Court Opinion

ID: 4403815
Source: CourtListenerOpinion
Date Created: 2019-06-05 22:00:21.784253+00
Date Added: 2024-06-11T14:24:21.701029
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
No. 18‐1216

UNITED STATES OF AMERICA,
                                                 Plaintiff‐Appellee,

                                v.

JOHN BUNCICH,
                                             Defendant‐Appellant.

        Appeal from the United States District Court for the
          Northern District of Indiana, Hammond Division.
       No. 2:16‐cr‐00161‐JTM‐JEM‐1 — James T. Moody, Judge.

      ARGUED MARCH 26, 2019 — DECIDED JUNE 5, 2019

   Before BAUER, ROVNER, and BRENNAN, Circuit Judges.
   BAUER, Circuit Judge. John Buncich was the Sheriff of Lake
County, Indiana. He was charged by a grand jury with five
counts of wire fraud and one count of accepting bribes. He was
found guilty on all six counts. For the reasons that follow, we
vacate his conviction on Counts I‐III, affirm as to Counts IV‐VI,
and remand for resentencing.
2                                                         No. 18‐1216

                         BACKGROUND
    John Buncich was elected Sheriff of Lake County, Indiana,
and took office on January 1, 2011. He named Timothy Downs
his Chief of Police, the highest ranking officer under the sheriff.
The sheriff was responsible for providing the county police
with towing services. Buncich created a list of twelve tow
operators and assigned each to a defined territory. Some
operators were assigned to specific police units and some were
responsible for completing certain assignments such as heavy
towing—the towing of semi trucks and other large vehicles.
Buncich was the final decision maker regarding territories and
assignments.
    Buncich held an annual campaign fundraiser called
“Summer Fest” and directed Downs and other subordinates to
sell tickets to the event. Towing companies were specifically
targeted by the individuals selling tickets.1 Downs collected the
ticket sales revenue and gave it to Buncich; he testified that he
would not have kept his job if he refused to sell tickets.
   The county’s second largest tower was Willie Szarmach of
CSA Towing. Szarmach and CSA contributed to Buncich to
ensure a spot on the tow list. During the campaign Szarmach
gave $500 cash to Buncich through an intermediary and CSA
gave the campaign a check for $2,000, the maximum allowed
by Indiana law. (Szarmach also gave cash above that limit.)
After the election, Buncich assigned Szarmach light and heavy

1
   When Buncich was elected the Lake County Democratic Chairman in
2014, he also instructed Downs to sell tickets to Democratic party fund‐
raisers.
No. 18‐1216                                                    3

towing territories near Gary, Indiana. CSA was assigned gang
unit towing shortly after Szarmach gave $1,000 cash to
Buncich; CSA was also given towing territory assigned to other
companies whose owners either paid only by check or declined
to buy tickets entirely.
    Scott Jurgensen, who owned Samson Relocation & Towing,
was assigned the auto theft towing detail. About five months
after Samson began towing, Downs approached Jurgensen
about making payments. The two largest towers told Jurgen‐
sen they were paying off Buncich.
    On April 8, 2014, Jurgensen met with Downs at a restau‐
rant. (Unbeknownst to Downs, Jurgensen had become a
confidential informant for the FBI.) Jurgensen told Downs he
would pay “five hundred cash, two thousand dollar check like
I did last time.” He asked Downs if he could get a rival com‐
pany’s territory for another $2,500. Downs told him everything
was “fair game” after the upcoming Democratic primary in
May. Jurgensen gave him a check and cash; Downs said that he
would“still need more after May.”
    In June, Jurgensen and Szarmach met with Downs and
expressed an interest in increasing their territory. They asked
if Buncich was planning on “trim[ming] down the flock.”
Downs said “some people that weren’t very friendly [will]
probably bite the dust,” but they would likely have to wait
until after the November election to get more of the auto detail.
Szarmach said he could provide $10,000 with no paper trail.
   The trio met again on October 8, 2014, when Downs told
Jurgensen he was selling Democratic fundraiser tickets. Downs
said he did not “like to pressure anybody into anything” and
4                                                  No. 18‐1216

