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Parties Involved:
William C. Schlapman
Appellant
United States of America
Appellee

Document Text:

FI L~ D 

UNITED STATES COURT OF APPEALS United States Coc~n1. ~! Ap~il11 

TP.r-t.n . t"Nml • 

FOR THE TENTH CIRCUIT 

UNITED STATES OF AMERICA, 

Plaintiff-Appellee, 

'JULO 2 1992 

ROBERT L, HOECKEP.. 

Clerk 

v . No. 91-1086 

WILLIAM C. SCHLAPMAN, 

Defendant-Appellant. 

(D. C. No. 90-CR-36-11) 

( D. Colo . ) 

ORDER AND JODGMEHT* 

Before MCKAY and BRORBY, Circuit Judges, and VAN SICKLE,** 

District Judge . 

William C. Schlapman appeals his conviction and sentence for 

one count of conspiracy under 18 u.s.c. S 371, and six counts of 

money laundering under 18 u.s.c. S 1956 . 

Schlapman asserts the district court erred in: 

Specifically, Mr. 

(1) failing to 

dismiss the conspiracy count because it impermissibly alleged 

multiple conspiracies; (2) admitting a transcript containing a 

* be 

This order and judgment has no precedential value and shall not 

cited, or used by any court within the Tenth Circuit, except 

purposes of establishing the doctrines of the law of the case, 

judicata, or collateral estoppel. 10th Cir. R. 36.3. 

for 

res 

** The Honorable Bruce M. Van Sickle, Senior District Judge for 

the District of North Dakota, sitting by designation. 

Appellate Case: 91-1086 Document: 010110259021 Date Filed: 07/02/1992 Page: 1
bankruptcy court's ruling concerning the existence of the alleged 

conspiracy into evidence; (3) failing to grant his motions for 

separate trial; and (4) imposing an improper sentence. 

This case involves an extensive conspiracy among twelve 

defendants to defraud bankruptcy creditors. Mr. Schlaprnan was the 

accountant for the debtors, Gary and Marcee Levine. These three 

defendants were tried jointly. The facts surrounding this 

conspiracy are set out in detail in the companion case United 

States v. Levine, Nos. 91-1082, 91-1096 (10th Cir., July 2, 1992). 

Facts pertinent to Mr. Schlapman will be set out as necessary to 

our discussion. 

The Conspiracy Count in the Indictment 

Mr. Schlaprnan joined in a motion asking the district court to 

dismiss the conspiracy count of the indictment as duplicitous. 

Alternatively, Mr. Schlaprnan moved the court for an election of 

offenses. The district court denied the motions finding 18 u.s.c. 

§ 371 creates a single offense with specific alternative means to 

commit the offense, therefore the count is not duplicitous. The 

court reasoned that even if the count were duplicitous, dismissal 

was still not warranted because the duplicity would be harmless in 

this case. Finally, the district court concluded the policy goals 

underlying the rule against duplicity were not offended in this 

case. 

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On appeal, Mr. Schlapman argues that the indictment charging 

him with conspiracy which has as its objective the commission of 

five crimes, did not provide him with proper notice of the 

specific charges against him. Mr. Schlapman asks us to vacate his 

conviction and order count one of the indictment dismissed. 

We review the trial court's ruling on dismissal of an 

indictment for abuse of discretion. United States v. Williams, 

899 F.2d 898, 904 (10th Cir. 1990), rev'd on other grounds, 112 S. 

Ct. 1735 (1992). 

18 u.s.c. § 371 provides: "If two or more persons conspire 

either to commit any offense against the United States, or to 

defraud the United States," each shall be guilty of a crime. 

Mr. Schlapman concedes a number of courts have held that the 

two conspiracy clauses of§ 371 create only one crime which may be 

committed in one or two alternative ways . However, Mr . Schlapman 

argues the Tenth Circuit rejected this approach in United States 

v. Thompson, 814 F.2d 1472 (10th Cir.), cert. denied, 484 U.S. 830 

(1987). 

We disagree. 

concerning double 

The panel in 

jeopardy. 

