Court Opinion

ID: 4570977
Source: CourtListenerOpinion
Date Created: 2020-09-29 22:00:54.536314+00
Date Added: 2024-06-11T13:30:59.401178
License: Public Domain

Case: 17-12274       Date Filed: 09/29/2020     Page: 1 of 23

                                                                     [DO NOT PUBLISH]

                 IN THE UNITED STATES COURT OF APPEALS

                           FOR THE ELEVENTH CIRCUIT
                             ________________________

                                    No. 17-12274
                              ________________________

                         D.C. Docket No. 4:16-cr-10039-KMM

DAVID W. SCHWARZ,

                                                                     Defendant-Appellant,

                                           versus

UNITED STATES OF AMERICA,

                                                                        Plaintiff-Appellee.

                              ________________________

                     Appeal from the United States District Court
                         for the Southern District of Florida
                           ________________________
                                  (September 29, 2020)

Before MARTIN and NEWSOM, Circuit Judges, and WATKINS, * District Judge.

PER CURIAM:

       *
       Honorable W. Keith Watkins, United States District Judge for the Middle District of
Alabama, sitting by designation.
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      David Schwarz appeals his convictions and sentences for: (1) conspiracy to

commit bank fraud in violation of 18 U.S.C. § 1349, (2) two counts of bank fraud

in violation of 18 U.S.C. § 1344, and (3) one count of interference with the

administration of internal revenue laws in violation of 26 U.S.C. § 7212(a).

      Schwarz asserts, among several other claims, that the district court abused its

discretion when it repeatedly denied his motions for a continuance of the trial date,

which he says caused him to suffer substantial prejudice in defending against the

government’s charges. Because we find merit in Schwarz’s continuance argument

and remand for a new trial, we do not address the remaining issues he raises on this

appeal.

                                          I.

A. FACTUAL BACKGROUND

      David Schwarz held a one-third ownership stake in and served as the chief

financial officer of Cay Clubs Resorts and Marinas from 2004 to 2007. His

business partner, Fred Davis Clark, Jr., held a two-thirds ownership interest and

served as the chief executive officer. Their purported goal was to develop multiple

amenity-rich luxury resortsand to sell condominium units within those resorts to

buyers. The business eventually employed over 1,000 people, sold over 1,100

condo units, amassed gross revenues between $700 to $800 million, and was once

estimated to be worth $400 million, but it failed in 2008. Criminal investigations

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followed. In 2015, a jury found Clark guilty of bank fraud, making false

statements in connection with federally insured loans, and obstructing an official

proceeding. Second Superseding Indictment, United States v. Clark, No. 4:13-cr-

10034-JEM-1 (S.D. Fla. Oct. 1, 2015), ECF No. 351; Jury Verdict, Clark, No.

4:13-cr-10034-JEM-1 (S.D. Fla. Dec. 11, 2015), ECF No. 468. In 2016, Clark was

sentenced to 480 months in prison. Amended Judgment, Clark, No. 4:13-cr-

10034-JEM-1 (S.D. Fla. June 27, 2016), ECF No. 631. On October 11, 2016,

Schwarz was indicted.

B. THE INDICTMENT

      The government charged that Schwarz and his co-conspirators orchestrated

the sale of Cay Clubs condos to straw buyers to create a false appearance of

business success and to pay off the business’s financial obligations.The

government alleged that in each set of transactions, Clark, Schwarz, and others

acting at their direction prepared and caused to be prepared fraudulent loan

applications and related documents that were submitted to financial institutions.

The loan applications included false employment, wage, asset, and liability

information for the named borrowers. Persons acting at the direction of Dave

Clark affixed false signatures and notarizations to some of the documents. The

documents also falsely represented that the cash to close such loans was provided

by the borrower (as required), when in fact, Cay Clubs provided the funds.

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Schwarz personally wired the cash to close for these transactions out of Cay Clubs

accounts.The two relevant bank fraud charges rested on allegations that Schwarz

personally transferred the cash to close for two units in 2006. The government

alleged that the conspirators paid the mortgage payments out of Cay Clubs

accounts for at least some of the nominee loans. The alleged victims of this fraud

included JP Morgan Chase Bank, N.A. and Fifth Third Bank, N.A.

