United States v. Friedman
| Decision Date | 18 July 2018 |
| Docket Number | No. 15 CR 675-2,15 CR 675-2 |
| Parties | UNITED STATES OF AMERICA v. ARTHUR FRIEDMAN |
| Court | U.S. District Court — Northern District of Illinois |
AMY J. ST. EVE, Circuit Judge*:
On April 17, 2018, a jury convicted defendant Arthur Friedman on three of five counts of bank fraud, 18 U.S.C. § 1344. Friedman has filed a post-trial motion for a judgment of acquittal and an alternative motion for a new trial. (R. 124.) For the following reasons, the Court denies his motions.
On November 12, 2015, a grand jury returned an indictment charging Friedman and Leon Bilis, co-owners of an automobile-leasing company named Prestige Leasing, with bank fraud. The indictment charged that from 2008 until November 2011 Bilis and Friedman schemed to defraud banks by submitting fraudulent loan applications for customers who had not actually purchased cars. In some instances, the vehicles that Bilis and Friedman claimed had been sold to a customer had already been exported overseas. Bilis and Friedman submitted these fraudulent applications, according to the indictment, to inflate Prestige's operating capital. On March 6, 2017, Bilis pleaded guilty pursuant to a written plea agreement, which contained a cooperationprovision. (R. 58.) Friedman proceeded to trial.
On March 16, 2018, less than a month before trial was scheduled to begin, Friedman filed a motion to dismiss the indictment. (R. 84.) He claimed that in late 2011, when the banks first came calling for unpaid loans, Bilis and he hired a lawyer named Jeffrey Steinback. Not long after, Friedman claimed, he obtained independent counsel, but Steinback continued to represent Bilis. Based on their prior attorney-client relationship, Friedman argued that Steinback's representation of his codefendant-turned-cooperator, Bilis, prejudiced his right to a fair trial. The Court held an evidentiary hearing on the matter and it reviewed evidence submitted ex parte. The Court concluded that there was no risk of prejudice against Friedman, and therefore denied his motion on April 6, 2018. (R. 107 (the "April Opinion").)1
The government went to trial on a redacted indictment, which charged five counts of bank fraud in violation of 18 U.S.C. § 1344. Counts One and Two related to two loans submitted to U.S. Bank and American Eagle Bank in the name of Aleksandr Petlakh, a Prestige employee. Counts Three and Four related to two loans submitted to American Eagle Bank and MB Financial Bank in the name of Daniel Krasilovsky, Friedman's cousin. Count Five related to a loan submitted to American Eagle Bank in the name of Michael Blekhman, a former Prestige customer. At trial, the government called the following witnesses: Alina Sandal, Leon Bilis, Andray Zdunkevich, Jerry Sklarzewski, Val Himin, Petlakh, Vassily Larchenko, Stanislaw Podolny, Krasilovsky, Igor Nemov, Brian Landers, Special Agent David Malone, Alex Troyanovsky, Alex Zdanov, Kay Pollock, and Barry Kreczmer. Friedman called one witness, Buffalo Grove Police Lieutenant Tara Anderson. Friedman did not testify at trial.
During trial, Bilis testified that many customers needed loans to purchase cars from Prestige, and that Prestige had relationships with several banks to facilitate those loans. Prestige would submit the customer's personal information, information about the sale and the vehicle, and, after a credit-report check, Prestige would receive the funds and the customer would be obligated to repay the bank. The banks relied on Prestige's representations about the customer, sale, and location of the vehicle in deciding to issue loans, according to testimony.
Bilis testified that in 2008 Prestige began to suffer financially, and at that time Friedman proposed submitting several fraudulent loan applications in Bilis's and Friedman's own names for vehicles that had already been exported. Bilis testified that to conceal the fraud Prestige would make monthly payments on those loans. The government introduced loan applications in Friedman's and Bilis's names which they had submitted to banks, and vehicle reports showing that those vehicles had already been exported overseas before Bilis and Friedman had submitted those loans. The government also elicited the testimony of Prestige's accounts-payable manager, Alina Sandal, who explained that she created monthly financial statements that showed the company's profits and losses. She testified that Friedman received and reviewed those statements.
Bilis further testified that Prestige continued its financial decline past 2008. Bilis and Friedman began using the names of other individuals—family, friends, and Prestige employees—to take out fraudulent loans. The government introduced evidence of loans in the name Friedman's father and cousin as well as certain Prestige employees. Many of those loans were for cars that were not in the country, according to vehicle reports. Bank records, further, showed that these supposed customers did not repay the loans; Prestige did.
