U.S. v. Stein
| Decision Date | 28 November 2000 |
| Docket Number | No. 99-1983,N,No. 99-1987,99-1983,99-1987 |
| Citation | 233 F.3d 6 |
| Parties | (1st Cir. 2000) UNITED STATES, Appellee, v. CHERYL B. STEIN, Defendant, Appellant. UNITED STATES Appellee, v. WENDY B. GOLENBOCK, Defendant, Appellant. UNITED STATES, Appellee, v. SUSAN OTIS, Defendant, Appellant. o. 99-1985, |
| Court | U.S. Court of Appeals — First Circuit |
APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS.
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Kevin S. Nixon for appellant Cheryl B. Stein.
John J.E. Markham, II with whom Markham & Read was on brief for appellant Wendy B. Golenbock.
Richard D. Biggs with whom Marcia G. Shein and the Law Office of Shein & Biggs were on brief for appellant Susan Otis.
Mark J. Balthazard, Assistant U.S. Attorney, with whom Donald K. Stern, United States Attorney, was on brief for appellee.
Before Selya, Circuit Judge, Campbell, Senior Circuit Judge, and Lipez, Circuit Judge.
Defendant-appellants Wendy B. Golenbock, Cheryl B. Stein and Susan B. Otis were each charged in an indictment with one count of bankruptcy fraud in violation of 18 U.S.C. 152 and one count of conspiracy to commit bankruptcy fraud in violation of 18 U.S.C. 371. The charges arose from their alleged concealment of Golenbock's and Stein's ownership interest in a summer home in Wellfleet, Massachusetts, which they placed in Otis's name in trust during bankruptcy proceedings. After a jury trial in the district court, Golenbock and Stein were convicted on both counts, and Otis was convicted on the conspiracy count. We affirm the convictions and sentences.
At the time of the bankruptcy proceedings, Golenbock and Otis were lawyers.1 Golenbock and Stein worked and lived together in Weston, and were, at times, in the business of real estate development and management. Otis was a close personal friend of both.
On October 5, 1982, Golenbock and a friend named Ellen Ratner purchased a parcel of land on Bond Street in South Wellfleet, Massachusetts ("the Wellfleet property") for $18,000.2 To build a house on the property, they borrowed $56,700 from the Cape Cod Five Cent Savings Bank ("Cape Cod Five"), secured by a mortgage on the property. In 1986, Ratner sold her interest in the Wellfleet property to Golenbock and Stein for $34,050. The Cape Cod Five was notified of the transfer, and released Ratner from the mortgage. Shortly thereafter, Golenbock and Stein obtained an additional $50,000 line of credit from the Cape Cod Five, secured by a second mortgage on the Wellfleet property. Golenbock and Stein used the newly-built house on the Wellfleet property as a vacation home, and sometimes rented it out.
On September 25, 1990, Golenbock and Stein filed separate Chapter 11 bankruptcy petitions. They did not list the Wellfleet property as an asset in their bankruptcy schedules or in their statement of financial affairs. Neither did Golenbock and Stein list the Cape Cod Five as a creditor of theirs, state that they had conveyed the Wellfleet property to anyone else in the year before bankruptcy, nor identify the Wellfleet property as being held or managed for someone else. Stein did not disclose an ongoing civil action she had brought relating to a hot tub she and Golenbock had had installed at the Wellfleet property.
Two days after Golenbock and Stein filed their bankruptcy petitions, Golenbock gave Otis a $15,000 check. On October 4, 1990, a deed was filed with the Barnstable Country Registry of Deeds conveying the Wellfleet property from Golenbock and Stein to Otis (under the name of Alekman) as sole trustee of the B.Z. Realty Trust, for a stated consideration of $108,000. The deed on its face was dated and notarized December 31, 1989. Stein testified at trial that the deed was signed in Andover, Massachusetts -- in Essex County -- on December 31, 1989, but the deed reflects that the signatures were notarized in Middlesex County, where Golenbock and Stein both lived.
At the same time as the deed was recorded, a Declaration of Trust for the B.Z. Realty Trust was also recorded. Two dates appeared on the Declaration as indicating when it was executed: August 1, 1989, and August 1, 1990.
