Court Opinion

ID: 616027
Source: CourtListenerOpinion
Date Created: 2011-10-25 18:47:51+00
Date Added: 2024-06-11T17:50:35.662874
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                               No. 09-4968

UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

           v.

RICHARD N. GARRIES,

                Defendant - Appellant.

Appeal from the United States District Court for the Eastern
District of Virginia, at Newport News.    Rebecca Beach Smith,
District Judge. (4:08-cr-00050-RGD-JEB-1)

Argued:   September 23, 2011                 Decided:   October 25, 2011

Before TRAXLER, Chief Judge, and WILKINSON and NIEMEYER, Circuit
Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Lawrence Hunter Woodward, Jr., SHUTTLEWORTH, RULOFF,
SWAIN, HADDAD & MORECOCK, PC, Virginia Beach, Virginia, for
Appellant.   Brian James Samuels, OFFICE OF THE UNITED STATES
ATTORNEY, Newport News, Virginia, for Appellee. ON BRIEF: Neil
H. MacBride, United States Attorney, Alexandria, Virginia,
Katherine Reynolds, Third Year Law Student, OFFICE OF THE UNITED
STATES ATTORNEY, Newport News, Virginia, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

      Richard      Garries      was     indicted        on        twenty-four      counts,

including conspiracy to commit mail and wire fraud, and multiple

counts     each    of    mail   fraud,        wire    fraud,        and   making     false

statements.        The charges arose from a wide-ranging scheme to

defraud that centered on real estate transactions funded by sub-

prime mortgages arranged by Garries.                  The jury convicted Garries

of   all   counts,      and   the    district       court    sentenced     him     to   240

months’ imprisonment.           Garries appeals.              Finding no reversible

error, we affirm.

                                          I.

      We   briefly      summarize       the       evidence    presented      at    trial,

viewing the evidence, as we must, in the light most favorable to

the government.          See, e.g., United States v. Young, 609 F.3d

348, 355 (4th Cir. 2010).

      In   2003,     Garries        pleaded       guilty     to    wire   fraud,     after

selling forged and fraudulent vehicle financing contracts on the

secondary market.         Garries was sentenced to twenty-five months’

imprisonment, followed by a term of supervised release.

      After he was released from prison in 2005, Garries began

working as a mortgage originator for Security First Funding, a

mortgage brokerage company in Newport News, Virginia.                             Security

First and the mortgage lenders with which it had relationships

                                              2
focused on “sub-prime” mortgages -- mortgages offered to higher-

risk   borrowers.          The       government’s            evidence        established          that

Garries and his staff did whatever was necessary to make a given

client appear to qualify for a loan.                           Garries (or his staff at

his direction) inflated the income of loan applicants so the

applicants        would    meet       the        lender’s          required        debt-to-income

ratio.     They altered or created out of whole cloth any documents

necessary to support the inflated income or to meet other lender

requirements,       sometimes         forging          the    applicant’s          signature       and

other times cutting a legitimate signature from one document and

pasting it onto a forged document.                           For applicants who did not

have enough money in the bank to meet the lender’s requirements,

Garries gave them “show money” for deposit in their accounts and

took   the   money        back       after       the    lender       verified        the       account

balance.

       Garries      also    worked          as    a     “flipper,”          buying       houses    to

renovate and resell.                 Many of Garries’ Security First clients

were   seeking       investment         properties            to     rent     or     resell,      and

Garries frequently steered these clients to properties he owned.

Garries encouraged          the       clients          to    buy    the     houses    by       falsely

promising,        inter    alia,       to    give       the        buyers    cash     back       after

closing,     to    provide       a    renter          for    property,       or     to     make   any

necessary     repairs        after           closing.               Appraisals           for     these

properties often stated that the house had certain equipment or

                                                  3
fixtures that were not present when the buyer took possession,

or indicated that various repairs had been done that in fact had

not been done.         Because of the true condition of the homes, most

of the buyers were unable to resell the houses for a profit or

rent    the    houses     at   a   price     that       covered    the    high-interest

mortgages Garries had placed them in, and they generally lost

the investment properties to foreclosure.

       Stuart Gordon was a “hard money” lender who provided short-

term    high-interest      loans     for    Garries       to     buy    and    repair   the

houses he flipped.             After learning that Garries was inflating

his estimates for repairs and seeking draws for repairs that had

not    been    done,    Gordon     began    requiring       Garries       to    show    city

inspection stickers and verifications before he would release

money from escrow.         That did not prove to be much of an obstacle

for Garries -- he simply forged the inspection documents.

