U.S. v. Word, 95-8288

• Decision Date: 21 November 1997
• Docket Number: No. 95-8288,95-8288
• Citation: 129 F.3d 1209
• Parties: 11 Fla. L. Weekly Fed. C 797 UNITED STATES of America, Plaintiff-Appellee, v. Thomas J. WORD; Richard A. Anders; Calvin L. Word; Dawn Dailey, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1209

129 F.3d 1209

11 Fla. L. Weekly Fed. C 797

UNITED STATES of America, Plaintiff-Appellee, v. Thomas J. WORD; Richard A. Anders; Calvin L. Word; Dawn Dailey, Defendants-Appellants.

No. 95-8288.

United States Court of Appeals Eleventh Circuit.

Nov. 21, 1997.

Rise Jean Weathersby, Federal Defender Program, Atlanta, GA, for Thomas Word.

Paul D. Sarkozi, Joseph P. Armao, Squadron, Ellenoff, Plesent, Sheinfeld & Sorkin, L.L.P., New York City, for Richard Anders.

Donald Franklin Samuel, Garland, Samuel & Loeb, Atlanta, GA, for Calvin Word.

Janice A. Singer, Office of Janice A. Singer, Atlanta, GA, for Dawn Dailey.

Martin James Weinstein, Assistant U.S. Attorney, Atlanta, GA, Ross A. Albert, Special Assistant U.S. Attorney, U.S. Securities & Exchange Commission, Washington, DC, for Plaintiff-Appellee.

Appeals from the United States District Court for the Northern District of Georgia.

Before EDMONDSON and DUBINA, Circuit Judges, and LIMBAUGH ^*, Senior District Judge.

EDMONDSON, Circuit Judge:

The four Defendant-appellants in this appeal raise many issues challenging both their convictions and their sentences for conspiracy to commit mail fraud, wire fraud, and securities fraud in violation of federal law. With three exceptions, we conclude that all of these challenges lack merit.

These arguments have merit: (1) Defendant-appellant Dawn Dailey's ("Dailey") challenge to the district court's exclusion of her evidence about her relationship with Calvin Word; (2) Defendant-appellant Richard Anders's ("Anders") challenge to his sentence, which attributed responsibility for the entire loss caused by the conspiracy to Anders despite his joining the conspiracy late; and (3) Appellants' challenge to the district court's failure to determine their ability to pay the restitution ordered by that court. ¹

Background

All Defendant-appellants--Calvin Word, Thomas Jefferson Word, Dawn Dailey, and Richard Anders--were involved with First Alliance Securities ("FAS"), a small brokerage firm dealing in penny stocks. The firm was established by Calvin Word, who hired his nephew Thomas Jefferson Word as a manager. Calvin also hired Dawn Dailey ² and Richard Anders as brokers. Some of the brokers hired by FAS, including Anders, were not properly registered traders and used the registration numbers of other brokers, including Jeff Word's registration number.

In 1994 Defendant-appellants were convicted on many counts for crimes related to a securities fraud scheme. This scheme involved high-pressure, fraudulent sales tactics--such as guaranteed returns--and unauthorized trading.

The trading at FAS followed a "wave" pattern, ³ resulting in the appearance that customers were realizing profits. The profits were illusory, however, because FAS brokers did not allow customers to sell their stocks for a cash return. Instead, the customers were manipulated into investing the proceeds into more penny stocks. The brokers made money on commissions for these trades and through a system of insider trading.

Discussion

Dawn Dailey

Dawn Dailey appeals claiming that she was denied the right to a fair trial because she was--pursuant to pre-trial motions by both the government and Calvin Word--permitted to introduce no evidence of physical and emotional abuse by Calvin Word and to introduce no evidence of Battered Woman's Syndrome. At trial, the government argued that the jury could infer that Dailey willfully and knowingly committed fraud because she was romantically involved with the man responsible for the fraudulent scheme's creation--Calvin Word.

Very little evidence was actually admitted about the relationship between Calvin Word and Dawn Dailey. But based only upon the introduction, by the government and Calvin Word, of the fact that the two were romantically involved during the conspiracy and subsequently married, the government argued that an inference of closeness and confidentiality should be drawn. Dailey says the jury was not allowed to hear about the other side of the relationship--a relationship the government insisted on stressing to support a conviction.

