U.S. v. Phillips, 89-2797

• Decision Date: 24 September 1990
• Docket Number: No. 89-2797,89-2797
• Citation: 914 F.2d 835
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. James PHILLIPS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 835

914 F.2d 835

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

No. 89-2797.

United States Court of Appeals,

Seventh Circuit.

Argued April 18, 1990.

Decided Sept. 24, 1990.

David Capp, Andrew B. Baker, Jr., Asst. U.S. Attys., Hammond, Ind., for plaintiff-appellee.

Steve Lustina, Levinson & Lustina, David N. Gilyan, Merrillville, Ind., for defendant-appellant.

Before WOOD, Jr., POSNER, and COFFEY, Circuit Judges.

HARLINGTON WOOD, Jr., Circuit Judge.

Appellant James Phillips appeals from his conviction of one count of perjury under 18 U.S.C. Sec. 1623 for falsely testifying before the grand jury. Phillips appeals his conviction on two grounds that he alleges marred virtually every juncture of his trial: ineffective assistance of trial counsel and prosecutorial misconduct.

I. FACTUAL BACKGROUND

The original indictment against Phillips charged him with two counts of perjury as a result of his testimony before a grand jury concerning payments he received from the Gary Insurance Agency through James Bradach in 1985 and 1986. At oral argument, the government explained that the grand jury's inquiry into the payments from James Bradach to Phillips was motivated by a suspicion that James Phillips was one of several persons receiving checks from Bradach who operated as a "laundry" or "conduit" of funds from the Gary Insurance Agency. ¹ The government believed that in return for patronizing the Gary Insurance Agency with Lake County, Indiana's insurance business, Lake County commissioners received kickbacks out of the insurance premiums paid to the Gary Insurance Agency ("the agency"). Phillips received checks from Bradach, who was a managing partner of the agency, cashed them, and purportedly returned the laundered cash to Bradach for dissemination to Lake County commissioners or directly delivered the money to the knavish commissioners himself. Phillips, however, was never charged with any criminal offense other than perjury before the grand jury.

Phillips received checks from Bradach totaling $49,000.00 beginning on July 3, 1985, to December 31, 1985, and an additional $30,992.00 from January 13, 1986, to April 15, 1986. When testifying before the grand jury, Phillips alleged that Bradach paid him merely to be "available to deal" with the Teamsters union regarding a credit card scheme in which Bradach participated. Phillips conceded that he did no work for the money.

Richard Fry, Rebecca Lake, Sol Ashbach, and James Ward originally formed Preferred Plus Services, Inc. to implement their idea of marketing a credit card primarily to union members to pay the portion of major medical bills not covered by their medical insurance. Lacking the funds to launch their project, this quartet of entrepreneurs sought out a well-heeled backer. Ashbach's accountant, Jack Weichman, suggested Bradach, another client of Weichman's, as a potential financer. When Ashbach approached Bradach concerning the project, Bradach agreed to attempt to secure financing in exchange for a piece of the action. Eventually, the entire project withered on the vine when the parties were unable to fuel the enterprise with funding and the Teamsters failed to embrace the plan with the boundless enthusiasm exhibited by the five corporate principals.

Bradach's involvement with Preferred Plus, and particularly the date of his initial association with the corporation, was undoubtedly a crucial factor in the jury's determination of whether Phillips lied to the grand jury when he testified that the checks Bradach wrote to him in 1985 were to retain his services for the corporation, should they ever be needed. The government maintained at trial that Bradach's payments to Phillips began several months before Bradach became involved with Preferred Plus, and thus the funds paid to Phillips in 1985 were devoted to the nefarious Lake County insurance kickback scheme. Phillips maintained that Bradach had preliminary encouragement from Weichman to become involved in Preferred Plus in the Spring of 1985 and had a formal meeting with the original entrepreneurial quartet on June 10, 1985, during which Bradach received two books explaining the plan from the principals.

On November 16, 1988, a jury found Phillips guilty of perjury under Count I, which concerned his testimony regarding the 1985 payments, and not guilty under Count II, which concerned the testimony about the 1986 payments. The district court granted the defendant's motion for a new trial on Count I due to the government's failure to produce material exculpatory evidence (a daily time sheet maintained by Jack Weichman dated June 10, 1985, and government witness Richard Fry's rap sheet). After Phillips's retrial, a jury again found the defendant guilty under Count I.

