U.S. v. Moody

• Citation: 923 F.2d 341
• Decision Date: 25 January 1991
• Docket Number: No. 89-6271,89-6271
• Parties: Bankr. L. Rep. P 73,810, 32 Fed. R. Evid. Serv. 368 UNITED STATES of America, Plaintiff-Appellee, v. Shearn MOODY, Jr., Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 341

923 F.2d 341

Bankr. L. Rep. P 73,810, 32 Fed. R. Evid. Serv. 368

UNITED STATES of America, Plaintiff-Appellee, v. Shearn MOODY, Jr., Defendant-Appellant.

No. 89-6271.

United States Court of Appeals Fifth Circuit.

Jan. 25, 1991.

Samuel J. Buffone, Terrance G. Reed, Asbill, Junkin, Meyers & Buffone, Washington, D.C., for Shearn Moody.

Sean Connelly, Atty., Appellate Section, Crim. Div., U.S. Dept. of Justice, Washington, D.C., Henry K. Oncken, U.S. Atty., Paula Offenhauser, Asst. U.S. Atty., Houston, Tex., Sidney Glazier, Atty., Appellate Section, Crim. Div., U.S. Dept. of Justice, Washington, D.C., for plaintiff-appellee.

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

Before RUBIN, SMITH, and BARKSDALE, Circuit Judges.

BARKSDALE, Circuit Judge:

Shearn Moody, Jr. (Moody), appeals his convictions for: (1) concealing property belonging to his bankruptcy estate, in violation of 18 U.S.C. Sec. 152 p 1 (Count 1); and (2) subsequent to the initiation of his bankruptcy proceeding, concealing his property with intent to defeat the provisions of title 11, in violation of Sec. 152 p 7 (Count 2). Primarily at issue are whether the charges are inconsistent, requiring reversal, and whether Sec. 152 p 7 applies only to pre-bankruptcy petition activity. While the Counts may have been multiplicitous (an issue not before us), they were not inconsistent; and, by its plain terms, p 7 applies to both pre- and post-petition activity. We AFFIRM.

I.

Shearn Moody's father died in 1936, when Moody was two years of age, leaving substantial trusts to both Moody and his brother, Robert Moody. Each trust included a three-eighths interest in the Beach Corporation (Beach). Moody's mother owned the remaining one-quarter interest. Beach owned the property in issue, real estate known as Outlot 162 in Galveston, Texas. In December 1963, Beach deeded Outlot 162 to Moody, Robert Moody, and their mother, as individuals.

That month, Moody, Robert Moody, and their mother, as general partners, formed the Seaside Lanes partnership to own and manage the properties owned individually by the Moodys or by the trusts of Moody or Robert Moody. In the partnership agreement, Moody, Robert Moody, and their mother transferred their interests in Outlot 162 to the partnership. A motel had been built on a portion of Outlot 162; the partnership constructed a bowling alley on the property. In June 1984, the partnership sold the bowling alley for approximately $500,000. ¹ The sale proceeds were invested in a certificate of deposit (CD) at Moody National Bank and totalled over $500,000 at maturity in December 1984.

In the interim, Moody had established an insurance company, which was placed in receivership in 1972. One result of the company's demise was a civil fraud action against Moody personally, resulting in a $6 million judgment, entered January 1980, which was affirmed by this court. Meyers v. Moody, 693 F.2d 1196 (5th Cir.1982), cert. denied, 464 U.S. 920, 104 S.Ct. 287, 78 L.Ed.2d 264 (1983). At that time, the judgment, including interest, totalled approximately $12 million.

In 1980, approximately three months after entry of the district court judgment, Moody created the 1980 Trust to provide a life income to a long-time employee and to maintain both the Moody family home and his ranch. The 1980 Trust was funded in part by a transfer of all of Moody's property acquired from the trust established for Moody by his father. However, Moody's interest in Outlot 162 was not conveyed to the 1980 Trust until December 29, 1982, six days after this court affirmed the judgment against Moody and six months before his first bankruptcy petition was filed.

In June 1983, Moody filed a bankruptcy petition under Chapter 13 in the Southern District of Texas. The petition was subsequently withdrawn and a similar petition filed in November 1983, in North Carolina, where Moody was receiving medical care. The Chapter 13 proceeding was converted to a Chapter 11 reorganization; and a trustee was appointed in October 1984. The North Carolina bankruptcy court transferred the proceeding to the Southern District of Texas in January 1985, and a new trustee was appointed.

Both of Moody's bankruptcy petitions listed his Seaside Lanes partnership interest as an asset of the bankruptcy estate. Moreover, in July 1984, after the partnership sold the bowling alley, Moody's attorney, Jane Ford, informed Robert Moody, Chairman of the Board at Moody National Bank, that Shearn Moody's interest in the sale proceeds (the $500,000 CD) belonged to the bankruptcy estate and warned Robert Moody that the sale might be void because it had occurred without notice to the bankruptcy creditors. And, by letter that August, Ford instructed the president of Moody National Bank that the $500,000 CD should not be disbursed absent a bankruptcy court order. The North Carolina trustee likewise demanded that Moody's share of the proceeds be released to the trustee when the CD matured.