Certain of the supposed customers testified, each explaining that he did not authorize theloan applications, receive the vehicle identified in the application, or receive the loan proceeds. Friedman's cousin, Daniel Krasilovsky, for example, testified (after receiving immunity from the government) that Friedman had requested his driver's license so that Friedman could take out loans. Shortly after, according to Krasilovsky, he began receiving payment books, which Friedman told him to disregard. Krasilovsky testified that when the bank pressed for information Friedman told him to go to the police.
Bilis also testified that by 2011 Prestige's financial situation had still not measurably improved, and he and Friedman grew more desperate to increase the company's capital. One customer, Stanislav Podolny, testified that he provided Prestige cash for a car that he did not receive. Floor-plan investors, who financed vehicles to be marketed and sold on Prestige's lot in exchange for a cut of the mark-up price, testified similarly. Igor Nemov, for example, testified that he invested substantial sums, but he later found out that Prestige did not have many of the cars he had financed.
The government's evidence showed that by 2011 the banks began contacting the customers whose names appeared on fraudulent applications regarding outstanding payments. One supposed customer and Prestige employee, Petlakh, explained that when he confronted Friedman and Bilis, both men apologized to him. Similarly, three American Eagle Bank representatives—Andray Zdunkevich, Jerry Sklarzewski, and Barry Kreczmer—testified that after receiving word that some of the loans may have been fraudulent, they investigated, and determined that several Prestige loans were suspect and delinquent. They confronted Friedman and Bilis, who admitted that they had applied for loans based on fictitious sales.
When the government rested its evidentiary presentation, Friedman called Lt. Tara Anderson. Lt. Anderson testified regarding her initial investigation of fraud at Prestige, whichshe later referred to the FBI. Friedman also used Lt. Anderson to impeach certain witnesses based on potentially inconsistent statements those witnesses had previously made to her. The Court, however, sustained objections to Friedman's attempted impeachments with respect to Nemov's and Podolny's testimonies.
After hearing the evidence, the parties' arguments, and the Court's instructions, the jury found Friedman not guilty on Counts One and Two and guilty on Counts Three, Four, and Five.
Friedman brings a motion for acquittal under Federal Rule of Criminal Procedure 29 or, in the alternative, a motion for a new trial under Federal Rule of Criminal Procedure 33. The Court addresses these motions in turn.
Rule 29 governs motions for a judgment of acquittal. Rule 29(a) provides that, "[a]fter the government closes its evidence or after the close of all the evidence, the court on the defendant's motion must enter a judgment of acquittal of any offense for which the evidence is insufficient to sustain a conviction." FED. R. CRIM. P. 29(a). Where, as here, a defendant makes a Rule 29(a) motion after the government's case and the court reserves decision, the court "must decide the motion on the basis of the evidence at the time the ruling was reserved." FED. R. CRIM. P. 29(b).2
"A motion for acquittal should be granted only where the evidence is insufficient tosustain a conviction." United States v. Kohli, 847 F.3d 483, 489 (7th Cir. 2017) (quotation and citation omitted). A court will overturn the jury's verdict only if, "after viewing the evidence in the light most favorable to the government, the record is devoid of evidence from which a reasonable jury could find guilt beyond a reasonable doubt." United States v. Wrobel, 841 F.3d 450, 454 (7th Cir. 2016) (quoting United States v. Campbell, 770 F.3d 556, 571-72 (7th Cir. 2014)); see also United States v. Wilson, 879 F.3d 795, 802 (7th Cir. 2018); United States v. Presbitero, 569 F.3d 691, 704 (7th Cir. 2009). A defendant bears the burden to "convince" the court that "no rational trier of fact could have found him guilty." United States v. Warren, 593 F.3d 540, 546 (7th Cir. 2010) (quoting United States v. Moore, 572 F.3d 334, 337 (7th Cir. 2009)). It is a "heavy" burden—indeed a "nearly insurmountable" one. United States v. Maldonado, 893 F.3d 480, 484 (7th Cir. 2018).
Friedman challenges the sufficiency of the evidence regarding Counts 3 and 4, which relate to loans taken out in the name of Krasilovsky, Friedman's cousin. Friedman argues that the government's proof rested solely on Krasilovsky's unreliable and inconsistent testimony.
The government produced more than enough evidence to convict...
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