# United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________ Nos. 95-4206 and 96-1228

___________ United States of America, *
* Plaintiff - Appellee, *
* Appeals from the United States
v. * District Court for the
* District of Minnesota. Gary Lefkowitz, *
* Defendant - Appellant. *

___________ Submitted: April 14, 1997 Filed: September 9, 1997

___________ Before RICHARD S. ARNOLD, Chief Judge, LOKEN and HANSEN, Circuit Judges.

___________
LOKEN, Circuit Judge.

Gar y Lefkowitz appeals his forty-five-count conviction for mail and wire fraud, managing a continuing financial cr imes enterprise , defrauding an agency of the United States, aiding inthe pr eparation of false tax returns, making a false statement in connection with a bankruptcy case , an d obs tructionof justice . He was sentenced to 293 months in prison for th e continuing financial crimes enterprise violation , and to lesser concurrent terms on the other counts of conviction. Lefkowitz argues that the

## The HONORABLE DAVID S. DOTY, United States District Judge for the 1 

## District of Minnesota.
-2- evidence was insufficient to convict him of any crime, that a judge of thi s court denied him due process by limiting his Criminal Justice Act award fo r exper t services to $169,000, and that the district court abused it s 1 discretion in partially denying his third motion for a continuance. In No

. 96-1228, Lefkowitz appeals a post-conviction order that he reimburse the government for the costs of his defense. We reverse the convictions on on e wire fraud count and one mail fraud count but otherwise affirm.
I. Sufficiency of the Evidence.

In revie wing the sufficiency of the evidence, we view the evidenc e inthe light most favorable to the government and uphold the verdict “if any interpretation of the evidence would allow areasonable-minded jury to conclude guilt beyond a reasonable doubt.” Unit ed States v. Hood , 51 F.3d 128, 129 (8th Cir. 1995).

A. The Core Scheme to Defraud.
From 1984 to 1994, Lefkowitz was President of Citi-Equity Group , Inc. (CEG), a California corporation that formed real estate limite d partnerships to build low- and moderate-income housing. In 1987, CEG bega n concen trating on projects that would qualify limited partners for low

income ho using tax credits under 26 U.S.C. § 42. To qualify, investor s must b uild, rehabilitate, or acquire buildings in which a prescribe d percentage of the apartment units are occupied by low-income tenants. The federal government al locates tax credits to the States, with at least ten percent reserved for ventures in which nonprofit organizations participate

. State and local housing agencies allocate the credits to specific projects

.

## -3- In a ty pical project, CEG would find land in a desirable location , develop plans for an apartment complex, hire a builder, and apply to the appropriate housing agency for tax credits. Wit h credits allocated to the project, CEG would form a limited partnership, with Lefkowitz and CEG as genera l partners, and release a Private Placement Memorandum (PPM) t o
se curities broker-dealers who marketed the investment to prospectiv e lim ited partners. Money raised from limited partners was the project’ s equity, generally be tween one-quarter and one-third of the total project cost. Upon completion of the building, CEG’s management company leased ou t the ap artments, the state housing agency released the allocated ta x cre dits, remaining debts to the builder were paid, and limited partner s began receiving their annual tax credits.

Du ring the late 1980's, CEG’s builders obtained construction loan s to build the project s, while CEG obtained permanent financing to replace the construction loan once a building was completed. Beginning in 1990, with construction loa ns hard to obtain, CEG began marketing First Secured Mortgages (FSMs) to individual investors. FSM i nvestors made non-recourse loans at construction loan interest rates to the limited partnerships that owned one or more designated projects, with the expectation that CEG’ s permanent lenders would take out the FSM loans with long-term mortgages.

Frau d on Investors. When Lefkowitz left CEG in May of 1994 , properties in which limited partners and FSM investors had invested more tha n$80,000,000 were unbuilt, unfinished, or lost in foreclosure. Th e evidenc e demonstrates that Lefkowitz had managed CEG so as to defrau d inve stors. Funds from limited partners and FSM investors were firs t deposited in an operating account for each particular investment. Bu t Lefkowitz and CEG as general partners immediatel y transferred all investor funds to a central CEG account. From there, Lefkowitz personall y controlled all expenditures, and CEG employees had standing instructions first to pay Lefkowitz’s personal bills, then CEG’s general operatin g expenses, and finally expenses for the various ongoing projects. Fro m January 1990 to May 1 994, $9,500,000 was used to pay Lefkowitz’s personal expenses, including over $5,000,000 in deposits to Mrs.

