U.S. v. Myerson

• Decision Date: 07 March 1994
• Docket Number: 368 and 369,Nos. 159,D,s. 159
• Parties: UNITED STATES of America, Appellee-Cross-Appellant, v. Harvey MYERSON, Defendant-Appellant-Cross-Appellee. ockets 92-1751, 93-1008 and 93-1057.
• Court: U.S. Court of Appeals — Second Circuit

Page 153

18 F.3d 153

62 USLW 2623

UNITED STATES of America, Appellee-Cross-Appellant, v. Harvey MYERSON, Defendant-Appellant-Cross-Appellee.

Nos. 159, 368 and 369, Dockets 92-1751, 93-1008 and 93-1057.

United States Court of Appeals Second Circuit.

Argued Sept. 27, 1993.

Decided March 7, 1994.

Sean O'Shea, Asst. U.S. Atty. for the Eastern District of New York, Brooklyn, NY (Zachary W. Carter, U.S. Atty. for the Eastern District of New York, Peter A. Norling, Mark Kirsch, Asst. U.S. Attys. for the Eastern District of New York, Brooklyn, NY, of counsel), for Appellee-Cross-Appellant.

Jeremy Gutman, New York City, for Defendant-Appellant-Cross-Appellee.

Before: CARDAMONE, McLAUGHLIN, and LAY, ^* Circuit Judges.

LAY, Senior Circuit Judge:

Harvey Myerson, a New York attorney, appeals from two judgments entered against him after he was convicted by juries in two separate trials. Myerson was convicted on three counts of mail fraud, in violation of 18 U.S.C. Sec. 1341, and on two counts of travel fraud, in violation of 18 U.S.C. Sec. 2314, ¹ for significantly overbilling his clients and fraudulently claiming that personal charges were legitimate business expenses. In a second trial, Myerson was convicted under a separate indictment of conspiracy to defraud the United States, in violation of 18 U.S.C. Sec. 371; of making a false statement on his tax return, in violation of 26 U.S.C. Sec. 7206(1); and of assisting in filing a false tax return for his law partnership, in violation of 26 U.S.C. Sec. 7206(2). ²

Myerson appeals both convictions. Under the mail fraud counts, Myerson claims (1) that the district court erred in failing to give the jury a missing witness instruction; (2) that the district court erred in refusing to admit certain impeachment testimony; (3) that during summation the prosecutor improperly denigrated Myerson serving in his role as his own defense counsel; and (4) that the district court improperly enhanced Myerson's sentence under the Federal Sentencing Guidelines. Under the tax fraud conviction, Myerson asserts that the district court improperly admitted evidence of prior acts under the Federal Rules of Evidence. We affirm all judgments of conviction. On the cross-appeal, we find the district court did not err in dismissing the two travel fraud counts.

I. The Billing Fraud Case

Myerson was charged in a fifteen count superseding indictment with defrauding six clients and his own law firm while he was a partner at the New York law firm he founded, Myerson & Kuhn ("M & K"). ³ This fraud was based on Myerson's submitting a legal fee that overbilled his clients by millions of dollars and by his fraudulent claims that personal charges were legitimate business expenses. Following a contentious six week trial, Myerson was convicted of defrauding three of his clients: Shearson Lehman Hutton, Inc. ("Shearson"), ICN Pharmaceuticals, Inc. ("ICN"), and the Home Insurance Company ("Home"). ⁴ Myerson was also convicted on two travel fraud counts involving Shearson and the United Food & Commercial Workers' Union ("UFCW"), which were dismissed by the district court following the jury verdict. ⁵

The Shearson Fraud

The Shearson fraud was discovered when three young M & K associates found doctored timesheets and computer runs, indicating that M & K attorney hours had been inflated and that Shearson had been billed considerable sums for legal work that had never been performed. The associates delivered the timesheets to Shearson. At trial, the government's witnesses included three of Myerson's partners, various Shearson employees and others who established that Myerson defrauded Shearson, M & K's most important client, out of nearly $2,000,000 in less than one year. Myerson's partners Lloyd Clareman, Mark Segall, and Arthur Ruegger all testified pursuant to cooperation agreements with the government that Myerson "would direct what he wanted the bills to be for particular matters or clients for particular months" and that these billing levels were unrelated to the service needs of the clients. Testimony at trial reflected that Myerson would direct that the actual time reported on associates' and partners' timesheets be adjusted upward to meet Myerson's desired billing levels. Clareman testified that his secretary would first draft Shearson bills based on computer runs and then, at Myerson's direction, he and Segall would inflate attorney hours in order to hike the overall bills.

