Opinion ID: 77997
Heading Depth: 2
Heading Rank: 1

Heading: Kickback Schemes

Text: We conclude that Judge Couvillion's findings that Ballard did not earn money by giving the Five business in exchange for kickbacks and, therefore, did not attempt to fraudulently assign his income to IRA or TMT, was supported by the evidence and not manifestly unreasonable. Specifically, Judge Couvillion's finding that the Hyatt payments were not indicative of a kickback scheme was plausible given the fact that Hyatt received the Embarcadero Hotel contract because Pritzker made the only bid and, therefore, did not need Ballard's and Lisle's help. For Judge Couvillion's finding to be clearly erroneous, the record would need to show that Ballard and Lisle somehow convinced Intercontinental and Del Webb not to bid. The Commissioner did not argue this and Judge Haines did not include it in his findings and the evidence does not suggest it. Rather, Del Webb's executive stated at the bidding that he would not participate because someone prematurely promised him the contract. It seems unlikely that he would attend the bidding and then concoct this story, when he simply could have declined to show like Intercontinental's representatives. Also, Judge Couvillion's finding is plausible given that Ballard testified at trial that Lisle allowed Hyatt's bid, not because of some promise to receive a kickback, but because Weaver explained to him the advantage of doing so, namely that having the Embarcadero Hotel might dissuade Hyatt from building a competing hotel nearby. The fact that Weaver sent Kanter one of Hyatt's payments with a letter referring to the participants does not persuade us that Judge Couvillion was required to find that Ballard and Lisle always were meant to receive part of the payments. The record shows that, by this point, IRA owned KWJ Corporation and remitted a portion of the payments to Weaver, so that the participants could have been KWJ Corporation and Weaver. Weaver may not have named these participants outright because he and Kanter had not disclosed to Hyatt that Weaver sold KWJ Corporation. Likewise, the fact that Kanter sent a KWJ Company distribution to Ballard and Lisle, rather than TMT and Carlco, does not persuade us that Ballard and Lisle earned the Hyatt payments or that TMT and Carlco were their alter egos. Kanter viewed Ballard and Lisle as TMT's and Carlco's managers. As such, they would have been the gatekeepers of TMT's and Carlco's money. Also, Kanter apparently corrected the error by voiding those checks. Furthermore, Judge Haines's rejections of Ballard's and Lisle's testimony on this matter were either beyond his power as a reviewer, rather than fact-finder, or were based on inaccurate facts. For instance, Judge Haines stated that Ballard's testimony was not credible because it was self-serving, uncorroborated, or simply feigned. However, defendant testimony is most often self-serving and uncorroborated and, without having heard it, Judge Haines could not say that any testimony was feigned, especially when the factfinder reached an opposite finding. Judge Haines also stated that Ballard's testimony was not credible because he gave contradictory accounts of whether he had met Weaver. The record shows, however, that Ballard never denied meeting Weaver and that it was the questioning attorney who did so. Judge Haines likewise stated that Kanter's testimony was not credible because Kanter claimed that Weaver sold KWJ Corporation for the money when Weaver actually did not receive any money from the sale for four years. The record shows, however, that Kanter did not indicate that Weaver needed money immediately and explained that Weaver's other impetus for selling was a dispute with Pritzker. Judge Couvillion's finding that the Frey payments were not indicative of a kickback scheme was plausible and, therefore, not clearly erroneous, given that Frey's offer to purchase the first apartment complex in question was accepted by Prudential because he offered more than its appraised value. Ballard's only involvement with the sale was advising Prudential to accept the offer when Prudential's fiduciary duty already arguably required accepting the offer. Moreover, this sale, like all of Frey's future dealings, was done with an unrelated Miami Prudential employee, rather than Ballard or Lisle. In reaching the conclusion that the transaction was indicative of a kickback scheme, Judge Haines merely cited Ballard's advice to accept the deal and Frey's and Prudential's future relationship. Judge Haines's reasoning is insufficient to persuade us that Judge Couvillion committed clear error. Basically, Judge Haines stated that because Ballard did his job and Frey continued to do business with one of the largest financiers in the country, Ballard and Lisle must have agreed with Kanter to direct business to Frey in exchange for kickbacks. Judge Haines considered the same facts as Judge Couvillion, but reached an entirely different outcome, without demonstrating why Judge Couvillion's finding must have been wrong. This was beyond Judge Haines's power when reviewing the findings of a Special Trial Judge. Judge Couvillion's finding that the Schaffel payments were not indicative of a kickback scheme was not clearly erroneous. Nothing in the record shows that Schaffel's and Kanter's fee-sharing agreement was anything beyond Schaffel paying Kanter for introducing him to Ballard and Lisle, which gave Schaffel an entree to obtaining business with Prudential. Also, nothing in the record suggests that Schaffel's entree was anything beyond that which normally accompanies an introduction. The fact that Ballard met with Schaffel and an IBM representative shortly after this introduction and then advised Prudential to purchase IBM's headquarters does not persuade us that Judge Couvillion's finding was manifestly unreasonable. Ballard simply could have been doing his job. Likewise, the fact that Ballard and Lisle had the power to influence