## -4-

Lef kowitz’s bank account and $2,000,000 in American Express bills. CE G employ ees referred to the resulting shortfall -- the difference betwee n money on hand and money needed to replace projec t funds spent elsewhere --
as the “black hole.” In 1990, the black hole was $3,000,000 to $4,000,000

. ByJanuary 1994, it had grown to $25,000,000 to $30,000,000. When CE G employees expressed concern about the growing black hole, Lefkowitz replie d that he could always raise more money.

As the bl ack hole grew, Lefkowitz increasingly relied on funds from new projects to compl ete old projects. IRS agents traced new partnership deposits that cleared negative balances in the central CEG account and the n were used to meet Lefkowitz’s personal needs and to fund older projects. This practice was not disclosed to CEG investors, as each PPM included an “Estimated Use of Proceeds” section that showed only a small portion of the funds going to CEG for general partner expenses, salaries, and fees. Lefkowitz denies that this was fraudulent, pointing to Article IX of the PPM’s, which permitte d CEG to lend money “on behalf of the Partnership to others , including the General Partners and their Affiliates.” However , while this provision would alert investors that idle limited partnership funds might be loaned to other productive projects, it did not describ e Lef kowitz’s practice of repeatedly “lending” limited partners’ entir e investment to projects whose funds were exhausted.

There was evidence Lefkowitz intenti onally concealed these internal transfers from investors. Prior to one visit fr om a due diligence officer repr esenting broker-dealers, Lefkowitz asked an in-house accountant i f anything in the partn ership tax returns might “hurt him.” The accountant replied that pages re flecting the loans from the partnerships to CEG were his biggest concern. Lefkowitz promptly ripped those pages out of the ta x return s. On another occasion, CEG’s securities counsel asked Lefkowit z about his wholesale borrowing of investor funds. Lefkowitz replied that it was limited to short-term loans on a few occasions when partnerships ha d idle funds.

## -5- Lefkowitz also misused FSM funds. FSM loan documents provided that the borrowing partner ship “shall not use or permit any related person” to
use the FSM loan “other than in connection with the construction an d de velopment of the Property.” Numerous investor witnesses describe d meeting s and conversations in which Lefkowitz represented that monie s raised in FSM offerings were construction funds that would be used to buil d spe cific projects, secured by mortgages on those projects, and that th e moneywould be held in escrow and drawn down as construction proceeded

. Notwithstanding these representations, FSM funds were transferred to the central CEG account and spent at Lefkowitz’s discretion.

CEG’s real estate construction projects could not be marketed t o limited partners, FSM lender/investors, and builders without commitments for permanent financing from long-term lenders. Indeed, by 1990, man y housing agencies required proof of permanent financing before allocating taxcredits to a proposed project. When CEG encountered difficulties in obtaining permanent financing, Lefkowitz persuaded the presidents of two lender s to provide commitment offers conditioned on CEG signing a n acceptance and paying a fee within a specified p eriod. Lefkowitz told the lenders that he would not use their letters, but he then referred to the letters in investor PPMs, sent them to housing agencies as part of CEG’s applications for tax credits (in one case even p roviding a copy of a bogus check as evidence the commitment fee had been paid), and provided them to builders who used the letters to obtain construction loans. As a result of this deception, investors contributed money, housing agencies allocated tax credits, and builders built projects that CEG could not close.

Fraud on Builders. Because it commingled project funds, CE G sometimes failed to make progress payments to builders. When progres s payments were in arrears on a project for which CEG did not disclose a lac k of permanent financing, the result was devastating to the builder, wh o could not pay employees and subcontractors and could not undertake ne w proje cts because its capital was tied up in the CEG project. In thes e situations, Lefkowitz coerced builders to extend their construction loans and wait

## -6-

while CEG looked for permanent financing. If abuilder became impatient, Lefkowitz threatened legal action, and in some c ases fabricated claims and filed suit. In one s uch dispute, Lefkowitz testified that CEG was unable to obtain permanent financing because the lender “found severe constructio n defects, code violations and shoddy workmanship,” when in fact the lender’ s inspec tion revealed only minor defects that would not have prevente d perman ent financing. These tactics forced several builders int o bankruptcy.

Fraud on Housing Agencies and the IRS. Lefkowitz’s scheme included two differ ent types of fraud on government agencies. First, CEG wit h Lefk owitz’s personal approval represented to housing agencies that th e Nation al Development Council (NDC) was a nonprofit general partner i n certain projects. Infact, NDC did not have a partnership agreement with CEG , and in many cases was unaware that CEG was using its name on ta x cred it applications. Based on those misrepresentations, nonprofit ta x credits were allocated to CEG projects and ultimately claimed by thei r investors.

