U.S. v. Reed

Decision Date08 May 1989
Docket NumberNo. 88-2129,88-2129
PartiesUNITED STATES of America, Plaintiff-Appellant, v. Lonnie D. REED, Defendant-Appellee.
CourtU.S. Court of Appeals — Seventh Circuit

Mel S. Johnson, Asst. U.S. Atty., Milwaukee, Wis., for plaintiff-appellant.

Dennis P. Coffey, Coffey, Coffey & Geraghty, Milwaukee, Wis., for defendant-appellee.

Before POSNER, COFFEY and KANNE, Circuit Judges.

COFFEY, Circuit Judge.

The United States appeals the order of the United States District Court for the Eastern District of Wisconsin granting defendant-appellee Lonnie D. Reed's motion for judgment of acquittal and conditionally granting Reed's motion for new trial notwithstanding the jury's finding that Reed was guilty of conspiracy to defraud a federally insured savings and loan institution. We reverse.

I.

The facts of this case center on the application for and acquisition of a $49,600 home loan by Alice Reed, a/k/a Alice Nickles ("Nickles"), the defendant's wife. On March 23, 1985, Mrs. Reed, using the assumed name Alice Nickles, completed a loan application at Greater Milwaukee Bank in Milwaukee, Wisconsin. In her application Nickles stated that she was unmarried, that she earned a monthly salary of $2,184 in her job as a computer programmer at Midwest Enterprise, and that her assets included a $7,000 gift.

In order to confirm some of the information in Nickles' application, Susan Matowitz, vice-president of Greater Milwaukee, mailed a verification of employment form ("VOE") to Midwest Enterprise, Nickles' alleged place of employment. The VOE was returned to the bank signed by Lonnie Reed, the owner of Midwest Enterprise, stating that Alice Nickles had been employed there since 1978, earned $27,072 in 1984 and $28,392 in 1985, and accumulated $4,287.32 in an employee savings plan. This information, along with Nickles' application, was then forwarded for consideration to Republic Savings and Loan in Milwaukee. 1 Thereafter, Republic requested Matowitz to verify Nickles' ability to make a down payment on the loan and cover closing costs. After discussing various possibilities with Matowitz, Nickles provided her with a letter certifying that Lonnie Reed, a friend of Nickles', would give Nickles the $7,000 required for a down payment and closing costs. Upon receipt of this information, Robert Kesselhon of Republic approved Nickles' loan application and sent Nickles a commitment letter stating that closing was scheduled for May 31, 1985, and that down payment in the form of a certified, cashier's or savings and loan check or cash was necessary at the closing.

The May 31 closing was attended by Nickles, Matowitz, Claire Nachazel, a closing attorney for Republic, Karl Dovnik, and Brian Carter, the sellers of the house, and the defendant, who Nickles introduced as her boyfriend, Lonnie Reed. Reed stated that he was attending to assist Nickles with the purchase of the house. Three checks payable to Alice Nickles totalling $9,954.81 were presented to cover the down payment and closing costs. 2 All three were drawn on a Midwest Enterprise account at Heritage Bank in Milwaukee and signed with the name Lonnie Reed. Because these checks were personal in nature, there was a dispute regarding whether the checks could be accepted because they were not the type of checks specified in the commitment letter--namely, a certified, cashiers' or savings and loan check. According to Karl Dovnik, Reed then presented a deposit slip verifying that there were sufficient funds in the Midwest Enterprise account to cover the three checks. After reviewing the deposit verification slip, counsel for Republic accepted the checks, closed the loan, and Republic executed a mortgage on the house Nickles had purchased.

Republic subsequently discovered that the checks presented at the closing were worthless 3 and foreclosed the mortgage on Nickles' house. Republic conducted a foreclosure investigation revealing that Nickles was on probation for check forgery and turned the matter over to the Federal Bureau of Investigation's Milwaukee office.

On November 3, 1986, FBI Special Agent Joanne Cunningham interviewed Nickles at the office of Nickles' probation officer. After Agent Cunningham read Nickles her Miranda rights, Nickles signed a waiver of rights form with the name Alice Reed and discussed with Agent Cunningham the details of the Republic loan transaction. At the conclusion of her interview with Nickles, Agent Cunningham advised defendant Reed of his rights; he in turn signed a waiver of rights form and stated during the question and answer session that he owned Midwest Enterprise, a plumbing business, and that he and Nickles had been married since 1979.

