United States v. McQuarrie
| Decision Date | 26 May 2020 |
| Docket Number | No. 18-2132,18-2132 |
| Parties | UNITED STATES OF AMERICA, Plaintiff-Appellee, v. SCOTT DAVID MCQUARRIE, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
HELENE N. WHITE, Circuit Judge. Defendant Scott McQuarrie was convicted following jury and bench trials of: one count of making a false statement in connection with a loan renewal, one count of making a false statement to an agency of the United States, four counts of conversion/concealment of property pledged to the Farm Service Agency (FSA), two counts of making false statements under oath, one count of making a false bankruptcy declaration, one count of bankruptcy fraud, one count of conspiracy to commit bankruptcy fraud, one count of mail fraud, and one count of wire fraud. McQuarrie appeals his convictions and sentence. We AFFIRM his convictions, VACATE his sentence, and REMAND for resentencing.
McQuarrie obtained several loans in 2001 and 2002 from the FSA to purchase a farm and finance the farm's operation. To secure these loans, McQuarrie gave FSA a mortgage and pledged personal property, including livestock, crops, and machinery, as collateral. McQuarrie never made his required annual payments on these loans, but instead sought loan assistance, which resulted in the restructuring of his loans. As part of the loan restructuring process, the FSA required a re-appraisal of the collateral to "determine whether [it was] feasible for the Government to restructure the loans versus [liquidate] the account." R. 268, PID 2654. In December 2009, the appraiser met McQuarrie on his farm to value the items that had been pledged as collateral. Except for a baler that McQuarrie represented was owned by his father, McQuarrie claimed ownership of all the livestock and equipment that was listed as collateral. The FSA ultimately approved McQuarrie's request to restructure his loans, and the process was completed on July 20, 2011, when McQuarrie executed a new mortgage and signed new security agreements and an agreement regarding the use of collateral. Before McQuarrie signed these documents, James Monroe, an FSA farm loan manager, explained to him that by signing he was representing that he was the exclusive owner of the items and agreeing to the terms of the use of collateral agreement, which required that he obtain permission from the FSA before selling assets pledged as collateral.1
McQuarrie failed to make his required payments in 2011 or 2012. In March of 2012, McQuarrie's house was destroyed by a fire, and he requested compensation for the structure from his insurance company. Because the FSA held a mortgage on the house, the insurance company mailed McQuarrie a check that was jointly payable to McQuarrie and the FSA, which was deposited in a supervised bank account controlled by the FSA. In addition to the replacement cost of the structure, McQuarrie also sought reimbursement for lost household contents. He submitted receipts to the insurance company through his father's insurance agency. In March and October of 2012, the insurance company sent McQuarrie a series of checks totaling $30,824.82 to replacethe contents. In March of 2013, McQuarrie asked Betty Garrett, another FSA loan manager, to release $30,824.82 from the supervised bank account to reimburse McQuarrie for the same contents. After reviewing the supporting documents from the insurance company that McQuarrie brought in, FSA issued McQuarrie a check for $30,824.82.2 However, McQuarrie had excluded the two pages that showed that he had already been reimbursed for the contents. Additionally, as part of his request for reimbursement, he submitted an estimate for the replacement of a four-person hot tub. Before doing so, however, he altered the estimate to make it appear to be a receipt. The true cost of the replacement hot tub was several thousand dollars lower than the price reflected in the documents submitted by McQuarrie.
McQuarrie never paid the annual payment that was due in April of 2013. Thus, in August of 2013, Garrett went to McQuarrie's farm to perform an inspection and update the list of collateral for new security agreements.3 During that visit, McQuarrie was handed the security agreement that he had signed in 2011, and he stated that he still owned all of the items that were listed. McQuarrie also provided updated livestock numbers to be incorporated into the new security agreement. In October 2013, McQuarrie went to the FSA office to discuss his delinquent payment and the likelihood that the agency would begin foreclosure proceedings to reclaim the collateral. During that meeting, Garrett attempted to have him sign the new security agreement that reflected the updated information that McQuarrie had provided, but McQuarrie refused, claiming that manyof the items on the list "had been sold, junked out or scrapped or he never owned [them] in the first place." R. 266, PID 3669. He also claimed that some of the cattle belonged to his father.
McQuarrie filed for bankruptcy in February 2014, but soon dismissed his petition, allowing the FSA to begin the foreclosure process. In April of 2014, Garrett contacted McQuarrie to ask when the agency could pick up the cattle. Despite having previously claimed complete ownership of the cattle in 2011 and partial ownership of the cattle in October 2013, McQuarrie now claimed that he did not own any of the cattle, and that the cattle in fact belonged to his father and another man. In June of 2014, Garrett returned to McQuarrie's residence to check the collateral and observed a fence surrounding the property with a gate across the driveway. Garrett was ultimately able to access the property to assess the collateral, though it does not appear that she spoke with McQuarrie. However, on September 9, 2014, Garrett spoke to McQuarrie when he visited the office. Garrett informed McQuarrie that she was going to have the pledged equipment sold at auction in October and needed to arrange to pick it up. Upon hearing this, McQuarrie "stated that he didn't own any equipment" and had merely listed it on the security agreement "because he thought he needed it for security to reschedule the loan." Id. at PID 3676. Garrett asked how he could sell equipment that was not his and McQuarrie responded that "he was going to be filing bankruptcy any day and so these issues didn't matter." Id. at PID 3676-77. McQuarrie re-filed for bankruptcy on September 25, 2014.
As part of the bankruptcy proceedings, McQuarrie completed schedules detailing his assets and liabilities. During this process, he made a number of false statements, including that he hadnot sold any equipment during the two-year period before the filing of the bankruptcy petition,4 that he had no ownership interest in the newly-opened Alpena General Store,5 and that his records had been destroyed in the house fire.6
The Government began investigating McQuarrie's actions in the middle of 2014. During Agent McClutchey's resulting interview of McQuarrie, McQuarrie admitted that before the appraisal in 2011, he R. 171-10, PID 914 (). In short, he admitted to using his father's cattle and certain of his machinery to "inflate the appearance of [his] operation." Id. at PID 919.
McQuarrie was indicted in June 2016, on six counts alleging that he made false statements and converted or concealed collateral that had been pledged to secure his FSA loans. A third superseding indictment was returned in January 2018, which charged him with fourteen counts and added his parents as co-defendants.
Jury selection began on February 6, 2018. At the beginning of the process, the magistrate judge who was conducting voir dire provided each venire member with a list of backgroundquestions to answer. A majority of the venirepersons had finished their introductions when the following colloquy occurred:
Outside the presence of the venire, McQuarrie explained that he was requesting new counsel because he believed his counsel had been pressuring him to accept a plea deal and was therefore not prepared to represent him at trial.7 After inquiring why McQuarrie felt this way and hearing from McQuarrie's attorney, the magistrate judge denied McQuarrie's request for new counsel. McQuarrie's counsel then expressed concern that McQuarrie's comments might have tainted the jury venire, and the magistrate judge responded that "Mr. McQuarrie didn't say anything too awful, just he wanted another attorney, but I don't think that that had any—you know, pervasive effect on the trial thus far." Id. at PID 4646. The magistrate judge twice said that she wanted to ensure that McQuarrie was not trying to undermine his own trial, and McQuarrie denied that this was his intention. McQuarrie's parents then moved for a mistrial, at which point thegovernment suggested that a narrower remedy such as a curative instruction would be preferable. However, after taking a recess and conferring with the district court judge, the magistrate judge ultimately dismissed the entire jury panel.
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