Court Opinion

ID: 2768945
Source: CourtListenerOpinion
Date Created: 2015-01-12 18:00:24.944111+00
Date Added: 2024-06-11T11:27:34.951381
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 _____________

                                      No. 13-3284
                                     _____________

                            UNITED STATES OF AMERICA

                                             v.

                                 MICHAEL SCRIPPS,
                                                 Appellant
                             __________________________

                       Appeal from the United States District Court
                         for the Eastern District of Pennsylvania
                           (D.C. Crim. No. 2-12-cr-00298-001)
                       District Judge: Honorable Legrome D. Davis
                              __________________________

                      Submitted Under Third Circuit L.A.R. 34.1(a)
                                  December 8, 2014

           Before: VANASKIE, COWEN, and VAN ANTWERPEN, Circuit Judges

                                 (Filed: January 12, 2015)
                                      _____________

                                       OPINION*
                                     _____________

VANASKIE, Circuit Judge.

       A jury convicted Appellant Michael Scripps on seven counts of wire fraud, 18

U.S.C. § 1343, arising from his scheme to defraud his mother and autistic uncle out of

       *
        This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
millions of dollars from the family’s publishing fortune. Appellant now challenges the

District Court’s supplemental jury instructions, the impartiality of members of the

prosecution team, the exclusion of expert testimony, and the reasonableness of his

sentence. We see no error in the handling of any of these issues and will affirm the

District Court’s judgment.

                                             I.

       In the late nineteenth and early twentieth centuries, Edward Willis Scripps

amassed a fortune in the publishing industry. Siblings Melissa and David Scripps were

heirs to this fortune; Melissa’s son, the Appellant, was also the beneficiary of a

substantial trust fund.

       As established at trial, Appellant partnered with his college friend Richard

Gleeson to defraud Melissa and David of their share of the Scripps fortune. Gleeson

worked as a financial advisor for Merrill Lynch in Media, Pennsylvania. In 2002,

Appellant convinced his mother and uncle to transfer their money to Merrill Lynch. With

Gleeson’s help, Appellant began secretly and fraudulently transferring millions of dollars

into his own account from David’s and Melissa’s accounts. Appellant also tricked his

mother and uncle into borrowing hundreds of thousands of dollars against their Michigan

residence and funneled the borrowed money to himself.

       Melissa and David discovered Appellant’s fraud in 2006. In 2008, Merrill Lynch

paid David and Melissa $5.875 million to release their claims against the company on

condition that they report the fraud to the United States Attorney’s Office (USAO) for the

Eastern District of Pennsylvania (EDPA). Attorney Zane Memeger, now the EDPA

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United States Attorney, but then in private practice, represented Merrill Lynch in the

matter and accompanied David and Melissa to Philadelphia when they reported the

crime.

         Memeger became the United States Attorney while the case was still being

investigated, and he sought to recuse himself. The Justice Department assigned the case

to the USAO for the District of New Jersey and its United States Attorney, Paul Fishman.

The Justice Department’s Notice of Recusal left it to Fishman’s discretion whether

Assistant United States Attorneys (AUSAs) from the EDPA could continue working on

the case as Special Attorneys under Fishman’s supervision. Pursuant to that discretion,

Fishman allowed EDPA AUSA Terri Marinari to continue as lead counsel.

         In June 2012, a grand jury indicted Appellant on seven counts of wire fraud.

Appellant moved to dismiss the indictment because of Memeger’s conflict of interest. In

October 2012 the District Court denied the motion, finding that Memeger had properly

recused himself in accordance with the United States Attorneys’ Manual and the

Department of Justice’s guidance.

         Appellant was tried in April of 2013. The Government called fifteen witnesses,

including David and Melissa Scripps, Richard Gleeson, and several Merrill Lynch

employees. Appellant called several witnesses, including an expert on financial

reporting, but the District Court limited the scope of the expert’s testimony. After

retiring to deliberate, the jury repeatedly asked for clarification on the concept of

reasonable doubt. The District Court provided supplemental instructions, to which

Appellant objected. The District Court overruled the objections, and the jury found

                                              3
Appellant guilty on all counts. The District Court sentenced Appellant to 108 months’

imprisonment, the maximum period of incarceration within the advisory Guidelines

range. This appeal followed.

                                             II.

       The District Court had jurisdiction pursuant to 18 U.S.C. § 3231. We have

jurisdiction under 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a).

                                            III.

