Court Opinion

ID: 2620501
Source: CourtListenerOpinion
Date Created: 2013-10-31 16:51:25.984742+00
Date Added: 2024-06-11T08:23:21.900350
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 ____________

                                     No. 12-2948
                                    _____________

                           UNITED STATES OF AMERICA

                                            v.

                                 MIKEL D. JONES;
                               DONA NICHOLS JONES,
                                              Appellants
                                  ______________

             APPEAL FROM THE UNITED STATES DISTRICT COURT
               FOR THE EASTERN DISTRICT OF PENNSYLVANIA
                (D.C. Crim. No. 11-cr-00261-001 and 11-cr-00261-002)
                     District Judge: Honorable Berle M. Schiller
                                    ____________

                      Submitted Under Third Circuit LAR 34.1(a)
                                  October 11, 2013
                                   ____________

               Before: FUENTES, COWEN and BARRY, Circuit Judges

                           (Opinion Filed: October 31, 2013 )
                                    ____________

                                       OPINION
                                     ____________

BARRY, Circuit Judge

      Mikel Jones and his wife, Dona Nichols Jones, were convicted of conspiracy to

defraud and various counts of wire fraud, mail fraud, and money laundering, in

connection with their use of a line of credit extended by Stillwater Holdings, LLC
(“Stillwater”) to the Mikel Jones Law Firm to fund hundreds of thousands of dollars of

personal expenses. 1 Mikel Jones was sentenced to 42 months in prison and ordered to

pay $457,743.75 in restitution. Dona Jones was sentenced to one day in prison and

restitution of $358,995. They now appeal.

       On appeal, the Joneses claim that the evidence was insufficient to support their

convictions and that the District Court erred in three respects: (1) in denying their motion

to reopen the evidence; (2) by allowing testimony about Mikel Jones’ commingling of

personal and client funds; and (3) under Bruton v. United States, 391 U.S. 123 (1968), by

allowing federal agents to testify about out-of-court statements each of the Joneses made

about the other’s role in the scheme to defraud. We will affirm. 2

                                      I. Background

       We write primarily for the parties and thus we need only briefly set forth the

relevant facts. In February of 2006, Mikel Jones obtained a $750,000 line of credit from

Stillwater to finance his law firm’s “working capital.” Under the arrangement, Jones was

to submit an operating budget for Stillwater’s approval, use the borrowed funds

accordingly, and repay any outstanding debt by a maturity date of February 2008.

       In the months to come, the law firm underperformed. Stillwater increased the line

of credit and extended the maturity date to June 2008, conditioned on the firm’s hiring

1
  The indictment also alleged a separate scheme to defraud the Philadelphia Commercial
Development Corporation. The Joneses were acquitted of this alleged fraud, and it is not
at issue before us.
2
  The District Court had jurisdiction under 18 U.S.C. § 3231, and we have appellate
jurisdiction under 28 U.S.C. § 1291.
                                             2
Jeffrey Dubin, a financial advisor, to discipline its spending. Dubin controlled the

account containing the borrowed funds and authorized disbursements only when

consistent with the Stillwater-approved budget. By June 2008, Jones remained unable to

repay the debt. Despite its concern that the borrowed funds were being misspent,

Stillwater continued to finance the law firm, hoping that settlements of outstanding cases

would bring in revenue.

       Stillwater’s concern was well-placed. From February 2008 to January 2009, the

Joneses used the borrowed funds to purchase sporting tickets and cover other personal

expenses. To obtain payment, Mikel Jones submitted a misleading budget to Stillwater,

documenting, as advertising expenses, roughly $20,000 in monthly payments to

Comcast-Spectator, a sporting ticket vendor, and Strata-Tech, Inc., an inactive Florida

corporation the Joneses controlled. He directed an employee to prepare false invoices

from Comcast-Spectator and Strata-Tech, ostensibly for advertising services, and

submitted them to Dubin. Dubin dutifully paid the invoices, issuing a total of $137,665

in checks to Comcast-Spectator (or to Jones personally, as reimbursement), and $146,995

to Strata-Tech. The checks to Comcast-Spectator paid for 76ers tickets; Dona Jones used

most of the Strata-Tech funds to pay her personal credit card bills.

       Later in 2009, the firm was expecting to receive a large fee from a settlement.

Stillwater informed Mikel Jones that it would collect the entire fee to partially satisfy the

law firm’s outstanding debt. Jones asked to retain $160,000 so he could repay a creditor

from “the street” who would harm Jones if he defaulted, and Stillwater agreed. The vast

                                              3
majority of that $160,000 took a circuitous route to the law firm’s trust account, restoring

client funds Mikel Jones had previously withdrawn.

