Opinion ID: 529387
Heading Depth: 3
Heading Rank: 3

Heading: Mr. Willmitt

Text: 88 Appellant Willmitt challenges the sufficiency of the evidence supporting his convictions on ITSP, mail fraud, and wire fraud counts. Mr. Willmitt does not challenge the fact that the transfer of funds which form the basis of the various counts in fact took place. Rather, he re-argues the question of his role as a principal in the clearinghouse operations. The gist of Mr. Willmitt's argument is that because he had no role in directly establishing or implementing the undertaker side of the operation, the government failed to prove that he knew anything about the misrepresentations which were at the heart of the fraudulent scheme. As part of his argument, Mr. Willmitt takes issue with trial testimony which identified him as a principal in the clearinghouse organization. 89 The evidence presented at trial indicated that (1) Mr. Willmitt was aware of and discussed the general business operations with Mr. Cardall; (2) his level of control over assets and individuals in the operation led at least two individuals to conclude that Mr. Willmitt was a principal in the operations; (3) Mr. Willmitt's offices in the Los Angeles area were connected by computer (including electronic mail) with the Cardall offices in Salt Lake City; (4) identical copies of business documents were found in Mr. Willmitt's office and in Mr. Cardall's possession; (5) in taped telephone conversations Mr. Willmitt offered to backdate contracts in order to justify the receipt of payments to Mr. Willmitt's investment company; (6) one of the Cardall-controlled businesses--Payable Accounting Company--paid for services rendered in Los Angeles by an accountant hired by Mr. Willmitt to perform some work for him; (7) seven clearinghouse bank accounts served as the source of funds for ninety-four percent of the Willmitt-controlled bank accounts in California; (8) Mr. Willmitt was a party to the fraudulent preparation of contracts and letters to support the claim that a buyer had been found for the Bahia Kino property; (9) checks issued from Willmitt-controlled accounts (containing clearinghouse funds) went to pay for a car for Mr. Cardall's son, as well as for personal expenses incurred by Mr. Willmitt and his daughter; and (10) when word of the FBI search of Cardall's Salt Lake City offices reached Mr. Willmitt, he contacted his daughter in California and directed her to remove all Salt Lake City-related documents from the Willmitt offices in California. This brief summary of the extensive record amply supports the jury's conclusion that Mr. Willmitt knew that the moneys at issue were taken by fraud. Appellant's conviction on the ITSP, mail fraud, and wire fraud counts are affirmed. 90 Mr. Willmitt next argues that the evidence did not support his conviction on the bankruptcy fraud charge and that the jury instruction on that issue was contrary to law. Mr. Willmitt relies heavily on the fact that the $35,000 he received two days after ICH and UCH filed their bankruptcy petitions was drawn on a Payable Accounting Company's (PAC) account, rather than on one of the numerous clearinghouse accounts. 41 According to appellant, since PAC had not filed for bankruptcy, it was not a debtor within the meaning of the Bankruptcy Code, and, therefore, he had not engaged in concealment. Mr. Willmitt argues that at the time he received it, the money was the legal and equitable property of PAC and that he was legally entitled to assume that [the] cashier's check was the property of PAC, not IHC or UCH.... Id. at 77. At most, he argues, the money was subject to recovery as an avoidable preference or fraudulent transfer only after the bankruptcy trustee obtained a judicial declaration that its transfer [from the clearinghouses] to PAC was void. Willmitt Brief, at 79. 91 Mr. Willmitt's argument overlooks two critical facts: (1) the evidence indicated, and the jury believed, that Mr. Willmitt was a principal in the clearinghouse operation, and (2) the plain language of section 541 of the bankruptcy code clearly and broadly defines what constitutes the debtor's property. 92 As a principal in the interrelated operations which comprised the scheme, Mr. Willmitt cannot now claim that he innocently relied on PAC's legal ownership of the funds he received. Testimony indicated that Mr. Willmitt was privy to Mr. Cardall's confidences concerning the business operation, and that his suggestions influenced the course of the business. Additionally, the evidence showed that numerous bank accounts were established by Cardall-controlled businesses and Willmitt-controlled businesses, and that extensive intercompany transfers were part and parcel of the overall scheme's operational mode. Finally, the evidence established that Mr. Willmitt had discussed bankruptcy plans with Mr. Cardall at the very time they were fraudulently contracting to sell the Bahia Kino property. From all of this evidence, any reasonable trier of fact could find beyond a reasonable doubt that Mr. Willmitt knew that the funds ostensibly drawn from the PAC account in fact constituted funds belonging to the debtor clearinghouses' estate. 93 Secondly, the clear and unambiguous language of section 541 states: 94 (a) The commencement of a case under Section 301, 302, or 303 of this title creates an estate. Such estate is comprised of all the following property, wherever located and by whomever held: 95 (1) Except as provided in subsections (b) and (c)(2) of this section, 42 all legal or equitable interests of the debtor in property as of the commencement of the case. 96 11 U.S.C. Sec. 541 (1982 & Supp. II 1984) (emphasis added). This section is to be broadly construed to include all property interests, whether reachable by state-law creditors or not, and whether vested or contingent. This definition draws into the estate all of the Debtor's property interests as of the filing date, save [the restricted transfer of beneficial interest in a trust.] In re DeWeese, 47 B.R. 251, 254 (W.D.N.C.Bankr.1985) (citation omitted); see also In re Shore Air Conditioning & Refrigeration, 18 B.R. 643, 646 (D.N.J.Bankr.1982) (Clear wording and intent of drafters demonstrates that scope of Sec. 541(a) is very broad and encompasses all interests of debtor as of date its petition is filed.). A plain reading of this broadly worded section makes clear that clearinghouse funds diverted into interrelated company accounts did not lose their status as debtor's property simply because they were held in a PAC account. 97 Finally, Mr. Willmitt claims that the jury instruction on this count was contrary to law because it failed to include the terms legal or equitable as modifiers of the word interest. 43 As we've noted previously, in examining a challenge to a jury instruction, we review the record as a whole to determine whether the instructions 'state the law which governs and provided the jury with an ample understanding of the issues and the standards applicable.'  Big Horn Coal, 852 F.2d at 1271. Here, the court's instruction clearly conveyed the essence of the law and provided the jury with an understanding of the applicable standard. The court's omission of the words legal or equitable in restating the section in no way prejudiced appellant. 98 Finally, Mr. Willmitt challenges his conviction under RICO. In light of our preceding discussion concerning his involvement as a principal in the clearinghouse operation, we find no merit to his contentions. Mr. Willmitt's convictions on all grounds are affirmed.