       The conduct outlined above provided the factual basis for

most   of     the    charges    alleged     in    the    indictment.           The   false-

statement      charges,    however,        were   based     on    statements         Garries

made to the probation officer to whom Garries reported while on

supervised release following his 2003 wire-fraud conviction.                             As

to    those    charges,    the     government’s         evidence       established      that

Garries       made   numerous      false    statements         about     his   residence,

income, assets, bank accounts, and various business entities he

owned or operated.

                                            4
      Over     Garries’        objection,          the     district      court     permitted

Horace     Goins     to    testify      about        his     business      dealings      with

Garries.       The     Goins     transactions             were     not   charged    in    the

indictment, but they were very similar to the charged conduct

and occurred during the same time frame as the actions charged

in the indictment.

      Goins testified that he received more than $80,000 through

a   cash-out    refinancing           loan    arranged        by    Garries.        Garries

persuaded    Goins        to   invest    the       loan    proceeds       in   Williamsburg

Restaurant     Equipment        and     Supply,      a     company       incorporated     and

operated by Garries.             Garries told Goins that there was a big

market   for    used       restaurant        equipment,          that    the   company    had

already lined up several lucrative contracts, and that he needed

capital to renovate the retail store and build an inventory.                              As

it turned out, only a few pieces of equipment were ever bought,

the company never began operations, the promised contracts never

materialized, and the shares of stock promised to Goins were

never issued.        Not surprisingly, Goins lost all the money he had

invested in the company.               Goins also testified about two houses

he bought through Garries that he intended to use as rental

properties.        Garries      made     false      promises        to   Goins   about    the

condition of the houses and their rental potential.                              When Goins

discovered the true condition of the houses, Garries refused to

make any repairs, and Goins was forced to spend significant sums

                                               5
to make the houses habitable.                Goins ultimately lost all of his

retirement savings, and he was forced to declare bankruptcy.

                                            II.

     Under the Federal Rules of Evidence, “[e]vidence of other

crimes, wrongs, or acts is not admissible to prove the character

of a person in order to show action in conformity therewith,”

but such evidence is admissible “for other purposes, such as

proof    of    motive,        opportunity,        intent,    preparation,       plan,

knowledge, identity, or absence of mistake or accident.”                         Fed.

R. Evid. 404(b).         On appeal, Garries challenges on Rule 404(b)

grounds the district court’s decisions to admit the testimony of

Horace   Goins   and     to    admit   evidence      about   Garries’    2003   wire

fraud conviction.

                                            A.

     Garries was not charged with any crimes relating to his

dealings with Horace Goins, and Garries therefore argues that

the Goins evidence should have been excluded under Rule 404(b).

We disagree.

     Rule     404(b)’s    limits       on    admissibility    do   not   apply    to

evidence of conduct that is intrinsic to the crimes charged.

See United States v. Lighty, 616 F.3d 321, 352 (4th Cir.) (“Rule

404(b) limits only the admission of evidence of acts extrinsic

to the one charged, but does not limit the admission of evidence

                                             6
of intrinsic acts.”), cert. denied, 131 S. Ct. 846 (2010), and

80 U.S.L.W. 3015 (U.S. Oct. 17, 2011) (No. 10-1010).                                  Uncharged

conduct is intrinsic and thus not subject to Rule 404 “if the

uncharged conduct arose out of the same series of transactions

as the charged offense.”             United States v. Siegel, 536 F.3d 306,

316 (4th Cir. 2008) (internal quotation marks omitted).                                    Garries

was charged with conspiracy to commit mail and wire fraud, and

the     Goins    transactions        arose           out    of    the    same     series       of

transactions as the charged conspiracy.                          The Goins transactions

were    thus    intrinsic      to   the       crimes       charged,      and    the    district

court    properly      admitted      the       evidence.          See    United       States    v.

Muscatell, 42 F.3d 627, 631 (11th Cir. 1995) (in case where

defendants “were charged with conducting a continuing scheme to

defraud,       characterized        by        land    flip       transactions,         inflated

appraisals,      buyer-rebates,           and       fraudulent      loan       applications,”

evidence of uncharged transaction that was largely identical to

those     charged      in    the    conspiracy             was   properly       admitted       as

intrinsic to the crimes charged).

                                                B.