that a purchase “don’t gotta be big.” He also said he no longer
sold tickets to S & S, another towing company, because he
believed its owner tried to record him.
    The next day Downs informed Jurgensen and Szarmach
that Buncich had decided to take all heavy towing away from
S & S and give it to Szarmach. He also showed them fundraiser
tickets that Buncich was “real interested in” and they agreed to
pay $2,500. On October 14, 2014, Jurgensen and Szarmach each
gave Downs $500 cash and a check for $2,000 made out to the
Lake County Central Democratic Committee. When they asked
how much the county’s largest tower, Jerry Kundich had paid,
Downs said that Kundich dealt with Buncich directly.
    Buncich sent out an email regarding “CSA’s newly revised
towing district” on June 1, 2015. Two days later Jurgensen
provided Downs with $2,500 cash for twenty‐five tickets to
Buncichs’s campaign fundraiser. He asked if he would be “safe
and left alone on the Lake County tow list” and Downs
assured he would be until Downs himself ran for sheriff. After
the meeting Downs was confronted by FBI agents and agreed
to cooperate with the investigation.
   A few days later Downs met with Szarmach and Kundich
who each gave him $2,500 cash. On July 15, 2015, Downs gave
$7,500 he had collected from Jurgensen, Szarmach, and
Kundich to Buncich. When Downs asked Buncich about
Jurgensen he responded that he “don’t have to worry about
nothing.”
    In March 2016, Buncich met Jurgensen and Szarmach at the
Delta Restaurant. Szarmach desired a newly available towing
assignment related to Gary ordinance enforcement. Buncich
No. 18‐1216                                                   5

said he was removing one of their competitors, DC Towing,
from the list and that “[y]ou take care of your friends.”
    On April 22, 2016, Jurgensen and Szarmach paid Buncich
for the Gary towing assignment. The men parked their trucks
at Delta. After Buncich pulled into the parking lot Szarmach
stepped out of his truck and left the door open with $3,500 cash
resting on the driver’s seat. He asked Buncich, “Did you see
my new truck?” and Buncich took the envelope off the seat.
Jurgensen, less theatrically, handed Buncich an envelope with
$2,500, which he pocketed. During lunch, Szarmach asked
Buncich for a towing assignment with the Indiana University
Northwest campus police. Buncich agreed and Szarmach was
later informed that he was on the University tow list.
   Jurgensen and Szarmach complained that the officer in
charge of Gary code enforcement, Niko Zairis, had not called
in many tows. Buncich told them they did not have to pay the
county a $50 franchise fee on tows; Szarmach responded that
not paying the fee would allow for more “sponsorship.”
   On July 21, 2016, the trio once again met at Delta where
Jurgensen gave Buncich $2,500 cash. Buncich asked if they
wanted any tickets; Szarmach asked for 25 and Jurgensen
declined. Szarmach said he would also give Buncich a $1,000
check and $2,500 cash at the fundraiser. Szarmach asked what
Buncich could do for Jurgensen in the New Chicago territory,
which Jurgensen shared with Tow Central. Tow Central was
soon removed from the New Chicago towing list, leaving the
entire territory to Jurgensen. The trio also discussed replacing
Zairis. Buncich addressed the money problem by assigning an
6                                                 No. 18‐1216

officer to spend five days a week searching for cars to tow in
Gary.
    On September 2, 2016, Jurgensen met Buncich at Delta. He
gave Buncich $7,500 cash and asked him to ensure that he
remained the sole tow company on the New Chicago list.
Buncich pocketed the envelope and said, “We’ll make it work.
You got it.” Buncich asked Jurgensen to “do 500ʺ for a
fundraiser for Indiana gubernatorial candidate John Gregg and
to not say anything to Szarmach about the meeting.
   On October 20, 2016, Buncich met with Jurgensen and
Szarmach to sell them tickets to a Democratic fundraiser. When
they said they were going to “do the right thing” Buncich said
he was “gonna cut down the numbers here, the firms.”
    In November 2016 the FBI searched Buncich’s home and
office, and Szarmach’s business locations. Agents found four
used and thirteen unused money bands in denominations of
$1,000, $2,000 and $5,000.
    Buncich was charged and convicted of five counts of wire
fraud pursuant to 18 U.S.C. § 1343 and § 1346. Counts I‐III
relied on “Federal Reserve payroll funds transfer[s]” dated
May 5, 2014, November 17, 2014, and August 10, 2015. Counts
IV and V relied on JP Morgan Chase wire transfers dated
April 8, 2014, and October 21, 2014. The Chase wire transfers
correspond to the two $2,000 checks paid by Jurgensen.
Buncich was also convicted in Count VI, of bribery in violation
of 18 U.S.C. § 666(a)(1)(B). The indictment stated that Buncich
had deprived Lake County of the $50 franchise fees for the
Gary ordinance tows.
No. 18‐1216                                                   7