      Meanwhile, according to the indictment, Clark and Schwarz were funneling

cash out of Cay Clubs for their personal gain. Clark and Schwarz attempted to

conceal their ill-gotten gains by, among other things, paying Clark’s salary to

Cristal Coleman, Clark’s then-girlfriend; by failing to report income from Cay

Clubs on their tax returns; and by failing to file tax returns for Clark and Cay

Clubs.The government alleged that Schwarz interfered with the administration of

internal revenue laws by submitting a W-2 purporting to show wages paid to

Cristal Coleman to conceal wages earned by Clark.

C. THE CONTINUANCE MOTIONS

      Schwarz’s only attorney, a solo practitioner, was appointed on October 31,

2016. On November 3, trial was set for December 5, 2016. On November 4,

2016, Schwarz filed an unopposed motion for an April 2017 trial date. The district

court partially granted this request on November 9, and set trial for February 6,

2017, in Key West, Florida. Schwarz renewed the motion on November 18, again

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asking for an April trial date. Schwarz represented that the government had

recently produced its initial discovery, which included a three-terabyte hard drive

and several boxes of records and CDs.Schwarz noted that the conspiracy and tax-

related allegations in the case covered activities from 2004 to 2007 and that the

discovery extended beyond 2015 and included an extensive Securities and

Exchange Commission investigation.The government opposed the motion, and the

court held a motion hearing on November 30. At the hearing, the court denied the

motion because it believed that defense counsel had adequate time and because of

the scheduling constraints posed by a Key West trial, which required coordinating

with other judges for use of a single courtroom. During the same hearing, the court

denied appointment of a second attorney because the court did not view the case as

particularly complex. Schwarz’s counsel orally suggested moving the trial to

Miami but did not formally move for such a transfer. Six days later the court, sua

sponte, moved the trial to Miami.

      Schwarz filed a third motion for a continuance on January 24, 2017, again

asking for an April 2017 trial date. In the third motion, Schwarz reiterated his

prior arguments and added that his counsel had been in trial for three of the

preceding weeks and that he continued to receive requests for stipulations from the

government that required days of rereading transcripts. He alleged that expert and

other defense witnesses who testified in Clark’s trial were no longer available and

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that it was difficult to seek other witnesses or pursue direct evidence in the allotted

time. The government opposed the granting of a continuance longer than thirty

days. The motion was denied without explanation on the same day as it was filed.

      At a calendar call on February 2, four days before the scheduled beginning

of the trial, defense counsel reminded the district court that it had denied past

continuances, but he stated, “[W]e have the time blocked out to try this case.” The

court responded, “So, we’re going to give you a little more time. I’m not going to

give you the time that you wanted, . . . but we can now set this based on the prior

court settings for . . . . February 21st.” The trial began on that date.

D. THE TRIAL

      At trial, the government divided its core conspiracy allegations into two sets

of transactions. The government offered evidence that the conspirators engaged in

seven related-party transactions in 2004—with Coleman and a Cay Clubs

employee acting as buyers—to create the appearance of success of the venture and

to increase the perceived value of its products. The government elicited testimony

that, by providing the closing cash, Cay Clubs essentially inflated the selling

price.Cay Clubs highlighted the “appreciation” on these units in marketing

materials to potential buyers. The government offered evidence that the

conspirators engaged in a second set of related-party sales to Coleman and to other

members of Clark’s family in 2006 to obtain funds for a commercial loan payment.

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      The government’s trial presentation ventured far beyond the evidence

needed to support its indictment. The government argued that Cay Clubs was a

massive Ponzi scheme—a fraud from its inception to its demise that engaged in

deception in virtually every aspect of its business. It attempted to show that the

first set of related-party sales was important to establish high appraisal values for

Cay Clubs units, so that banks would approve other buyers’ mortgage applications.