        Garries also contends that the district court erred under

Rule    404(b)    by    allowing         the    government          to   present       evidence

related    to    his    2003    conviction            for    wire    fraud.        Given       the

factual     basis      for     the       false-statement             charges          --    false

statements       Garries     made        to     his    probation         officer,          Garries

                                                7
concedes     that    evidence          of   his       supervised      release       status    was

admissible.        He argues, however, that the government should not

have been permitted to introduce evidence about the underlying

conviction itself or details of the conditions of his supervised

release and his compliance with those conditions.                                  According to

Garries,     the     only    purpose        of    this        detailed    evidence      was    to

assail his character, which is prohibited by Rule 404(b).                                      We

disagree.

       As an initial matter, we note that much of the testimony

about    the    terms        of    Garries’            supervised        release      and     his

compliance with those terms was intrinsic to the false-statement

charges and therefore was not, as discussed above, subject to

the proscriptions of Rule 404(b).                        See Lighty, 616 F.3d at 352

(“Evidence      is     inextricably              intertwined          with     the     evidence

regarding the charged offense [and thus intrinsic] if it forms

an integral and natural part of the witness’s accounts of the

circumstances surrounding the offenses for which the defendant

was     indicted.”      (internal            quotation          marks        and     alteration

omitted)).      And as we explain, the challenged evidence that was

not intrinsic was properly admitted under Rule 404(b).

       To be admissible under Rule 404(b), prior bad acts evidence

must    be   relevant       to    an    issue         other    than   character,       such    as

identity or motive; necessary to prove an element of the crime

charged; and reliable.                 See United States v. Blauvelt, 638 F.3d

                                                  8
281, 292 (4th Cir. 2011), cert. denied, 79 U.S.L.W. 3712 (U.S.

Oct. 3, 2011) (No. 10-1473); Siegel, 536 F.3d at 317-18.                       Rule

404(b) is “an inclusive rule, admitting all evidence of other

crimes or acts except that which tends to prove only criminal

disposition.”     United States v. Young, 248 F.3d 260, 271–72 (4th

Cir. 2001) (emphasis added; internal quotation marks omitted).

       Given Garries’ denial of involvement in the forging and

altering of loan documents at issue in this case, evidence about

the prior conviction was probative of his intent and knowledge

on the various mail and wire fraud counts.                See United States v.

Queen,    132   F.3d   991,    996   (4th    Cir.     1997)   (“Once   an   act    is

assumed to be done, the prior doing of other similar acts is

useful as reducing the possibility that the act in question was

done     with   innocent      intent.”   (internal       quotation     marks      and

alteration omitted)).           Evidence of the restitution award was

likewise probative of Garries’ motive for the false statements

counts, by showing why he lied to the probation officer about

his bank accounts and income.                Under these circumstances, we

cannot    say   that   the    district      court’s    decision   to   admit      the

challenged evidence was arbitrary or irrational.                  See Blauvelt,

638 F.3d at 292 (“Because judgments of evidentiary relevance and

prejudice are fundamentally a matter of trial management, we

defer to the discretion of trial courts and will not vacate a

conviction unless we find that the district court judge acted

                                         9
arbitrarily     or    irrationally    in     admitting    evidence.”      (internal

quotation marks and alterations omitted)).

                                       III.

      The    district    court    frequently       interrupted    and    questioned

Garries     during    his    testimony,      and    Garries    argues     that      the

court’s interference deprived him of a fair trial. ∗                          Because

counsel for Garries did not object to the court’s questioning,

see   Fed.    R.     Evid.   614(c)    (“Objections       to     the    calling      of

witnesses by the court or to interrogation by it may be made at

the time or at the next available opportunity when the jury is

not present.”), we review this claim for plain error only, see

United States v. Godwin, 272 F.3d 659, 672 (4th Cir. 2001).

      There is no question that a trial judge has the authority

to question witnesses.           See Fed. R. Evid. 614(b) (“The court may

interrogate        witnesses,     whether     called     by    itself    or    by    a

party.”); Godwin, 272 F.3d at 672 (“[A] trial judge possesses

broad authority to interrogate witnesses.”).                     When exercising

this authority, however,

      the trial judge must always remember that he occupies
      a position of preeminence and special persuasiveness”
      in the eyes of the jury, and, because of this, he

      ∗
        The presiding judge became ill after the close of
testimony, and Judge Smith took over the case at the jury-
instruction phase.

                                        10
        should take particular care that his participation
        during trial -- whether it takes the form of
        interrogating witnesses, addressing counsel, or some
        other conduct -- never reaches the point at which it
        appears clear to the jury that the court believes the
        accused is guilty.

