U.S. v. Thomas

• Decision Date: 05 September 1995
• Docket Number: No. 93-6673,93-6673
• Parties: 42 Fed. R. Evid. Serv. 1380 UNITED STATES of America, Plaintiff-Appellee, v. Wilda M. THOMAS; Elizabeth W. Thomas, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1332

62 F.3d 1332

42 Fed. R. Evid. Serv. 1380

UNITED STATES of America, Plaintiff-Appellee, v. Wilda M. THOMAS; Elizabeth W. Thomas, Defendants-Appellants.

No. 93-6673.

United States Court of Appeals Eleventh Circuit.

Sept. 5, 1995.

Patrick B. Collins, Mobile, AL and Cecily Kaffer, Mobile, AL, for appellants.

J.B. Sessions, III, U.S. Atty. and Donna E. Barrow, Asst. U.S. Atty., Mobile, AL, for appellee.

Appeal from the United States District Court for the Southern District of Alabama.

Before CARNES, Circuit Judge, JOHNSON, Senior Circuit Judge, and HOBBS ^*, Senior District Judge.

CARNES, Circuit Judge:

Wilda and Elizabeth Thomas appeal their convictions and sentences for wire fraud and conspiracy to commit mail and wire fraud stemming from the operation of a loan brokerage firm. We affirm their convictions but remand for resentencing.

I. STATEMENT OF FACTS

Wilda Thomas and her mother, Elizabeth Thomas, owned and operated a loan brokerage firm called The Regency Group in Birmingham, Alabama. The Regency Group purportedly matched borrowers with lenders for an advance fee. In March of 1988, Joe Roberts, one of the Regency Group's clients, complained about its practices to the Federal Bureau of Investigation, and he brought with him Carolyn Whittington, a Regency Group employee, whom the FBI interviewed. Whittington herself pleaded guilty to fraud charges in May of 1991, and she began to cooperate with the government in 1992 regarding her involvement with the Regency Group.

A grand jury indicted both Wilda and Elizabeth Thomas on October 22, 1992, for one count of conspiracy to commit mail and wire fraud, 18 U.S.C. Secs. 2 and 371, and two counts of wire fraud, 18 U.S.C. Sec. 1343. At trial, fifteen former clients testified that they paid advance fees to the Regency Group, and that the Thomases or Whittington at various times told them that funding for their loans was imminent or had already been approved. However, none of the loans the clients requested ever came through, and the Regency Group never refunded the clients' advance fees. In addition, several clients testified that they wrote checks to the Regency Group in order to cover expense fees for processing loans, with the express written condition that the Regency Group would return the money if the loan did not receive funding. Those clients never received either a loan or a refund. Others testified that Whittington or the Thomases had told them the Regency Group had successfully funded loans in the past, which was not true. Finally, one client testified that he had executed a power of attorney for Elizabeth Thomas as President of the Regency Group, and that the Regency Group had abused that power of attorney by using it to obtain a loan without his knowledge. That client never received any of the money that was borrowed with his power of attorney.

Both Wilda and Elizabeth Thomas were convicted and sentenced on all three counts. On appeal, they raise eleven challenges to their convictions and two challenges to their sentences.

II. ISSUES RELATED TO THE CONVICTIONS

We review a trial court's evidentiary rulings only for clear abuse of discretion. See United States v. Veltmann, 6 F.3d 1483, 1491 (11th Cir.1993). Questions of law and questions of the application of the law to the facts receive de novo review, while a trial court's findings of fact are reviewed under the clearly erroneous standard. See United States v. Garcia, 13 F.3d 1464, 1471 (11th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 2723, 129 L.Ed.2d 847 (1994).

A. RULE 804(b)(3) ISSUES

The Thomases' first two challenges to their convictions relate to the district court's evidentiary ruling that defense counsel could not testify to certain statements made to them by witnesses who invoked their Fifth Amendment privilege against self-incrimination and refused to testify at trial.

The Thomases' defense was that they lacked the intent to defraud their clients. To prove this, they sought to introduce evidence that they themselves had relied upon the representations of a Texas brokerage firm, the McCoy West Group, that it would present the Regency Group's loan "packages" to New York and European lenders to obtain funding. At trial, the defense called William McCoy III to the stand and explained that it also planned to call Mary McCoy and William McCoy, Jr. to testify. The three McCoys were principals of the McCoy West Group. The Thomases assert that the McCoy West Group did present some of the Regency Group's loan packages to New York and European lenders, and that the McCoys would have confirmed this assertion on the stand.