It put forth testimony that Cay Clubs contracted to provide new furniture in some

buyers’ units and agreed with certain buyers to pay lease-back payments of up to

fifteen percent of the purchase price. The government attempted to show that Cay

Clubs wrongfully concealed the lease-back agreements from lenders and closing

agents. The government also introduced testimony regarding Cay Clubs’s broken

promises to condo buyers to provide amenities and unit improvements and to make

lease-back payments.

      Schwarz offered several alternative theories for acquittal to the jury,

generally asserting that he acted in good faith. The defense attempted to cast

Schwarz as a minority partner and office manager who was unaware of any false

statements in the nominee loan applications (except as related to the cash to close)

and who certainly lacked any deceptive or corrupt intent. While Schwarz admitted

to making the closing payments, he thought those actions were legal. At the time

the transactions involving Coleman and involving Clark’s family members took

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place, he viewed the company money that was withdrawn to pay closing cash as

Clark’s money: Schwarz booked the transactions as either equity distributions or

loans to Clark and directed it to where Clark requested. Likewise, the cash to close

an employee’s 2004 related-party sales was deducted from the employee’s

commissions.

      In Schwarz’s view, he honestly believed that everything he did was proper.

Responsibility for any wrongdoing rested with Clark and with others involved with

acquiring financing for units, selling units, and preparing the nominee loan

applications. Schwarz argued that he never intended to corruptly interfere with the

administration of revenue laws because he did not know it was wrong to pay

Coleman a salary at Clark’s request.Schwarz also offered evidence of reliance by

him and by Cay Clubs on lawyers, accountants, and auditors in support of his

argument that he acted in good faith.In his opening statement, Schwarz posited that

the question for the jury was “whether or not you’re going to hold David Schwarz

responsible for the activities of David Clark, because he did not participate in them

and had nothing to do with them.”

      After a nine-day trial, the jury returned its verdict convicting Schwarz on

four of the eight counts contained in the indictment. It acquitted him of one count

of bank fraud and of three counts of making false statements in connection with

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federally insured loans in violation of 18 U.S.C. § 1014.After being sentenced to

480 months’ imprisonment, Schwarz appealed.

                                          II.

      We review a district court’s denial of trial continuances for abuse of

discretion. United States v. Valladares, 544 F.3d 1257, 1261 (11th Cir. 2008).

“The Sixth and Fourteenth Amendments to the U.S. Constitution guarantee that

any person brought to trial in any state or federal court must be afforded the right

to assistance of counsel before he or she can be validly convicted and punished by

imprisonment.” United States v. Verderame, 51 F.3d 249, 251 (11th Cir. 1995).

This guarantee includes “both a fair opportunity to be represented by counsel of his

own choice and a sufficient time within which to prepare a defense.” United States

v. Baker, 432 F.3d 1189, 1248 (11th Cir. 2005) (quoting Gandy v. Alabama, 569
F.2d 1318, 1321 (5th Cir. 1978)). Under certain circumstances, denial of motions

for a continuance of trial may vitiate the effect of this fundamental right.

      The matter of continuance is traditionally within the discretion of the
      trial judge, and it is not every denial of a request for more time that
      violates due process even if the party fails to offer evidence or is
      compelled to defend without counsel. Contrariwise, a myopic
      insistence upon expeditiousness in the face of a justifiable request for
      delay can render the right to defend with counsel an empty formality.
      There are no mechanical tests for deciding when a denial of a
      continuance is so arbitrary as to violate due process. The answer must
      be found in the circumstances present in every case, particularly in the
      reasons presented to the trial judge at the time the request is denied.

Ungar v. Sarafite, 376 U.S. 575, 589 (1964) (internal citations omitted).

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      When assessing the totality of the circumstances, this Court has considered

the “time available for preparation, the likelihood of prejudice from denial, the

accused’s role in shortening the effective preparation time, the degree of

complexity of the case, and the availability of discovery from the prosecution.”