Sec ond, to mollify investors when projects were late, Lefkowit z instru cted CEG employees to file tax returns claiming that building s fin ished late in the year had been completed and leased to tenants i n Januar y. This misrepresentation permitted CEG to wrongfully claim an d distribute to investors tax credits for the entire year. There is ample evidence that Lefkowitz knew the properties were unfinished and the claime d credits u nearned. He once told a CEG accountant not to worry abou t clai ming false completion dates because CEG had lots of property an d Lefko witz could always claim he was confused. In addition, on severa l occasions, Lefkowitz had CEG claim tax credits for periods during which CE G
was negotiating to purchase low-income housing projects built by others.

## -7- B. Mail and Wire Fraud.

To sustain Lefkowitz’s convictions o n seventeen counts of mail fraud and thi rteen counts of wire fraud in violation of 18 U.S.C. §§ 1341 an d 1343, the evidence must establish a scheme to de fraud, use of the mails or interstat e wires incident to the scheme, and intent to cause harm. Se e Pereira v. United States , 347 U.S. 1, 8 (1954); United States v. Manzer , 69 F.3d 222, 226 (8th Cir. 1995); United States v. Nelson , 988 F.2d 798, 804 (8th Cir.), cert. denied , 510 U.S. 914 (1993). As we have explained, there was abundant ev idence that Lefkowitz used CEG to implement a single massive scheme to defraud investors, lenders, builders, and governments. Thus, the issue for e ach of these counts is whether the government proved that a particular use of the mails or wires was “part of the execution of the fraudulent scheme.” Schmuck v. United States , 489 U.S. 705, 71 2 (1989).
Counts nineteen, twenty-one, and twenty-seven concern the Paris Place Apartments in Sauk Rapids, Minnesota. In the fall of 1991, construction
was completed, CEG took possession, and tenants moved in. But CEG had onl y anillusory permanent financing commitment, so the partnership could not make a final payment to the builder. When the builder demanded payment, CEGsued the builder alleging failure to complete environmental studies. To support that claim , Lefkowitz persuaded the purported permanent lender to wit hdraw its commitment because of environmental problems and the n submitted an affidavit stating that the lender refused to fund the loan an d CEG had forfeited its commitment fee. The lende r testified that CEG never paid the commitment fee and never requested that a permanent loan b e funded.
Count nineteen is a letter from the builder to CEG demanding pa yment. Count twenty-one is CEG’s reply, authorized by Lefkowitz after a month’s delay, directing the builder to come to Los Angeles to pick up its check. Count twenty-seven is the Lefkowitz affidavit. All were transmitted by wire. Lefkowitz argues the government failed to prove he intended to harm the builder in this contract dispute. However, the

## -8-

jurymay properly infer intent from circumstantial evidence. See United States v. Berndt , 86 F.3d 803, 809 (8th Cir. 1996). The evidence wa s sufficient to permit a reasonable jury to infer that Lefkowitz intended to harmthe builder by providing an illusory permanent financing commitment and t hen avoiding CEG’s obligations to the builder with a sham lawsui t supported by Lefkowit z’s false affidavit. Each document was either a use of the wires to further the scheme to defraud or, in the case of th e builder’s demand for payment, a reasonably fores eeable use of the mails or wires by a third party. See United States v. Brewer , 807 F.2d 895, 89 8 (11th Cir.), cert. denied , 481 U.S. 1023 (1987). The convictions on these counts must be affirmed.
Counts two, seven, eight, and eighteen relate to Lefkowitz’s on -going deception of investors. Count two is a Lefkowit z-approved letter from CEG to an investor in the Citi-Minnesota partnership falsely stating tha t const ructionhad been delayed by severe weather in Duluth but would b e completed on time. In fact, construction was ne ver started. Counts seven and eight were identical letters from Lefkowitz to two investors in th e Cit i-Minneapolis IX partnership falsely stating that construction wa s “moving forward” and enclosing a photograph fals ely described as depicting “a groundbreaking ceremony . . . on the site of the property owned by Citi

Min neapolis Partners IX.” In fact, the Citi-Minneapolis IX project wa s never begun. Count eighteen was a wire transfer of Citi-Elmcrest rental income into CEG’s main account. That income had been dedicated to th e limited partners or to a reserve fund to cover unexpected maintenanc e costs.