Regarding his involvement in the Republic loan transaction, Reed stated that he was not present when Nickles completed the loan application, but admitted that he had given his wife the necessary information to fill out the form. He also stated that Nickles typed out the VOE with information he had provided and that she had signed his name to the form at his direction. Similarly, he admitted to giving Nickles the information needed to complete the gift letter, 4 again instructing her to sign his name thereon. Reed admitted that these documents contained numerous falsehoods, including Nickles' name, marital status, occupation and yearly income. His explanation for the worthless Midwest Enterprise checks presented at closing was much the same as that given for the other false documents--they were from his business, and he told his wife to fill them out and sign his name to them.

Reed and Nickles were indicted on June 23, 1987, on a conspiracy count, two counts of making false statements, and one count of executing a scheme to obtain money from a federally insured financial institution. The latter three counts were also charged as overt acts in furtherance of the alleged conspiracy. The actions against Reed and Nickles were severed, and Reed's trial commenced on February 1, 1988.

During the course of the two-day jury trial, defendant Reed stated that he was only vaguely aware that his wife was attempting to purchase the home where they and their children were living. He admitted that the information in the various loan documents contained falsehoods regarding his wife's name, marital status, employment, income and assets, but at trial denied providing his wife with the information necessary to complete the documents. He also admitted going to the real estate closing with her, but denied presenting the checks or deposit slip to the bank officials. Although the defendant acknowledged at trial that he had informed Agent Cunningham that he had assisted his wife in completing the various documents and checks, presented the worthless checks to the bank officials, and stated at the closing he was assisting Nickles with the home purchase, he asserted that he only made this statement to assist his wife, who was on probation and in jeopardy of going to jail.

At the close of all the evidence, Reed's attorney filed an oral motion for judgment of acquittal pursuant to Fed.R.Crim.P. 29(a). The district judge reserved judgment on the motion and submitted the case to the jury. On February 4, 1988, the jury returned a verdict convicting Reed on the conspiracy count, but acquitting him on the remaining counts. Subsequently, defense counsel renewed his motion for judgment of acquittal on the conspiracy count. The district judge queried defense counsel regarding the appropriateness of a new trial. Reed's attorney then stated that as an alternative to his Rule 29 motion, he would move for a new trial pursuant to Fed.R.Crim.P. 33. On April 29, 1988, the district court granted the defendant's motion for judgment of acquittal on the conspiracy count. The court found:

"By finding Lonnie Reed not guilty on each of the substantive counts the jury indicated quite emphatically that reasonable doubt existed as to Reed's guilt on those charges. It follows, therefore, that reasonable doubt had to exist as to whether or not any of the overt acts alleged to have been committed in furtherance of the conspiracy had been committed."

The court also stated that had it not granted the defendant's motion for judgment of acquittal, it would have granted his motion for new trial. The government filed a motion for reconsideration of the district court's order, which the district court denied on May 17, 1988.

The United States filed this appeal on June 16, 1988, alleging that the district court erred in granting the defendant's motion for judgment of acquittal, based on the court's perception that the jury's guilty verdict on the conspiracy count and acquittal on the substantive counts were inconsistent. The government also contends that the district court abused its discretion in conditionally granting the defendant's motion for new trial.

II.

The government initially contends that the district court erred in granting the defendant's motion for judgment of acquittal based on its belief that the jury's verdicts were inconsistent. Although the defendant argues that in granting the Rule 29 motion, the trial judge did not rely solely on the inconsistent verdicts, it is clear from the district court's order that the grant of the defendant's motion was based in large part on the trial judge's finding that Reed's conviction on the conspiracy count was inconsistent with the jury's verdict of acquittal on the substantive counts.

The district judge's finding is insufficient to justify overturning the jury's verdict, because "[i]t is well settled ... that '[c]onsistency in the verdict is not necessary. Each count in an indictment is regarded as if it was a separate indictment.' " United States v. Abayomi, 820 F.2d 902, 907 (7th Cir.1987) (quoting Dunn v. United States, 284 U.S. 390, 393, 52 S.Ct. 189, 190, 76 L.Ed. 356 (1932)). "The policy consideration underlying this rule is that a jury may acquit on some...

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