U.S. v. Robichaux, 92-3396
| Citation | 995 F.2d 565 |
| Decision Date | 01 July 1993 |
| Docket Number | No. 92-3396,92-3396 |
| Parties | 39 Fed. R. Evid. Serv. 210 UNITED STATES of America, Plaintiff-Appellee, v. Edward ROBICHAUX, Defendant-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
Patrick C. McGinity, New Orleans, LA, (court appointed), for defendant-appellant.
Harry Rosenberg, U.S. Atty., Mary J. Darrow, and Herbert W. Mondros, Asst. U.S. Attys., New Orleans, LA, for plaintiff-appellee.
Appeals from the United States District Court for the Eastern District of Louisiana.
Before WISDOM, DAVIS, and SMITH, Circuit Judges.
This criminal case involves mail and wire fraud which led to the failure of an insurance company. We AFFIRM the conviction on all three counts and also AFFIRM the sentence.
Edward Robichaux was the CEO of North American Financial Corporation (NAFC). Edward Street was the CEO of Windmier Financial Services (Windmier). In April 1989, Robichaux and Street formed a joint venture, N.W. Venture.
To fund this venture, Street contributed approximately $13 million in Federal National Mortgage Company securities MAs or "Fannie-Maes". These securities did not belong to Street but were held in trust by several banks. Street learned the identification numbers of these securities and through this information was able to act as if he had control over these securities. Street's financial manipulations led to his conviction for bank fraud and wire fraud. Robichaux did not pay anything for these securities.
In June 1989, Robichaux attempted to secure a $2.2 million dollar loan from the People's Bank in Biloxi. He proposed to use one of the FNMA's as collateral. On June 8, 1989, Robichaux faxed a letter of guarantee to the People's Bank reflecting that he did own the securities. This conduct forms the substance of count three. The loan was not completed because Robichaux could not produce the securities.
Shortly thereafter, Robichaux entered into an agreement with Gordon L. Rush, who owned Presidential Fire and Casualty Company (Presidential). Robichaux assigned the Fannie-Maes to G.L.R., Inc., (GLR) in exchange for various GLR assets, including GLR stock. GLR then assigned these FNMAs to Presidential as a capital contribution. Without incurring any corresponding debt, Presidential placed the FNMAs on its books. The effect of this assignment was to make Presidential appear to be solvent. Presidential continued to issue insurance policies (and collect premiums) for without this $13 million Presidential would have been undercapitalized and thus barred from any further insurance business.
At this time, Rush wrote personal checks to Robichaux for commissions totaling $86,000, which was funded by Presidential.
On October 2, 1989, Robichaux faxed to the Texas State Board of Insurance (Texas) a letter verifying that approximately $12.78 million in Fannie-Maes was held by NAFC on behalf of GLR, free and clear of any encumbrance. Count two of the indictment is based on this misrepresentation.
In December 1989, the Louisiana Insurance Commission (Commission) retained Deloitte & Touche (Touche) to audit Presidential. Touche asked Robichaux to verify Presidential's ownership of the FNMAs. Robichaux verified that the FNMAs were held by him for GLR by letter on December 18, 1989. Count one of the indictment is based on this verification. Touche relied on Robichaux's verification and issued a favorable audit. On November 12, 1991, Presidential was declared insolvent.
Gordon Rush and Edward Street have been convicted of charges related to Robichaux's. Rush is awaiting sentencing, and Street's appeal is pending before this Court.
Robichaux was indicted on September 13, 1991 for mail fraud (count one) and two counts of wire fraud (counts two and three). After a four day trial, a jury found Robichaux guilty on all counts. The district court sentenced Robichaux to fifty-seven months in jail.
Robichaux raises numerous points of error. We have arranged them in seven categories:
A. 404(b) Evidence.
B. Failure to Disclose Grand Jury Transcript.
C. Surplusage in the Indictment.
D. The Non-Severance of the Indictment.
E. Sufficiency of the Evidence.
F. Prosecutorial Misconduct.
G. Sentencing.
In the fall of 1987, Robichaux admitted to an undercover FBI agent that he knew that certain bonds he intended to use to increase the assets of another insurance company which was owned by Rush were fraudulent. Robichaux subsequently inflated the assets of this insurance company with these bonds. On September 14, 1988, he pleaded guilty to this crime.
