U.S. v. Vebeliunas

• Decision Date: 18 April 1996
• Docket Number: No. 153,D,153
• Citation: 76 F.3d 1283
• Parties: UNITED STATES of America, Appellee, v. Vytautus VEBELIUNAS, also known as VV, Defendant-Appellant. ocket 94-1185.
• Court: U.S. Court of Appeals — Second Circuit

Page 1283

76 F.3d 1283

UNITED STATES of America, Appellee, v. Vytautus VEBELIUNAS, also known as VV, Defendant-Appellant.

No. 153, Docket 94-1185.

United States Court of Appeals Second Circuit.

Argued Sept. 21, 1995 Decided Feb. 21, 1996 As Amended in Response to Petition for Rehearing April 18, 1996.

Norman A. Olch, New York City, for Defendant-Appellant.

Gordon Mehler, Assistant United States Attorney for the Eastern District of New York, Brooklyn, New York (Zachary W. Carter, United States Attorney, Susan Corkery, Assistant United States Attorney, Brooklyn, New York, of counsel), for Appellee.

Before: OAKES, MINER, and MAHONEY, Circuit Judges.

MAHONEY, Circuit Judge:

Defendant-appellant Vytautus Vebeliunas appeals from a judgment entered April 4, 1994 in the United States District Court for the Eastern District of New York, Carol Bagley Amon, Judge, that convicted him of eight counts of bank fraud in violation of 18 U.S.C. § 1344 (counts 2, 4-5, 29, 32-33, 38, and 41), fifteen counts of criminal conflict of interest in violation of 18 U.S.C. § 1006 (counts 18-28, 31, 36-37, and 40), sixteen counts of misapplication of credit union funds in violation of 18 U.S.C. § 657 (counts 3, 7-17, 30, 34-35, and 39), and one count of causing the filing of a false loan application in violation of 18 U.S.C. § 1014 (count 42) ¹, all stemming from abuses of his relationship with the Kasa Lithuanian Federal Credit Union ("Kasa"). Vebeliunas was acquitted on one count of bank fraud (count 6) and two counts of witness tampering in violation of 18 U.S.C. § 1512(b) (counts 43-44). His conviction on a substantive RICO count for violation of 18 U.S.C. § 1962(c) (count 1) was vacated in response to a posttrial motion as hereinafter described. Vebeliunas also appeals from an order entered December 16, 1994 in the United States District Court for the Eastern District of New York, I. Leo Glasser, Judge, that denied Vebeliunas' posttrial motion pursuant to 28 U.S.C. § 455 to vacate the judgment of conviction.

Vebeliunas was sentenced to thirty-six months imprisonment on each count, to run concurrently, followed by three years of supervised release. Judge Amon also imposed restitution in the amount of $581,194, a $60,000 fine, and special assessments totalling $800.

Vebeliunas contends on appeal that: (1) the district court's jury instructions on the conflict of interest counts improperly amended the indictment, and also allowed him to be convicted on the basis of conduct that was not criminal; (2) counts 7-14 were barred by the applicable statute of limitations; (3) the government's failure to call as witnesses the borrowers with respect to the loans at issue on counts 2-4, 11, 14, 16-17, 22, 25, and 27-28 violated his rights under the Confrontation Clause of the Sixth Amendment; (4) the district court erred by allowing the government to request the jury to draw inculpatory inferences from its own witnesses' exculpatory statements, thereby undermining the convictions on counts 32-40; (5) the evidence presented to the jury regarding the RICO count that was later dismissed created prejudicial spillover as to all of the remaining counts, requiring the reversal of his convictions on all counts; (6) his motion to vacate the judgment based upon 28 U.S.C. § 455 should have been granted because of an appearance of partiality by Judge Amon; (7) he was denied the effective assistance of counsel by his counsel's failure to interview fifteen potential witnesses; (8) the bank fraud convictions are multiplicitous; and (9) there was insufficient evidence to support his conviction on any count because there was no evidence that he misled Kasa.

We affirm the judgment of conviction and the denial of Vebeliunas' posttrial recusal motion.

Background

In view of the guilty verdicts that the jury rendered on almost all of the counts submitted to it, the factual recital that follows credits all the jury findings and inferences in favor of the prosecution that the jury might reasonably have drawn from the evidence presented to it.

In 1980, Vebeliunas participated in the founding of Kasa, a federal credit union chartered and insured by the National Credit Union Administration (the "NCUA"). During the 1980s, Kasa acquired assets of more than $80,000,000 and a membership of approximately 6,000, and opened branches in several different states.