During closing argument the government contended that the defense that Dailey and Calvin did not discuss the intricate details of the conspiracy was contrary to common sense. That closing argument included these comments:

Now, remember who's the one who taught Ms. Dailey how to sell? Calvin Word. Who's the one she went home with every day? Calvin Word. Who's the one she went to work with before she was at First Alliance and after she was at First Alliance? That's Calvin Word.

...

In the case of Ms. Dailey and Mr. Word, they shared a home, job, transportation. They went on vacation together, I believe.

Ms. Singer says it's improper for you to draw any inference because they were boyfriend and girlfriend. I don't think the court is going to instruct you on that. It seems entirely proper and entirely consistent, as you know in your lives, day-do-day[sic] common sense lives, that people who go on vacation, work together, live together, spend all their time together, are going to have a pretty good idea about what's going on in the workplace when they work together.

1. Expert Testimony

Dailey attempted to admit expert psychiatric testimony that she suffered from "Battered Woman's Syndrome" and, thus, did not and could not have had the requisite mental intent or knowledge to carry out the scheme. Federal Rule of Criminal Procedure 12.2 specifically addresses the presentation of expert testimony about the mental state of a defendant, when mental state bears upon the issue of guilt.

Under this rule, notice must be provided that such evidence potentially will be used at trial. Also, the notice must be given before the time for the filing of pretrial motions, unless otherwise provided by the trial court. Fed.R.Crim.P. 12.2(b); see generally United States v. Piccinonna, 885 F.2d 1529, 1536 (11th Cir.1989). Notice was not timely given by Dailey; and, thus, the district court properly excluded the evidence. Fed.R.Crim.P. 12.2(d); see also United States v. Buchbinder, 796 F.2d 910, 914 (7th Cir.1986). The exclusion by the district court of expert testimony about Battered Woman's Syndrome was not error.

2. Lay testimony

Dailey also argues that, even if expert testimony was properly excluded, it amounted to abuse of discretion--violating her right to a fair trial--to exclude lay testimony of the abusive nature of the relationship or, at least, of the stormy nature of the relationship between Dailey and Word. This evidence, she argues, was needed to tell the other side of the story about the relationship and to refute the government's contentions that the jury, in the light of the romantic nature of the pertinent relationship, should infer that Dailey knew all that Word knew; the government made the nature and success of the Words' relationship an issue by asking the jury to draw this inference.

We review evidentiary rulings for abuse of discretion. See United States v. Ramos, 933 F.2d 968, 974 (11th Cir.1991). In this case, there was an abuse of discretion.

"A defendant's right to a fair trial is violated when the evidence excluded is material in the sense of a crucial, critical, highly significant factor." Id. A criminal defendant has the right to present witnesses in his own defense. Boykins v. Wainwright, 737 F.2d 1539, 1544 (11th Cir.1984). In this case, Dawn Dailey was not afforded the opportunity to present evidence to counter the government's argument that an inference of confidence (with a complete exchange of information) could be drawn from Dailey's relationship with Calvin Word: that she knew of the scheme to defraud investors and willfully participated in that scheme.

As established before trial--when the district court was considering the motion in limine to exclude evidence of problems in the Words' relationship, Dawn Dailey Word, in effect, would have testified that Word physically and emotionally abused her and would have testified that Word did not share much information with her. ⁴ In addition, other witnesses who were present at FAS could have testified about the emotional and verbal abuse that Dailey suffered--tending to show that Calvin Word wished Dailey to have no opinions of her own and to trust him blindly.

The government's trial strategy made this defense evidence highly significant. With the district court's exclusion of the proposed testimony of abuse (or similar evidence about a less-than-storybook relationship) Dailey had no means to defend against the government's contentions; and the jury did not hear the whole story about the relationship. See United States v. Cohen, 888 F.2d 770, 776 (11th Cir.1989) ("if there is not other practical means to prove the point, then the need factor points strongly toward receipt of such evidence") (citations and quotations omitted). All the jury was told was that Dawn Dailey and Calvin...