    Buncich argues on appeal that the government failed to
introduce sufficient evidence to convict on the five wire fraud
counts. Buncich also argues that the district court erred in
admitting Exhibit 49.2, a chart showing $58,100 in cash
deposits into Buncich’s jointly‐held bank account. Buncich also
appeals admission of the testimony of IRS Agent Gerard
Hatagan in laying a foundation for the chart and testifying that
deposits with no explained source were likely from criminal
activity.
   A. Honest Services Wire Fraud
       1. Legal Standard
    We will reverse a conviction only where the record, viewed
in the light most favorable to the government, is “devoid of
evidence from which a reasonable jury could find guilt beyond
a reasonable doubt.” United States v. Durham, 645 F.3d 883,
892 (7th Cir. 2011), cert. denied, 132 S. Ct. 1537 (2012). To
establish wire fraud under 18 U.S.C. § 1343, the government
must prove the defendant (1) participated in a scheme to
defraud, (2) intended to defraud, and (3) used interstate wires
in furtherance of the fraud. United States v. Sheneman, 682 F.3d
623, 628 (7th Cir. 2012) citing United States v. Green, 648 F.3d
569, 577–78 (7th Cir. 2011). An honest services fraud scheme
covers only bribery or kickbacks. United States v Hawkins, 777
F.3d 880, 882 (7th Cir. 2015). To prevail, the government must
show that the bribe in question “entail[ed] a plan to change
how the employee or agent does his job.” Id.
8                                                     No. 18‐1216

       2. Analysis
    Both parties agree the evidence presented to the trial court
failed to establish the wire transfers that were the basis of
Counts I‐III. Buncich’s conviction on Counts I–III is hereby
reversed.
    Sufficient evidence, however, supports Buncich’s wire
fraud convictions on Count IV and Count V. Buncich argues
that the wire transfers dated April 8, 2014, and October 21,
2014, were not proven to be “anything more than a campaign
contribution.” On the contrary, from the record here a rational
jury could conclude that these payments were made to Buncich
in exchange for official acts. “The exchange of an official act for
money violates federal law, no matter how the recipient uses
the cash.” United States v. Smith, 816 F.3d 479, 480 (7th Cir.
2016).
    Jurgensen testified that donating to the Buncich campaign
was necessary to maintain his towing assignments. After
Jurgensen gave the check in April 2014, Buncich assured
Downs that Jurgensen “don’t have to worry about nothing.”
Other towing companies who failed to buy their full allotment
of campaign tickets had territory taken away.
    Downs told Jurgensen and Szarmach that Buncich intended
to remove towing companies and that those who “weren’t very
friendly” would “probably bite the dust.” Szarmach and
Jurgensen gave Downs $1,000 cash plus checks including the
one described in Count V. Buncich then moved the heavy tow
boundary, increasing Szarmach’s tows and the profits of both
men.
No. 18‐1216                                                    9

    The jury concluded that the April 2014 check was a quid
pro quo bribe for maintaining Jurgensen’s territory. It also
concluded that the October 2014 check was given in exchange
for expanding the heavy tow boundary for Szarmach. These
conclusions were rationally based on the evidence presented,
and the guilty verdict is affirmed as to Counts IV and V.
   B. Rule 404(b) Evidence
       1. Legal Standard
    Rule 404(b) excludes evidence of other crimes, wrongs, or
acts if the purpose is to show a personʹs propensity to behave
in a certain way, but other‐act evidence may be admitted for
“another purpose” including, but not limited to, “proving
motive, opportunity, intent, preparation, plan, knowledge,
identity, absence of mistake, or lack of accident.” United States
v. Gomez, 763 F.3d 845, 855 (7th Cir. 2014) (en banc). The Rule
excludes evidence if its relevance to “another purpose” is
established only through the forbidden propensity inference.
Id. at 856. The admission must be supported by some
“propensity‐free chain of reasoning.” Id. The district court
“should not just ask whether the proposed other‐act evidence is
relevant to a non‐propensity purpose but how exactly the
evidence is relevant to that purpose—or more specifically, how
the evidence is relevant without relying on a propensity
inference.” Id.
   If the proponent demonstrates that the evidence is relevant
to a legitimate purpose, the district court must then use
Rule 403 to determine “whether the probative value of the
other‐act evidence is substantially outweighed by the risk of
unfair prejudice,” taking into account “the extent to which the
10                                                     No. 18‐1216

non‐propensity fact for which the evidence is offered actually
is at issue in the case.” United States v. Brewer, 915 F.3d 408, 415
(7th Cir. 2019).
    We review Rule 404(b) decisions for an abuse of discretion.
United States v. Norweathers, 895 F.3d 485, 490 (7th Cir. 2018)
(citing United States v. Schmitt, 770 F.3d 524, 532 (7th Cir. 2014)).
Under this standard we will defer to the district court “unless
no reasonable person could adopt its view.” Id. Even if we
make such a finding, reversal is only warranted “if the average
juror would find the prosecutionʹs case significantly less
persuasive without the improper evidence.” Id.
       2. Analysis
    Exhibit 49.2 was a chart showing that $58,100 in cash was
deposited into Buncich’s jointly‐held account between April
2014 and September 2016. Agent Hatagan laid a foundation for
the admission of the exhibit. Hatagan also reviewed Buncich’s
income and concluded that the source of the cash was illegal
activity—Hatagan could not find any legitimate source for the
cash.
    The district court initially denied the government’s motion
to admit Exhibit 49.2. The court concluded that the deposits
into Buncich’s account were too “remote in time, that they
can’t possibly bear any relevance to the alleged bribes” and
“the amounts vary too wildly from the alleged bribes to be
probative.” The court also noted that “the danger of unfair
prejudice to the Defendant and the danger of misleading the
jury and causing them to speculate and concern themselves
with matters unrelated to this case, [is] just too great for me to
admit it.” The court then limited the allowed evidence to those
No. 18‐1216                                                   11