United    States   v.    Parodi,   703    F.2d       768,       775   (4th   Cir.   1983)

(citation,      internal    quotation    marks,       and       alteration    omitted).

The ultimate inquiry is “whether the trial judge’s comments were

so prejudicial as to deny a party an opportunity for a fair and

impartial trial.”          Godwin, 272 F.3d at 679 (internal quotation

marks omitted).

      It is apparent from the record that Garries was a difficult

witness.        He rarely gave a direct answer to a question, but

would instead spend paragraphs and paragraphs talking his way

around    the    question.     The   district         court       was    understandably

frustrated      with    Garries’   conduct,      and        a    great    many    of   the

court’s interruptions were attempts to get Garries to answer the

question that had been asked.            See, e.g., J.A. 1415-16 (“He just

asked you if you made any income.                    Just answer the question,

okay?     Good speeches, but just answer the question.                           Then you

can   explain     it,   all   right?”);       J.A.    1504       (“Stop.     Just   stop.

Answer questions.”).          Some of the statements perhaps may have

been a bit intemperate, see J.A. 1626 (“Can you say, ‘No,’ N-O?

Can you?”), but the court’s efforts at keeping Garries focused

can in no sense be considered prejudicial.                      See United States v.

                                         11
Smith, 452 F.3d 323, 333 (4th Cir. 2006) (“[E]ven a stern and

short-tempered          judge’s        ordinary         efforts        at      courtroom

administration do not establish bias or partiality. . . .                               A

tart remark or two might be what is needed to keep a lengthy

trial      on    track.”      (internal     quotation        marks     and    alteration

omitted)).

        Some of the court’s comments and questions, however, seem

to undermine the substance of Garries’ testimony.                           For example,

when Garries was testifying about Horace Goins’ investment in

the restaurant supply company, the court asked Garries whether

he   had    bought      any    restaurant        equipment     with     Goins’    money.

Garries said that he had bought equipment, to which the court

responded, “Oh, you did.               What did you do with the restaurant

equipment?”        J.A. 1496.        When Garries insisted that the company

had sold some equipment, the court asked, “Who was this person

who was purchasing . . . restaurant equipment?                        Name me just one

and how much they purchased.”                  J.A. 1497.       Another problematic

exchange involved Garries’ testimony about Terance Boothe, who

worked with Garries as a loan processor and pleaded guilty to a

conspiracy charge arising from his conduct in this case.                          Boothe

testified        that   he    had    created     a   phony    check    to    convince   a

mortgage lender that a buyer had paid earnest money.                            Garries,

however,        testified     that    the   buyer    had     actually    paid    earnest

money -- not with the phony check that had been submitted to the

                                            12
lender, but with a legitimate check that had been held in the

file    and   not   provided      to    the    lender.    The    district   court

interrupted Garries to say, “So Mr. Boothe did this himself, and

you had nothing to do with it.                  And he did it, and although

there was perfectly valid stuff in the file he did it to screw

up the transaction.      Is that correct?”          J.A. 1729.

        We believe that the questions and comments of this nature

can be construed as reflecting the district court’s disdain for

Garries and disbelief of his testimony, sentiments to which the

jury should not have been privy.                See Godwin, 272 F.3d at 678

(“[C]ross-examination        of    a     witness    by   the    trial   judge   is

potentially more impeaching than such an examination conducted

by an adversary attorney.              The judge, by his office, carries an

imprimatur of impartiality and credibility in the eyes of the

jury.     In fact, a judge’s apparent disbelief of a witness is

potentially     fatal   to   the       witness’s   credibility.”        (emphasis

added; footnote omitted)); cf. Quercia v. United States, 289

U.S. 466, 470 (1933) (“It is important that hostile comment of

the judge should not render vain the privilege of the accused to

testify in his own behalf.”).              Accordingly, we will assume that

Garries has satisfied his burden of demonstrating that plain

error occurred.

       The existence of plain error, however, is not enough to

entitle Garries to relief; Garries must also show that the error

                                          13
affected his substantial rights.               See Godwin, 272 F.3d at 679.

An error affects a defendant’s substantial rights when the error

“actually    affected      the   outcome      of    the    proceedings.”      United

States v. Hastings, 134 F.3d 235, 240 (4th Cir. 1998).                       We have

no difficulty concluding that any error in this case did not

affect the outcome of the trial.