Lefkowitz argues that the evidence was insufficient to convict hi m on these counts because the government failed to prove he embezzle d investor funds. But the evidence was sufficient to prove that the three
uses of th e mails furthered the scheme to defraud by falsely assurin g investors their proje cts were proceeding. See United States v. Lane , 474 U.S. 438, 451-52 (1986). The wire transfer of rental income was part of the core scheme to pool CEG project funds and use them without regard to contrary promises in the PPMs and partnership agreements.

## -9- Lefkowitz also argues that the gover nment failed to prove use of the mails in counts sevenand eight because the recipients testified that the letters arrived by mail but not “United States mail.” However, a rational jury may conclude from such testimony that the i tems were delivered by the United States Postal Service. See United States v. Fox , 69 F.3d 15, 1 8 (5thCir. 1995); United States v. Griffith , 17 F.3d 865, 877 (6th Cir.), cert. denied , 513 U.S. 850 (1994).
Counts nine and twenty-nineinvolve two letters concerning the extent of a permanent lender’s prior dealings with CEG. Lefkowitz used th e letters to induce investors to contribute to FSM-VIII, falsely representin g the inform ation contained in the lender’s letter. He argues that th e govern ment failed to prove intent to deceive FSM-VIII investors becaus e investors were on notice that CEG did not have solid permanent financing commitments. However, Lefkowitz used the letters to further his overall scheme to defraud investors by obtaining FSM fun ds that were siphoned away fromthe proposed projects to pay his personal expenses and CEG’s othe r debts.

Count s fourteen to sixteen, twenty, and twenty-two to twenty-fiv e relate to FSM-VI. The first three counts involve interest checks mailed to FSM investors at a time when FSM-VI’s funds w ere depleted and could not be ea rning interest. These checks support a conviction for mail frau d because they prevented investors from uncoveringthe fraud. See Lane , 474 U.S. at 451. The las t four counts involve wire transfers of the original investor funds into FSM-VI, unquestionably an in tegral part of the overall scheme to defraud as these funds were moved into CEG’s main account an d spent on expenses unrelated to FSM-VI properties. Lefkowitz argues that pooling investor funds and spending them at his discretion was no t inconsistent with the language in the various PPMs. We disagree, but in any event the jury could reasonably find the overall scheme fraudulent, th e language of the PPMs notwithstanding. The documents at issue in thes e counts clearly furthered that overall scheme.

## -10- Counts twenty-six and twenty-eight concern Lefkowitz-approved l etters that CEG faxed to one of its broker-dealers. One letter falsely state d that CEG was holding FSM-IV funds in escrow and releasing them t o contractors as work was completed, when in fact CEG had already spent most of those funds on unrelated properties and was paying FSM-IV contractors from its main account. The other letter falsely stated that CEG had almos t $1,500,00 0 of FSM-VI funds in a construction fund for the Aspen II I apartment building; in fact, most FSM-VI funds had been funneled into CEG’ s main account and spent elsewhere. Lefkowitz arg ues this evidence does not prove intent to harm investors because the FSM-IV properties were built an d he always intended to build Aspen III. But both letters concealed CEG’s use of investor funds so that the broker-dealer would continue encouraging clients to invest in its projects. Intent to harm may be inferred fro m this type of active c oncealment. See United States v. Stouffer , 986 F.2d 916, 923 (5th Cir.), cert. denied , 510 U.S. 837 (1993).
Count thirty

concerns a telephone conversation in early Februar y 1993 between Lefkowitz and a Minnesota broker-dealer concerning whether the FSM

VI funds were still in escrow and available for construction. Lefkowitz concedes that he liedabout that but argues that the government presented
no e vidence that this was an interstate telephone conversation. Th e government responds, “There was no evidence that Lefkowitz, a California businessman, was in M innesota at the time.” Given the government’s burden of proof, that response is totally inadequate.
Testifying for the government at trial, the broker-dealer relat ed the substance of the conversation but not whether it was an interstate call. Lefkowitz testified at length for the defense bu t was not asked about this
conver sation. A jury may reasonably infer from circumstantial evidenc e that a te lephone call was between the parties in different States. Se e Unit ed States v. Galbraith , 20 F.3d 1054, 1056-57 (10th Cir.), cert

. denied , 513 U.S. 889 (1994); United States v. Griffith , 17 F.3d 865, 874 (6th Cir. ), cert. denied , 513 U.S. 850 (1994). But our review of th e massiv e record on appeal has uncovered no circumstantial evidence fro m which the jury could infer that Lefkowitz,

## Counts forty-two and forty-threecharged Lefkowitz with violating 18 2 

## U.S.C. § 1001 (1990) by knowingly and willfully using false documents in a matter within the jurisdiction of an agency of the United States (the IRS) when he caused CEG to file false non-profit tax credit applications with MHFA. Though Lefkowitz claims that he did not know the applications would list NDC as a project partner, there was ample evidence permitting a reasonable jury to find knowing and willful violations of § 1001. See United States v. Yeriman , 468 U.S. 63, 69 (1984).
-11- who made many trips t o Minnesota, was elsewhere at the time of this call. Lacking help from the government on this issue, we agree with Lefkowit z that the evidence is insufficient to prove the interstate element o f federal wire fraud. His conviction on count thirty must be reversed.

