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.

Gary Lefkowitz appeals his forty-five-count conviction for mail and wire fraud, managing

a continuing financial crimes enterprise, defrauding an agency of the United States, aiding

in the preparation of false tax returns, making a false statement in connection with a bankruptcy case, and

obstruction of justice. He was sentenced to 293 months in prison for the

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.

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evidence was insufficient to convict him of any crime, that a judge of this

court denied him due process by limiting his Criminal Justice Act award for

expert services to $169,000, and that the district court abused its

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 one

wire fraud count and one mail fraud count but otherwise affirm.

I. Sufficiency of the Evidence.

In reviewing the sufficiency of the evidence, we view the evidence

in the light most favorable to the government and uphold the verdict “if

any interpretation of the evidence would allow a reasonable-minded jury to

conclude guilt beyond a reasonable doubt.” United 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 limited

partnerships to build low- and moderate-income housing. In 1987, CEG began

concentrating on projects that would qualify limited partners for lowincome housing tax credits under 26 U.S.C. § 42. To qualify, investors

must build, rehabilitate, or acquire buildings in which a prescribed

percentage of the apartment units are occupied by low-income tenants. The

federal government allocates 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.
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In a typical 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. With credits allocated to the

project, CEG would form a limited partnership, with Lefkowitz and CEG as

general partners, and release a Private Placement Memorandum (PPM) to

securities broker-dealers who marketed the investment to prospective

limited partners. Money raised from limited partners was the project’s

equity, generally between one-quarter and one-third of the total project

cost. Upon completion of the building, CEG’s management company leased out

the apartments, the state housing agency released the allocated tax

credits, remaining debts to the builder were paid, and limited partners

began receiving their annual tax credits.

During the late 1980's, CEG’s builders obtained construction loans

to build the projects, while CEG obtained permanent financing to replace

the construction loan once a building was completed. Beginning in 1990,

with construction loans hard to obtain, CEG began marketing First Secured

Mortgages (FSMs) to individual investors. FSM investors 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.

Fraud on Investors. When Lefkowitz left CEG in May of 1994,

properties in which limited partners and FSM investors had invested more

than $80,000,000 were unbuilt, unfinished, or lost in foreclosure. The

evidence demonstrates that Lefkowitz had managed CEG so as to defraud

investors. Funds from limited partners and FSM investors were first

deposited in an operating account for each particular investment. But

Lefkowitz and CEG as general partners immediately transferred all investor

funds to a central CEG account. From there, Lefkowitz personally

controlled all expenditures, and CEG employees had standing instructions

first to pay Lefkowitz’s personal bills, then CEG’s general operating

expenses, and finally expenses for the various ongoing projects. From

January 1990 to May 1994, $9,500,000 was used to pay Lefkowitz’s personal

expenses, including over $5,000,000 in deposits to Mrs.
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Lefkowitz’s bank account and $2,000,000 in American Express bills. CEG

employees referred to the resulting shortfall -- the difference between

money on hand and money needed to replace project funds spent elsewhere --

as the “black hole.” In 1990, the black hole was $3,000,000 to $4,000,000.

By January 1994, it had grown to $25,000,000 to $30,000,000. When CEG

employees expressed concern about the growing black hole, Lefkowitz replied

that he could always raise more money.

As the black hole grew, Lefkowitz increasingly relied on funds from

new projects to complete old projects. IRS agents traced new partnership

deposits that cleared negative balances in the central CEG account and then

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 permitted 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 describe

Lefkowitz’s practice of repeatedly “lending” limited partners’ entire

investment to projects whose funds were exhausted. 

There was evidence Lefkowitz intentionally concealed these internal

transfers from investors. Prior to one visit from a due diligence officer

representing broker-dealers, Lefkowitz asked an in-house accountant if

anything in the partnership tax returns might “hurt him.” The accountant

replied that pages reflecting the loans from the partnerships to CEG were

his biggest concern. Lefkowitz promptly ripped those pages out of the tax

returns. On another occasion, CEG’s securities counsel asked Lefkowitz

about his wholesale borrowing of investor funds. Lefkowitz replied that

it was limited to short-term loans on a few occasions when partnerships had

idle funds.
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Lefkowitz also misused FSM funds. FSM loan documents provided that

