U.S. v. Powell

• Decision Date: 07 August 2009
• Docket Number: No. 08-1161.,No. 08-1138.,08-1138.,08-1161.
• Citation: 576 F.3d 482
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Roosevelt POWELL and Willie Harris, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

576 F.3d 482

UNITED STATES of America, Plaintiff-Appellee, v. Roosevelt POWELL and Willie Harris, Defendants-Appellants.

No. 08-1138.

No. 08-1161.

United States Court of Appeals, Seventh Circuit.

Argued April 9, 2009.

Decided August 7, 2009.

Gary T. Bell (argued), Office of the United States Attorney, Hammond, IN, for Plaintiff-Appellee.

Bryan M. Truitt (argued), Tsoutsouris & Bertig, Valparaiso, IN, for Defendant-Appellant Roosevelt Powell.

MacArthur Drake (argued), Gary, IN, for Defendant-Appellant Willie Harris.

Before MANION, ROVNER, and WOOD, Circuit Judges.

MANION, Circuit Judge.

A grand jury indicted Willie Harris, a Gary, Indiana, lawyer, and Roosevelt Powell, who collected property taxes on behalf of Lake County, Indiana, for their role in the sale of two properties to the Gary Urban Enterprise Association. A jury found Harris and Powell guilty of wire fraud, conspiring to defraud the United States, and filing a false tax return. They appeal. We affirm their convictions and Harris's sentence, but vacate Powell's sentence and remand to the district court for further proceedings.

I.

Indiana's enterprise zone program was devised in 1983 in an attempt to provide incentives for businesses to locate or expand in distressed and blighted areas. Jim Landers & Dagney Faulk, In the Zone: A Look at Indiana's Enterprise Zones, Ind. Bus. Rev., Summer 2005, at 7. Businesses inside the enterprise zone receive tax incentives in exchange for donating a percentage of the tax savings to the local urban enterprise association. Id. at 9. The Gary Urban Enterprise Association ("GUEA") was such an association; businesses located within the Gary enterprise zone contributed heavily to it in lieu of paying inventory taxes. However, due to a combination of a large pot of money at the GUEA's disposal—as much as five million dollars a year—and minimal oversight over how the money was to be spent, the GUEA attracted a corrupt abuse of the funds. The GUEA was ultimately dissolved after an investigation revealed that the GUEA's executive director, JoJuana Meeks, was treating the GUEA as her personal bank account. Prior to its demise, however, the GUEA had embarked on a property-purchasing spree, acquiring many properties in Gary for the purpose of redeveloping them. The convictions of defendants Roosevelt Powell and Willie Harris in this case resulted from their roles in the sale of two properties in Gary to the GUEA: a former grocery store located at 6300 Miller, and a vacant building located at 768 Broadway.

A. 6300 Miller¹

Towards the end of 1999, the owners of 6300 Miller, who had long ceased operating the building on the property as a grocery store, let the members of the Lake County Council know that they intended to donate the property to a public charity. William Smith, one of the councilmen and—later— a co-defendant of Powell and Harris, got wind of the intended donation and indicated that he knew of an organization that might have some interest in the property. Harris, an attorney who owned the law firm Willie Harris & Associates in Gary then contacted Gerald Bishop, one of the lawyers for the owners of 6300 Miller, about the property. He told Bishop that the Gary Historical and Cultural Society ("Historical Society"), a local nonprofit organization, would accept 6300 Miller as a donation. Dharathula Millender, Harris's 84-year-old aunt by marriage, was the Historical Society's president, and Harris was its attorney. The papers for the transfer were drawn up and signed at Harris's law office on December 27, 2000. At the time of the donation, 6300 Miller was appraised for $397,500 and had $37,000 in accrued property taxes, which the Historical Society assumed.

Harris, Smith, and Powell then attempted to sell the property. In the spring of 2001, Powell called Meeks at the GUEA and told her about it. Powell knew her from his work at SRI, a company hired to run the delinquent property tax sale auctions in Lake County. Powell had seen Meeks attend several auctions on behalf of the GUEA and, after finding out what she was doing, offered to help her. He eventually assisted Meeks in buying "a lot" of property for the GUEA—including a house he owned in his daughter's name.