When the three M & K associates found the doctored timesheets and delivered them to Shearson, along with computer runs and other materials, Shearson performed an internal audit of M & K's bills and found that, conservatively, M & K had overcharged Shearson by $1,996,003. Shearson executives called Myerson and Clareman and confronted them with the results of the audit. Myerson disputed the overcharge and stated he had no knowledge of it. However, after further discussions, Shearson executives failed to accept Myerson's explanations and terminated M & K.

The ICN Fraud

In like fashion to the Shearson fraud, the government produced evidence that showed ICN had been repeatedly overcharged for legal services that were never actually rendered, and that Myerson billed ICN for several of his pleasure trips, including a trip to the Kentucky Derby. Myerson also obtained thousands of dollars in petty cash and charged it to ICN.

Ruegger and another M & K partner, Daniel Cooper, were the partners responsible for the ICN account. According to government witnesses Segall and Ruegger, during monthly lunch meetings at which billing targets were set for various clients, Cooper was told by Myerson to get the bills for ICN to at least $300,000 per month. Ruegger testified that, on at least one occasion, Cooper told him, "Harvey wants the bills at 300 and I can't get them there."

The Home Insurance Fraud

Testimony at trial established that Myerson charged thousands of dollars in personal expenses to Home although he did no work for the company. Among these expenses were a charter flight to Myerson's summer home in East Hampton, Long Island, and over $5,000 in twenty-three petty cash disbursements. Most of the charges were reflected in Home's "Reinsurance" case which was handled by another M & K partner, Philip Kaufman. Kaufman and Home's general counsel testified at trial that Myerson had no involvement in Home cases.

Myerson's defense at trial focused on the frauds committed by other partners (primarily Myerson's close set of proteges, Segall, Clareman and Cooper) who had either pleaded guilty to their involvement in the billing fraud or had entered into cooperation agreements with the government to escape prosecution. On appeal, Myerson does not dispute that the government, as verdict-holder, is entitled to the benefit of all favorable inferences and disputed facts, and indeed Myerson does not dispute that sufficient evidence existed for the jury to find his guilt beyond a reasonable doubt on the counts upon which he was convicted. Rather, he asserts that the district court made specific errors which severely prejudiced his defense and which require reversal of his convictions. We address each of these contentions.

A. The Missing Witness Instruction

Myerson initially claims that the district court erred in refusing to instruct the jury that it could draw an adverse inference against the government because the United States had failed to immunize the testimony of accomplice and M & K partner Daniel Cooper, whose attorney had informed the district court and Myerson that, if called, Cooper would assert his Fifth Amendment privilege against self-incrimination. Myerson argues that the district court erred further by instructing the jury instead that the jury could draw no inference from the fact that Cooper had not testified.

Cooper was the billing partner for ICN who, according to the government's theory, fraudulently inflated bills at Myerson's direction. Cooper was a participant in several lunch meetings at which Myerson exhorted his partners Clareman and Segall to inflate the bills for Shearson. Additionally, Cooper worked on and was "monitoring" certain matters for Home. Consequently, Myerson argues, Cooper figured significantly with respect to each of the counts on which Myerson was convicted.

On its direct case, the government introduced statements attributed to Cooper that directly inculpated Myerson. However, the government did not call Cooper himself, who had pleaded guilty to defrauding the UFCW, but who had not yet been sentenced. In addition to his guilty plea, Cooper had acknowledged to the government his obstruction of justice, based on his destruction of records that had been subpoenaed in connection with the grand jury investigation. Cooper also admitted his part in falsifying the ICN bills. The government informed the district court, however, that Cooper had no agreement with the government concerning his plea or possible sentence.

During his defense case, Myerson announced in the presence of the jury that he intended to call Cooper as a witness. Myerson acknowledged to the court that he had done this despite having been informed by Cooper's counsel several days earlier that, if called by either party, Cooper would invoke his Fifth Amendment privilege. Cooper's counsel appeared before the district court and confirmed that Cooper would invoke his privilege. Cooper's counsel also informed the district court that Cooper's testimony would not exculpate Myerson.

Myerson did not challenge Cooper's assertion of privilege as invalid, and does not do so in this court. Rather, Myerson asked the court to recognize "the right of the jury to at least hear the questions that were asked." Myerson complained that, among other things, because the government would not immunize Cooper, he was being precluded from testing whether or not Cooper had a "de facto deal" with the government. The district court offered Myerson the opportunity to...