Thompson faced a narrow issue 

In that case, the defendant pleaded 

guilty to the information which charged him with conspiracy to 

commit mail fraud and was later indicted for conspiring to defraud 

the government. The defendant moved to dismiss the indictment 

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claiming he would face double jeopardy if he were tried under the 

indictment. We held the defendant would not face double jeopardy 

because each conspiracy offense included an element that the other 

did not. As no issue of duplicity was before the court, we 

conclude Thompson is inapposite to the present case. 

We align with those courts that conclude§ 371 provides for a 

single offense of conspiracy which specifies alternative means of 

committing the offense. See,~, United States v. Smith, 891 

F.2d 703, 712 (9th Cir. 1989), cert. denied, 111 S. Ct. 47 (1990); 

United States v. Berlin, 707 F. Supp. 832, 836 (E.D . Va. 1989); 

United States v. Persico, 520 F. Supp. 96, 102 (E.D . N. Y. 1981). 

It is the only logical interpretation of § 371. "It would be 

strange to infer that Congress intended to punish twice a 

conspiracy that violates both clauses. Where a single criminal 

statute prohibits alternative acts, courts should not infer the 

legislature's intent to impose multiple punishment. " Smith, 891 

F.2d at 712. 

Our interpretation is consistent with Supreme Court precedent 

that allows an indictment to 

objective is to commit several 

single count of a conspiracy 

allege a single conspiracy whose 

crimes. "The allegation in a 

to commit several crimes is not 

duplicitous for 'The conspiracy is the crime, and that is one, 

however diverse its objects.'" Braverman v. United States, 317 

U.S. 49, 54 (1942) (quoting Frohwerk v. United States, 249 U.S . 

204, 210 (1919)). See also United States v. Daily, 921 F.2d 994, 

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1001 (10th Cir. 1990), cert. denied, 112 s. Ct. 405 (1991); United 

States v. Sullivan, 919 F.2d 1403, 1435 n. 53 (10th Cir. 1990). 

Thus, we conclude the district court did not abuse its 

discretion in denying Mr. Schlapman's motion to dismiss count one 

of the indictment for duplicity. 

Bankruptcy Court Transcript 

The district court admitted into evidence a transcript of a 

hearing conducted before the bankruptcy court. The hearing 

concerned whether Mrs. Levine should be required to turn over 

certain financial records. The transcript contained the testimony 

of Mrs . Levine and her attorney. The transcript also contained 

the bankruptcy judge's admonition to the Levines' attorneys and 

his conclusion that the law firm had either ignored its ethical 

obligations or had openly conspired with the Levines to secret 

funds and records from the creditors. Mr. Schlapman did not 

object to the introduction of this evidence. 

Mr. Schlapman contends on appeal that although the transcript 

does not specifically name him, the government used Mr. 

Schlapman's close association with the law firm that was lambasted 

by the court against him. Mr. Schlapman contends the Levines 

furthermore used his close association with the law firm to 

bolster their claim that they were unwittingly duped by their 

lawyers and accountants. Ultimately, Mr. Schlapman contends he 

was prejudiced by the admission of the bankruptcy court's 

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conclusions regarding the law firm as the jury could infer birds 

of a feather flock together. 

When a party fails to object to the introduction of evidence, 

we review the trial court's decision to admit the contested 

evidence for plain error. United States v. Henning, 906 F.2d 

1392, 1397 (10th Cir. 1990), cert. denied, 111 S. Ct. 789 (1991). 

Plain error is so basic, prejudicial or lacking in its elements 

that justice cannot have been done. Id. 

Mr. Schlapman objects to the admission of this evidence as 

improper hearsay and conclusions to the crimes for which he is 

being tried. Even assuming this to be true, we do not believe the 

admission of this evidence prejudiced Mr. Schlapman, much less 

rose to the level of plain error. 

The transcript did not mention Mr. Schlapman or implicate him 

in the conspiracy. It implicated only the Levines and the law 

firm. In that regard, the evidence aided Mr. Schlapman in his 

defense theory. Mr. Schlapman asserted at trial that he was duped 

both by the law firm and by the Levines. In his opening 

statement, Mr. Schlapman's attorney said to the jury: 

Bill Schlapman permitted the use of his trust 

account by these people. It was poor judgment, it was 

stupid, but he did so without any criminal intent. 