Counts three, four, and seventeen re late to tax credit applications. Two counts involve letters advising CEG that the Minnesota Housing Finance Age ncy(MHFA) had reserved nonprofit tax credits for projects after CE G falselylisted NDC as a fifty-percent general partner. Lefkowitz argues the evidence was insu fficient to prove he knew of this misrepresentation. However, a CEG employee testified that Lefkowitz instructed him to claim NDC as a fifty-percent partner and specifically approved the fraudulen t applications. The third count involves a fraudulent permanent financin g commitment letter that CEG faxed to MHFA to satisfy its requirements for taxcredits. Lefkowitz argues that no non-profit tax credit application
was submitted for this project so the fax did not further an alleged schem e to defraud. However, for-profit tax credits wer e allocated to the project and claimed by CEG investors before the building was completed. Therefore , the fax was an integral step in the overall scheme to defraud government of low-income housing tax credits. 2

Counts five, six, and ten to thirteen are IRS ta x forms CEG mailed to inv estors advising they were entitled to claim low-income housing ta x credit s in a particular year. Five advised of non-profit tax credits for pro jects on which CEG had falsely claimed NDC as a partner. Lefkowit z argues he reasonably relied on his accountants to

## As to fifteen of the mail fraud counts, Lefkowitz generally argues that the 3 

## government failed to prove use of the mails, and the government responds that there was testimony “for each mailing” but only provides three citations to the trial record. When the record is as massive as in this case, we expect defense counsel who raise an issue of this kind to cite the testimony and exhibits establishing each failure of proof, and government counsel to respond with equal specificity. When both sides fail in this regard, appellant cannot complain if we affirm. However, in this case we have combed the record and found sufficient evidence as to use of the mails for all mail fraud counts with the exception of count one.
-12- determine what credits investors could legitimately claim. However , Lefkowit z caused the filing of false tax credit applications. Advisin g invest ors to claim the resulting undeserved credits was a foreseeable and
necessar ystep in this part of the overall scheme to defraud. The sixt h tax form advised an investor to c laim credits for all of 1990 on a project that CEG did not purchase until December 31, 1990. Lefkowitz argue s insufficient proof of intent to d efraud because CEG might have assumed the benefits and burdens of ownership, and thus became entitled to the credits, before s igning the purchase agreement. However, the real estate broke r testified that he did not introduce Lefkowitz to the seller until lat e December, sufficient evidence tha t the claim of tax credits for the entire year was part of the overall scheme to defraud.

Count one involves a letter from Lefkowitz to a broker-deale r enclo sing Lefkowitz’s written response to a due diligence organization’ s inquiry as to why he had not disc losed his suspension from the practice of law in California. Broker-dealers were concerned that the suspensio n should be disclosed to CEG investors. Lefkowitz’s explanation was a dishon est summary of the conduct that caused the suspension and th e Calif ornia Supreme Court’s opinion in the matter. At trial, Lefkowit z objected in chambers to any evidence of the California suspension a s irrelevant and unfairly prejudici al. The government proposed to limit its eviden ce to a certified copy of the California Supreme Court opinion plus Lefkowitz’s response to the broke r-dealer inquiry, introduced with minimal founda tion from a broker-dealer recipient. The district court ruled that the documents would be admitted on that basis. When trial resumed, th e witness te stified that she received the letter and its enclosure but wa s not aske d on direct or cross exam if they were received by United State s mail. On appeal, Lefkowitz argues that the government faile d to prove that this lett er was sent by United States mail. We agree that under th e 3 governing mail fraud statute (§ 1341 has since

## Section 225 provides: 4 

## (a) Whoever (1) organizes, manages, or supervises a continuing financial crimes enterprise; and (2) receives $5,000,000 or more in gross receipts from such enterprise during any 24-month period, shall be fined not more than $10,000,000 if an individual, or $20,000,000 if an organization, and imprisoned for a term of not less than 10 years and which may be life. (b) For purposes of subsection (a), the term “continuing financial crimes enterprise” means a series of violations under section 215, 656, 657, 1005, 1006, 1007, 1014, 1032, or 1344 of this title, or section 1341 or 1343 affecting a financial institution, committed by at least 4 persons acting in concert.
-13- been amended to include delivery “by any private or commercial interstate carrier”), the government’s proof as to use of the mails was insufficient. See United States v. Hannigan , 27 F.3d 890, 895 (3d Cir. 1994); Unite d States v. Cady , 567 F.2d 771, 775 (8th Cir. 1977). Accordingly , Lefkowitz’s conviction on count one must be reversed. C. Continuing Financial Crimes Enterprise (Count Forty-Seven).