Powell and Smith showed Meeks the property at 6300 Miller. Powell told her that the property was in the process of being transferred from the county to the Historical Society (which was not true) and that she could buy it once the transfer was completed. They then discussed a purchase price. Powell stated that they wanted $450,000. After Meeks told him that the GUEA "couldn't do that," the parties quickly agreed on a price of $200,000. Property taxes were not discussed—even though, by this point, the unpaid property taxes had ballooned to $73,000. Powell directed Meeks to prepare a purchase agreement in the name of the Historical Society and to make out the check to that organization. A purchase agreement was prepared and addressed to Millender but signed by Harris on behalf of the Historical Society. While the agreement called for the GUEA to pay the outstanding property taxes, no amount was listed. Meeks assumed that taxes would not be an issue because the county was transferring the property to the Historical Society.

Property taxes did indeed turn out to be a non-issue, but not for the reason Meeks assumed. In addition to his work for SRI, Powell also owned and operated a company named U.S. Research Consultants, Inc. ("US Research"), which had a contract with Lake County to collect delinquent property taxes on its behalf. On October 2, Lee Christakis, an attorney working for U.S. Research who acted on Powell's instructions, filed a lawsuit against the Historical Society regarding the delinquent taxes owed on 6300 Miller. Despite the fact that the building was in decent shape and the GUEA was paying $200,000 to buy it in order to use it as a training center, the complaint stated that the property was in a state of disrepair necessitating its demolition in order to be restored to a tax-paying basis. Harris personally accepted service of the complaint on behalf of the Historical Society three minutes after the complaint was filed. An agreed order was entered later that day reducing all property taxes due on the property to $15,000, which Harris paid. The Lake County Treasurer—whose permission U.S. Research was required to seek before reaching a settlement with a taxpayer—was not aware of either the lawsuit or settlement.

On the same day as the lawsuit to reduce the property taxes, Powell picked up the $200,000 check from the GUEA. The check was deposited into Harris's law firm trust account on October 3. At the same time, Harris wrote a check from the trust account to himself (postdated October 4) for $50,000 and deposited it into his law firm's business account. He also wrote a check to Smith for $75,000, one to Powell for $25,000, and another to the Historical Society for $50,000. Bank records showed that Smith deposited his check shortly thereafter, while Powell deposited his check about a week later.

Millender deposited the $50,000 check in the Historical Society's bank account a week after Powell. According to her testimony at trial, Millender's entire understanding of how the Historical Society obtained the $50,000 rested on a conversation she had with Smith, during which he had asked her if "they" could "borrow" the Historical Society's 501(c)(3) status² for $50,000 "to get a building for a training program for young people." Although Millender was present at the short meeting in Harris's law office during which the documents donating the property to the Historical Society were completed, and even signed the document transferring the property from the former grocery store owners to the Historical Society, she testified that she did not know that the Historical Society ever owned 6300 Miller. Rather, she stated that she had complete trust in her attorney Harris: "if he said sign it, I would sign it. I wouldn't read it. I would sign it, if he said it's something you're supposed to do."

Millender was not told that the Historical Society would have to own any property in order to receive the $50,000. She testified that she would never have taken title to 6300 Miller because the cash-strapped Historical Society had difficulty meeting expenses for the old school building it currently possessed. She was surprised when FBI agents showed her the $200,000 check from the GUEA to the Historical Society; she did not know about that check either, or that Smith, Powell, and Harris had pocketed $150,000 of the proceeds. Millender also was never informed about the property taxes owed on the property or the lawsuit filed against the Historical Society. Her signatures both on the $200,000 check and the deed transferring 6300 Miller to the GUEA were forged. She did acknowledge receiving and depositing the $50,000 check on behalf of the Historical Society.

B. 768 Broadway

The second property sale involved in this case was the sale of the vacant building located at 768 Broadway to the GUEA. Harris paid $2,600 for the property in September 1999. Because he was having marital problems at the time, Harris hid his ownership of the property from his wife by titling the property in the name of Dorothy Ard, a close family friend. Harris told Ard he would pay for the property, its maintenance, and any taxes.

In August 2001, Powell contacted Meeks and told her that 768 Broadway was available, claiming that his client was Dorothy Ard, "an elderly woman who was trying to divest herself and move back south." After viewing the property, Meeks again spoke with Powell, who stated Ard was looking for at least $60,000. Meeks offered $40,000, and Powell said he would contact Ard. Powell called back and claimed that he had spoken to Ard and that she would settle for $51,500. Meeks agreed and gave Powell a GUEA check for $51,500 made out to Dorothy Ard. The check was...