U.S. v. Shadduck

• Decision Date: 09 January 1997
• Docket Number: 95-1396 and 96-1342,Nos. 95-1395,s. 95-1395
• Citation: 112 F.3d 523
• Parties: 37 Collier Bankr.Cas.2d 1667, Bankr. L. Rep. P 77,350 UNITED STATES of America, Appellee, v. Michael D. SHADDUCK, Defendant, Appellant. (Two Cases) UNITED STATES of America, Appellee, v. Andrea D. SHADDUCK, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 523

112 F.3d 523

37 Collier Bankr.Cas.2d 1667, Bankr. L. Rep. P 77,350

UNITED STATES of America, Appellee, v. Michael D. SHADDUCK, Defendant, Appellant. (Two Cases)

UNITED STATES of America, Appellee, v. Andrea D. SHADDUCK, Defendant, Appellant.

Nos. 95-1395, 95-1396 and 96-1342.

United States Court of Appeals First Circuit.

Heard Jan. 9, 1997.

Decided April 24, 1997.

James B. Krasnoo with whom Law Offices of James B. Krasnoo, Andover, MA, was on brief, for appellants.

Mark J. Balthazard, Assistant United States Attorney, with whom Donald K. Stern, United States Attorney, was on brief, for appellee.

Before CYR, Circuit Judge, CAMPBELL, Senior Circuit Judge, and STAHL, Circuit Judge.

CYR, Circuit Judge.

Appellants Michael and Andrea Shadduck challenge the judgments of conviction and sentence entered against them for bankruptcy fraud, see 18 U.S.C. § 152, following their four-day jury trial. We affirm the convictions, but vacate, in part, the sentence imposed upon Michael Shadduck and remand for resentencing.

I BACKGROUND ¹

Appellant Michael Shadduck ("Shadduck"), a self-employed insurance salesman, invested in several insurance policies and a pension fund with Guardian Investor Services Corporation ("Guardian"). Three days before the Shadducks filed their joint chapter 11 petition on June 4, 1993, Shadduck had requested the maximum loan advances available on four Guardian life insurance policies. The chapter 11 petition, unaccompanied by schedules, listed liabilities totaling $2,269,381.13 to the twenty largest unsecured creditors.

On the day the joint chapter 11 petition was filed, Mrs. Shadduck drew an $8,000 check on their personal checking account and endorsed it over to her husband. Three days later, four checks totaling $124,383.66 were deposited in a bank account in the name of John Shepard, a friend of Shadduck. Three checks had been issued to Shadduck by Guardian and represented portions of the aforementioned loan proceeds, as well as policy dividends. The fourth was the $8,000 check withdrawn by Mrs. Shadduck from the joint account three days earlier.

At the creditors meeting on June 14, Shadduck denied having made any payment in excess of $600 to any creditor within the 90-day period preceding June 4, denied having a bank account, and disavowed any beneficial interest either in insurance policies or a pension plan. Mrs. Shadduck, who was continuing to write checks on their joint checking account during this time, remained silent as her husband made these misrepresentations under oath.

Following the creditors meeting, two other Guardian checks, totaling $13,346.01, payable to Shadduck and endorsed over to Shepard, were deposited in the Shepard account. Two days later Shadduck gave Shepard a $73,900 check, drawn on Shadduck's Guardian pension plan and endorsed over to Shepard. At On July 1, the Shadducks filed their bankruptcy schedules, signed the same day under penalty of perjury, asserting that they had no interest in pension plans or insurance policies and, further, that they had no bank account. Throughout this entire period, however, Shadduck had funds in his pension plan and Mrs. Shadduck continued to write checks on their joint checking account. Shepard subsequently drew checks totaling $171,211.12 to Shadduck on September 29 and November 2, 1993, in amounts mirroring the checks Shadduck had issued to Shepard the previous June. Three of these checks, totaling $17,134.70, explicitly noted that the proceeds represented pension plan funds.

the time, the Shadduck pension plan account contained $118,339.05. On July 19, 1993, a $33,517.36 check was drawn on the Shadduck pension plan account, representing the balance in the pension plan after the required $10,921.69 withholding for federal income tax.

The Shadducks were indicted on January 19, 1994: he on four counts, for concealing assets and falsely stating that he had no bank account, insurance policies, or pension plan, in violation of 18 U.S.C. § 152; she on one count, for falsely stating she had no bank account. At trial, Shadduck admitted making false statements but nevertheless insisted that he had not listed the pension plan funds on the schedules because they were exempt, even though he concededly had failed also to list any pension plan funds as property claimed exempt. Shadduck further testified that the monies invested in the insurance policies belonged to clients who had requested that he invest approximately $85,000 in their behalf. Shadduck admitted making false statements at the creditors meeting and on the bankruptcy schedules, but vouchsafed that his wife had not known what was going on.

