Opinion ID: 2791321
Heading Depth: 2
Heading Rank: 2

Heading: Schneider’s Convictions

Text: 1. Conspiracy to Defraud Fifth/Third Bank (Count 1) Schneider contends that the evidence presented at trial was insufficient to convict him of conspiracy to defraud Fifth/Third Bank. He asserts that Nazzal and Morton were the real perpetrators, that he was “merely present” as an innocent bystander at many of the relevant conversations (some of which took place in Arabic, which he does not speak), and that there was no real evidence that he knew of or participated in their scheme. A conviction for bank fraud under 18 U.S.C. § 1344 requires three elements: “(1) that the defendant knowingly executed or attempted to execute a scheme to defraud a financial institution; (2) that the defendant did so with the intent to defraud; and (3) that the financial institution was insured by the FDIC.” United States v. Everett, 270 F.3d 986, 989 (6th Cir. 2001) (citation omitted). We will reverse such a conviction “only, if viewing the record as a whole, the judgment is not supported by substantial and competent evidence.” Id. The thrust of Schneider’s argument is that the evidence failed to prove his intent to defraud and his knowing participation in Nazzal’s conspiracy. He relies heavily on United States v. Parkes, 668 F.3d 295 (6th Cir. 2012), for the proposition that the jury incorrectly inferred his intent to defraud. In Parkes, however, the only real evidence against the defendant was a single faxed email, id. at 301, and our decision to reverse was bolstered by a finding of prosecutorial misconduct. Id. at 306. This case is different. Because the evidence against Schneider is more substantial, his reliance on Parkes is unpersuasive. -9- Case Nos. 13-2612 / 13-2628 United States v. Nazzal / Schneider We believe United States v. Davis, 490 F.3d 541 (6th Cir. 2007), is more illuminating. In that case, we affirmed a conviction for a fraud scheme perpetrated mainly by the defendant’s wife. Id. at 548-50. Like Schneider, Davis argued that no evidence indicated he knew that certain documents were fraudulent. Id. at 549-50. Also like Schneider, Davis claimed he was an innocent bystander and blamed everything on his co-defendant, whose fraudulent actions had “dominated” the trial. Id. at 549. Nonetheless, we affirmed Davis’s conviction because evidence of the repeated occurrence of fraudulent activities and his participation in the destruction of evidence proved that he possessed the requisite knowledge and intent. Id. at 550. Thus, a lead defendant’s participation in a scheme to defraud does not negate another defendant’s involvement with it. Id. As in Davis, the record here contains substantial circumstantial evidence pointing to Schneider’s guilt—certainly more than enough for a rational trier of fact to have inferred his knowledge of and intent to participate in Nazzal’s scheme. Schneider prepared many of the fraudulent documents used, some of which were notarized by his employees and faxed from his law office. Many of the closings and negotiations also took place there. See Davis, 490 F.3d at 548-50 (permitting an inference of knowing participation from repeated fraudulent transactions occurring at defendant’s home). Moreover, Schneider signed two of Nazzal’s fraudulent payoff letters as “Treasurer” of Nazzal’s companies—despite later telling the FBI that he had never been an officer in any of them. See id. at 550 (“[T]he record contains testimony . . . that implicates Mr. Davis in cover-up operations to destroy evidence, from which the jury could infer that he sought to conceal his own wrongful acts.”). Viewed in the light most favorable to the prosecution, this circumstantial proof is more than sufficient to support Schneider’s conviction as to Count 1, because “‘[i]ntent to defraud can be proven by circumstantial evidence and by - 10 - Case Nos. 13-2612 / 13-2628 United States v. Nazzal / Schneider inferences drawn from the scheme itself.’” United States v. Isaiah, 434 F.3d 513, 519-20 (6th Cir. 2006) (quoting United States v. Ryan, 213 F.3d 347, 350 (7th Cir. 2000)). 2. Bribery of Bank Official (Count 3) Schneider also argues that the trial evidence was insufficient to convict him of bribing Fifth/Third employee Eric Morton.4 The basis of this conviction was the $1,000 check drawn from Schneider’s law firm’s trust account paid to Morton in advance of the 12803 Hamilton closing. At trial, Morton testified unequivocally that he received this payment as “a bribe” to ensure funding after the original buyer backed out of the deal. On appeal, Schneider contends that there was no evidence at trial indicating that he ever knew the purpose of this payment. The issue is again one of knowledge and intent. Davis is illuminating here as well. There, a witness testified to forging signatures at the lead defendant’s direction and also recalled that Davis “‘came in and out that day.’” Davis, 490 F.3d at 550. Davis’s mere presence at the location was a critical fact: “[t]he record provided ample support for the jury to make the inference that Mr. Davis had the requisite knowledge and fraudulent intent to be a participant in the scheme, by virtue of the repeated occurrence of fraudulent activities, spearheaded by his wife, at his place of business and his home.” Id. at 549. We again find that the circumstantial evidence supports the inference that Schneider had knowledge of the bribery. Like the witness in Davis, Schneider was “in and out” of the conversations