Prudential is insufficient to persuade us that Judge Couvillion was required to find that they did, in fact, exercise this power. Furthermore, although Kanter suggested in his letter to Schaffel that their fee-sharing agreement extended to Travelers deals because it was inextricably linked to Lisle, these arguments are insufficient to prove something untoward. If Schaffel was paying Kanter as thanks for having made the introduction, then the fee-sharing agreement understandably might extend to Lisle's future employer. Moreover, Judge Haines's reasoning that Schaffel's projects with Prudential after Ballard and Lisle left the company were an outgrowth of the earlier introduction actually supports Judge Couvillion's finding. If the payments were kickbacks for Ballard and Lisle directing Prudential business to Schaffel, then they would have stopped when Ballard and Lisle could no longer do so. Judge Couvillion's finding that the PMS transactions were not indicative of a kickback scheme is supported by the record. Schnitzer did not need help obtaining Prudential conversion business, but sold 47.5% of PMS to IRA because he needed help obtaining business from other companies. The record upholds Judge Couvillion's reasoning. Schnizter testified at trial that he had no interest in Kanter bringing in more Prudential business because he already had developed a relationship with Prudential. That Schnitzer developed this relationship by preparing standardized operating reports, which he knew would please Prudential, demonstrates that Schnitzer's Prudential business did not involve Ballard's or Lisle's maneuvering. The fact that Schnitzer's business with Prudential continued to increase after IRA purchased a portion of PMS is insufficient to persuade us that Judge Couvillion's account of the matter was erroneous. This continued growth could have been an extension of the previous growth. Also, the fact that Schnitzer conferred with Ballard before selling a portion of PMS to IRA is insufficient to show that Ballard agreed to give PMS more business in exchange for kickbacks. Schnitzer testified that he conferred with Ballard only to determine whether Kanter could deliver on his promise of bringing in more business. Judge Couvillion evidently found this testimony credible, and the testimony is neither contradicted by extrinsic evidence nor internally inconsistent. See Anderson, 470 U.S. at 573-74, 105 S.Ct. at 1511-12. Finally, Judge Couvillion's finding that the Essex Partnership transactions were not indicative of a kickback scheme was not clearly erroneous. A review of the facts suggests that both Judge Couvillion's and Judge Haines's accounts were plausible. As Judge Couvillion concluded, Kanter may have become involved with the Essex Partnership simply as a hotel management venture. Eulich may have become involved with the partnership, and been willing to do most of the work, for the proximity to Kanter and the experience. Indeed, Eulich testified that he got involved because he wanted to gain Kanter's influence in the hotel industry. In light of this, the fact that Kanter's organizations contributed little to the partnership and that Eulich's MHM realized little profit from the partnership does not necessarily show that it was a way of disguising kickbacks. Lastly, Connolly simply may have been happy to receive the assistance in running GHM. As Judge Haines concluded, the partnership may have been designed by Ballard, Lisle, and Kanter as a way of pocketing Prudential's management fees on the Gateway and Midland. Ballard and Lisle may have directed Prudential contracts to Connolly, whom Prudential already liked and who had experience working at large hotels, and then used Eulich to do all of the work. However, when both scenarios are plausible, the scenario described by the factfinder deserves deference. See id. at 575, 105 S.Ct. at 1512. Accordingly, although we find Judge Haines's conclusion on this matter possible, this is insufficient to show that Judge Couvillion's finding was manifestly unreasonable. In general, we find that Judge Haines overstepped the bounds of his review in concluding that Judge Couvillion gave too much weight to the Five's testimony that they were not paying kickbacks. Judge Haines did not state, and the record does not illustrate, that this testimony was not credible. The weight given to credible testimony was entirely within Judge Couvillion's discretion as the factfinder. See id. Also, we generally note that Judge Haines rarely could point to concrete evidence proving his account of the transactions and frequently stated that his conclusions were based on only inferences from the circumstances. For Judge Haines to have properly found that Judge Couvillion's findings were clearly erroneous, he would have needed to cite, and the record would have needed to provide, evidence that these findings were not plausible. Inferences, based largely on the same facts considered by Judge Couvillion but entirely opposite of Judge Couvillion's findings, were insufficient. We likewise note Judge Haines's conflict with Judge Couvillion's use of phrases such as Kanter and/or entities associated with him when describing with whom the Five agreed to do business. Judge Haines repeatedly emphasized that the Five agreed to do business solely with Kanter and that no one at IRA did anything. Judge Haines used this finding to argue that Kanter, Ballard, and Lisle were the true earners of the money and fraudulently attempted to assign their income to IRA and the other entities. We acknowledge that Judge Haines's finding that Kanter did the work may demonstrate that Kanter earned, and attempted to assign, the money. However, this finding does not prove the same of Ballard, absent evidence that Ballard helped Kanter do the work to earn the money. [10] Since Judge Couvillion's finding that Ballard did not sell his influence for kickbacks was not clearly erroneous, as discussed above, we cannot reach this conclusion.