                                       II. Discussion

       A. Sufficiency of the Evidence

       We apply a “particularly deferential standard of review when deciding whether a

jury verdict rests on legally sufficient evidence.” United States v. Dent, 149 F.3d 180,

187 (3d Cir. 1998). Viewing the evidence in the light most favorable to the government,

we must sustain a jury’s verdict if “any rational trier of fact could have found the

essential elements of the crime beyond a reasonable doubt.” Id.

              1.     The Fraud and Conspiracy Counts

       The Joneses deny that they defrauded Stillwater. They claim that all of the

disputed payments covered legitimate firm expenses: the sporting tickets secured

business from prospective clients, and the various personal expenses constituted

permissible “draws” from firm income to which Mikel Jones was entitled as the firm’s

owner. Dona Jones argues that her “role was very limited and clearly in the category of a

supportive wife.” Appellants’ Br. at 74.

       The government presented ample evidence to the contrary. The 2006 line of credit

agreement limited use of the funds to “working capital,” which included neither personal

expenses, nor hundreds of thousands of dollars in sporting tickets. Brian Spira, an agent

of Stillwater who arranged and monitored the deal, confirmed that understanding. Mikel

Jones’ own efforts to obscure the intended use of the funds corroborated it: Jones

                                              4
documented the payments as advertising expenses in the 2008 budget, directed his

employees to prepare false invoices, and concealed his control of Strata-Tech.

       The government also demonstrated that Dona Jones knew the borrowed funds

were only intended to cover the law firm’s operating expenses: Spira testified that he told

her so, and that he expressed his concern that the money was being misspent.

Nonetheless, Dona Jones instructed Dubin’s staff to mail Strata-Tech checks to the

Joneses’ Florida home and used the proceeds to pay her personal credit card bills.

       The Joneses point to evidence that, contrary to Spira’s testimony, Stillwater in fact

expected its funds to be used to purchase sporting tickets: in his 2006 loan application to

Stillwater, Mikel Jones attached a copy of his firm’s 2005 budget, which included two

line items for “Philadelphia Eagles” and “Philadelphia 76ers” under “annual promotional

expenses.” A1262. Whatever inference the jury could have drawn from that document

regarding the events it was considering that took place three years later, and under a

different budget, is not for us to say. We are required only to decide, under the standard

of review set forth above, whether the evidence sufficiently supports a conclusion of

guilt. It surely does. The jury could reasonably have concluded that Mikel Jones

misrepresented the intended use of the funds in order to induce approvals to disburse

those funds to him, and that Dona Jones was aware of, benefited from, and actively

participated in the scheme with Mikel.

              2.     Money Laundering

       Along the same lines, appellants contend that “the law firm of Mr. Jones could do

                                             5
what it wanted” with the $160,000 in settlement proceeds that forms the core of the

money laundering count. Appellants’ Br. at 76. Thus, they argue that the government

failed to prove that the money laundering transactions involved “proceeds of specified

unlawful activity,” as it must to sustain a conviction under 18 U.S.C. § 1956.

       A reasonable juror could conclude that Mikel Jones obtained the $160,000

fraudulently. The settlement proceeds were held in the law firm’s operating account,

which Jones could only access through Dubin. Dubin testified that he controlled the

account on behalf of Stillwater, an unsurprising fact given that Jones had accrued over $2

million in debt and was struggling to repay it. And when Jones asked Dubin for the

$160,000 check, Stillwater made clear that it would have called on the full amount of the

settlement proceeds and only agreed to allow Jones to retain the $160,000 because of his

claimed need to repay a debt from “the street.” Jones did not repay a debt from “the

street”; he, instead, replenished client funds in his law firm’s trust account. Thus, Jones’

misrepresentation induced Dubin to disburse the funds and Stillwater to forbear from

collecting them.

       B. Motion to Reopen the Evidence

       The Joneses challenge the District Court’s denial of their motion to reopen the

evidence, after deliberations had begun, to introduce a July 2006 email that had been

turned over as discovery but overlooked by counsel.

       Decisions to reopen are “traditionally a discretionary matter for the district court,”

United States v. Vastola, 915 F.2d 865, 876 (3d Cir. 1990), which “should be extremely

                                              6
reluctant to grant reopening,” United States v. Kithcart, 218 F.3d 213, 219 (3d Cir. 2000).

We review for abuse of discretion. Prejudice to the party opposing the motion, and the

moving party’s explanation for failing to present the evidence earlier, are salient

considerations on a motion to reopen. United States v. Coward, 296 F.3d 176, 181 (3d

Cir. 2002).

       In the email, Mikel Jones provided Spira a breakdown of how he planned to spend

a $75,000 draw from the line of credit. The breakdown included a $7,000 expense for a

remaining balance on a Philadelphia Eagles season ticket contract. Spira appears to have

approved the expense, as he issued a $75,000 check to the law firm the next day.