the borrowing partnership “shall not use or permit any related person” to

use the FSM loan “other than in connection with the construction and

development of the Property.” Numerous investor witnesses described

meetings and conversations in which Lefkowitz represented that monies

raised in FSM offerings were construction funds that would be used to build

specific projects, secured by mortgages on those projects, and that the

money would 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 to

limited partners, FSM lender/investors, and builders without commitments

for permanent financing from long-term lenders. Indeed, by 1990, many

housing agencies required proof of permanent financing before allocating

tax credits to a proposed project. When CEG encountered difficulties in

obtaining permanent financing, Lefkowitz persuaded the presidents of two

lenders to provide commitment offers conditioned on CEG signing an

acceptance and paying a fee within a specified period. 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 providing 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, CEG

sometimes failed to make progress payments to builders. When progress

payments were in arrears on a project for which CEG did not disclose a lack

of permanent financing, the result was devastating to the builder, who

could not pay employees and subcontractors and could not undertake new

projects because its capital was tied up in the CEG project. In these

situations, Lefkowitz coerced builders to extend their construction loans

and wait
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 while CEG looked for permanent financing. If a builder became impatient,

Lefkowitz threatened legal action, and in some cases fabricated claims and

filed suit. In one such dispute, Lefkowitz testified that CEG was unable

to obtain permanent financing because the lender “found severe construction

defects, code violations and shoddy workmanship,” when in fact the lender’s

inspection revealed only minor defects that would not have prevented

permanent financing. These tactics forced several builders into

bankruptcy.

Fraud on Housing Agencies and the IRS. Lefkowitz’s scheme included

two different types of fraud on government agencies. First, CEG with

Lefkowitz’s personal approval represented to housing agencies that the

National Development Council (NDC) was a nonprofit general partner in

certain projects. In fact, NDC did not have a partnership agreement with

CEG, and in many cases was unaware that CEG was using its name on tax

credit applications. Based on those misrepresentations, nonprofit tax

credits were allocated to CEG projects and ultimately claimed by their

investors.

Second, to mollify investors when projects were late, Lefkowitz

instructed CEG employees to file tax returns claiming that buildings

finished late in the year had been completed and leased to tenants in

January. This misrepresentation permitted CEG to wrongfully claim and

distribute to investors tax credits for the entire year. There is ample

evidence that Lefkowitz knew the properties were unfinished and the claimed

credits unearned. He once told a CEG accountant not to worry about

claiming false completion dates because CEG had lots of property and

Lefkowitz could always claim he was confused. In addition, on several

occasions, Lefkowitz had CEG claim tax credits for periods during which CEG

was negotiating to purchase low-income housing projects built by others.
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B. Mail and Wire Fraud.

To sustain Lefkowitz’s convictions on seventeen counts of mail fraud

and thirteen counts of wire fraud in violation of 18 U.S.C. §§ 1341 and

1343, the evidence must establish a scheme to defraud, use of the mails or

interstate wires incident to the scheme, and intent to cause harm. See

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 evidence that Lefkowitz used CEG to implement a single

massive scheme to defraud investors, lenders, builders, and governments.

Thus, the issue for each 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, 712

(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 only

an illusory permanent financing commitment, so the partnership could not

make a final payment to the builder. When the builder demanded payment,

CEG sued the builder alleging failure to complete environmental studies.

To support that claim, Lefkowitz persuaded the purported permanent lender

to withdraw its commitment because of environmental problems and then

submitted an affidavit stating that the lender refused to fund the loan and

CEG had forfeited its commitment fee. The lender testified that CEG never

paid the commitment fee and never requested that a permanent loan be

funded. 

Count nineteen is a letter from the builder to CEG demanding payment.