       Appellant argues that (1) the District Court’s supplemental jury instructions

understated the prosecution’s burden of proof and undermined the core defense

argument; (2) Memeger’s conflict should have been imputed to all AUSAs assigned to

his office; (3) the exclusion of Appellant’s expert testimony was improper; (4)

Appellant’s sentence was procedurally and substantively unreasonable; and (5) taken

together, these errors rise to the level of constitutional error. We address each argument

in turn.

                                            A.

       To establish Appellant’s guilt at trial under 18 U.S.C. § 1343, the Government was

required to prove (1) knowing and willful participation in a scheme or artifice to defraud,

(2) specific intent to defraud, and (3) the use of interstate wire communications in

furtherance of the scheme. United States v. Andrews, 681 F.3d 509, 528 (3d Cir. 2012).

The defense did not contest that Appellant made seven wire transfers out of David

Scripps’s account. Thus, the primary question at trial was whether Appellant participated

in a scheme to defraud with specific intent to defraud. Appellant’s defense was that his

                                             4
mother, Melissa, had irresponsibly dissipated her substantial fortune, had approved of her

son transferring family members’ money into his own account, and had alleged fraud

only as a condition of her multimillion-dollar settlement with Merrill Lynch.

       At trial, the jury repeatedly requested additional instructions on the concept of

reasonable doubt. From the bench, the District Court noted that the jury was obligated to

determine beyond a reasonable doubt whether a scheme to defraud existed, and then to

apply the same standard to determine whether each of the seven alleged fraudulent wire

transactions out of David Scripps’s bank account occurred. The District Court then

instructed the jury:

              The – obviously, the testimony from Melissa Scripps
              concern[s] the presence or non-presence of a scheme in other
              factual circumstances. But as I read this indictment, you’re
              not asked to adjudicate anything in these seven counts about
              Melissa. So the government is obligated to prove, beyond a
              reasonable doubt, the charges concerning David Scripps.
              ...
              I mean, we’re not judging, for example, whether we like any
              of the witnesses. We are not judging their lifestyle. We are
              not judging whether they’ve squandered in a profoundly sad
              way their time. That’s not our place. That’s not our duty;
              right? We’re judging conduct. And, at the end of the day, as
              my mother said to me, and I love my mother, she says
              Legrome, you’re responsible for what you do; right?

(App. at 516-517.)

       Appellant contends that these instructions downplayed the need for the jury to find

intent to defraud and a scheme to defraud, and instead focused the jury solely on the

uncontroverted wire transfers. Moreover, the defense theory was that Melissa’s lifestyle

diminished her credibility as a witness, and Appellant contends that the instruction not to

                                             5
judge Melissa’s lifestyle undermined this argument and encroached on the jury’s role as

factfinder. Finally, Appellant challenges the District Court judge’s invocation of his own

mother in a case focused on a deeply troubled mother/son relationship.

       We review the District Court’s supplemental jury instructions in the context of the

overall charge for an abuse of discretion — whether the instruction was “arbitrary,

fanciful or clearly unreasonable.” United States v. Jackson, 443 F.3d 293, 297 (3d Cir.

2006) (quoting Stich v. United States, 730 F.2d 115, 118 (3d Cir. 1984)). Within this

context, we find that the District Court properly instructed the jury and did not abuse its

discretion. The supplemental instructions clarified that the jury must find the existence of

a scheme to defraud beyond a reasonable doubt and explicitly noted that Melissa

Scripps’s testimony related to the existence of such a scheme. The District Court’s

instruction not to judge Melissa Scripps’s lifestyle focused the jury’s attention on the

charged conduct at issue in the trial, but also reserved for the jury the question of her

credibility. Finally, the fact that this case involved the relationship between a mother and

her son did not render the District Judge’s references to lessons learned from his mother

inappropriate.

       In sum, the District Court’s supplemental jury instructions were not arbitrary,

fanciful, or clearly unreasonable. Accordingly, we find no abuse of discretion.

                                              B.

       Appellant asserts that because the current United States Attorney for the EDPA

worked on this matter in private practice, the entire office should have been precluded

from assisting in the prosecution of this case for two reasons. First, Appellant believes

                                              6
that the Notice of Recusal from the Department of Justice required the entire USAO for

the Eastern District to recuse itself. Second, he argues that the failure of the EDPA

AUSAs to recuse themselves constituted structural error that undermined confidence in

the proceeding. We review the District Court’s refusal to dismiss Appellant’s indictment

for abuse of discretion. United States v. Bryant, 655 F.3d 232, 238 (3d Cir. 2011).

       We find Appellant’s arguments entirely unsupported. The Notice of Recusal

assigned the case to Paul Fishman, the United States Attorney for the District of New

Jersey, but explicitly empowered Fishman to allow attorneys from Memeger’s office to

prosecute the case under his supervision. That is exactly what happened here. Nor did

Young v. United States ex rel. Vuitton et Fils S.A., 481 U.S. 787 (1987), require recusal.

