U.S. v. Nichols

• Decision Date: 05 August 2005
• Docket Number: No. 04-1062.,No. 04-1059.,04-1059.,04-1062.
• Citation: 416 F.3d 811
• Parties: UNITED STATES of America, Appellee, v. James R. NICHOLS, Appellant. United States of America, Appellee, v. Robert Gomez, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

416 F.3d 811

UNITED STATES of America, Appellee, v. James R. NICHOLS, Appellant.

United States of America, Appellee, v. Robert Gomez, Appellant.

No. 04-1059.

No. 04-1062.

United States Court of Appeals, Eighth Circuit.

Submitted: January 10, 2005.

Filed: August 5, 2005.

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Thomas M. Bradshaw, argued, Kansas City, MO (Amy E. Engel, on the brief), for appellant in 04-1059.

Bruce W. Simon, Kansas City, MO, for appellant in 04-1062.

John Daniel Stewart, argued, Assistant U.S. Attorney, Kansas City, MO (Todd P. Graves and James Curt Bohling, on the brief), for appellee.

Before SMITH, HEANEY, and COLLOTON, Circuit Judges.

SMITH, Circuit Judge.

James R. Nichols and Robert Gomez appeal their convictions of conspiracy to commit interstate transportation of property by fraud, interstate transportation of property stolen by fraud, conspiracy to commit money laundering, money laundering, and civil forfeiture. Following a joint-jury trial, the district court¹ sentenced Nichols to a total term of 292 months' imprisonment and Gomez to a total term of 262 months' imprisonment. We affirm.

I. Background

Between 1998 and 2002, Nichols and Gomez masterminded a nationwide fraud and money-laundering scheme involving the sale of nonexistent motor vehicles from a nonexistent probate estate. To perpetrate the fraud, Gomez claimed to be the adopted son of one John Bowers, deceased, and the sole heir to his estate. Nichols represented himself as the executor of John Bowers's estate. In actuality, there was no John Bowers. Nichols and Gomez created Bowers, and then used this fictitious person to defraud others-primarily persons of religious faith.

To snare the unwary, Nichols and Gomez told potential investors that John Bowers had died and left an estate worth approximately $400 million. According to the two, Bowers left instructions to reward persons of religious faith by offering them the opportunity to purchase automobiles at a very low price.² The vehicles were said to be between one and two-years old and were offered for sale at prices between $1000 and $5000. Nichols and Bowers told purchasers that they would have to pay for the cars up front, and that their money would be placed in a non-interest bearing account until the estate closed. Supposedly, the probate judge imposed restrictions preventing the disclosure of details about the individual cars. However, purchasers could request a refund of their purchase money at any time.

The scheme was initially aimed at members of Nichols's home church in southern California. However, as news of the vehicles spread, other southern California churches were targeted. At first, only Nichols's family promoted the sale of the "estate cars," but others were eventually enlisted to spread the word. Gwendolyn Baker, a resident of Memphis, Tennessee, began selling the "estate cars" through churches in the Memphis area after contacting Nichols and Gomez. Baker was later introduced to Dr. Corinne Conway of Higginsville, Missouri, who then promoted the sale of the fictitious cars nationwide through her organization, the Virtuous Women's International Ministry. Unwitting people across the nation sold the fictitious cars to members of their local churches because of Dr. Conway's promotions. Those within the scheme called these persons "finders" because they found purchasers for the "estate cars."

Money collected through Baker, Dr. Conway, and the finders was funneled to Nichols who deposited the funds in a California bank account. Nichols would then transfer a portion of the funds to California casino accounts where Gomez would exchange the money for casino chips or cash. Nichols also made direct withdrawals from the account to get cash, make transfers to family members, and to buy vehicles. In addition, as the scheme progressed, Nichols would refund money to purchasers of the "estate cars" who were unwilling to wait for delivery. Over the course of the scheme, Gomez and Nichols collected more than $21 million from the sale of the "estate cars," but refunded approximately $8.5 million.

The car scam began to run out of gas when the Missouri Attorney General's Office was notified of the scheme and began an investigation. The United States Postal Inspectors and the Federal Bureau of Investigation later joined in the investigation. From those investigations, a Missouri Grand Jury returned a twenty-three count indictment against Gomez and Nichols.