United States v. Jeri, 869 F.3d 1247, 1257 (11th Cir. 2017) (quoting United States

v. Uptain, 531 F.2d 1281, 1286 (5th Cir. 1976)). To prevail on this type of claim, a

“defendant must show that the denial of the motion for continuance was an abuse

of discretion which resulted in specific substantial prejudice.” Verderame, 51 F.3d

at 251. To show prejudice, the defendant “must identify relevant, non-cumulative

evidence that would have been presented,” Valladares, 544 F.3d at 1262 (quoting

United States v. Saget, 991 F.2d 702, 708 (11th Cir. 1993)), and that indicates “a

different outcome had the motion for a continuance been granted.” Id. at 1264.

      Under the circumstances of this case, the district court’s continuance denials

were a clear abuse of its discretion. Every Uptain factor, except for the availability

of discovery, counseled in favor of granting a continuance. First, the available

preparation time was short. This analysis centers on what knowledge and evidence

Schwarz’s counsel could amass in the allotted time—access to his client’s

memories is not a substitute. Schwarz’s counsel was a solo practitioner. After

subtracting his time spent in other trials and the time period before the

government’s first disclosure of discovery materials, Schwarz’s counsel effectively

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had twelve weeks to prepare to try a complex financial case in which his client was

facing decades in prison. The government investigated and pursued the alleged

Cay Clubs conspirators for at least three years before Schwarz’s trial began, plus

the months or years of preparation required to try Clark in a complex, six-week

trial—twice. See Indictment, Clark, No. 4:13-cr-10034-JEM-1 (S.D. Fla. Nov. 26,

2013), ECF No. 3; Minute Entry, Clark, No. 4:13-cr-10034-JEM-1 (S.D. Fla. Aug.

14, 2015), ECF No. 323 (indicating that the first Clark trial extended for twenty-

eight days); Minute Entry, Clark, No. 4:13-cr-10034-JEM-1 (S.D. Fla. Dec. 11,

2015), ECF No. 467 (indicating that the second Clark trial extended for twenty

days). Unlike Clark, who employed at least six attorneys by the end of his second

trial, Schwarz was reliant on one attorney to contest three federal prosecutors

armed with the IRS’s resources and the SEC’s extensive investigation records.

Notices of Appearance, Clark, No. 4:13-cr-10034-JEM-1, ECF Nos. 35, 100, 114,

163, 398, 435.1

       1
          While Schwarz is not entitled to Clark’s trial process—a team of six lawyers preparing
for twelve months for Clark’s first trial and an additional three months for his second trial—the
results are interesting. Docket Sheet, Clark, No. 4:13-cr-10034-JEM-1, ECF Nos. 35, 253, 406.
Clark’s first trial resulted in the acquittal of Cristal Coleman and a hung jury on his own charges,
and Clark’s second trial resulted in an acquittal on substantially the same conspiracy charge of
which Schwarz was convicted. Minute Entry, Clark, No. 4:13-cr-10034-JEM-1 (S.D. Fla. Aug.
14, 2015), ECF No. 323; Second Superseding Indictment at 3–6, Clark, No. 4:13-cr-10034-JEM-
1 (S.D. Fla. Oct. 1, 2015), ECF No. 351; Jury Verdict, Clark, No. 4:13-cr-10034-JEM-1 (S.D.
Fla. Dec. 11, 2015), ECF No. 468.
        All of the foregoing facts from United States v. Clark are not subject to reasonable
dispute because they can be accurately and readily determined from public records whose

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       Second, Schwarz played a limited role in shortening his own preparation

time by failing to request disclosure of expert witnesses until eight days before the

original trial date.The government did not file its third response to the district

court’s discovery order until after it received this request.