The district court permitted the FBI agent to testify at this trial about Robichaux's earlier conduct. Federal Rule of Evidence 404(b) allows the introduction of other crimes as proof of knowledge and intent. 1 The district court must also undertake a 403 probity--prejudice balancing. 2 The district court's determinations on these matters "will not be disturbed absent a clear showing of abuse of discretion". 3
The government was required to prove that Robichaux had the specific intent to commit fraud. Robichaux asserted at trial that he lacked this intent, and in his brief to this Court contended that he did not know "what was going on". Because intent is subjective, it is often difficult to prove. This was the rationale behind allowing evidence of other crimes to show intent under 404(b).
Robichaux was on trial for enhancing with fraudulent securities the assets of an insurance company owned by Rush. That just a few years ago Robichaux had knowingly used fraudulent securities to increase the assets of another insurance company owned by Rush made it substantially less likely he did not know "what was going on" and had acted without intent to commit fraud in this case.
The probative value of this evidence is strong. The district court must also consider the prejudicial effect and whether the probative value is substantially outweighed by the attendant prejudice. Because the offenses are so similar the potential prejudice is great, for there is the risk that the jury may become confused or convict the defendant under a propensity theory. The prejudice, however, results from the great probative value. Indeed, the earlier evidence is so similar that it almost amounts to a signature. The district court acted properly in admitting this evidence and wisely instructed the jury as to the limited purpose of this extrinsic evidence.
The government did not turn over to Robichaux the grand jury transcript of Jennifer Matte, an attorney for Presidential, who testified at Robichaux's trial. This failure to disclose, Robichaux argues, requires a new trial.
The grand jury testimony consisted only of Matte stating her name, occupation, and that she was counsel for Presidential. She thereupon invoked the Fifth Amendment and gave no further testimony. At trial, Matte was more loquacious (her testimony occupies forty-five pages of volume 11 of the transcript), and her testimony was harmful to Robichaux. Robichaux suggests that if he had known about this prior testimony, he would have cross-examined her about it and sought to impeach her.
Robichaux's argument fails. The law is clear that cross-examining a witness about an invocation of the Fifth Amendment at a grand jury proceeding is not permitted. 4 This Court has held that, 5
Because the law is clear that Matte could not be questioned about her earlier testimony, we need not reach the question of whether this evidence is material under Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963) and U.S. v. Bagley, 473 U.S. 667, 105 S.Ct. 3375, 87 L.Ed.2d 481 (1985) or falls under the Jencks Act.
Robichaux sought to have parts of the indictment struck. We review for abuse of discretion.
Robichaux's argument is meritless. The cast of characters including Rush in paragraph A of the indictment is accurate, helpful, and relevant. The listing of the victims including the citizens of Louisiana and Texas in paragraph B appears to be an accurate listing of those who suffered because of Robichaux's alleged fraud. Finally, as this Court has stated, the use of the phrase " 'scheme and artifice to defraud' [in paragraph B] does not make the indictment defective ... [it was] meant only to elaborate the nature of [the defendant's] fraudulent activity". 6 The district court did not abuse its discretion in refusing to strike portions of the indictment.
Robichaux claims that counts one and two were improperly joined with count three.
We must consider whether either a misjoinder or a prejudicial joinder has occurred.
This Court has held that misjoinder "is a matter of law which is completely reviewable on appeal, but rule 8 [of the Federal Rules of Criminal Procedure] 7 is to be broadly construed in favor of initial joinder". 8 Rule 8's transaction requirement is flexible and "may comprehend a series of many occurrences, depending not so much upon the immediateness of their connection as upon their logical relationship". 9
Prejudicial joinder is committed to the discretion of the trial court, and reversal is warranted only if the defendant can show clear prejudice from the trial court's refusal to sever. 10
Some of the same securities used in the transaction that forms the basis of count three were used in the transaction that was the basis for counts one and two. Both transactions occurred within a few months of each other. They require similar background explanations....
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