Opinion ID: 77997
Heading Depth: 3
Heading Rank: 3

Heading: Schaffel

Text: Judge Couvillion found the following. William Schaffel was a mortgage broker. In 1979, Kanter invited Schaffel, Ballard, and Lisle to dinner. He indicated that he had a business opportunity to discuss with Schaffel. Schaffel, eager for potential business and to meet two senior Prudential real estate executives, accepted the invitation. At the dinner, the foursome did not discuss Prudential business. Rather, Kanter told Schaffel of a proposed casino in need of financing. Kanter told Schaffel that he and/or another entity associated with him could help Schaffel obtain the contract to arrange the casino's financing in return for 50% of Schaffel's earned fees. Sometime after the dinner meeting, in a letter addressed to IRA, Schaffel agreed to pay IRA 50% of his fees earned from any business deals that IRA or its associates were instrumental in setting up. The casino project ultimately fell through. In the year that followed, however, Schaffel was able to arrange financing with Prudential for several of his clients. Citing the aforementioned letter, Schaffel shared with IRA a portion of his broker's fees from each of these projects. Some of the projects occurred after Ballard and Lisle quit working at Prudential. Later, after Lisle left Prudential and began working at Travelers, Schaffel had substantial business dealings with Travelers. Initially, Schaffel did not share with Kanter his fees earned from these projects, taking the position that their fee-sharing agreement lapsed when Ballard and Lisle left Prudential. Kanter refuted this position and, in a letter to Schaffel, stated that he felt the agreement extended to Travelers projects because of the continuity of the very personnel to whom [Schaffel was] first introduced. Ultimately, Schaffel and Kanter agreed that the fee-sharing arrangement extended to Travelers projects. In concluding that the Schaffel payments were not kickbacks to Ballard and Lisle, Judge Couvillion found that the payments to IRA were simply Schaffel's way of repaying Kanter for having introduced him to Ballard and Lisle. Judge Couvillion acknowledged that Schaffel's letter to IRA indicated that the payments were conditioned upon IRA associates helping to arrange deals and that Ballard and Lisle both knew that Schaffel and Kanter had a fee-sharing agreement, but found that this evidence was insufficient to prove that Ballard and Lisle directed financing to Schaffel's clients in return for money. Judge Haines stated that Judge Couvillion's findings were incomplete and added the following. Lisle testified that he understood that Kanter arranged the dinner in part to see whether Schaffel might be able to do business with Prudential. When Schaffel agreed to split with Kanter a percentage of his earned fees, Schaffel insisted that Kanter's portion be paid to an individual or entity with a real estate broker's license. Schaffel was concerned with the legality of sharing broker's fees with a non-broker. Shortly after the dinner meeting, a representative of IBM, Incorporated (IBM), approached Schaffel about selling IBM's headquarters to Prudential. Schaffel arranged a meeting between himself, the representative, and Ballard. After this meeting, Ballard referred the matter to a Prudential field office which did complete the purchase. Schaffel split part of his fee for arranging the sale with Kanter. Judge Haines concluded that the evidence showed that Kanter agreed with Ballard and Lisle to share any fees he might receive from Schaffel if Ballard and Lisle influenced Prudential to direct contracts to Schaffel's clients. Judge Haines reasoned that Judge Couvillion clearly erred in thinking that IRA, rather than Kanter, earned the payments. Specifically, Judge Haines stated that Schaffel expected Kanter alone to help him obtain contracts and that no one at IRA helped arrange such contracts. Judge Haines stated that the only reason that the payments were made to IRA was Schaffel's fear that directly paying Kanter, a nonbroker, was illegal. Judge Haines likewise reasoned that Judge Couvillion clearly erred in finding that there was insufficient evidence to show that Kanter agreed to share the fees with Ballard and Lisle in exchange for their influence. While Judge Haines admitted that there was no direct evidence of this, he stated that a number of facts, namely the joint dinner meeting, Ballard's immediate role in Prudential's purchase of IBM's headquarters, Ballard's and Lisle's abilities to exert influence at Prudential, and Kanter's position during his dispute with Schaffel that the fee-sharing agreement was inextricably linked to Lisle's assistance, provided compelling circumstantial evidence of a kickback arrangement. Furthermore, although Judge Haines acknowledged that some of Schaffel's projects were initiated after Ballard and Lisle left Prudential, he stated that the inference may fairly be drawn that those projects were an outgrowth of Ballard's and Lisle's earlier decisions to do business with Schaffel, which gave Schaffel a favorable reputation at Prudential. Judge Haines draws inferences from the relationships of Kanter, Ballard, Lisle and Schaffel with no hard facts to support his conclusions. Obviously, Kanter could act on behalf of IRA with or without knowledge on the part of Ballard and Lisle. Credibility was the key factor in the facts found by Judge Couvillion and he alone heard and saw the witnesses. The findings drawn by Judge Couvillion are just as plausible as those of Judge Haines and thus they are not clearly erroneous.