Despite the stated consideration of $108,000, Otis did not pay any such sum to Golenbock and Stein. The mortgagor, Cape Cod Five, was not notified of the transaction. Golenbock and Stein continued to make regular mortgage and line of credit payments, often by postal money orders, bank checks or cash. The postal money orders and bank checks were obtained by employees of Golenbock and Stein, at their instruction and using cash provided by them. Later payments were made using accounts controlled by Golenbock and Stein. They made all the payments until the property was sold in June 1996.
In addition to paying the mortgage, Golenbock and Stein also paid the telephone, electric, and trash pickup bills for the Wellfleet property while it was in Otis's name in trust. The accounts for those bills were changed to Otis's name beginning in 1991. However, the mailing address for the bills always remained Golenbock and Stein's post office box, which Otis did not use. Mail sent to the Wellfleet address was routed to Golenbock's and Stein's offices.
Golenbock and Stein also handled and paid for the insurance on the property after the title was transferred. In June, 1991, a year and a half after the date on the deed to Otis, and nine months after the deed was recorded, Golenbock and Stein applied for new homeowner's insurance for the property in their names only, with no reference to Otis or the Trust. The insurance for the Wellfleet property was designated for personal use, not commercial use. In July, 1991, they had Otis and the Trust added to the policy as additional insureds. Only Golenbock and Stein, however, were insured for the contents of the Wellfleet property and for the loss of use. All the payments made for the Wellfleet property expenses were paid for or directed to be paid by Golenbock and Stein and their handwriting appears on checks and bills relating to those expenses.
Only Golenbock and Stein dealt with the real estate broker for the rental of the property. The income tax forms for the rental were mailed only to Golenbock and Stein's post office box. The tax form for the rent for the year 1990 was issued to Golenbock. The name was changed to Otis in 1991, at Golenbock's direction. Rental income checks from the real estate broker were payable to Otis in 1991, but were endorsed by Golenbock.
In November, 1990, several weeks after filing their bankruptcy petitions, Golenbock testified under oath at a bankruptcy meeting of creditors ("341 meeting") that she had not conveyed any property within the prior year to an insider or "good friend." She did not include the Cape Cod Five when listing the banks to which she owed money. Stein attended a 341 meeting in 1990, and both Golenbock and Stein attended another 341 meeting in June, 1992. At none of those meetings did either disclose to the representative of the U.S. Trustee's Office, who was conducting their examinations, an ownership interest in the Wellfleet property, its transfer in the year before the bankruptcy, or the existence of the Cape Cod Five debt. Golenbock and Stein's regular reports and cash flow statements submitted to the U.S. Trustee's Office did not reflect the payments they were making in connection with the Wellfleet property expenses.
In November 1991, Golenbock testified in a bankruptcy deposition conducted by one of her creditors. After being confronted with the creditor's knowledge of her prior interest in the Wellfleet property, she admitted that she had owned it. She stated, however, that it had been sold in 1989 to Otis. Golenbock further testified that she had transferred the property because she could not pay the mortgage.
In 1994, after Golenbock and Stein's bankruptcy cases had been converted to Chapter 7 liquidations, another 341 meeting was conducted, this time by their appointed bankruptcy trustee. Both Stein and Golenbock testified under oath at that meeting. They affirmed that the only property they still owned was their primary residence, and did not disclose any interest in the Wellfleet property. The trustee only learned about their involvement in the Wellfleet property in 1997, when he heard it from the U.S. Trustee's Office.
In April 1995, Golenbock and Stein received their bankruptcy discharges. By August 1995, while title to the Wellfleet property was still in Otis's name in trust, Golenbock and Stein resumed making the mortgage payments directly from Golenbock's bank account. In March, 1996, both bankruptcy cases were closed.
In early 1996, Golenbock contacted a real estate broker to list the Wellfleet property for sale. Golenbock and Stein, not Otis, dealt directly with the real estate broker during the sale process. In June 1996, the Wellfleet property was sold for $175,000, and a check for $65,906.66, most of the profits, was issued to Otis. She endorsed it to Golenbock on behalf of Max Golenbock-Stein, Golenbock and Stein's six-year-old son.
Although the funds were deposited in Golenbock's client trust account in Max's name, the account was used for Golenbock and Stein's personal and business purposes. For example, $5,100 was paid from the account to Stein for "New England School of Law," which Stein was attending, and nearly $10,000 in checks were paid from the account to Golenbock personally, for no stated purpose. The account was also used to deposit a $27,500 settlement check received from an insurance company for one of Golenbock's law clients, and to issue the $25,000 disbursement check to the client. The...
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