Phillips now maintains that many component pieces of evidence admitted by the government at his second trial were either improperly admitted or mischaracterized as a result of prosecutorial misconduct. Moreover, Phillips maintains that his counsel at trial was ineffective due to his failure to object to the introduction of much of the government's evidence, his inadequate cross-examination of government witnesses, and his failure to use or comprehend the importance of exculpatory evidence at his disposal. Phillips offers an intimidating list of prosecutorial overreaching and defense counsel incompetence that suggests that his trial was the high-water mark of injustice. On this record, however, we find Phillips's allegations of misconduct and incompetence to be exaggerated and insufficient to warrant a reversal.

II. ANALYSIS

Phillips's claims of prosecutorial misconduct and ineffective assistance of counsel are both legion and intertwined: the allegations of prosecutorial misconduct are usually accompanied by claims that defense counsel was ineffective in countering the government's alleged underhandedness. We will therefore discuss the asserted instances of government chicanery and defense counsel incompetence together when discussing each stage of the trial where Phillips alleges the two wrongs occurred consecutively or alternatively.

Generally, claims of prosecutorial misconduct are based on the right to a fair trial under the due process clause. United States v. Weaver, 882 F.2d 1128, 1140-41 (7th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 415, 107 L.Ed.2d 380 (1989); United States v. Mealy, 851 F.2d 890, 903 (7th Cir.1988). While we are obliged to determine initially whether the challenged remark or conduct was actually improper, Mealy, 851 F.2d at 903; United States v. Swiatek, 819 F.2d 721, 730 (7th Cir.), cert. denied, 484 U.S. 903, 108 S.Ct. 245, 98 L.Ed.2d 203 (1987), we must primarily focus on the overall fairness of the trial, not the blameworthiness of the prosecutor, Smith v. Phillips, 455 U.S. 209, 219, 102 S.Ct. 940, 947, 71 L.Ed.2d 78 (1982); Weaver, 882 F.2d at 1141. When the alleged prosecutorial misconduct does not rise to a constitutional magnitude on direct appeals of federal convictions, we also consider whether the prosecutor's conduct substantially influenced the trial's result. United States v. Turk, 870 F.2d 1304, 1308 (7th Cir.1989); United States v. Pirovolos, 844 F.2d 415, 425 (7th Cir.), cert. denied, 488 U.S. 857, 109 S.Ct. 147, 102 L.Ed.2d 119 (1988).

Phillips will only succeed on a claim of ineffective assistance of counsel if he shows that his trial counsel's conduct fell below that of a reasonably competent attorney under the circumstances and there is a reasonable probability that, but for counsel's unprofessional conduct, the result of the proceeding would have been different. Strickland v. Washington, 466 U.S. 668, 687, 104 S.Ct. 2052, 2064, 80 L.Ed.2d 674 (1984). The sixth amendment requires "reasonably effective assistance of counsel" measured by an objective standard, id. at 687-88, 104 S.Ct. at 2064, but that "[j]udicial scrutiny of counsel's performance must be highly deferential," id. at 689, 104 S.Ct. at 2065. Moreover, even if defense counsel's performance was deficient, there was no denial of the sixth amendment right to effective assistance of counsel if the result would have been the same regardless of counsel's conduct. Id. at 697, 104 S.Ct. at 2069.

A. The Government's Cross-Examination of Bradach

Defense witness Bradach testified during direct examination about expenses that he incurred on behalf of Preferred Plus and stated that he had paid $2,000 to the accounting and consulting firm of Berney and Zweben for accounting work that had been done prior to Bradach's introduction into the plan. On cross-examination, the government queried Bradach about a document dated August 22, 1985, that Al Mazz of the accounting firm of Friedman, Eisenstein, Reamer & Schwartz ("FERS") had provided to Preferred Plus. Bradach adamantly testified that he had paid FERS $3,000 for work ordered by one of the original four entrepreneurs prior to Bradach's entry into the plan. At Phillips's first trial, Bradach had testified that he had paid a $3,000 bill to Al Mazz and his accounting firm for a preliminary business study that was done for Preferred Plus prior to Bradach's involvement with the plan. The government introduced this purported study, as well as a transcript excerpt of Bradach's testimony at the first trial, at Phillips's second trial in an alleged attempt to impeach Bradach. Defense counsel now asserts that the prosecutor intentionally misused this evidence, which was allegedly mischaracterized by a confused Bradach, in an attempt to reinforce the evidence in its case-in-chief that Bradach did not become involved in Preferred Plus until after the initial July 3, 1985, payment to Phillips.

The government's queries to Bradach regarding his alleged payment of expenses on behalf of Preferred Plus were a valid impeachment of Bradach's credibility. Phillips complains that the government was not cross-examining Bradach to establish the truth and was...