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
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jury may properly infer intent from circumstantial evidence. See United

States v. Berndt, 86 F.3d 803, 809 (8th Cir. 1996). The evidence was

sufficient to permit a reasonable jury to infer that Lefkowitz intended to

harm the builder by providing an illusory permanent financing commitment

and then avoiding CEG’s obligations to the builder with a sham lawsuit

supported by Lefkowitz’s false affidavit. Each document was either a use

of the wires to further the scheme to defraud or, in the case of the

builder’s demand for payment, a reasonably foreseeable use of the mails or

wires by a third party. See United States v. Brewer, 807 F.2d 895, 898

(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 Lefkowitz-approved letter from CEG

to an investor in the Citi-Minnesota partnership falsely stating that

construction had been delayed by severe weather in Duluth but would be

completed on time. In fact, construction was never started. Counts seven

and eight were identical letters from Lefkowitz to two investors in the

Citi-Minneapolis IX partnership falsely stating that construction was

“moving forward” and enclosing a photograph falsely described as depicting

“a groundbreaking ceremony . . . on the site of the property owned by CitiMinneapolis Partners IX.” In fact, the Citi-Minneapolis IX project was

never begun. Count eighteen was a wire transfer of Citi-Elmcrest rental

income into CEG’s main account. That income had been dedicated to the

limited partners or to a reserve fund to cover unexpected maintenance

costs.

Lefkowitz argues that the evidence was insufficient to convict him

on these counts because the government failed to prove he embezzled

investor funds. But the evidence was sufficient to prove that the three

uses of the mails furthered the scheme to defraud by falsely assuring

investors their projects 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.
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Lefkowitz also argues that the government failed to prove use of the

mails in counts seven and 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 items were delivered by the

United States Postal Service. See United States v. Fox, 69 F.3d 15, 18

(5th Cir. 1995); United States v. Griffith, 17 F.3d 865, 877 (6th Cir.),

cert. denied, 513 U.S. 850 (1994).

Counts nine and twenty-nine involve two letters concerning the extent

of a permanent lender’s prior dealings with CEG. Lefkowitz used the

letters to induce investors to contribute to FSM-VIII, falsely representing

the information contained in the lender’s letter. He argues that the

government failed to prove intent to deceive FSM-VIII investors because

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 funds that were siphoned away

from the proposed projects to pay his personal expenses and CEG’s other

debts.

Counts fourteen to sixteen, twenty, and twenty-two to twenty-five

relate to FSM-VI. The first three counts involve interest checks mailed

to FSM investors at a time when FSM-VI’s funds were depleted and could not

be earning interest. These checks support a conviction for mail fraud

because they prevented investors from uncovering the fraud. See Lane, 474

U.S. at 451. The last four counts involve wire transfers of the original

investor funds into FSM-VI, unquestionably an integral part of the overall

scheme to defraud as these funds were moved into CEG’s main account and

spent on expenses unrelated to FSM-VI properties. Lefkowitz argues that

pooling investor funds and spending them at his discretion was not

inconsistent with the language in the various PPMs. We disagree, but in

any event the jury could reasonably find the overall scheme fraudulent, the

language of the PPMs notwithstanding. The documents at issue in these

counts clearly furthered that overall scheme.
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Counts twenty-six and twenty-eight concern Lefkowitz-approved letters

that CEG faxed to one of its broker-dealers. One letter falsely stated

that CEG was holding FSM-IV funds in escrow and releasing them to

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 almost

$1,500,000 of FSM-VI funds in a construction fund for the Aspen III

apartment building; in fact, most FSM-VI funds had been funneled into CEG’s

main account and spent elsewhere. Lefkowitz argues this evidence does not

prove intent to harm investors because the FSM-IV properties were built and

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 from

this type of active concealment. 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 February 1993

between Lefkowitz and a Minnesota broker-dealer concerning whether the FSMVI funds were still in escrow and available for construction. Lefkowitz

concedes that he lied about that but argues that the government presented

no evidence that this was an interstate telephone conversation. The

government responds, “There was no evidence that Lefkowitz, a California

businessman, was in Minnesota at the time.” Given the government’s burden

of proof, that response is totally inadequate. 

Testifying for the government at trial, the broker-dealer related the

substance of the conversation but not whether it was an interstate call.

Lefkowitz testified at length for the defense but was not asked about this

conversation. A jury may reasonably infer from circumstantial evidence

that a telephone call was between the parties in different States. See

United 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 the

massive record on appeal has uncovered no circumstantial evidence from

which the jury could infer that Lefkowitz,
Counts forty-two and forty-three charged 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). 

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who made many trips to Minnesota, was elsewhere at the time of this call.

Lacking help from the government on this issue, we agree with Lefkowitz

that the evidence is insufficient to prove the interstate element of

federal wire fraud. His conviction on count thirty must be reversed.