deposits related to the $26,000 paid by Jurgensen and
Szarmach between April 8, 2014, and September 22, 2016.
    Buncich took the stand in his own defense. He denied ever
taking bribes and claimed that Downs never gave him cash
from Jurgensen or Szarmach. He also denied taking the $3,500
off the seat of Szarmach’s truck. The government filed a new
motion to admit Exhibit 49.2, seeking to introduce the chart to
rebut Buncich’s testimony regarding how he handled pay‐
ments. The court granted the government’s motion and
admitted Exhibit 49.2 into evidence.
    Unexplained wealth evidence is admissible where (1) the
evidence presented creates an inference that the defendant was
involved with the crime; (2) the unexplained wealth was
acquired during the period in which the crime allegedly
occurred; and (3) the government presents other evidence to
support the charge, including evidence that the income was
not obtained through legitimate means. United States v.
Cardena, 842 F.3d 959, 983 (7th Cir. 2016). Relying on a series
of cases mostly involving large scale drug conspiracies, the
district court concluded that “large unexplained amounts of
cash are indicative of criminal activity.” See United States v.
Hogan, 886 F.2d 1497 (7th Cir. 1989), United States v. Penny, 60
F.3d 1257 (7th Cir. 1995), United States v. Harris, 536 F.3d 798,
811 (7th Cir. 2008). The court concluded that “the highly
probative value of this evidence for purposes of rebutting the
defendant’s self‐described practices regarding his handling of
cash is not outweighed by any danger of unfair prejudice to the
defendant.” We disagree.
12                                                 No. 18‐1216

    The prejudice substantially outweighed the probative value
of the exhibit, particularly when considered in conjunction
with Hatagan’s testimony that money in the account was
derived from illegal sources. The government presented no
evidence that the money in excess of the $26,000 described in
the indictment was an illicit gain from criminal activity. We
required such evidence in Cardena and it is of particular
importance here where the account at issue is a joint bank
account. As the deposits shown in the chart were well in excess
of the amount of bribes Buncich was charged with, the exhibit
and Hatagan’s testimony were propensity evidence not
submitted for any purpose permitted by Rule 404(b).
   The court’s mistake in admitting Exhibit 49.2 and Agent
Hatagan’s testimony was, however, harmless. “The test for
harmless error is whether, in the mind of the average juror, the
prosecutionʹs case would have been significantly less
persuasive had the improper evidence been excluded.” United
States v. Stewart, 902 F.3d 664, 683 (7th Cir. 2018) (citations
omitted). The other evidence presented to the jury was
extensive. Buncich was videotaped receiving large cash
payments from Jurgensen and Szarmach. He subsequently
increased Szarmach’s heavy towing territory and directed his
personnel to increase the amount of tows made under the
“Gary ordinance towing” unit for the benefit of Jurgensen and
Szarmach. Campaign records showed that the checks were
deposited into campaign accounts, while the cash payments
were not.
    Buncich’s explanations were not persuasive. He claimed he
did not take the cash out of Szarmach’s truck, but only leaned
in to inspect it. Buncich claimed the $7,500 he received from
No. 18‐1216                                                   13

Jurgensen was actually an improperly documented campaign
loan repayment, but other loan repayments were meticulously
documented. Buncich also claimed that another $2,500 was
paid by Jurgensen as a campaign donation, but that the cash
payment was deposited in separate transactions with Jurgen‐
sen listed as an “anonymous” donor. The jury rejected these
explanations. Determinations of a witnessʹs credibility are to be
made by the jury, and “we will not … second‐guess the juryʹs
credibility determinations.” United States v. Lawson, 810 F.3d
1032, 1039 (7th Cir. 2016) .
    The cash payments documented in Exhibit 49.2 and the
testimony of Agent Hatagan would not have significantly
altered the weight given to the rest of the evidence, nor would
it have changed the mind of the average juror. The other
evidence presented was sufficient to support the jury’s guilty
verdict.
                       CONCLUSION
    The district court’s error in the admission of the Rule
404(b) evidence was harmless, and the jury’s guilty verdicts on
Counts IV‐VI are affirmed. The jury’s guilty verdicts on
Counts I‐III are reversed, and the case is remanded for further
action consistent with this opinion.