United States v. Reichel

• Decision Date: 28 December 2018
• Docket Number: No. 17-2562,17-2562
• Citation: 911 F.3d 910
• Parties: UNITED STATES of America, Plaintiff - Appellee v. Bryan S. REICHEL, Defendant - Appellant
• Court: U.S. Court of Appeals — Eighth Circuit

911 F.3d 910

UNITED STATES of America, Plaintiff - Appellee

v.Bryan S. REICHEL, Defendant - Appellant

No. 17-2562

United States Court of Appeals, Eighth Circuit.

Submitted: October 19, 2018

Filed: December 28, 2018

David Genrich, David J. MacLaughlin, Joseph H. Thompson, Assistant U.S. Attorneys, U.S. Attorney's Office, District of Minnesota, Minneapolis, MN, for Plaintiff - Appellee

Aaron James Morrison, Wold & Morrison Law, Minneapolis, MN, for Defendant - Appellant

Bryan S. Reichel, Lisbon, OH, Pro Se

Before SHEPHERD, KELLY, and STRAS, Circuit Judges.

KELLY, Circuit Judge.

Bryan Reichel appeals from his convictions for wire fraud, filing for bankruptcy for the purpose of executing a scheme to defraud, and making false statements in relation to bankruptcy proceedings. Upon careful consideration of the issues presented, we affirm the judgment of the district court.¹

I

This case stems from Reichel’s operation of PureChoice, Inc., a business that developed indoor air quality monitoring systems. Reichel founded PureChoice in 1992. During his tenure as president and CEO, Reichel obtained millions of dollars in bank loans for the company. PureChoice, having not yet turned a profit, was unable to pay back these loans. Reichel approached private investors, seeking and obtaining bridge loans, many of which he personally guaranteed. Reichel told the investors that PureChoice would use the money to restructure its debt and to fund its operations until it could reach profitability. What Reichel didn’t tell the investors was that PureChoice was already in default on many of its bank loans, with collection actions threatened or pending against the company and himself—which is the type of information that PureChoice’s lawyer urged him to disclose and that several investors indicated would have caused them to rethink their decisions to invest.

After obtaining bridge loans under false pretenses, Reichel did not attempt to pay them back until threatened with collection actions. Nor did he primarily use the loans to fund PureChoice operations, as he had promised. Instead, he paid off earlier loans, paid himself a large salary and bonuses, and occasionally instructed PureChoice employees to simply write him checks for tens of thousands of dollars in company funds. He did the same with the millions of dollars in stock sales that he collected from some of the same investors.

In 2010, Reichel was forced out of the company after an employee discovered that he had been stealing money. Soon after, one of PureChoice’s investors, George Anderson, filed suit against Reichel to recover $1.5 million in unpaid loans. Reichel’s stated defense was that payment on the loans was not due until May 2011. Anderson’s counsel agreed to delay filing his summary judgment motion until May, giving Reichel an opportunity to pay off the debt. But on April 29, 2011, Reichel filed for bankruptcy under Chapter 7, thus automatically staying Anderson’s collection action.

During the course of the bankruptcy proceedings, the trustee discovered that Reichel had failed to disclose household goods worth at least $97,000, the sale of utility equipment, the transfer of $212,000 to an account in the name of "Reichel Investments, LP," and the fact that he was using the Reichel Investments account to pay his personal expenses. The trustee asked the bankruptcy court to deny discharge due to fraudulent activity. In 2012, Reichel waived his right to discharge.

In 2014, Reichel was indicted on seven counts of wire fraud in connection with the PureChoice investments, in violation of 18 U.S.C. § 1343. In 2015, the government filed a superseding indictment, which added five new counts related to Reichel’s failed bankruptcy proceedings: one count of filing for bankruptcy for the purpose of executing a scheme to defraud, in violation of 18 U.S.C. § 157 ; three counts of making a false statement in relation to bankruptcy proceedings, in violation of 18 U.S.C. § 152(3) ; and one count of concealing a tax refund that was bankruptcy estate property, in violation of 18 U.S.C. § 152(1).

A jury found Reichel guilty on all counts except the concealment of a tax refund. At sentencing, the district court applied multiple enhancements to Reichel’s offense level, resulting in a Guidelines range of 262 to 327 months. It sentenced Reichel to 264 months of imprisonment. Reichel appeals, challenging several of the district court’s decisions before and after trial and at sentencing.