Counts three, four, and seventeen relate to tax credit applications.

Two counts involve letters advising CEG that the Minnesota Housing Finance

Agency (MHFA) had reserved nonprofit tax credits for projects after CEG

falsely listed NDC as a fifty-percent general partner. Lefkowitz argues

the evidence was insufficient 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 fraudulent

applications. The third count involves a fraudulent permanent financing

commitment letter that CEG faxed to MHFA to satisfy its requirements for

tax credits. Lefkowitz argues that no non-profit tax credit application

was submitted for this project so the fax did not further an alleged scheme

to defraud. However, for-profit tax credits were 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 tax forms CEG mailed to

investors advising they were entitled to claim low-income housing tax

credits in a particular year. Five advised of non-profit tax credits for

projects on which CEG had falsely claimed NDC as a partner. Lefkowitz

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.

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determine what credits investors could legitimately claim. However,

Lefkowitz caused the filing of false tax credit applications. Advising

investors to claim the resulting undeserved credits was a foreseeable and

necessary step in this part of the overall scheme to defraud. The sixth

tax form advised an investor to claim credits for all of 1990 on a project

that CEG did not purchase until December 31, 1990. Lefkowitz argues

insufficient proof of intent to defraud because CEG might have assumed the

benefits and burdens of ownership, and thus became entitled to the credits,

before signing the purchase agreement. However, the real estate broker

testified that he did not introduce Lefkowitz to the seller until late

December, sufficient evidence that 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-dealer

enclosing Lefkowitz’s written response to a due diligence organization’s

inquiry as to why he had not disclosed his suspension from the practice of

law in California. Broker-dealers were concerned that the suspension

should be disclosed to CEG investors. Lefkowitz’s explanation was a

dishonest summary of the conduct that caused the suspension and the

California Supreme Court’s opinion in the matter. At trial, Lefkowitz

objected in chambers to any evidence of the California suspension as

irrelevant and unfairly prejudicial. The government proposed to limit its

evidence to a certified copy of the California Supreme Court opinion plus

Lefkowitz’s response to the broker-dealer inquiry, introduced with minimal

foundation from a broker-dealer recipient. The district court ruled that

the documents would be admitted on that basis. When trial resumed, the

witness testified that she received the letter and its enclosure but was

not asked on direct or cross exam if they were received by United States

mail. On appeal, Lefkowitz argues that the government failed to prove that

this letter was sent by United States mail. We agree that under the

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.

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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); United

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 manager of a continuing financial crimes enterprise (CFCE)

violates 18 U.S.C. § 225 if (i) he supervises a series of mail or wire

fraud transactions which affect a financial institution, (ii) receives at

least $5,000,000 in gross receipts from the criminal enterprise in a

twenty-four-month period, and (iii) acts in concert with at least three

other persons in executing the crimes. The jury found that Lefkowitz

4

violated
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§ 225 when CEG raised more than $5,000,000 from FSM-VI and FSM-VIII

investors within a two-year period, because banks invested in those

offerings and at least three other 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 in

FSM-VI and FSM-VIII. Those offerings together grossed over $5,000,000.

Given CEG’s practice of making all invested funds available to Lefkowitz

personally, 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 banks

investing in FSM-VIII were not “affected” by the fraud because Lefkowitz

used funds from later projects to repay FSM-VIII investors. However,

whatever the banks finally realized on their investments, they were

affected when deceived into investing funds that CEG then fraudulently

misused. 

Lefkowitz primarily argues that the government failed to prove he

acted “in concert” with at least three other persons in defrauding

financial institutions. “[T]he plain meaning of the phrase ‘in concert’

signifies mutual agreement in a common plan or enterprise.” United States

v. Rutledge, 116 S. Ct. 1241, 1247 (1996). While acknowledging that

numerous CEG employees acted in concert with him in executing the overall

scheme to defraud, Lefkowitz argues that there was no knowing complicity

by his subordinates in the continuing FSM fraud against financial

institutions. The jury was carefully and properly instructed on this

issue:

In order to sustain its burden of proof for the crime of

managing a continuing financial crimes enterprise as charged

in Count Forty Seven of the indictment, the government must

prove the following:

One. The defendant committed three or more violations of

the mail fraud and/or the wire fraud statutes affecting

financial institutions;

* * * * *
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Four. The defendant organized managed or supervised these

three or more other persons in connection with this series of

violations . . . .