       Third and fourth, the likelihood of prejudice and the degree of complexity

were high. Schwarz’s counsel was tasked with reviewing discovery materials

spanning from 1989 to at least 2015. 2The discovery materials included a hard drive

containing three terabytes of information, 3 six CDs of bank records (comprising

some or all of the records for Cay Clubs’s 150 entities and related bank accounts),

accuracy cannot reasonably be questioned. See Fed. R. Evid. 201(b)(2); Grayson v. Warden,
Comm’r, Alabama DOC, 869 F.3d 1204, 1225 (11th Cir. 2017) (“[A] court may take judicial
notice of a document filed in another court . . . to establish the fact of such litigation and related
filings.” (quoting Taylor v. Charter Med. Corp., 162 F.3d 827, 830 (5th Cir. 1998)) (internal
quotation marks omitted)).
         2
           Early on, the government put Schwarz on notice that it was delving into some of
Clark’s and Schwarz’s activities that began in 1989 as potential Federal Rule of Evidence 404(b)
evidence.
         3
           What is a terabyte? Well, it depends on the medium (print, photo, video, etc.), but at
bottom it is a number of bytes of information. Three terabytes is approximately thirty with
twelve zeros following, or 3 million million, or 3 trillion bytes. According to various cases,
printed text gets the best bang for the buck: Three terabytes of plain text would be
approximately 3,000 gigabytes (GB), or the equivalent of 1.5 trillion pages of plain (or
“typewritten”) text. See Laethem Equip. Co. v. Deere & Co., No. 05-10113, 2008 WL
11355558, at *4 n.1 (E.D. Mich. Dec. 3, 2008) (citation omitted); Haka v. Lincoln Cnty., 246
F.R.D. 577, 578 n.1 (W.D. Wis. 2007).
         According to the conversion rate found in McNulty v. Reddy Ice Holdings, Inc.,
3 terabytes would equal approximately 660 million pages of “printed text.” 271 F.R.D. 569, 570
n.1 (E.D. Mich. 2011). Without delving into the distinctions between “plain” text and “printed”
text, let’s just say a terabyte is more than a little information. Three terabytes would hold 3,000
copies of the Encyclopedia Britannica, or 30% of the printed collection of the Library of
Congress. United States v. Salyer, Cr. No. S-10-0061-LKK, 2011 WL 1466887, at *1 n.2 (E.D.
Cal. Apr. 18, 2011) (quotation omitted), report and recommendation adopted, Cr. No. S-10-061-
LKK, 2011 WL 1811211 (E.D. Cal. May 12, 2011).

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forty boxes available for inspection and copying at the U.S. Attorney’s office,

hundreds of real-estate transactions, four boxes of trial exhibitsfrom Schwarz’s co-

conspirators’ two trials, and records from an SEC investigation that extended over

several years. This discovery included 1,000 pages of Schwarz’s prior testimony

and at least 800,000 emails. Hidden among this trove were documents that the

government specifically identified as potential Brady material during Clark’s

prosecution, but neglected to so identify for Schwarz.

      The government alleged before the district court that most of the material

was not relevant and that many of the documents on the drive were stored “in a

way that they take up a large amount of data but do not necessarily consist of a

commensurate number of pages or page-equivalents of documents.” But even if

we were to assume that each page of material consumed one megabyte of memory,

that Schwarz’s counsel only slept four hours each night, and that he reviewed

documents during every waking hour for the 103 days between when the hard

drive was made available on November 10, 2016 and trial, Schwarz’s counsel

would have needed to review over 1,400 pages per hour. If he read only the emails

during that time, he would have needed to review nearly 400 emails per hour.

      Of course, Schwarz’s counsel could not have spent every waking hour

reviewing documents. While reviewing this material, he was professionally

obligated to present and respond to pre-trial motions, to draft jury instructions and

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voir dire questions, and to seek and prepare possible defense witnesses, including

experts. The government provided most of the discovery, including identifying

most of its likely trial exhibits and its “hot documents” for the tax-related

allegations, within a few weeks after defense counsel’s appointment. However,

knowledge of the government’s key evidence for conviction and reassurances that

most of the discovery was produced in an abundance of caution are not a substitute

for defense counsel reviewing the evidence and preparing a case for acquittal.

Loyalty to his client’s interests required Schwarz’s counsel to view the discovery

with an independent eye. The Government’s assessment that most of the materials

were “not relevant” is meaningless: The opposing team is not privileged to call

plays for the defense. Nor is the bulk of knowledge possessed by a defendant a

measure of counsel’s preparation for trial. The measure is counsel’s reasonable

ability to prepare. As stated in each of Schwarz’s continuance motions,

preparation for trial in this brief period of time was an impossible task.

