U.S. v. Poulsen
| Decision Date | 01 August 2008 |
| Docket Number | No. CR2-06-129.,CR2-06-129. |
| Citation | 568 F.Supp.2d 885 |
| Parties | UNITED STATES of America, Plaintiff, v. Lance K. POULSEN, et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
Dale Edward Williams, Jr., Mark Yost, Gary Spartis, Doug Squires, Jeff Neiman, United States Attorney's Office, Columbus, OH, for Plaintiff.
Thomas Michael Tyack, Tyack Blackmore & Liston Co. LPA, Joseph E. Scott, Joseph E. Scott Law Offices, Javier H. Armengau, Frederick Douglas Benton, James Lloyd Ervin Jr., Benesh, Friedlander, Coplan & Aronoff, LLP, D. Michael Crites, Rich Crites & Dittmer LLC, Columbus, OH, Joleen Scott Miller, Louisville, CO, Brian Edward Dickerson, Sharlene
I. Chance, The Dickerson Law Group, Upper Arlington, OH, Leonard W. Yelsky, Yelsky & Lonardo, Cleveland, OH, for Defendants.
I. INTRODUCTION ........................................................................ 888
II. DEFENDANTS' RULE 29 MOTIONS ......................................................... 889
A. Legal Standards .................................................................. 889
B. The Sufficiency of the Evidence as to Ayers, Parrett, Speer and
Faulkenberry ................................................................... 890
1. National Century's Business Model ............................................. 891
2. National Century's Representations to Investors ............................... 892
3. The Fraud ..................................................................... 894
4. The Cover-Up .................................................................. 895
5. What the Defendants Knew ...................................................... 898
6. The Demise of National Century ................................................ 899
7. Summary of the Evidence as to Ayers, Parrett, Speer and
Faulkenberry ................................................................ 900
C. The Sufficiency of the Evidence as to Dierker ................................... 900
1. Undisputed Facts Established at Trial ........................................ 901
2. Evidence Supporting Dierker's Acquittal ...................................... 903
3. Evidence Implicating Dierker in the Fraud .................................... 905
(a) Dierker's Knowledge of National Century's Practice of Advancing .......... 905
(b) Dierker's "Under Water" Comments to Beacham .............................. 907
(c) Dierker's June 7, June 11, and July 12, 2001 Funding
Authorizations ......................................................... 908
(d) Gibson's Advances to Medshares ........................................... 910
(e) Dierker's September 26, 2001 Memo About the Sale of Villa View
Hospital ............................................................... 910
(f) The Receivables Purchase Report .......................................... 911
(g) Summary of the, Evidence as to Dierker ................................... 912
III. DEFENDANTS' RULE 33 MOTIONS ........................................................ 912
A. Legal Standards ................................................................. 912
B. Defendants' Motions for New Trials Based on United States v. Santos ............. 912
C. Ayers's Motion for a New Trial Based on Pre-Trial and Trial Publicity ............914
D. Dierker's Motion for a New Trial Based on Prosecutorial Misconduct ...............916
1. The Government's Re-Direct of Witness Terrence Glomski ........................916
2. The Government's Closing Statement ............................................918
E. Ayers's and Dierker's Motions for New Trials Based on Brady Violations
and Rule 33 .....................................................................921
1. The SEC Trustees Order ........................................................922
2. The SEC Auditors Orders .......................................................924
3. Documents Disclosed in the Civil Litigation ...................................926
4. Gibson's Letters to Demmler ...................................................926
IV. AYERS'S MOTION TO INTERVIEW THE JURORS ...............................................928
V. CONCLUSION ...........................................................................928
This is a case about the good company that Wasn't. It's about those at the helm who steered it wrong. And it's about investors who, through no fault of their own, lost billions in assets.