relating to the 12803 Hamilton transaction—because they took place at his law office. Schneider was also involved in other aspects of the 12803 Hamilton deal. He was present in court the day Nazzal met the property owners and he signed a fraudulent payoff letter 4 18 U.S.C. § 215(a)(1) criminalizes the actions of anyone who “corruptly gives, offers, or promises anything of value to any person, with intent to influence or reward an officer, director, employee, agent, or attorney of a financial institution in connection with any business transaction of such institution.” - 11 - Case Nos. 13-2612 / 13-2628 United States v. Nazzal / Schneider as the “Treasurer” of G&S Development. The jury is the trier of facts, and it could reasonably infer knowledge from Schneider’s frequent participation in drafting documents relating to fraud. 3. Variance/Constructive Amendment of Indictment (Count 7) Schneider contends that his trial was tainted by a constructive amendment to—or, alternatively, a fatal variance from—the superseding indictment when the Government presented evidence purportedly outside the scope of the crimes charged. Count 7 erroneously alleged that the conspiracy to defraud Standard Federal began in December 2005 when it actually started in May 2004. The Government concedes that the date range stated in the indictment is incorrect, ascribing it to a drafting error, and that the indictment should have alleged a conspiracy ranging from May 2004 to September 2009. Because of this clerical error, the only evidence presented as to Schneider’s actions on Count 7 predated the dates alleged in the indictment by 11 months. In a well-reasoned order, the district court denied Schneider’s motion for judgment of acquittal by finding that this date discrepancy only amounted to a harmless variance of no consequence. We agree. Fed. R. Crim. P. 52(a) requires us to disregard “[a]ny error, defect, irregularity or variance that does not affect substantial rights.” A variance affects substantial rights “only when a defendant proves prejudice to his ability to defend himself or to the overall fairness of the trial.” United States v. Manning, 142 F.3d 336, 339 (6th Cir. 1998). Schneider fails to show such prejudice. The date discrepancy was a clerical error readily apparent from the face of the indictment. He had ample notice of the conduct that formed the charged offense. Additionally, the district court instructed the jury that Schneider was charged with conspiracy to defraud Standard Federal some time beginning in December 2005, but that the Government only had to prove that the crimes happened reasonably close to that date. These instructions were proper - 12 - Case Nos. 13-2612 / 13-2628 United States v. Nazzal / Schneider because the beginning and end dates of a conspiracy are not essential elements of the charged offense. See United States v. Warshak, 631 F.3d 266, 309 (6th Cir. 2010) (“the temporal scope of a conspiracy is not an ‘essential’ or ‘material’ element of the charge”) (internal quotations and citations omitted). C. Intended Loss Enhancement—U.S.S.G. § 2B1.1(b)(1)(J) Nazzal and Schneider both argue that the district court erred in applying an 18-level enhancement under U.S.S.G. § 2B1.1(b)(1)(J) after finding that they intended to obtain more than $2.5 million from their conspiracy to defraud. We review a district court’s loss calculations for clear error. United States v. Poulsen, 655 F.3d 492, 512 (6th Cir. 2011).
Nazzal incorrectly argues that his loss calculation was “purely speculative” because it was based upon facts that were not part of the record. Prior to the sentencing hearing, the Government submitted charts with two possible loss calculations. The first contained all Fifth/Third loans that might be considered relevant conduct as to Nazzal. The second detailed only those losses stemming from the six transactions explicitly discussed at trial. At Nazzal’s request, the district court limited its calculation of the Fifth/Third losses to only the second chart—i.e., those transactions that were specifically discussed at trial. Accordingly, the court attributed approximately $3 million in intended loss to Nazzal as follows: nearly $1.9 million for the various Fifth/Third frauds, $130,000 for the Comerica fraud, and $960,000 for the Standard Federal fraud.5 We see no error. 5 Although the loans from Fifth/Third totaled $3,150,000.00, the Government offered $1,259,915.58 in offset credits favoring the defendants—a net loss of $1,890,084.12. There was no reduction for the sale or value of collateral for the lien jumping conspiracies against Standard Federal ($750,000) or Comerica ($130,000), which represented nothing more than theft of funds through the use of false documents, false testimony, and false litigation. - 13 - Case Nos. 13-2612 / 13-2628 United States v. Nazzal / Schneider