      We appreciate the heavy case loads and tight time constraints under which

district courts operate, but we do not see compelling countervailing justifications

for the district court’s denials here. The district court provided little explanation of

its rationale for denying the second continuance motion, and it provided no

explanation for denying the third motion. From the court’s comments at its

hearing on the second motion, we can discern that it did not view this case as

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complex and that it considered the limited availability of the Key West court

facilities.

       While the core allegations of the indictment may have appeared simple—

“three substantive transactions, a conspiracy charge, and interference with the

IRS,” in the government’s view—Schwarz’s second continuance motion informed

the district court of the voluminous discovery and of the government’s anticipation

of a twenty-day trial. 4 These were strong indicators of trial complexity. If the

Key West court facilities were unavailable in March and April of 2017, the district

court was not bound by a binary choice; it should have looked beyond that time

horizon. When Schwarz renewed his motion after the trial was moved to Miami, a

venue with a greater number of courtrooms, the district court should have

reconsidered its assessment of courtroom constraints. The court may have

considered the scheduling and availability of witnesses when the third continuance

motion was filed two weeks before a planned February 6, 2017 trial. However, the

district court’s later decision to continue the trial at the last litigation minute, four

days before the early February trial date, suggests that this factor did not heavily

influence its decision. At every decision point, the risk that a continuance would

       4
          In the motion hearing, Schwarz’s counsel stated his prescient fears that “in a conspiracy
case, the [g]overnment is not going to limit itself to the three predicate actions that are put in the
Indictment. They’re very likely to bring in a whole slew of other transactions in order to support
the conspiracy. I have to be prepared for this.”The government did exactly as counsel predicted.

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prejudice the government was virtually nil, while the defendant risked being

unprepared for trial, resulting effectively in a life sentence. Considering the

circumstances facing both the parties and the court, we find that the district court

abused its discretion in a manner that virtually guaranteed Schwarz would not

receive a fair trial.

       The denials substantially prejudiced Schwarz’s defense. In addition to the

inherent prejudice suffered by a defendant whose counsel was forced to litigate

under such grueling circumstances, Schwarz has supplemented the record on

appeal with new documents that he argues indicate a different outcome had a

continuance been granted. We agree.

       The government argued at trial that Cay Clubs was a wholly fraudulent

enterprise, deceiving buyers with promises of unit improvements and lease-back

payments and wrongfully concealing lease-back agreements from lenders. These

allegations were the vehicle through which a mass of highly prejudicial evidence

entered the case. For example, the government introduced emotionally charged

testimony from three buyers of Cay Clubs units, one who put her husband’s life

insurance payout toward her Cay Clubs loan, one who had to borrow from his

retirement due to his losses, and one who declared bankruptcy and lost her primary

residence. These witnesses offered some testimony relevant to the core bank fraud

allegations: Each witness’s purchasing decisions were influenced by Cay Clubs’s

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appreciation analysis that highlighted the first set of related-party sales. But their

testimony extended far beyond these core allegations when they offered highly

sympathetic descriptions of the horrid state of their units and of Cay Clubs’s failure

to pay lease-back payments. This testimony, and the government’s opening and

closing arguments that Cay Clubs was a wholly fraudulent enterprise, were highly

likely to engage juror sympathies and to motivate jurors to punish Schwarz for

these buyers’ hardships. Undercutting these allegations could have changed the

outcome.

      Schwarz’s motion to supplement contains several documents that undermine

this grand theory and that support his “good faith” defense. Schwarz has submitted

financial statements and records of unit upgrades that show that Cay Clubs spent

over $52 million to improve its buildings, sites, furniture, and fixtures across fiscal

years 2005 and 2006. A memorandum of interview conducted by the government

with a loan officer for Fifth Third Bank and a fax cover sheet sent to that employee

indicate that at least some of Cay Clubs’s lenders were aware of lease-back

agreements. An opinion from the law firm Greenberg Traurig advising the

company regarding the impact of securities laws on Cay Clubs’s lease-back

agreements suggests that Cay Clubs went to great lengths to comprehend and

comply with applicable laws in that aspect of its business. On the whole, these

supplemental documents, combined with other evidence and testimony adduced at

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trial, are consistent with an alternative theory that Cay Clubs was a well-

intentioned but badly run business—one that could not fulfill its promises before it

collapsed in the midst of a financial crisis.