       The Joneses claim that the email proves Spira perjured himself when he testified

that he would never have approved using Stillwater funds to cover sporting ticket

expenses:

       Q: Okay, did [Mikel Jones] tell you he intended to use the fund to purchase
       any tickets?
       A: No.
       Q: What about using funds to promote a sport events, in any fashion, to
       help the law firm?
       A: No.
                                     *      *      *

       Q: Would you have approved line of credit funds going for the purchase of
       basketball tickets?
       A: No.
       Q: Why not?
       A: Because those funds don’t count as working capital of a firm. They
       don’t advance cases, they don’t pay expenses, they don’t pay overhead.

A404, 423.

                                             7
       The July 2006 email could have been useful to the Joneses. Counsel could

have questioned Spira about it and how, if at all, he could reconcile the above

testimony with his past approval of sporting ticket expenses.

       Nonetheless, the District Court properly denied the motion. As useful as the email

may have been to appellants, it was hardly a game-changer. In the email, Jones made

sure to frame his request for the season ticket payment as an exception to what Stillwater

would generally authorize. He described the season ticket contract as a relic from when

his “original partners were involved” and noted that he needed to make the payment to

avoid forfeiting a $50,000 deposit. A129.

       The fact that Spira had once approved a modest sporting ticket expense as an

exception to the ordinary course of the law firm’s spending hardly provides conclusive

evidence that he would have expected such payments to be made routinely as

“advertising expenses” years later, in much higher amounts, and with no explicit

accounting for them in the firm’s budget. Indeed, the apparent need for Jones in his

email to justify the payment as an extenuating circumstance only supports Spira’s general

testimony regarding the permissible uses of Stillwater funds. The email’s appeal to the

defense was, therefore, largely superficial, a fact that could have been easily lost on a jury

called upon to consider it in the midst of deliberations. The District Court did not abuse

its discretion when it denied the motion to reopen.

       C. Testimony About Mikel Jones’ Commingling of Funds

       At trial, the government examined a tax and estate lawyer who worked with Mikel

                                              8
Jones about money Jones removed from his law firm’s trust account. The witness noted

that such commingling of client and personal funds violated the rules of professional

ethics. The Joneses had moved before trial to exclude this evidence and now challenge

the District Court’s denial of that motion. We review for abuse of discretion. See United

States v. Serafini, 233 F.3d 758, 768 (3d Cir. 2000).

       The Joneses argue that the testimony “was irrelevant,” “tainted Mr. Jones before

the jury as an unethical lawyer,” and should have been excluded as impermissible

character evidence. Appellants’ Br. at 65, 66. However, evidence of uncharged bad acts

may be admitted to prove motive. See Fed. R. Evid. 404(b)(2). Jones used the $160,000

in retained settlement funds to replenish his firm’s trust account, from which he had

withdrawn roughly $150,000. Thus, the disputed testimony, which documented the

shortfall in the trust account and described the professional consequences of allowing the

lapse to continue, was direct evidence of Jones’ motive in defrauding Stillwater out of the

settlement funds it sought to collect.

       D. Bruton

       Neither Mikel nor Dona Jones testified at trial. However, two federal agents

testified about their interviews with both of them, recounting statements by each of them

concerning the conduct of the other. The Joneses argue that this testimony violated their

right to confront their accuser under Bruton v. United States, 391 U.S. 123 (1968).

Bruton, and subsequent cases clarifying it, forbid the “introduction of a non-testifying

defendant’s out-of-court statement, which directly implicates a co-defendant by name.”

                                             9
United States v. Hardwick, 544 F.3d 565, 572 (3d Cir. 2008).

       Because appellants never raised a Bruton objection in the District Court, we

review for plain error, and will “correct only particularly egregious errors” that affect

“substantial rights” and “seriously affect the fairness, integrity or public reputation of

judicial proceedings.” United States v. Richards, 241 F.3d 335, 341 (3d Cir. 2001)

(internal quotation marks omitted).

       Much of the agents’ testimony concerned out-of-court statements that each

defendant made about his or her own role in the scheme. The only statements by one

defendant that even mentioned the other concerned banal and undisputed factual issues.

Dona Jones stated that Mikel started his law firm seven years prior to her interview, that

she and Mikel established Strata-Tech together, and that they both participated in the

financial management of the law firm. Mikel Jones said even less about Dona, revealing

only that he did not know why Strata-Tech was registered in his wife’s name.

       At no point did the Joneses dispute their control of Strata-Tech, and,

unsurprisingly, Mikel Jones never denied that he managed the finances of his law firm.

Their defense was addressed solely to the use of Stillwater funds for sporting tickets and

personal expenses. Given the immateriality of the only statements that could even

arguably raise an issue under Bruton, there is no error, much less plain error, to correct.

                                      III. Conclusion

       The judgments of sentence will be affirmed.

                                              10