(Emphasis 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 of these counts concern low-income housing tax credits CEG

claimed for a project not yet completed. The other six relate to credits

based upon false placed-in-service dates. To sustain a conviction under

26 U.S.C. § 7206(2), the evidence must show that defendant willfully caused

the preparation of a materially false tax return. Lefkowitz first argues

that the government failed to prove willfullness because he only mistakenly

supplied incorrect information to his accountants. However, the trial

testimony of the various CEG accountants provided ample evidence that

Lefkowitz (i) instructed a CEG accountant to claim credits on a project he

knew was incomplete, and (ii) willfully provided false placed-in-service

dates to his accountants. That is sufficient proof of willfulness. See

United States v. Kouba, 822 F.2d 768, 773 (8th Cir. 1987). 

Lefkowitz also argues that false placed-in-service dates will not

sustain these convictions because low-income housing tax credits also

require proof that a building is a “qualified low-income building.” 26

U.S.C. § 42(f)(1). Lefkowitz told his accountants that the projects were

pre-leased to qualified low-income tenants, so that CEG could begin taking

tax credits when the apartments were placed in service. Thus, Lefkowitz

knew when he provided false placed-in-service dates that his accountants

would wrongfully claim tax credits based on that information. That is

sufficient to sustain the § 7206(2) convictions.
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E. False Statement in a Bankruptcy Case (Count Forty-Six).

CEG was forced into Chapter 11 bankruptcy shortly after Lefkowitz left

the company in May 1994. Some weeks later, after Lefkowitz attempted to

sell a mortgage owned by a company he controlled but purchased with CEG

investor funds, CEG filed in its bankruptcy case an affidavit by a real

estate broker stating: 

On approximately June 13, 1994, I received a telephone call from

Mr. Lefkowitz. During that phone call Mr. Lefkowitz asked me

if I would be interested in acting as a broker to sell a

mortgage which he holds on an apartment complex. I indicated

to Mr. Lefkowitz that until the City Equity Group problems were

resolved I would be unable to assist in this regard. Once I

indicated that I was unable to assist him the phone call

terminated rather abruptly. 

Lefkowitz responded with an affidavit stating: “The conversation . . .

never occurred.” Based on Lefkowitz’s affidavit, the jury convicted him

of “knowingly and fraudulently mak[ing] a false declaration, certificate,

verification, or statement under penalty of perjury . . . in or 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 the

impression that Lefkowitz was attempting to sell his own mortgage, rather

than one owned by a company he controlled. His affidavit simply denied

that the conversation as described had occurred. However, Lefkowitz’s

affidavit, read literally, asserts that the conversation never occurred,

not that it occurred but differently than the broker described it.

Moreover, his affidavit “must be considered in the context in which [it

was] given.” United States v. Robbins, 997 F.2d 390, 395 (8th Cir.), cert.

denied, 510 U.S. 948 (1993). The jury could reasonably find that Lefkowitz

lied to the bankruptcy court to cover up his effort to profit from the

prior embezzlement of CEG property. 
-17-

F. Obstruction of Justice (Count Forty-Four).

In early 1993, Lefkowitz received a letter informing him that he was

the target of a grand jury investigation. 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 took 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 home

with CEG’s response. She finally produced the documents in early 1994

after receiving a target letter and discussing the matter with her own

attorney. Based on this incident, Lefkowitz was convicted of violating 18

U.S.C. § 1503 by corruptly obstructing the grand jury’s investigation. 