      In Godwin, we applied plain-error review to questions and

comments made by the district court that were similar in nature

to the problematic comments at issue in this case.                       See Godwin,

272 F.3d at 674-76.         While finding the court’s participation in

the trial “troublesome,” id. at 681, we nonetheless concluded

that the defendants could not establish that the outcome of the

trial was affected by the district court’s error:                     “In the face

of   the   overwhelming      evidence      presented       against    them   by   the

Government,     there      was     no   reasonable         probability     that   the

[defendants’]    good      faith    defense        would   succeed.       Where   the

evidence is overwhelming and a perfect trial would reach the

same result, a substantial right is not affected,” id. at 680

(citation omitted).

      As in Godwin, the government’s evidence in this case was

overwhelming.        At trial, the government presented almost 300

exhibits and called twenty-six witnesses, including members of

Garries’ staff (one of whom was his daughter) who were involved

in   the   schemes   and    testified      about     their    own   wrongdoing    and

                                         14
Garries’ awareness of and involvement in the misconduct; law

enforcement officers who testified about obviously forged and

altered    documents       found     in   Garries’      trash       and   in    his    office

files;     and     representatives        from      the      mortgage        lenders        that

approved     loans        in    reliance      on       information         that       Garries

falsified.         The   government       also     called      as   witnesses         many    of

Garries’    clients,       who     gave   wrenching          testimony       about     losing

everything because they trusted the wrong man.

     The only significant evidence countering the government’s

compelling evidence was Garries’ own testimony.                           Garries denied

being involved in any wrongdoing, but he offered no evidence to

substantiate his claims, frequently claiming that the government

had in its possession but refused to turn over the receipts or

other documents that would show he was telling the truth.                                    His

testimony was often self-contradictory and at times was patently

incredible,        and    it     simply     failed        to     provide       a   coherent

explanation        for    the      testimonial         and      documentary        evidence

presented     by    the       government.         As    in     Godwin,       there     is     no

reasonable probability that, had the improper questioning by the

district     court       not    occurred,     the      jury     would     have     accepted

Garries’    claims       in    the   face    of     this       overwhelming        evidence.

Accordingly,       Garries       cannot     establish          that    his     substantial

rights     were      affected        by     the     district          court’s        improper

                                            15
participation     in     the    trial,    and    his    claim     thus    fails   under

plain-error review.

                                          IV.

       Garries raises two other issues on appeal, neither of which

merits detailed discussion.

       Garries first contends that the evidence was insufficient

to support his convictions.              The government presented evidence

establishing each element of every charge against Garries, and,

as   discussed    above,       that   evidence     overwhelmingly          established

Garries’ guilt.         See United States v. Beidler, 110 F.3d 1064,

1067 (4th Cir. 1997) (“Reversal for insufficient evidence is

reserved for the rare case where the prosecution’s failure is

clear.” (internal quotation marks omitted)).

       Garries also contends that the mail and wire fraud statutes

are unconstitutionally vague as applied to him.                          The statutes’

prohibition      of    “any    scheme    or     artifice     to   defraud,     or    for

obtaining   money      or     property   by     means   of   false   or     fraudulent

pretenses, representations, or promises,” 18 U.S.C.A. §§ 1341,

1343    (West    Supp.      2011),      raises    due      process       questions   of

vagueness if applied in “honest services” cases not involving

bribery or kickbacks.           See Skilling v. United States, 130 S. Ct.

2896, 2931 (2010).            This case, however, did not involve honest-

services fraud but instead involved “a conventional fraudulent

                                          16
scheme to obtain money,” a form of fraud that “is untouched by

Skilling and remains illegal.”                  United States v. Joshua, 648

F.3d 547, 553 (7th Cir. 2011).                There is nothing vague about the

statutory prohibition when applied to the conduct at issue in

this case.         See Skilling, 130 S. Ct. at 2927-28 (explaining that

a criminal statute is not vague if it “define[s] the criminal

offense [1] with sufficient definiteness that ordinary people

can understand what conduct is prohibited and [2] in a manner

that        does     not     encourage        arbitrary      and      discriminatory

enforcement”).

                                          V.

       To    summarize,      we   find   no   error    in   the    district   court’s

admission of evidence about Garries’ prior conviction or his

business dealings with Horace Goins.                   The mail and wire fraud

statutes are not unconstitutional as applied to Garries, and the

evidence      was    more    than    sufficient       to    sustain   each    of   the

convictions.         While the district court may have erred in its

questioning of Garries, Garries cannot establish prejudice under

plain-error        review,    because     the    evidence     of    his   guilt    was

overwhelming.        Accordingly, we affirm Garries’ convictions.

                                                                              AFFIRMED

                                          17