After the jury returned guilty verdicts against both defendants, the district court sentenced Shadduck to twenty-seven months' imprisonment, including enhancements based on the total intended loss, see U.S.S.G. § 2F1.1(b)(1) (Nov. 1994), violation of a judicial order, id. § 2F1.1(b)(3)(B), and defrauding multiple victims, id. § 2F1.1(b)(2)(B). Shadduck appeals his convictions and sentence. Mrs. Shadduck, who was sentenced to two years' probation, principally challenges her conviction. ²

II DISCUSSION

1. Andrea Shadduck

Andrea Shadduck concedes that she purchased the $8,000 bank check with funds drawn from the joint checking account and endorsed it to her husband, that she signed the bankruptcy schedules listing no bank account, and that she remained silent at the creditors meeting while her husband falsely represented that they had no bank account. She nonetheless contends that there was insufficient evidence that she intentionally made a false statement, since her husband testified to her lack of knowledge.

There was ample evidence to support the conviction. The jury reasonably could infer from all the circumstances, especially the timing of the various transactions, that she possessed the requisite fraudulent intent. She drew an $8,000 bank check on the unscheduled joint checking account the very day she and her husband signed and filed their joint chapter 11 petition. She signed the bankruptcy schedule stating she had no bank account, yet continued to draw checks on the joint account for more than three months, even after her husband, in her presence, falsely denied the existence of any such account at the creditors meeting. This circumstantial evidence alone supported a reasonable inference that her motive in making the $8,000 withdrawal from the joint checking account on the eve of bankruptcy was to prevent its disclosure to creditors. Finally, fraudulent intent was readily inferable from the fact that the Shadducks omitted from their joint list of claimed exemptions only the

                property not elsewhere disclosed as assets on their schedules. 3  Moreover, the jury was free to discredit the exculpatory testimony offered by her husband, United States v. Restrepo-Contreras, 942 F.2d 96, 99 (1st Cir.1991), and we are not at liberty to presume otherwise, see United States v. Laboy-Delgado, 84 F.3d 22, 26 (1st Cir.1996) (noting that appellate court must "resolve all disagreement regarding the credibility of witnesses to the government's behoof")
                

2. Michael Shadduck

a. Supplemental Jury Instruction ⁴

Shadduck claims the jury verdict was tainted by the response to a question submitted by the jury. ⁵ Although Shadduck would have us isolate the trial court's supplemental instruction, the law is clear that it " 'must be viewed in the context of the overall charge.' " United States v. Femia, 57 F.3d 43, 47 (1st Cir.) (quoting Cupp v. Naughten, 414 U.S. 141, 146-47, 94 S.Ct. 396, 400-01, 38 L.Ed.2d 368 (1973)), cert. denied, --- U.S. ----, 116 S.Ct. 349, 133 L.Ed.2d 245 (1995). The general charge had explained, with respect to each count, that the jury would need to determine whether the alleged false statements and concealment had been "knowing" and "fraudulent." There was no objection to the general charge.

Several hours after retiring to deliberate, the jury inquired in writing whether there would be a change in the ownership of certain funds invested in an annuity contract under the name of one Leonard Roy were the jury to find Shadduck guilty. The trial judge replied that there was no evidence on which to base a response to their inquiry and that they were not to consider this collateral matter in arriving at their verdicts. The court added:

You should decide whether you believe that [Shadduck] intentionally made a false statement or he did not make a false statement in regard to this material. That is the issue before you.

Shadduck objected that a further instruction was required to the effect that the jury would need to determine whether Shadduck had made the statements "fraudulently." After explaining that its response was consistent with its earlier and more detailed charge, the court denied the request. Later, Shadduck unsuccessfully moved for a mistrial on the ground that the response to the jury inquiry effectively had eliminated an element of the offense.

Viewed in the context of the entire charge, and given the clear signal from the trial judge that the jury inquiry related to a collateral matter not appropriate for their consideration, the response was entirely proper. It did nothing to disturb, let alone gainsay, the very clear instruction in the general charge; viz., that the jury must determine whether the alleged conduct had been undertaken "knowingly" and "fraudulently."

Now, ... the offenses ... are alleged to have been done "knowingly and fraudulently."

An act or failure to act is "knowingly" done if it's done voluntarily and intentionally and not because of mistake or accident or any other innocent reason.

The purpose of requiring that the government ... prove that a defendant acted "knowingly" is to insure that no one is convicted because of an act, or failure to act, due to a mistake or an accident or some--any innocent reason.

An act or failure to act is "fraudulently" done if it is done...