In that case, a plurality of the Supreme Court held that an attorney cannot simultaneously

represent a private client in a civil matter and prosecute his adversary for contempt

arising from that litigation. Id. at 809. Here, by contrast, Memeger had ceased

representing Merrill Lynch when he assumed office, and he played no role in the

prosecution.

       Accordingly, the District Court did not abuse its discretion in rejecting Appellant’s

motion to dismiss his indictment.

                                             C.

       Appellant asserts that the District Court improperly excluded portions of defense

expert Marico Kohn’s testimony under Federal Rule of Evidence 702. Under that Rule,

which “has a liberal policy of admissibility[,]” an expert witness must qualify as an

expert and proffer relevant and reliable testimony. Pineda v. Ford Motor Co., 520 F.3d

                                             7
237, 243 (3d Cir. 2008) (quoting Kannankeril v. Terminix Int’l, Inc., 128 F.3d 802, 806

(3d Cir. 1997)). We review the District Court’s decision for abuse of discretion. Id.

       Appellant called Kohn as an expert to describe how Merrill Lynch typically

reported transactions to account holders, and to establish that Melissa and David Scripps

had spent money profligately both before and during Appellant’s scheme. According to

Appellant, this testimony would have supported the defense theory that no fraud occurred

because Melissa knew or should have known about her son’s transactions. The District

Court, however, noted the unclear bases for the testimony, and determined that

information about the Scripps’s spending levels before the fraud would distract the jury

from the question of whether the fraud occurred. The District Court thus allowed Kohn

to testify only as to Merrill Lynch’s reporting procedures at the time of the fraud.

       This was not an abuse of discretion. Melissa Scripps’s testimony had already

established her history of extravagant spending, and the District Court was properly

concerned that the additional testimony lacked a reliable foundation and could focus the

jury on Melissa’s lifestyle rather than on Appellant’s legal culpability. Thus, we find that

the District Court acted within its discretion in excluding portions of Kohn’s expert

testimony.

                                             D.

       After trial, the District Court calculated an advisory Guidelines range of 87 to 108

months and sentenced Appellant to 108 months. Appellant asserts that the District Court

failed to consider his mitigation arguments and rendered an unreasonable sentence. We

                                             8
review the procedural and substantive reasonableness of Appellant’s sentence for abuse

of discretion. See United States v. Maurer, 639 F.3d 72, 77 (3d Cir. 2011).

       We first “ensure that the district court committed no significant procedural error in

arriving at its decision.” Id. (quoting United States v. Wise, 515 F.3d 207, 217–18 (3d

Cir. 2008)). Appellant suggests that the District Court ignored his lack of criminal

history, his statistically low risk of recidivism, and the fact that he started a family after

his mother discovered the fraud. The record, however, demonstrates that the District

Court carefully considered each of Appellant’s mitigation arguments at sentencing, as

required under 18 U.S.C. § 3553(a). (App. 531–621.) Therefore, we find no abuse of

discretion or procedural error in this determination.

       Second, we review the substantive reasonableness of Appellant’s sentence.

Maurer, 639 F.3d at 77. After considering Appellant’s arguments for mitigation, the

District Court concluded that Appellant deserved a substantial sentence because he had

stolen money from his vulnerable, autistic uncle, had entirely failed to take responsibility

for his actions, and showed no remorse. (App. at 618–19.) It selected a sentence at the

top of the advisory Guidelines range because it found Appellant’s criminal behavior

egregious, and determined that a substantial sentence would deter similar fraud in the

future. (App. at 618.) We conclude that a 108 month sentence falls within the range of

reasonable sentences in this case, and accordingly we will affirm.1

       1
        Appellant also protests that the Merrill Lynch employees who were separately
prosecuted in connection with this matter received substantially shorter sentences than
Appellant. Unlike Appellant, however, those employees took responsibility for their
crimes and cooperated with the Government. United States v. King, 604 F.3d 125, 145
                                               9
                                             E.

       Finally, Appellant claims that the cumulative effect of the District Court’s errors

substantially prejudiced Appellant, and resulted in reversible constitutional error. United

States v. Hill, 976 F.2d 132, 145 (3d Cir. 1992). Because we have found no individual

error committed by the District Court, we reject this contention.

                                            IV.

       For the foregoing reasons, we will affirm the District Court’s judgment entered on

July 17, 2013.

(3d Cir. 2010). Accordingly, we conclude that the discrepancies were warranted under
18 U.S.C. § 3553(a)(6).
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