Schneider argues that the district court incorrectly tagged him with the entire loss caused by the Fifth/Third6 conspiracy without making the requisite findings under United States v. Campbell, 279 F.3d 392 (6th Cir. 2002). Under Campbell, when holding a defendant accountable for the actions of a co-conspirator’s relevant conduct,7 a district court must make “particularized” findings: “(1) that the acts were within the scope of the defendant’s agreement; and (2) that they were foreseeable to the defendant.” Id. at 399-400 (citation omitted). “In order to determine the scope of the defendant’s agreement, the district court may consider any explicit agreement or implicit agreement fairly inferred from the conduct of the defendant and others.” Id. at 400 (quoting U.S.S.G. § 1B1.3, app. n.2). Whether a defendant can be held accountable for a co-conspirator’s conduct is a factual determination we review for clear error. Id. at 398. Schneider essentially argues that he could not have foreseen the “entire” loss because he only participated in some of Nazzal’s Fifth/Third frauds. The district court, however, properly attributed all Fifth/Third losses to both Nazzal and Schneider because these losses were procured as part of the overarching conspiracy. Schneider prepared numerous documents associated with these frauds, discussions of which frequently took place at his law office. He signed fraudulent payoff letters related to these frauds as the “Treasurer” of both Alter Investments and G&S Development. Testimony also revealed that Schneider was present at nearly all of Nazzal’s closings. There was no error here. 6 Because we affirm Schneider’s conviction as to Count 7 (the Standard Federal lien jump), we need not consider his argument that he should not be held accountable for those losses. 7 U.S.S.G. § 1B1.3(a)(1)(B) defines “relevant conduct” in the case of a jointly undertaken criminal activity as “all reasonably foreseeable acts and omissions of others in furtherance of the jointly undertaken criminal activity, that occurred during the commission of the offense of conviction, in preparation for that offense, or in the course of attempting to avoid detection or responsibility for that offense.” - 14 - Case Nos. 13-2612 / 13-2628 United States v. Nazzal / Schneider D. Nazzal’s Remaining Issues 1. Organizer/Leader Enhancement—U.S.S.G. § 3B1.1 The Sentencing Guidelines provide for a 4-level enhancement “[i]f the defendant was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive.” U.S.S.G. § 3B1.1(a). Nazzal argues mistakenly that the district court abused its discretion in applying this enhancement because he neither “recruited,” “controlled,” nor issued “orders” to anyone, and all of his co-defendants or associates were “independent operators.” The district court found that Nazzal directed at least six others in his various schemes including his attorney (Schneider), a bank loan officer (Morton), a title company representative (Carey), and several other associates (Tawbe, Zeaiter, and Harajli), and several witnesses explicitly testified as to Nazzal’s leadership role. We find no abuse of discretion in the application of the enhancement. 2. Obstruction of Justice Enhancement—U.S.S.G. § 3C1.1 The district court applied this 2-level enhancement based on a conversation in which Nazzal told co-defendant Carey that they had “to keep [their] stories straight” to avoid detection. Nazzal argues that he was convicted on Count 8 for precisely the same conduct now being used as the basis for this enhancement. Nazzal’s falsification-of-records conviction on Count 8, however, stemmed from his obtaining written statements from co-defendant Morton—not Carey—in which Morton falsely denied receiving bribes. Nazzal’s statement to Carey thus provides a separate and independent basis for the obstruction of justice enhancement. See United States v. Stafford, 639 F.3d 270, 275-76 (6th Cir. 2011) (affirming a § 3C1.1 obstruction enhancement where a defendant told a witness “we can’t say anything, we have got to stick together”). - 15 - Case Nos. 13-2612 / 13-2628 United States v. Nazzal / Schneider
Nazzal contends that the district court “ignored” relevant § 3553(a) factors because it did not expressly mention his age or health when calculating his below-Guidelines sentence. Nazzal was 59 years old at sentencing and his medical problems were not unusual for a man of his age and activity level. The record also indicates that the district court sufficiently discussed the other relevant § 3553(a) factors at sentencing. For example, the court expressly noted its obligation to “impose a sentence that is sufficient, but not greater than necessary to provide a just punishment and impose a sentence that will promote respect for the law, taking into account the nature of the offense and the circumstances of the offender.” The court received and considered a number of letters in Nazzal’s support, but noted that the kind picture they painted conflicted with the evidence presented at trial. The court discussed Nazzal’s criminal record, the fact that he recruited and encouraged others in his conspiracy, the “extensive loss” in the case, and the need to promote respect for the law and deterrence. The record also shows a careful consideration of Nazzal’s personal characteristics.
At the close of the Government’s proofs, Nazzal made a Rule 29 motion for judgment of acquittal with respect to Count 8. The district court took the motion under advisement and sent the count to the jury. After the guilty verdicts, the court noted that Nazzal’s motion was still under advisement and invited briefing. Nazzal did not file a brief as to this motion, nor does the record contain a ruling on it. Nazzal now claims that his conviction should be reversed because the district court failed to rule on his motion. We hold that Nazzal effectively withdrew his Rule 29 motion as to Count - 16 - Case Nos. 13-2612 / 13-2628 United States v. Nazzal / Schneider 8 by declining the court’s invitation to file a brief, failing to request a ruling on the motion at sentencing, and proceeding through the sentencing hearing without objection.