However, when the CD matured on or about December 21, 1984, Robert Moody ordered the proceeds wired to the partnership's account at the Bank of Galveston. On December 24, 1984, Shearn Moody cashed three checks totalling $201,000; they were drawn on the Seaside Lanes account, payable to Seaside Lanes, and endorsed by Shearn Moody. Moody then converted the proceeds into cashiers checks totalling $197,000. Subsequently, he cashed those checks and used the funds to buy cashiers checks in smaller amounts, which he cashed over the next several months. Moody did not inform the North Carolina bankruptcy trustee that he had taken this distribution from the partnership. In fact, the distribution and expenditure were not known to either the North Carolina or the subsequent Texas trustee until the end of July 1985, as a result of a bankruptcy deposition (Moody's) and hearing the next day (Robert Moody's testimony).

In December 1986, Moody and his employee, Norman Revie, were charged in a 14-count indictment in the Southern District of Texas. The first 13 counts charged mail and wire fraud based on a scheme unrelated to the present case; Count 14 charged bankruptcy fraud under 18 U.S.C. Secs. 152 and 2. In January 1987, Moody moved to dismiss the indictment; and in July 1987, his motion to sever Count 14 from the remainder of the indictment was granted. ² A two-count superseding indictment was filed in April 1989 (the indictment) which charged Moody with fraudulent concealment and transfer of the $201,000, in violation of 18 U.S.C. Sec. 152 p 1 (Count 1) and p 7 (Count 2).

Moody's principal defenses at trial were that the $201,000 (the proceeds) was not property belonging to the bankruptcy estate and that he did not act with the requisite criminal intent. Moody claimed that the $201,000 was not his personal property; that instead, it was property held under the 1980 Trust. ³ However, as stated above, both bankruptcy petitions listed Moody's interest in the Seaside Lanes partnership as a personal asset. And, inter alia, the government asserted that the 1980 Trust was a sham.

In September 1989, the jury found both Moody and Revie guilty on both Counts. After being sentenced in December 1989, to concurrent five year terms of incarceration and a fine of $5,000 on each Count, Moody timely appealed. ⁴

II.

Moody contends that (1) the two Counts are mutually repugnant, requiring reversal; (2) Count 2 should be dismissed, arguing that Sec. 152 p 7 pertains only to pre-petition conduct; (3) the district court committed plain error in its jury instruction defining property belonging to the bankruptcy estate; (4) the indictment was insufficient; (5) the court abused its discretion in denying a bill of particulars; and (6) the court committed reversible error in admitting testimony protected by the attorney-client privilege.

A.

Moody urges reversal on the basis that the Counts are factually repugnant to each other; that there are mutually inconsistent allegations of essential elements of each Count. Simply put, Moody contends that to convict on Count 1, the jury had to find that the proceeds were "property of the bankruptcy estate," but to convict on Count 2, the jury had to find that the same property (the proceeds) was "property of the debtor." Accordingly, Moody argues that "proof of Count Two necessarily establishes a defense to Count One and vice versa."

In addition, Moody argues that Sec. 152 p 7 only applies to pre-petition activity. Therefore, he contends that corresponding Count 2 must be dismissed, because the charged concealment was post-petition.

As revised by the Bankruptcy Reform Act of 1978, Pub.Law 95-598, 92 Stat. 2549, 11 U.S.C. Sec. 101, et seq., as amended, the Bankruptcy Code "was intended to create a more uniform and comprehensive scope to 'property of the estate' which is subject to the reach of debtors' creditors than had previously existed under the old Bankruptcy Act"; and pursuant to "Section 541 of the Code, all property in which a debtor has a 'legal or equitable interest' at the time of bankruptcy comes into the estate...." Matter of Goff, 706 F.2d 574, 578 (5th Cir.1983).

The statutes concerning crimes relating to bankruptcy, 18 U.S.C. Sec. 151 et seq., were amended to conform to the new Code, Bankruptcy Reform Act of 1978 Sec. 314, Pub.L. 95-598, 92 Stat. 2676. Concealment of assets is one of the subjects to which 18 U.S.C. Sec. 152 pertains; and, as stated, Moody was charged with offenses under its first (Count 1) and seventh (Count 2) paragraphs. The first paragraph provides:

Whoever knowingly and fraudulently conceals from a custodian, trustee, marshal, or other officer of the court charged with the control or custody of property, or from creditors in any case under title 11, any property belonging to the estate of a debtor ... [shall be fined or imprisoned or both].

The seventh paragraph provides:

Whoever, either individually or as an agent or officer of any...