1983, Montgomery and his wife, Louise Montgomery ("Mrs.Montgomery"), formed Sun Village Realty, Inc. ("Sun Village") a real estate and property management business in Sunriver, Oregon. The property management component of Sun Village, Summit Realty, entered into contracts with the owners of vacation houses in Sunriver, many of whom lived elsewhere. In return for a twenty five to thirty percent commission, Sun Village agreed to "diligently, and to the best of its abilities, rent the property[,] ... obtain new tenants as vacancies occur," and "clean[ ] the property each time a tenant checks out." The contract did not provide for, nor expressly prohibit, use of the vacation houses, or "units," by Sun Village, its employees or its guests without notice and compensation to the owner.

Reservations were processed at Sun Village's office. Clerks fielded calls and consulted the calendar board that hung in the office to determine which units were available. A reservation would be written on the calendar board and recorded in the computer. A software program generated a monthly statement ("owners' statement") that would be mailed to each owner, reporting the rental activity, receipts, charges and fees. Reservations not entered into the computer did not appear on the owner's statement. After a unit had been occupied, a housekeeper would clean the unit, and an "R" would be written on the calendar board, signifying that the unit was ready for the next tenant. Because the units would be independently cleaned after maintenance had been done, the owner generally incurred a full cleaning charge only if the unit had been occupied.

Mrs. Montgomery oversaw Sun Village's reservation office from 1989 until October 1992, when O'Connor moved to Sunriver to assist Montgomery, her brother, with legal issues unrelated to this case. Unwilling to work with O'Connor, Mrs. Montgomery left the office, and O'Connor assumed responsibility for the owners' statements. O'Connor purchased and lived in a duplex called "Goldfinch," which she occasionally rented to customers. She invested about $200,000 in Sun Village.

In January 1994, Mrs. Montgomery returned to the office. She noticed "very unusual situations with reservations and money." She suspected that O'Connor was diverting money from owners by assigning reservations to units that were no longer managed by Sun Village and by deleting reservations. Mrs. Montgomery discussed the irregularities with Montgomery "numerous times," and wrote him a note on a business record that stated, "Just another unit where[O'Connor] is hiding Res[ervations]." Frustrated by his inaction, she expressed her concerns in a letter she left for him on the kitchen counter of their residence. She wrote that she would not "be part of a dishonest operation," would not prepare owners' statements unless his "sister stops stealing," and would not solicit new owners because they "will probably be cheated." Mrs. Montgomery subsequently joined the conspiracy, however, and began omitting one night rentals from the owners' statements and creating inaccurate owners' statements.

The owners ultimately began to notice the decreased rental activity and unreported uses of their units. One owner became suspicious when she found that the rental activity in the owner's statement did not contain the names of the renters who had signed the guest-book, and that renters discussed a longer occupancy than that reflected in the statement. Another owner, William Wilson, received information from neighbors that his unit had been used. When the owner's statement did not reflect the use, Wilson confronted Montgomery, who apologized and explained that a computer or bookkeeping error had probably occurred. Other owners contacted O'Connor about the declining rental activity. She referred them to Mrs. Montgomery, who would tell the owners that rentals had been down or that the weather had been bad.

Among the unreported occupants were both paying customers and those whom Sun Village authorized to use the units at no cost. The calendar board contained a three-week reservation for "Yellow Pine 16" in April 1995 made for "Jim M.," meaning Montgomery. The occupant sent a check to Sun Village for $1,076, but the owner's statement did not report the rental or the rent received. Although Sun Village later sent a cashier's check and a promissory note for $9,011.40 to the owner of Yellow Pine 16, it was unclear whether the $1,076 in owed rent was included. Montgomery allowed others to use the units at no cost, a practice that Sun Village described with the terms "freebies" or "complimentary uses." He directed office staff not to record the freebies in the computer. O'Connor herself stayed in vacant units when she rented Goldfinch. She did not report her stay to the units' owners, although on two occasions she received permission beforehand and paid rent. Like Montgomery, she instructed office staff not to enter her use of units into the computer.

In October 1995, a state investigator questioned Montgomery about Sun Village's business practices. Montgomery reportedly said that "he only took money from the owners who didn't need their money." In March 1996, the Criminal Division of the Internal Revenue Service ("IRS") executed a search of Sun Village's business records and the Montgomery residence. Mrs. Montgomery's letter to Montgomery was seized from their bedroom.

In October 1999, a grand jury indicted Montgomery, Mrs. Montgomery and O'Connor on one count of conspiracy to commit mail fraud in violation of 18 U.S.C. § 371, and nineteen counts of either mail fraud or aiding and abetting mail fraud in violation of 18 U.S.C. §§ 1341 and 1342. The government obtained a superseding indictment in response to O'Connor's motion to dismiss the indictment for failing to allege how the monthly mailings were materially false. O'Connor filed a second motion to dismiss the indictment for failure to allege which rental dates were omitted from the monthly reports, and the government obtained a second superseding indictment.

Before trial Mrs. Montgomery agreed to cooperate with the government and to testify against Montgomery and O'Connor. After a five-day trial, the jury convicted both remaining defendants of conspiracy to commit mail fraud, Montgomery of five counts of mail fraud, and O'Connor of two counts of mail fraud. The jury acquitted defendants on the remaining counts. The prosecution dismissed all counts against Mrs. Montgomery.

The district court sentenced Montgomery to twenty-four months imprisonment on each count, to run concurrently, and O'Connor to eighteen months imprisonment on each count, also to run concurrently. Both sentences included a seven-level guideline increase due to the district court's determination of the amount of loss. Montgomery's sentence included an enhancement for obstruction of justice because the district court found that he had committed perjury when testifying. The court ordered defendants to pay, jointly and severally, $184,814.70 in restitution to the victims.

II.

Montgomery contends that the district court erred by not permitting him to claim the marital communications privilege to exclude from trial his wife's correspondence and his wife's testimony about conversations with him. The government counters that Mrs. Montgomery did not intend the information in the letter to remain confidential, that Mrs. Montgomery controls the privilege, and that the privilege does not apply because Mrs. Montgomery became an accessory after the fact. We review de novo the district court's construction of a federal rule of evidence. United States v. Angwin, 271 F.3d 786, 798 (9th Cir.2001).

A. Marital Privileges

Federal Rule of Evidence 501 provides that "the privilege of a witness [or] person ... shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience." The Supreme Court has recognized two privileges that arise from the marital relationship. The first permits a witness to refuse to testify against his or her spouse. See Trammel v. United States, 445 U.S. 40, 53, 100 S.Ct. 906, 63 L.Ed.2d 186 (1980). The witness spouse alone holds the privilege and may choose to waive it. Id. Because Mrs. Montgomery decided to testify, the first privilege is not at issue.

The second privilege, called the "marital communications" privilege, provides that "[c]ommunications between the spouses, privately made, are generally assumed to have been...