United States v. Shulick
| Citation | 994 F.3d 123 |
| Decision Date | 13 April 2021 |
| Docket Number | 19-1011,Nos. 18-3305,s. 18-3305 |
| Parties | UNITED STATES of America v. David T. SHULICK, Appellant |
| Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
Hope C. Lefeber, Suite 1205, 1500 John F. Kennedy Boulevard, Two Penn Center Plaza, Philadelphia, PA 19102, Lisa A. Mathewson [ARGUED], Meredith A. Lowry, Suite 1320, 123 South Broad Street, Philadelphia, PA 19109, Counsel for Appellant
Christopher J. Mannion, Michael T. Donovan, William M. McSwain, Robert A. Zauzmer [ARGUED], Office of United States Attorney, 615 Chestnut Street, Suite 1250, Philadelphia, PA 19106, Counsel for Appellee
Before: MCKEE, PORTER and FISHER, Circuit Judges.
Lawyer and businessman David Shulick owned a for-profit education company through which he contracted with the School District of Philadelphia to run its Southwest School, an institution designed to help some of Philadelphia's most at-risk children. Under the contract, Shulick received over $2 million to provide teachers, counselors, security, and special services to the charter school's students. But instead of spending the money on the students as the contract required, he embezzled funds for his personal benefit and the benefit of his co-conspirator, Chaka Fattah, Jr. After a complex, multi-year fraud investigation, Shulick was ultimately charged and convicted. He now appeals, alleging a number of errors, ranging from speedy trial right violations to errors in evidentiary rulings, faulty jury instructions, and sentencing miscalculations. After careful review of each claim, we conclude there was no reversible error in the proceedings and will therefore affirm.
Shulick owned and operated Delaware Valley High School Management Corporation (DVHS), a for-profit business which provided alternative education to at-risk students. DVHS's business model was to contract with school districts to handle the operation of their schools.
One of those school districts was the School District of Philadelphia. In early 2010, the School District hired and signed a contract with DVHS and Shulick to operate its Southwest School in Philadelphia, an institution serving at-risk high school students with attendance, behavioral, emotional, and familial issues, including some who had dropped out of school entirely. The contract provided that DVHS would operate Southwest for the 2010-2011 and 2011-2012 school years. The School District set forth a high-level plan for Southwest, dictating the number of students enrolled at the school and the services to be provided to them. Specifically, DVHS had to provide (1) six teachers at a cost of $45,000 each; (2) benefits for the staff at a total cost of $170,000 per year; (3) four security workers totaling $130,000 per year; and (4) a trained counselor and two psychology externs totaling $110,000 per year. The agreement was not flexible as to budgeted items. In a provision titled "Budget, " it required DVHS to "carry out the Work and bill the School District strictly in conformity with the Contractor's Budget." App. 4847. Within these parameters, DVHS and Shulick had authority to manage and run the school. Shulick could implement a curriculum and program and could hire and fire staff as he saw fit.
Despite the contract's clear requirements, Shulick failed to provide the services and staff he agreed to. He failed to employ the dedicated security personnel the contract required. He hired fewer teachers, provided those whom he did hire with far fewer benefits than the budget allocated, and paid his educators salaries of only $36,000 a year—$9,000 less than promised. Shulick then reduced their salaries even further if they elected health insurance. He even attempted to lay off teachers at the end of the school year to avoid paying them the final few months of their salaries. Overall, Shulick represented to the School District that he would spend $850,000 on salary and benefits each year but spent under half of that: about $396,000 in 2010-11 and about $356,000 in 2011-12. In all, of the over $2 million in funds he received, he spent only $1,186,001 on expenditures designated for Southwest.
Shulick's failure to spend these funds on Southwest was part of an elaborate conspiracy to embezzle money. Shulick directed the unspent funds to co-conspirator Chaka Fattah, Jr., an employee and confidante of Shulick and the son of former U.S. Representative Chaka Fattah, Sr. The two agreed that Fattah, Jr. would use the funds to pay off various liabilities incurred across Shulick's business ventures, while also keeping a cut of the embezzled money for himself.