Vebeliunas served as Kasa's president and as one of its directors until 1987. During this time, Kasa was headquartered in the same Queens, New York office building where Vebeliunas had his personal business office. At trial, the government introduced evidence that Vebeliunas managed Kasa's daily operations and controlled its loan decisions. Vebeliunas accomplished this by staffing Kasa's credit committee with employees of his other businesses, and by allowing only people who lacked financial sophistication to serve on Kasa's board of directors.

In 1987, Kasa removed Vebeliunas from its board of directors and terminated his presidency. By 1991, many loans to companies under Vebeliunas' control were in default, and Kasa was placed in conservatorship that August. These difficulties ultimately led to the liquidation of Kasa on July 31, 1992.

A. The Fraudulent Loans.

At trial, the government produced evidence showing that Vebeliunas used his influence to procure a number of improper Kasa loans for the benefit of companies under Vebeliunas' control, including Litas Investing Company, Inc. ("Litas"), Panagra Properties, Inc. ("Panagra"), Litas Travel, World Trade Industries ("WTI"), and Seaview Construction. These companies all had their offices in the same building as did Kasa and Vebeliunas, and there was no physical separation between them and Kasa in that building. Vebeliunas used numerous "straw borrowers," who did not actually receive the proceeds of their loans and who were assured that they would not have to repay the loans, to obtain money from Kasa. Vebeliunas also falsified documents in order to raise capital to fund the ventures of the companies under his control.

1. The Beach Club of Marco Island Loans.

In 1984, Vebeliunas formed Panagra in order to acquire the Beach Club of Marco Island (the "Beach Club"), a condominium hotel in Florida. On February 1, Panagra contracted with Broward Management Company to purchase twenty-seven units of the Beach Club for $2,080,812. This transaction required Panagra to produce a down payment of $310,000. Vebeliunas caused Stephen Hill, an attorney and part-time Kasa employee, to file for a loan in the amount of $310,000 from Kasa. Without Hill's knowledge, Vebeliunas later altered the application by changing the amount of the loan to $350,000. The Kasa board of directors approved the $350,000 loan to Hill based upon the false representation that Hill was in a contractual relationship with Panagra.

Vebeliunas then raised the rest of the money for Panagra to purchase the twenty-seven units by persuading twenty-seven individuals to apply for loans from Kasa. While each loan application stated that the individual was making a deposit of approximately $20,000 of his "own funds," in fact, each individual paid only $4,750, with the remainder to be supplied by Litas. These twenty-eight loans (including the Stephen Hill loan) were not separately charged in the present prosecution because they were time barred, but the loans were charged as predicate acts under the RICO count.

Next, Vebeliunas sought to acquire the remaining Beach Club units. He paid Edwin Stots $10,000 to file a Kasa loan application in the amount of $700,000 in order to raise the money necessary for this endeavor, and Stots testified that Vebeliunas had told Stots that another person named "Rimas" was doing the same thing. This testimony is corroborated by a Kasa loan application filed by Vebeliunas' wife's brother-in-law, Rimas Valaitis, in the amount of $700,000. The funds from these two loans were subsequently used by Panagra to purchase the remaining Beach Club units.

The Stots and Valaitis loans were never fully repaid. When Kasa was placed in conservatorship, the balance on these loans amounted to approximately $627,000.

2. The Club Regency of Marco Island Loans.

Later in the same year, Vebeliunas decided to purchase Club Regency of Marco Island ("Club Regency"), another condominium development located near the Beach Club. The owner, Leonard Masello, was in default of his loan payments to the Naples Federal Savings and Loan Association ("Naples Federal") with respect to Club Regency, and agreed to sell the property.

Vebeliunas raised the money for this purchase by persuading eight straw borrowers each to apply for a $100,000 loan from Kasa. The borrowers knew little or nothing about the purpose of the loans, and Vebeliunas assured them that they would not be liable for their repayment. Approximately half of this money was paid to Masello and to Naples Federal, while the other half was placed in a Kasa account that was drawn down to $5.00 by early 1985. These eight loans were never fully repaid, and a balance of $667,110 was due to Kasa as of the date of conservatorship.

A few months later, the Naples Federal loan fell into default, and Vebeliunas once again resorted to straw borrowers from Kasa to satisfy Naples Federal's demand for $500,000. Kasa issued loans to Joseph and Raymond Miezelis in the amounts of $150,000 and $350,000, respectively. Once again, the interests of Litas and Vebeliunas in the loan were never disclosed. The loans to the Miezelis were also never fully repaid; approximately $490,000 remained due at the date of conservatorship.

In early 1986, the Naples Federal loan again fell into default, and Vebeliunas caused Edwin Stots to write a check for $125,000 to Naples Federal. Vebeliunas then used funds from Kasa to cover this check. The funds were acquired by means of a loan in the name of Stots' father, who was never made aware of the loan. As of the date of...