Lefkowitz argues that this conviction must be reversed because the

government did not prove a sufficient nexus between his instruction to

remove documents and an intent to impede the grand jury process. We

disagree. Lefkowitz knew of the grand jury investigation when he

instructed the employee to remove the documents. Based upon her testimony,

the jury could reasonably infer that Lefkowitz had intended her to hide

these documents from the government. He knew that CEG had raised money and

claimed tax credits for those two projects when the partnerships did not

own any property. Thus, whether the removed documents were in fact

incriminating is irrelevant because the jury could reasonably find that

Lefkowitz believed they would incriminate. Section 1503 is violated by

“endeavors” to obstruct justice, which include “where the defendant acts

with an intent to obstruct justice, and in a manner that is likely to

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 government

5

provide “the basic tools of an adequate defense.” Little v. Armontrout,

835 F.2d 1240, 1243 (8th Cir. 1987) (en banc) (quotation omitted), cert.

denied, 487 U.S. 1210 (1988). As we discuss in Part IV, there is good

reason to infer that Lefkowitz was not a financially unable defendant

entitled to any CJA funding. But in any event, we are satisfied that the

funds he received gave him the basic accounting tools for an adequate

defense. He retained the services of a nationally recognized accounting

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 August 1994, the district court granted Lefkowitz a continuance of

three weeks, rather than the three months he requested. Lefkowitz argues

that the court erred in not granting a three-month continuance because his

case was especially complex, the records were voluminous, and the denial

of additional expert funding was an unforeseen hardship. “We will not

overturn a trial court’s denial of a continuance unless the trial court

clearly has abused its discretion, because continuances are not favored and

should be granted only when a compelling reason has been shown.” United

States v. Young, 943 F.2d 24, 25 (8th Cir. 1991) (quotation omitted), cert.

denied, 503 U.S. 964 (1992). There was no abuse of discretion in this

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 appointed

counsel under the CJA. See 18 U.S.C. § 3006A(a). A hearing was held at

which Lefkowitz represented that he had no assets or income because his

wife owned their residences, cars, jewelry, and art work. The court

ordered Lefkowitz to submit, in camera, current financial statements for

himself and his wife. After some delay, he submitted a financial statement

showing a personal net worth of $18,600,000 on December 31, 1990. The

court then concluded he was able to pay his costs of defense and

conditioned appointment of counsel on Lefkowitz or his wife depositing

$250,000 with the Clerk of Court to cover those costs. When Lefkowitz

reneged on his promise to deposit such assets, the court discharged

appointed counsel. Lefkowitz challenged this ruling, falsely representing

that the court overseeing CEG’s bankruptcy had enjoined him from depositing

assets for his defense. Concerned that Lefkowitz be effectively

represented in the criminal case despite his intransigence, the district

court reappointed counsel, but reaffirmed that Lefkowitz was responsible

for his costs of defense and ordered the Federal Defender to pursue

collection if he did not comply with the court’s order. Lefkowitz never

deposited any funds with the court.

After conviction and prior to sentencing, the district court held a

hearing to determine whether Lefkowitz should be ordered to pay his costs

of defense. The government presented evidence that he had spent several

hundred thousand dollars on personal expenses and unrelated attorney’s fees

between June 1994 and February 1995, contrary to his repeated claims of

indigence. Lefkowitz admitted the expenditures but claimed that he had no

significant current assets and had been living off family loans for several

months prior to his July 1995 incarceration. Unpersuaded, the district

court concluded that Lefkowitz has funds available and ordered him to

reimburse the government $316,693.70 for his costs of defense. Such an

order is expressly authorized by 18 U.S.C. § 3006A(f). 
-20-

On appeal, Lefkowitz argues that the court’s finding that he currently

has funds available is clearly erroneous. We disagree. A defendant has

the burden of demonstrating that he is unable to afford counsel, especially

when a pretrial 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 States v. Harris, 707 F.2d 653, 661 (2nd Cir.), cert. denied, 464

U.S. 997 (1983). Because Lefkowitz never met that burden, every pretrial

order appointing counsel specified that he would ultimately bear the cost

of his own defense. After the trial, Lefkowitz was given an opportunity

to demonstrate that he is presently unable to reimburse the government for

his defense. He presented nothing more than his personal testimony. The

district court found that testimony to be entirely lacking in credibility,

as do we. Our earlier orders granting him leave to prosecute these appeals

in forma pauperis are not to the contrary. 

V. Conclusion.

Lefkowitz’s convictions on count one and count thirty are reversed,

and the case is remanded for entry of an amended judgment and for

consideration of whether resentencing is necessary. The judgment appealed

in No. 95-4206 is in all other respects affirmed. The order appealed in

No. 96-1228 is affirmed. The concerns which led us to file portions of the

record 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 to

make the entire record in No. 96-1228 a public record.

A true copy.

Attest:

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