Bill was betrayed by a trusted business lawyer, a 

lawyer who he respected, who is knowledgeable, who ran 

the show in bankruptcy court. 

And more than that, he was manipulated by some very 

clever and cunning celebrities. 

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In closing, Mr. Schlapman's attorney returned to this defense 

theory stating: 

[W]hat is this case all about? 

And I suggest to you at the very least it's about 

furniture celebrities, it's about lawyers, it's about a 

liquidation sale, it's about bankruptcy court, it' s 

about undisclosed assets, it's not about the accountant . 

The bankruptcy judge's characterization of the law firm as 

unethical and his alignment of the Levines with that law firm tend 

to support Mr. Schlapman's defense. If anything, it advanced his 

defense theory. As applied to Mr. Schlapman, the transcript 

offered only exculpatory evidence. Exculpatory evidence cannot be 

prejudicial. Indeed, Mr. Schlapman has demonstrated no prejudice 

suffered as a result of the admission of this exhibit. 

Our review of the record reveals no plain error from the 

district court's admission of the bankruptcy court transcript into 

evidence. Consequently, we affirm the district court's admission 

of the transcript. 

Motion for Separate Trial 

Mr . Schlapman was tried jointly with coconspirators Gary and 

Marcee Levine . During the course of the proceedings, Mr. 

Schlapman made numerous motions for a separate trial. The 

district court finally denied Mr. Schlapman's motion at the end of 

the jury instruction conference. 

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On appeal, Mr. Schlapman argues the defenses presented by him 

and the Levines presented irreconcilable differences. He also 

contends he had to defend himself not only from the charges of the 

government but from the accusations of the Levines as well. Mr. 

Schlapman asserts he suffered extreme prejudice by being tried 

with the Levines. 

Specifically, Mr. Schlapman asserts that the Levines opened a 

whole new area of testimony dealing with the preparation of their 

returns after the government completed its examination of one of 

Mr. Schlapman's employees. Mr. Schlapman also contests the 

Levines' cross-examination of their former accountant for the 

proposition they relied heavily on their accountant's advice. 

Another witness testified he failed to report a substantial amount 

of income and Mr. Schlapman had prepared his tax return. 

We review a district court's decision to deny severance for 

abuse of discretion. United States v. Peveto, 881 F.2d 844, 857 

(10th Cir.), cert. denied, 493 U.S. 943 (1989). We generally will 

not overturn a district court's decision absent a strong showing 

of prejudice. 

Cir. 1991). 

United States v. Cox, 934 F.2d 1114, 1119 (10th 

"[I]n deciding on a motion for severance, the 

district court has a duty to weigh the prejudice 

resulting from a joint trial of co-defendants 

against the expense and inconvenience of separate 

trials.... Neither a mere allegation that 

defendant would have a better chance of acquittal 

in a separate trial, nor a complaint of the 

'spillover effect' from the evidence that was 

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overwhelming or more damaging against the codefendant than that against the moving party is 

sufficient to warrant severance . " 

United States v. Bailey, 952 F.2d 363, 365 (10th Cir. 1991) 

(quoting United States v. Cardall, 885 F.2d 656, 667-68 (10th Cir. 

1989)). Severance is warranted where the level of antagonism 

between the defendants rises to a point where the defenses are 

mutually exclusive. Peveto, 881 F . 2d at 857 . 

At the beginning of the trial, the district court expressed 

concern about the possibility of antagonistic defenses. However, 

after hearing all the evidence, the distri ct court explicitly 

found the defenses were not antagonistic and therefore they were 

certainly not mutually exclusive . The court specifically found 

the evidence presented by the Levines was consistent with Mr. 

Schlapman's theory of defense . 

The record supports the district court ' s factual finding. 

The record reveals the Levines presented evidence tending to show 

they relied on their lawyers and accountant, Mr. Schlapman. Mr. 