The m anager of a continuing financial crimes enterprise (CFCE ) viola tes 18 U.S.C. § 225 if (i) he supervises a series of mail or wir e fraud transactions which affect a financial institution, (ii) receives at least $5, 000,000 in gross receipts from the criminal enterprise in a twenty-f our-monthperiod, and (iii) acts in concert with at least thre e other per sons in executing the crimes. The jury found that Lefkowit z 4 violated

## -14-

§ 225 when CEG raised more than $5,000,000 from FSM-VI and FSM-VII I inv estors within a two-year period, because banks invested in thos e offerings and at least three othe r persons acted in concert with Lefkowitz in executing mail and wire frauds.

The evidence is clear that banks invested a total of $1,120,000 i n FSM -VI and FSM-VIII. Those offerings together grossed over $5,000,000

. Given CEG’s practice of making all invested funds available to Lefkowit z person ally, it is clear he received at least $5,000,000 from this part of the CEG enterprise in a two-year period. Lefkowitz suggests that bank s investing in FSM-VIII were not “affected” by the fraud because Lefkowit z us ed funds from later projects to repay FSM-VIII investors. However , wha tever the banks finally realized on their investments, they wer e aff ected when deceived into investing funds that CEG then fraudulentl y misused.

Lefkow itz primarily argues that the government failed to prove h e act ed “in concert” with at least three other persons in defraudin g financial institutions. “[T]he plain meaning of the phrase ‘in concert ’ signifies mutual agreement in a common plan or enterprise.” United States

v. Rutle dge , 116 S. Ct. 1241, 1247 (1996). While acknowledging tha t
numero us CEG employees acted in concert with him in executing the overall scheme to defraud, Lefkowitz argues that there was no knowing complicit y by his subordinates in the continuing FSM fraud against financia l in stitutions. The jury was carefully and properly instructed on thi s issue:

In order to sustain its burden of proof for the crime of ma naging a continuing financial crimes enterprise as charge d inCount Forty Seven of the indictment, the government mus t prove the following:
One. The defendant comm itted three or more violations of the mail fraud and/or the wire fraud statutes affectin g financial institutions;

* * * * *

## -15- Four. The defendant organized managed or supervise d these three or more other persons in connection with this series o f violations

. . . . (Empha sis added.) We conclude that the evidence is sufficient to support the jury’s finding that Lefkowitz violated 18 U.S.C. § 225.

D. False Tax Returns (Counts Thirty-Two To Forty-One).

Four o f these counts concern low-income housing tax credits CE G claime d for a project not yet completed. The other six relate to credits based upon false placed-in-service dates. To sustain a conviction unde r 26 U.S.C. § 7206(2), the evidence must show that defendant w illfully caused the pr eparation of a materially false tax return. Lefkowitz first argues that the government failed to prove willfullness because he only mistakenly sup plied incorrect information to his accountants. However, the tria l tes timonyof the various CEG accountants provided ample evidence tha t Lefkowitz (i) instructed a CEG ac countant to claim credits on a project he knew was incomplete, and (ii) willfully provided false placed-in-servic e dates to his accountants. That is sufficient proof of willfulness. Se e United States v. Kouba , 822 F.2d 768, 773 (8th Cir. 1987).

Lefk owitz also argues that false placed-in-service dates will no t sustai nthese convictions because low-income housing tax credits als o requ ire proof that a building is a “qualified low-income building.” 2 6 U.S.C. § 42(f)(1). Lefkowitz told his accountants that the projects were pre-leased to qualified low-incom e tenants, so that CEG could begin taking tax cred its when the apartments were placed in service. Thus, Lefkowit z kne wwhen he provided false placed-in-service dates that his accountant s would wro ngfully claim tax credits based on that information. That i s sufficient to sustain the § 7206(2) convictions.