      This alternative theory calls into question whether Schwarz had the requisite

mental states to be convicted of his crimes. To be convicted for conspiracy to

commit bank fraud he must have willfully conspired—i.e., voluntarily and

purposefully acted with intent to do something the law forbids—to commit a crime

that in turn requires specifically intending to deceive someone. See Eleventh

Circuit Pattern Jury Instructions (Criminal Cases), Offense Instruction 13.1, Basic

Instruction 9.1B, Offense Instruction 52 (2020). To be convicted of interference

with the administration of internal revenue laws, he must have corruptly interfered:

He must have acted knowingly and dishonestly for a wrongful purpose. Id. at

Offense Instruction 111.As stated in the district court’s instructions to Schwarz’s

jury, good faith, an honestly formed belief, a mistake in judgment, an error in

management, and/or carelessness cannot establish fraudulent intent. Id. at Special

Instruction 17.

      Without adequate proof of the proper mental states, the government’s case

becomes a prime example of how “the civil/criminal divide is frequently blurred.”

See Mihailis E. Diamantis, Successor Identity, 36 YALE J. ON REG. 1, 7 & n.24

(2019) (citing John C. Coffee, Jr., Does “Unlawful” Mean “Criminal”?:

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Reflections on the Disappearing Tort/Crime Distinction in American Law, 71 B.U.

L. REV. 193, 193 (1991)). After considering the increased viability of Schwarz’s

“good faith” defense, the extent to which it undermines the government’s highly

prejudicial “Ponzi scheme” allegation, and the impossible trial-preparation

challenge faced by Schwarz’s counsel, we are left with substantial doubt regarding

the outcome.

      This Court’s twenty-five-year-old admonition against the potential dangers

of haste bears repeating: “[A]n insistence upon expeditiousness in some cases

renders the right to defend with counsel an empty formality. In our system of

justice, the Sixth Amendment’s guarantee to assistance of counsel is paramount,

insuring the fundamental human rights of life and liberty.” Verderame, 51 F.3d at

252. In the particular circumstances of this case, Schwarz was denied this essential

constitutional right.

                                          III.

      Finally, the trial court’s history of denying continuances in criminal cases

has come to our attention. There are seven cases from 2006 through 2017 in which

the issue in this particular trial court was raised and argued on appeal, and, in all

but one, there are substantive rulings by this Court. See Jeri, 869 F.3d at 1257–59;

United States v. Ubieta, 630 F. App’x 964, 970–72 (11th Cir. 2015); United States

v. Bates, 590 F. App’x 882, 890–91 (11th Cir. 2014); United States v. Anderson,

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329 F. App’x 878, 882–84 (11th Cir. 2009); United States v. King, 306 F. App’x

501, 513–18 (11th Cir. 2009); Valladares, 544 F.3d at 1264–65; United States v.

Perez, 473 F.3d 1147, 1150–51 (11th Cir. 2006). We by no means challenge the

conclusions of prior panels. The rules of the Circuit are clear, and the bar is high

for reversal when continuances are denied. None of the listed cases resulted in

reversal, but three contained warnings to the trial court, and the most recent,

United States v. Jeri, found error by the trial court, but insufficient evidence of

prejudice to defendant under our precedent.

       United States v. King was a 2009 complicated tax fraud case involving four

years of personal and corporate tax returns of two corporations owned by

defendant which had been investigated by the Internal Revenue Service for over

three years and involved 80,000 documents in discovery. 306 F. App’x at 506.