At the start of the new millennium, National Century Financial Enterprises, Inc. ("National Century") appeared to be a thriving financing company with a national reputation as a leader in its field. But as it turned out, that reputation was built on smoke and mirrors. When nearly a decade of fraud perpetrated by the company finally came to light in 2002, public investigations quickly followed, culminating in criminal charges brought against eleven owners and senior executives. Some of the accused pleaded guilty and cooperated with the Government's investigation and prosecution. On February 4, 2007, five Defendants—Donald H. Ayers, Rebecca S. Parrett, Randolph H. Speer, Roger S. Faulkenberry, and James E. Dierker— proceeded to trial.1 After six weeks of extensive witness testimony, the jury returned guilty verdicts on all counts.
Defendants now seek relief from the jury's verdicts, arguing that the evidence presented at trial was insufficient to convict them, that the trial was hopelessly tainted by prejudicial media coverage, that the Government engaged in prosecutorial misconduct, and that the Government improperly withheld critical evidence that casts doubt on the reliability of the jury's guilty verdicts. For the reasons described below, the Court DENIES each of the Defendants' motions.2
All the Defendants move for judgments of acquittal, claiming that the Government did not carry its burden of proof. The Court will begin by considering the evidence against Ayers, Parrett, Speer, and Faulkenberry. Because Dierker has filed a far more substantive motion than his Co-Defendants, the Court will separately consider the evidence concerning him.
Following a jury verdict of guilty, Federal Rule of Criminal Procedure 29(c) permits a defendant to move for a judgment of acquittal on the grounds that the evidence presented was insufficient to convict him. Trial courts adjudicate Rule 29(c) motions under a standard deferential to the jury's verdict. The court asks whether, "after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979). The court does not "weigh the evidence, assess the credibility of the witnesses, or substitute [its] judgment for that of the jury." United States v. Wright, 16 F.3d 1429, 1440 (6th Cir. 1994). Rather, the court will "draw all available inferences and resolve all issues of credibility in favor of the jury's verdict." United States v. Salgado, 250 F.3d 438, 446 (6th Cir.2001). For these reasons, a defendant "bears a very heavy burden" in making out a sufficiency-of-the-evidence challenge to his conviction. United States v. Davis, 397 F.3d 340, 344 (6th Cir.2005). Indeed, a motion for judgment of acquittal will be granted only "where the prosecution's failure is clear." Burks v. United States, 437 U.S. 1, 17, 98 S.Ct. 2141, 57 L.Ed.2d 1 (1978).
At the close of the Government's case in chief, Defendants Ayers, Parrett, Speer and Faulkenberry moved for judgments of acquittal, as permitted by Rule 29(a). The Court denied Defendants' motions and explained in detail the basis for its decision by citing to the documentary and witness testimony that, if credited by the jury, would support Defendants' convictions. Defendants renewed their motions at the close of trial and the Court again denied them for the same reasons it had previously given.
Defendants now renew their motions a second time. In their briefing, however, they do little more than recite the legal standards for assessing post-trial motions brought pursuant to Rules 29 and 33, and make unsubstantiated assertions that the evidence was insufficient to convict them. The Court once again finds that the jury was presented with ample evidence from which it reasonably could have concluded that Ayers, Parrett, Speer and Faulkenberry committed the offenses with which they were charged.
The trial in this case lasted for six weeks. The twenty-two volume trial transcript shows that Defendants had considerable opportunities to, and in fact did, attack the Government's evidence against them by putting on their own defenses and by extensively cross-examining the Government's witnesses and challenging its documentary evidence. The record also shows that the evidence against Defendants was substantial. Six former National Century employees testified and three of these—Jon Beacham, Sheri Gibson, and Jessica Bily—were senior executives with intimate knowledge of the company's operations and how it perpetrated investor fraud. Each of these executives admitted to engaging in criminal conduct and they all implicated Defendants in the criminal conspiracy. Besides National Century insiders, the Government put on witness testimony from the investors whose money, unbeknownst to them, was improperly used to make unsecured loans to health-care...
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