United States v. Dunning, 16-16843
| Decision Date | 10 July 2018 |
| Docket Number | No. 16-16843,16-16843 |
| Parties | UNITED STATES OF AMERICA, Plaintiff-Appellee, v. JONATHAN WADE DUNNING, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
[DO NOT PUBLISH]
D.C. Docket No. 2:14-cr-00382-BJR-1
Appeal from the United States District Court for the Northern District of Alabama
Before WILSON and JORDAN, Circuit Judges, and CONWAY,* District Judge.
Defendant Jonathan Wade Dunning was charged in a 112-count1 indictment related to a fraudulent scheme to divert funds from two federally-funded community healthcare centers he had managed as chief executive officer. The indictment charged him with substantive and conspiracy counts to commit wire fraud, bank fraud, federal program fraud, and money laundering in violation of 18 U.S.C. §§ 2, 371, 666, 1343, 1344, 1349, 1956, and 1957. Dunning pleaded not guilty and his trial began on May 24, 2016.
At the close of the Government's case, and again at the close of all the evidence, Dunning unsuccessfully moved for judgments of acquittal. Following seventeen days of testimony, on June 17, 2016, the jury convicted Dunning on 98 of the 112 charged counts and he was sentenced to 216 months' imprisonment. Dunning appeals the convictions, arguing there was insufficient evidence presented at trial to support the jury's verdict. After review of the record and with the benefit of oral argument, we AFFIRM.
Dunning began his employment at Birmingham Health Center (BHC) in 1995 as clinical director, and became the chief executive officer in 1998. Duringhis tenure, BHC expanded the number of clinic locations, patients served, and revenue. Dunning additionally became the chief executive officer of Central Alabama Comprehensive Health (CACH) in 2005. Both community healthcare centers were non-profit organizations funded in part through federal grants from the United States Department of Health and Human Services, Health Resources & Services Administration ("HRSA"), to provide healthcare at no-cost or low-cost to homeless and economically disadvantaged populations.
After years of managing the centers, Dunning told others that he knew he was more "valuable" than the $290,000 annual salary he was being paid by the non-profits, and he had "found a way to make money off the government." Beginning in 2006, Dunning formed the first of several of his for-profit companies—each containing "Synergy" in the business name (collectively "the Synergy Entities")—which would subsequently take over the management duties of BHC and CACH as well as ownership of certain real estate used by BHC. Throughout the ensuing seven years, Dunning and the Synergy Entities had no other source of income, no other paying clients, and no other significant commercial real estate tenants other than BHC and CACH.
On October 31, 2008, Dunning left his employment with the community healthcare centers to focus on the operation of his for-profit Synergy Entities. However, Dunning retained management control over BHC and CACH through hismanipulation of the individuals he handpicked to succeed him as chief executive officer at the centers. Jimmy Lacey, who succeeded Dunning at BHC, lacked the appropriate experience in healthcare and was unemployed at the time he was selected; Lacey was an unindicted coconspirator who died six months before trial.2
The chief financial officer, Terri Mollica, and the lead grant-writer, Sharon Waltz, both left BHC with Dunning to work at the Synergy Entities although they continued to perform the same duties and continued to direct employees at BHC.3 Despite leaving BHC, Mollica maintained her access to both centers' federal grant funding accounts. Mollica was indicted separately and entered into a plea agreement in her case in April 2015; however, she refused to testify at Dunning's trial.
Dunning also continued his influence over the BHC controller, Sheila Parker, who remained employed at BHC, and managed (with Lacey) the affiliated Birmingham Financial Federal Credit Union (the "Credit Union"), which primarily served employees of BHC. Parker subsequently pleaded guilty to embezzling money from CACH's bank account, and testified at Dunning's trial.
Over the course of several years, Dunning used his control over BHC and CACH to divert $13.5 million to his for-profit Synergy Entities through consulting contracts, real estate leases, and transfers from BHC's revenue account containing federal grant funds. The Synergy Entities' main source of rental income of approximately $4 million was primarily from leases negotiated with Lacey on behalf of BHC. Through Dunning's fraudulent activities, he engineered the transfer of ownership to his Synergy Entities of two buildings housing BHC clinics, paying half of its appraised value for one building's purchase from BHC, and using BHC funds to pay the full purchase price from a third-party for the other building. Dunning used BHC funds to pay three-years worth of the debt service on a third building to be renovated for a BHC clinic; however, Dunning never renovated the property as promised, diverting the renovation loan funds to a separate property he owned, and keeping all of the profits from its eventual sale when BHC could not open a clinic. Because Dunning remained in control of the management of BHC and CACH, he diverted funds from the centers' federal grants and BHC's clinic operating account into his personal account, and used BHC funds to make payments on the loan for a new $85,000 Jaguar. Dunning also defrauded a business partner out of the proceeds in a joint venture performing work for BHC by diverting the full payments to his Synergy Entities and denying BHC had paid.