Prior to trial, Gomez and Nichols sought to have their respective cases severed and tried separately. The district court denied their motions. Gomez also sought to dismiss the money laundering counts of the indictment for lack of venue. The district court also denied that motion. At trial, Nichols testified in his own defense claiming that Gomez had set him up. Gomez did not testify. The jury returned guilty verdicts against both Nichols and Gomez. After reviewing a presentence investigation report (PSR), and conducting a sentencing hearing, the district court sentenced Nichols to a total term of 292 months' imprisonment and Gomez was sentenced to a term of 262 months' imprisonment. This joint appeal followed.

II. Discussion

Together, Nichols and Gomez assert a total of eight points on appeal. Some arguments are pressed by both, and others are brought independently. We address the joined arguments together, and the individual arguments will be addressed separately.

A. Severance — Nichols and Gomez

Both Nichols and Gomez assert that the district court erred in refusing to sever the trial. They maintain that their mutually antagonistic defenses necessitated severance. We review a district court's denial of a motion to sever for an abuse of discretion. United States v. Mickelson, 378 F.3d 810, 817-18 (8th Cir.2004). In order to reverse, the appellant must show that his or her right to a fair trial was prejudiced. Id.; see also Zafiro v. United States, 506 U.S. 534, 113 S.Ct. 933, 122 L.Ed.2d 317 (1993). Defendants who are jointly indicted on similar evidence from the same or related events should normally be tried together; to warrant severance a defendant must show "real prejudice"; that is, "something more than the mere fact that he would have had a better chance for acquittal had he been tried separately." Mickelson, 378 F.3d at 817-18. (citations omitted). A defendant can demonstrate real prejudice to his right to a fair trial by showing: (1) his defense is irreconcilable with that of his co-defendant; or (2) the jury will be unable to compartmentalize the evidence as it relates to the separate defendants. Id. However, severance is not required merely because evidence that is admissible only against some defendants may be damaging to others. Id.

In this case, Gomez's defense strategy was that he knew nothing about the Bowers's estate or the scheme to sell "estate cars" at low prices. He explained that he was a professional gambler and that Nichols was "backing his play" as an investment. Nichols, on the other hand, claimed that he was duped and misled by Gomez who alone masterminded the entire scheme. To that extent, Nichols claimed that he actually believed Gomez was the heir of the Bowers's estate and that the sale of the "estate cars" was completely legitimate.

"Mutually antagonistic defenses are not prejudicial per se." Zafiro v. United States, 506 U.S. 534, 538, 113 S.Ct. 933, 122 L.Ed.2d 317 (1993). The Supreme Court specifically rejected the notion that defendants who have contradictory defenses are inherently prejudiced simply because "a jury will conclude [either] that both defendants are lying and convict them both on that basis, or that at least one of the two must be guilty without regard to whether the Government has proved its case beyond a reasonable doubt." Id. at 540; see also United States v. Blankenship, 382 F.3d 1110, 1125 (11th Cir.2004) ("The Supreme Court has held that co-defendants do not suffer prejudice simply because one co-defendant's defense directly inculpates another, or it is logically impossible for a jury to believe both co-defendants' defenses.").

We first examine whether the defenses asserted by Gomez and Nichols are actually irreconcilable. As already stated, Gomez asserts that Nichols was backing his gambling and Nichols asserts that Gomez duped him. These two stories are reconcilable. Specifically, Nichols could very well have been duped by Gomez while at the same time giving Gomez money to finance his professional gambling. Stated another way, Nichols's contention that he was duped did not necessarily require that the jury either accept or reject the defense that Gomez merely received gambling support funds. Likewise, Gomez's contention did not require the jury to accept or reject the defense that Nichols was an unwilling participant.

Neither Gomez nor Nichols disputes that nonexistent cars were sold with much of the proceeds funneled through Nichols to casinos where Gomez received the funds in the form of gambling chips. See United States v. Serafino, 281 F.3d 327, 330 (1st Cir.2002) ("Serafino never disputed that the MBC vendors funneled payments through his companies' accounts, and Peckham's contention that he was neither the mastermind nor the driving force behind the scheme did not necessarily require that the jury either accept or reject the defense that Serafino was an unwitting participant."). At their core, both Nichols's defense and Gomez's defense asserted that they did not know of the fraud. See United States v. Jackson, 64 F.3d 1213, 1217 (8th Cir.1995) cert. denied, 516 U.S. 1137, 116 S.Ct. 966, 133 L.Ed.2d 887 (1995) (holding that defenses by drug offense co-defendants that neither had knowledge of drugs in a package were reconcilable).

We next examine whether the jury could compartmentalize the evidence. We have held that in reviewing the "consideration of the jury's ability to compartmentalize the evidence against the joint defenda...