## -16- E. False Statement in a Bankruptcy Case (Count Forty-Six).

CEG was forced into Chapter 11 bankruptcy shortly after Lefkowitz lef t the compa ny in May 1994. Some weeks later, after Lefkowitz attempted t o sell a mortgage owned by a company he controlled but purchased with CE G investor funds, CEG filed in its bankruptcy case an affidavit by a rea l estate broker stating:
On approximately June 13, 1994, I received a telephone call fro m Mr. Lefk owitz. During that phone call Mr. Lefkowitz asked m e if I woul d be interested in acting as a broker to sell a mortgage which he holds on an apartment complex. I indicate d to Mr. Lefkowitz that until the City Equity Group problems were resolved I would be unable to assist in this regard. Once I ind icated that I was unable to assist him the phone cal l terminated rather abruptly.

Lefk owitz responded with an affidavit stating: “The conversation . .

. never occurred.” Based on Lefkowitz’s affidavit, the jury convicted hi m of “kn owingly and fraudulently mak[ing] a false declaration, certificate, verification, or statement under penalty of perjury . . . inor in relation to any case under title 11.” 18 U.S.C. §152(3).
Lefkowitz argues that this conviction must be overturned because his statement was literally true. See Bronston v. United States , 409 U.S. 352, 362 (1973). The broker’s affidavit, Lefkowitz explains, gave th e impres sion that Lefkowitz was attempting to sell his own mortgage, rather thanone owned by a company he controlled. His affidavit simply denie d tha t the conversation as describedhad occurred. However, Lefkowitz’ s affid avit, read literally, asserts that the conversation never occurred , not that it occurred but differently than the broker described it

. More over, his affidavit “must be considered in the context in which [i t was] given.” United States v. Robbins , 997 F.2d 390, 395 (8 th Cir.), cert. denied , 510 U.S. 948 (1993). The jury could reasonably findthat Lefkowitz lied to th e bankruptcy court to cover up his effort to profit from th e prior embezzlement of CEG property.

## -17- F. Obstruction of Justice (Count Forty-Four).
In early 1993, Lefkow itz received a letter informing him that he was the target of a grand jury invest igation. In October, he instructed a CEG employee to remove all documents relating to two projects from CEG’ s offices. The employee gathered two boxes of documents and t ook them to her home. When a government document subpoena in December included one of the projects , the employee did not produce responsive documents at her hom e with CEG’ s response. She finally produced the documents in early 199 4 after rec eiving a target letter and discussing the matter with her ow n attorney. Based on this incident , Lefkowitz was convicted of violating 18 U.S.C. § 1503 by corruptly obstructing the grand jury’s investigation.

Lefkow itz argues that this conviction must be reversed because th e gover nment did not prove a sufficient nexus between his instruction t o remove do cuments and an intent to impede the grand jury process. W e disagree. Lefkowitz knew of the grand jury investigation when h e instructed the employee to remove the documents. Based uponher testimony, the jury could reasonably infer that Lefkowitz had intended her to hid e these documents from the government. He knew that CEG had r aised money and claimed ta x credits for those two projects when the partnerships did no t
ow nany property. Thus, whether the removed documents were in fac t inc riminating is irrelevant because the jury could reasonably find tha t Lefkowit z believed they would incriminate. Section 1503 is violated b y “en deavors” to obstruct justice, which include “where the defendant act s with an int ent to obstruct justice, and in a manner that is likely t o obstruct justice, but is foiled in some way.” United States v. Aguilar , 115 S. Ct. 2357, 2363 (1995).

II. Limiting Funding for Defense Experts.
Lefkowitz asserts that he was denied due process when a judge of this court limited him to $169,000 in accountant expert fees under the Criminal Justice Act

## The CJA provides a mechanism whereby “financially unable” defendants 5 

## may obtain expert services “necessary for adequate representation.” 18 U.S.C. § 3006A(e)(1). Fees in excess of $1,000 must be certified by the district court and approved by an active circuit judge “as necessary to provide fair compensation for services of an unusual character or duration.” § 3006A(e)(3). In this case, the reviewing circuit judge reduced the amount approved by the district court.
-18- (CJA ), 18 U.S.C. § 3006A(e). Due process requires that the governmen t 5 provide “t he basic tools of an adequate defense.” Little v. Armontrout , 835 F.2d 1 240, 1243 (8th Cir. 1987) (en banc) (quotation omitted), cert

. denie d , 487 U.S. 1210 (1988). As we discuss in Part IV, there is goo d
re asonto infer that Lefkowitz was not a financially unable defendan t entitl ed to any CJA funding. But in any event, we are satisfied that the fun ds he received gave him the basic accounting tools for an adequat e defense. He retained the services of a nationally recognized accountin g expert who testified extensively at trial. We find nothing in the record suggesting that this limitation on CJA fees resulted in an unfair trial.