Trial was set to begin forty days after arraignment and fifty-three days after

indictment. Discovery was turned over by the government during the 40 days. Id.

at 504. This Court noted: “The difficulty in trial preparation was exacerbated by

the fact that, little more than a month before trial, the government left 39 boxes

containing 80,000 discovery documents at Xpedia, a copy center.” Id. at 515–16.

The trial court denied several motions by defendant for a continuance, including an

unopposed motion for at least a seven-month continuance. Id. at 506. The trial

court eventually granted an eight-day continuance, after which the government

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added twenty-five exhibits and substituted ten more, one day before the new trial

date. Id. at 515–16. On the day of trial, defendant renewed orally his motion for a

continuance, to no avail. Id. at 515.

       Implying error, this Court made the following observations for the benefit of

the trial court:

       [T]his is a complicated tax fraud case involving voluminous records.
       King’s requests for more time to prepare was reasonable. While we
       understand the need to move cases expeditiously, this case was not a
       simple one. A 30– or 60–day continuance . . . would not have unduly
       delayed the court’s docket under these facts.
Id. at 516. Nevertheless, “[t]he problem for King . . . is that he has not shown that

the district court’s denials resulted in ‘specific, substantial prejudice’ to his

defense.” Id. There was also overwhelming evidence of guilt. Id. at 518.

       We issued another warning in our 2014 opinion in United States v. Bates,

which dealt with a child pornography prosecution. See generally Bates, 590 F.

App’x at 882. The denial of repeated requests for continuance was argued on

appeal but not decided by the panel. Id. at 890. Nevertheless, this Court instructed

on remand that “the District Court must assure itself that Mr. Bates has adequate

resources to permit his expert to review the evidence, and enough time to pursue

the evidence necessary to aid in his defense.” Id. Noting a short period for the

expert to complete a computer forensics examination, and a superseding indictment

just two weeks before trial, this Court warned: “If Mr. Bates is retried on remand,

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we hope and expect that the District Court will be mindful of his need for . . .

adequate time to prepare for trial.” Id. at 891.

       As stated above, in United States v. Jeri, our Court found error on the part of

this trial court in denying a motion for continuance when a television video of the

fruits of a search in a drug case was located by the government on the day before

trial, and turned over to defendant on the morning of trial.

               The facts of this case suggest to us that the trial court would have
       been wiser to grant a continuance or at least a short recess. After all,
       the video was not made available to Jeri until the morning of trial and
       he did not get to watch the video until after the first day of the day-and-
       a-half-long trial, by which time five Government witnesses had already
       testified.

Jeri, 869 F.3d at 1258. Again, however, despite “this error,” defendant could not

show specific, substantial prejudice, and there was no reversal. But our panel did

not leave it there:

             [I]t is worth reiterating “that a scheduled trial date should never
       become such an overarching end that it results in the erosion of the
       defendant’s right to a fair trial.” Id. at 1291 [citing United States v.
       Uptain, 531 F.2d 1281 (5th Cir. 1976)]. The costs attendant to a
       continuance were low, but the potential risk to the defendant was real.
       While we are acutely aware of the district courts’ heavy caseloads and
       fully appreciate the important public interest in their expeditious
       resolution, it is often wise to counsel patience in finding the “delicate
       balance between the defendant’s right to adequate representation by
       counsel of his choice and the general interest in the prompt and efficient
       administration of justice.”
Id. at 1258–59 (full citation added).

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      We are troubled, after three warnings by prior panels and in view of the

particular facts of this case, that this trial court has not heeded prior panel

warnings, resulting in an abuse of discretion in this case. The risk of error is

exacerbated by the setting of short trial dates. We have considered, but rejected

this time, the sanction of reassignment of this case to another court. To avoid

future sanctions, the trial court must be carefully mindful of the occasional needed

continuance for a defendant and, in some cases, both sides, especially in a case as

complicated as this one.

      Because we conclude that the district court abused its discretion in denying

Schwarz’s several motions for continuance and caused him to suffer substantial

prejudice in presenting his defense, we VACATE appellant SCHWARZ’s

convictions and REMAND for a new trial.

                                           IV.

      VACATED AND REMANDED.

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