II

Reichel first contends that the district court erred in denying his pretrial motion to sever the wire fraud counts from the bankruptcy-related counts. He argues that the counts were misjoined under Federal Rule of Criminal Procedure 8(a), which allows for joinder of separate counts only where the offenses "are of the same or similar character, or are based on the same act or transaction, or are connected with or constitute parts of a common scheme or plan." "The propriety of joinder is ... determined from the face of the indictment." United States v. Massa, 740 F.2d 629, 644 (8th Cir. 1984), overruled on other grounds by United States v. Inadi, 475 U.S. 387, 106 S.Ct. 1121, 89 L.Ed.2d 390 (1986). Rule 8(a) is "broadly construed in favor of joinder." United States v. Colhoff, 833 F.3d 980, 983 (8th Cir. 2016) (quoting United States v. McCarther, 596 F.3d 438, 441–42 (8th Cir. 2010) ). We review allegations of misjoinder under Rule 8(a) de novo. United States v. Colbert, 828 F.3d 718, 728 (8th Cir. 2016).

Joinder was appropriate here because the offenses were all connected to a common scheme. The superseding indictment alleges a single "scheme to defraud and to obtain and retain money by means of materially false and fraudulent pretenses." And it goes on to allege facts supporting the conclusion that all of the charged offenses were connected to this single scheme: Reichel obtained money through wire fraud and tried to keep that money through bankruptcy fraud. Reichel was free to argue at trial that he had no such scheme, but the district court correctly looked to the allegations in the superseding indictment to determine that joinder was proper.

Reichel also argues that the district court abused its discretion when it refused to sever the counts for trial under Rule 14. Rule 14 allows for severance at trial if joinder "appears to prejudice a defendant." Fed. R. Crim. P. 14(a). We review denial of severance under Rule 14 for an abuse of discretion and will reverse only upon a showing of severe prejudice, that is, if the defendant would have had "an appreciable chance for an acquittal" in a severed trial. United States v. Geddes, 844 F.3d 983, 988 (8th Cir. 2017) (quoting United States v. Scott, 732 F.3d 910, 916 (8th Cir. 2013) ).

Here, the district court’s decision to try the counts together was not an abuse of discretion. It concluded that evidence of wire fraud would be admissible as to the bankruptcy-related counts, and vice versa. "A defendant cannot show prejudice when evidence of the joined offense would be properly admissible in a separate trial for the other crime." Id. (cleaned up). We agree that evidence of the wire fraud would have been relevant to the § 157 count (filing for bankruptcy for the purpose of executing a scheme to defraud), and so it likely would have been admissible in a trial of the bankruptcy-related counts. It is less clear whether evidence of the bankruptcy fraud would have been admissible in a trial of the wire fraud counts, but even so, Reichel has not shown that he would have had "an appreciable chance for an acquittal" on any count had the trials been severed.

III

Reichel next contends that his convictions are not supported by sufficient evidence. When considering Reichel’s challenge to the jury’s verdict, "we review de novo the sufficiency of the evidence to sustain the conviction," viewing the evidence in the light most favorable to the jury’s verdict, resolving all conflicts in favor of the verdict, and accepting all reasonable inferences that support the verdict. United States v. Whitlow, 815 F.3d 430, 435 (8th Cir. 2016). We will reverse "only where no reasonable jury could find all the elements beyond a reasonable doubt." Id. (quoting United States v. Cole, 721 F.3d 1016, 1021 (8th Cir. 2013) ).

Reichel argues that the government failed to prove his fraudulent intentas to either the wire fraud or the bankruptcy counts.² He points to evidence from which, he says, the jury could have inferred that he wanted PureChoice to succeed, that he merely made a series of bad business decisions concerning the bridge loans, and that his false statements concerning his bankruptcy proceedings were the result of confusion and misunderstanding. But "[e]ven where the evidence rationally supports two conflicting hypotheses, the reviewing court will not disturb the conviction." United States v. Huyck, 849 F.3d 432, 441 (8th Cir. 2017) (quoting United States v. Griffith, 786 F.3d 1098, 1102 (8th Cir. 2015) ). Here, a juror could have inferred that Reichel intended to deceive the investors from the evidence that Reichel convinced them to lend money to PureChoice, used some of that money for his own expenses, and failed to repay them according to the terms of the loan. See United States v. Walker, 818 F.3d 416, 421 (8th Cir. 2016) ("Intent to defraud need not be proved by direct evidence. Provided the victims suffered some tangible loss ... the scheme itself often serves as evidence of a defendant’s intent to defraud." (cleaned up) ). Likewise, a juror could have inferred fraudulent intent concerning the bankruptcy from the evidence that Reichel filed for bankruptcy just before a creditor planned to file his summary judgment motion, then transferred funds to a hidden account, and finally failed to disclose that account and other items to the trustee. In light of all of the evidence presented, we cannot conclude that no reasonable jury could have found that Reichel possessed fraudulent intent sufficient to...