Schlapman presented evidence that he relied on the Levines to 

provide him with accurate and complete information and therefore 

did his job to the best of his ability based on the information 

available to him. 

show. 

Both parties presented evidence that the law firm ran the 

Mr. Levine testi fied that his attorney told him to put 

funds in the attorneys' secret account to pay the creditors. In 

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closing, the Levines stated that the real criminals in this case 

were the attorneys. Similarly, Mr. Schlapman attacked the 

attorneys in his closing argument as well. 

In addition, the court gave a jury instruction regarding 

reliance on the advise of counsel. No similar instruction was 

given on reliance on an accountant. 

instructed that Mr. Schlapman could not be 

Additionally, the court 

convicted of various 

charges if he acted in good faith on information which his clients 

provided. Finally, the court instructed the jury to consider the 

evidence against the defendants individually. 

Based 

could find 

information 

on the instructions and evidence presented, the jury 

the law firm provided the Levines with false 

which they in turn gave to Mr. Schlapman. Both 

defenses could be reconciled. Consequently, the defenses were not 

mutually exclusive. 

We hold that Mr. Schlapman has failed 

showing of prejudice resulting from his joint 

to make a strong 

trial with the 

Levines. Therefore, we hold the district court did not abuse its 

discretion by denying Mr. Schlapman's motion for severance. 

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Sentencing1 

First, Mr. Schlapman asserts the district court erred in its 

determination of the adjustment for the base offense level for 

losses caused by fraud. Our decision in Levine is dispositive. 

The district court's determination is affirmed. 

Second, Mr. Schlapman argues the court erred by failing to 

accord him a downward adjustment for acceptance of responsibility 

as accorded by §3El.1 of the Sentencing Guidelines. As support 

for this claim, Mr . Schlapman contends he is the only defendant 

who has provided substantial restitution. Furthermore, Mr. 

Schlapman contends that his remarks at the sentencing hearing 

demonstrate his acceptance of responsibility. He said, "I don't 

have anybody to blame but myself and I'm not mad at anybody, and I 

don't blame anybody. I was wrong in letting the Levines use my 

trust account." 

The district court concluded that Mr. Schlapman had not 

satisfied his burden of proof demonstrating his entitlement to a 

two point downward adjustment for acceptance of responsibility. 

1 Mr. Schlapman first argues that the ambiguous indictment 

renders it unclear whether the Sentencing Guidelines apply to his 

sentence. Mr . Schlapman is incorrect. Mr. Schlapman was 

convicted of one conspiracy with multiple objectives. The entire 

conspiracy lasted until the defendants were charged in July 1989. 

Thus the Guidelines clearly apply. See United States v. Williams, 

897 F.2d 1034, 1040 (10th Cir. 1990), cert. denied, 111 S. Ct. 

2064 (1991). (Although defendant's last transaction in conspiracy 

occurred before effective date of Sentencing Guidelines, where the 

entire conspiracy continued until after the effective date, it was 

proper for the court to sentence defendant under the Guidelines.) 

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The district court's conclusion that Mr. Schlapman had not 

accepted responsibility is supported by the record in at least 

four respects. First, Mr. Schlapman submitted a version of the 

offense prior to sentencing in which he stated he "did not 

intentionally defraud any one of anything." Second, during 

sentencing, Mr . Schlapman continued to deny he acted with criminal 

intent. Third, Mr. Schlapman made several false statements to the 

government during the course of its investigation. Fourth, 

although Mr. Schlapman negotiated a settlement with the bankruptcy 

trustee in a related civil proceeding, the settlement agreement 

also explicitly denies any liability by Mr. Schlapman. 

Mr. Schlapman did not show any remorse until the sentencing 

hearing. This showing is untimely for purposes of a downward 

adjustment for acceptance of responsibility. See United States v. 

Dennison, 937 F.2d 559, 566-67 (10th Cir. 1991), cert. denied, 112 

S. Ct. 886 (1992). 

Consequently, we affirm the district court's decision to deny 

Mr. Schlapman a two-point downward adjustment for acceptance of 

responsibility. 

Entered for the Court: 

WADE BRORBY 

Circuit Judge 

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