At Shulick's trial, a number of former DVHS employees testified to the harmful effects this scheme had. Teachers explained that students dealing with abuse, addiction, trouble with the law, and other personal and familial hardships never received access to the counseling assistance Shulick promised to provide. Without security staff on site, teachers had to attempt to keep the children safe while also educating them. Some employees confronted Shulick about his failure to pay for these services for Southwest's students. He would lie and direct his staff to misrepresent and misreport to cover up his fraud.
After a multi-year investigation, Shulick was indicted on October 11, 2016. He was charged with conspiring with Fattah, Jr. to embezzle from a program receiving federal funds ( 18 U.S.C. § 371 ); embezzling funds from a federally funded program ( 18 U.S.C. § 666(a)(1)(A) ); wire fraud ( 18 U.S.C. § 1343 ); bank fraud ( 18 U.S.C. § 1344 ); making a false statement to a bank ( 18 U.S.C. § 1014 ); and three counts of filing false tax returns ( 26 U.S.C. § 7206(1) ). He was arraigned on October 13, 2016. The wire fraud charges were subsequently dropped.
A year later, Shulick moved to dismiss the indictment, asserting his speedy trial rights. The District Court denied his motion (and later, renewed motions), and the case ultimately went to trial. Following a three-week trial, a jury convicted him on May 8, 2018 on all charges.
On the conspiracy, federal program embezzlement, bank fraud, and false statement counts, Shulick was sentenced to 60 months’ imprisonment and three years’ supervised release. On the three tax fraud convictions, Shulick was sentenced to 20 months for each count, to be served consecutively to each other but concurrently with the sentence on the other convictions, plus a year of supervised release. The District Court also imposed two fines of $20,000 each and a special assessment of $700. It ordered restitution of $759,735 to the School District and $5,000 to PNC Bank.
Shulick appeals, asserting several theories to challenge his conviction and sentence. After careful consideration, we reject each.
Shulick first argues his conviction must be reversed because the District Court violated his constitutional and statutory rights to a speedy trial. The Sixth Amendment guarantees "the right to a speedy ... trial." U.S. Const. amend. VI. To effectuate this constitutional guarantee, Congress enacted the Speedy Trial Act, 18 U.S.C. § 3161 et seq. , which "set[s] specified time limits ... within which criminal trials must be commenced." United States v. Williams , 917 F.3d 195, 199 (3d Cir. 2019) (quoting United States v. Rivera Constr. Co. , 863 F.2d 293, 295 (3d Cir. 1988) ).
The Speedy Trial Act requires that trial begin within 70 days of indictment or initial appearance, whichever occurs later. 18 U.S.C. § 3161(c)(1). However, certain periods of time may be excluded, including when a judge grants a continuance "on the basis of his findings that the ends of justice served by [the continuance] outweigh the best interest of the public and the defendant in a speedy trial." 18 U.S.C. § 3161(h)(7)(A).
In August 2017, as trial preparation was drawing to a close, the Government discovered that years before, during its lengthy investigation, one of the servers seized from DVHS had been filed under the wrong case number. Instead of being filed with the investigation into Shulick and Fattah, Jr.’s conspiracy, the server was mistakenly filed with a separate, unrelated investigation into former Congressman Chaka Fattah, Sr. On realizing this mistake, the Government promptly informed the District Court and made an untimely production of 1.5 million pages of documents and 900,000 emails. It declined, however, to voluntarily dismiss the indictment.
Shulick, invoking the Speedy Trial Act, moved to dismiss the indictment. The District Court denied his motion, saying it was only speculation that the remaining 64 days on the 70-day clock would expire before the case was ready for trial.2 The Court also stated that, upon an appropriate motion by the parties or sua sponte , it could, if necessary, continue the trial upon making the appropriate findings to support that the ends of justice would be served by a delay. In a separate order, the Court did just that. It issued an ends-of-justice continuance under § 3161(h)(7)(A) and moved the previously scheduled October 2, 2017 trial to April 11, 2018.
App. 46; see 18 U.S.C. § 3161(h)(7)(B)(ii) (...
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