III. The Third Continuance.
On May 1, 1995, after twice continuing the trial originally scheduled for A ugust 1994, the district court granted Lefkowitz a continuance o f three weeks, rather than the three months he requested. Lefkowitz argues that the court erred in not grant ing a three-month continuance because his
case was especially complex, the records were voluminous, and the denia l of additi onal expert funding was an unforeseen hardship. “We will no t
over turna trial court’s denial of a continuance unless the trial cour t clearly has abused its discretion, because continuances are not favored and should be granted only when a compelling reason has been shown.” Unite d States v. Young , 943 F.2d 24, 25 (8th Cir. 1991) (quotation omitted), cert. denied , 50 3 U.S. 964 (1992). There was no abuse of discretion in thi s case. The district court specifically considered the case’s complexity and its “unique circumstances” in granting the final three-week continuance.

## -19- IV. The Recoupment Order.
Following his initial indictment, Lefkowitz requested appointe d
counse l under the CJA. See 18 U.S.C. § 3006A(a). A hearing was held a t whic hLefkowitz represented that he had no assets or income because hi s wife own ed their residences, cars, jewelry, and art work. The cour t ord ered Lefkowitz to submit, in camera, current financial statements fo r himself and his wife. After some delay, he submitted a fina ncial statement sho wing a personal net worth of $18,600,000 on December 31, 1990. Th e court the n concluded he was able to pay his costs of defense an d
con ditioned appointment of counsel on Lefkowitz or his wife depositin g $25 0,000 with the Clerk of Court to cover those costs. When Lefkowit z renege d on his promise to deposit such assets, the court discharge d appointed counsel. Lefkowitz cha llenged this ruling, falsely representing that the court overseeing CEG’s bankruptcy had enjoined him from depositing
ass ets for his defense. Concerned that Lefkowitz be effectivel y rep resented in the criminal case despite his intransigence, the distric t court reappointed counsel, but reaffirmed that Lefkowitz was responsibl e fo r his costs of defense and ordered the Federal Defender to pursu e collectio nif he did not comply with the court’s order. Lefkowitz neve r deposited any funds with the court.

After conviction and prior to sentencing, the district court held a hearin g to determine whether Lefkowitz should be ordered to pay his costs of defense . The government presented evidence that he had spent severa l hundred thousand dollars on personal expenses and unrelated attorney’s fees betw eenJune 1994 and February 1995, contrary to his repeated claims o f indigence. Lefkowitz admitted th e expenditures but claimed that he had no significant current assets and had been living off family lo ans for several months p rior to his July 1995 incarceration. Unpersuaded, the distric t
co urt concluded that Lefkowitz has funds available and ordered him t o reim burse the government $316,693.70 for his costs of defense. Such a n order is expressly authorized by 18 U.S.C. § 3006A(f).

## -20- Onappeal, Lefkowitz argues that the court’s finding that he currentl y has funds available is clearly erroneous. We disagree. A defendant ha s the burden of demonstrating that he is unable to afford coun sel, especially when a pr etrial hearing casts doubt on his need for public assistance

. See, e.g. , United States v. Anderson , 567 F.2d 839, 840 (8th Cir. 1977) ; United St ates v. Harris , 707 F.2d 653, 661 (2nd Cir.), cert. denied , 46 4 U.S. 9 97 (1983). Because Lefkowitz never met that burden, every pretrial order appointing counsel specified that he would ultimately bear the cost of his ow n defense. After the trial, Lefkowitz was given an opportunit y to demonstrate that he is present ly unable to reimburse the government for his de fense. He presented nothing more than his personal testimony. The district court found that testimo ny to be entirely lacking in credibility, as do we. Our earlier orders granting him leave to prosecut e these appeals in forma pauperis are not to the contrary.

V. Conclusion.

Lefkowitz’s convictions on count one and count thirty are reversed, and th e case is remanded for entry of an amended judgment and fo r consideration of whether resenten cing is necessary. The judgment appealed in No. 9 5-4206 is in all other respects affirmed. The order appealed i n No. 96-1228 is affirmed. The concerns which led us to file portions of the
re cord in No. 96-1228 under seal appear to be no longer applicable

. Therefore, unless Lefkowitz files a motion objecting to this action within the time allowed for a petition for rehearing, the Clerk is directed t o make the entire record in No. 96-1228 a public record.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.