However, all three McCoys invoked their Fifth Amendment privilege against self-incrimination and refused to testify. Defense counsel then sought to introduce hearsay evidence of the McCoys' earlier statements, under Federal Rule of Evidence 804(b)(3), by putting the attorney for Elizabeth Thomas on the stand to testify to what the McCoys had told that attorney while she was interviewing them in anticipation of their testifying at trial. The trial court excluded as hearsay counsel's testimony. On appeal, the Thomases assert that the district court erred in refusing to admit the evidence for two reasons, contending: (1) that Rule 804(b)(3) mandates admission; and (2) that exclusion of the evidence deprived the Thomases of their right to a fair trial.

Rule 804(b)(3) states that the hearsay rule does not exclude a "statement against interest" if the declarant is unavailable as a witness. The rule defines a statement against interest as:

A statement which was at the time of its making so far contrary to the declarant's pecuniary or proprietary interest, or so far tended to subject the declarant to civil or criminal liability, or to render invalid a claim by the declarant against another, that a reasonable person in the declarant's position would not have made the statement unless believing it to be true. A statement tending to expose the declarant to criminal liability and offered to exculpate the accused is not admissible unless corroborating circumstances clearly indicate the trustworthiness of the statement.

Fed.R.Evid. 804(b)(3). Thus the rule establishes a three-prong test for the admission of statements against interest in criminal cases: (1) the declarant must be unavailable; (2) the statement must be against the declarant's penal interest; and (3) corroborating circumstances must clearly indicate the trustworthiness of the statement. United States v. Walker, 59 F.3d 1196, 1199 (11th Cir.1995).

Because they invoked their Fifth Amendment privilege to remain silent, it is clear that the McCoys were unavailable. See United States v. Hendrieth, 922 F.2d 748, 750 (11th Cir.1991). However, it is equally clear that the second prong of the test is not met. The Supreme Court has recently held that Rule 804(b)(3) "does not allow admission of non-self-inculpatory statements, even if they are made within a broader narrative that is generally self-inculpatory." Williamson v. United States, --- U.S. ----, ----, 114 S.Ct. 2431, 2435, 129 L.Ed.2d 476 (1994). As a result of that decision, we consider each statement individually when analyzing whether the statements meet the against-interest prong of the Rule 804(b)(3) test.

Defense counsel proffered several statements that the three McCoys made regarding their involvement with the Thomases. They asserted that Mary McCoy had told defense counsel the following: that she had submitted packages from the Regency Group to a bank in Switzerland; that the packages submitted by the Thomases "were exceptionally well put together"; that she could provide the names of some of the McCoy West Group's lenders in New York and Switzerland; that Wilda Thomas constantly called the McCoy West Group to find out the status of the packages, even to the point of being intrusive; and that the McCoy West Group allowed the Regency Group to adopt their non-disclosure forms. In addition, Mary McCoy would have explained the fee structure and the expenses charged by the McCoy West Group.

Defense counsel asserted that in addition to confirming Mary McCoy's statements, William McCoy III told counsel that he presented packages to the New York and European lenders; he described how the McCoy West Group interviewed a client and put a lending package together; he confirmed that the McCoy West Group charged the Regency Group, which was one of their clients, expense money; he stated that he had presented certain Regency Group packages to a certified public accountant, who had presented the packages to a Swiss bank; he stated that Wilda Thomas wanted to go on trips with him to present their loan packages to lenders; and he also stated that Wilda Thomas did go to the Channel Islands to meet with one of the McCoy West Group's contacts regarding one of the Regency Group's loan packages.

The defense also proffered that William McCoy, Jr., the father of William McCoy III, stated to defense counsel that Wilda Thomas was "always pushing," and that he was on the trip Wilda took to the Channel Islands. He explained that the McCoy West Group handled several of the Thomases' real estate deals, and that he had told Wilda Thomas a bank had approved one of the Regency Group's loan requests. William McCoy, Jr. told defense counsel about working on several of the loan packages of former Regency Group clients who testified in the Thomases' trial.

None of these statements are inculpatory, as Rule 804(b)(3) requires, but just the opposite. Each statement tends to exculpate the McCoys themselves from any allegation of participation in a sham business or fraud. The Supreme Court in Williamson did note that facially neutral statements might actually be against a declarant's interest: " 'Sam and I went to Joe's house' might be against the declarant's interest if a reasonable person in the declarant's shoes would realize that being linked to Joe and Sam would implicate the...