To disguise his fraudulent activities from an investigator at HRSA, Dunning directed Lacey and others to provide false information about payments from BHC to the Synergy Entities. Through the course of their multi-year relationship with Dunning's Synergy Entities, the community healthcare centers suffered significant financial problems which eventually forced BHC to the brink of bankruptcy and CACH to close its doors for good.
Dunning challenges the sufficiency of the evidence to sustain his convictions. We review the sufficiency of evidence to support a conviction de novo while viewing the evidence in the light most favorable to the government and resolving all credibility evaluations in favor of the jury's verdict. United States v. Hernandez, 743 F.3d 812, 814 (11th Cir. 2014) (per curiam). A jury's verdict must stand "if any reasonable construction of the evidence would have allowed the jury to find the defendant guilty beyond a reasonable doubt." United States v. Rodriguez, 732 F.3d 1299, 1303 (11th Cir. 2013). It is unnecessary for the government "to disprove every reasonable hypothesis of innocence, as the jury is free to choose among reasonable constructions of the evidence." United States v. Mieres-Borges, 919 F.2d 652, 656 (11th Cir. 1990).
"The test for sufficiency of evidence is identical regardless of whether the evidence is direct or circumstantial, and no distinction is to be made between the weight given to either direct or circumstantial evidence." United States v. Doe, 661 F.3d 550, 560 (11th Cir. 2011) (quotation omitted). However, "[w]here the government relies on circumstantial evidence, reasonable inferences, and not mere speculation, must support the jury's verdict." Id. (quotations omitted). "To the extent that [the defendant's] argument depends upon challenges to the credibility of witnesses, the jury has exclusive province over that determination and the court of appeals may not revisit this question." United States v. Chastain, 198 F.3d 1338, 1351 (11th Cir. 1999).
Dunning was convicted of multiple counts of substantive and conspiratorial criminal conduct to defraud a federal agency, 18 U.S.C. § 371, based on wire fraud, bank fraud, money laundering, and federal program fraud. "A conspiracy is an agreement between two or more persons to accomplish an unlawful plan." United States v. Chandler, 388 F.3d 796, 805 (11th Cir. 2004). To sustain a conspiracy conviction based on fraud in violation of 18 U.S.C. § 371, the Government was required to prove (1) an agreement between Dunning and at least one other person to commit an offense against or defraud the United States; (2) Dunning's knowing and voluntary participation in the agreement; and (3) thecommission of an act in furtherance of the agreement. See United States v. Tampas, 493 F.3d 1291, 1298 (11th Cir. 2007); United States v. Hasson, 333 F.3d 1264, 1270 (11th Cir. 2003); 18 U.S.C. § 371. "The knowledge requirement is satisfied when the [g]overnment shows a defendant's awareness of the essential nature of the conspiracy." United States v. Ndiaye, 434 F.3d 1270, 1294 (11th Cir. 2006). "[T]he defendant's assent can be inferred from acts which furthered the conspiracy's purpose." United States v. Miller, 693 F.2d 1051, 1053 (11th Cir. 1982) (quotation omitted).
In order to convict someone of fraudulently obtaining or misapplying funds from an organization receiving federal assistance, the Government must prove: (1) the defendant converted property owned by, or under the care, custody, or control of an organization receiving federal assistance; (2) the defendant was an agent of such an organization; (3) that property was valued at $5,000 or more; and (4) the organization received in excess of $10,000 in federal funds during the one-year period in which the defendant converted the property. 18 U.S.C. § 666(a)-(b); see Tampas, 493 F.3d at 1298. The statute defines an "agent" as one who is "authorized to act on behalf of another" and, "in the case of an organization or government, includes a servant or employee, and a partner, director, officer, manager, and representative." 18 U.S.C. § 666(d)(1); United States v. Langston, 590 F.3d 1226, 1233-34 (11th Cir. 2009).
To sustain Dunning's convictions for wire fraud, 18 U.S.C. § 1343, the Government...
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