Court Opinion

ID: 72611
Source: CourtListenerOpinion
Date Created: 2010-04-26 07:37:10+00
Date Added: 2024-06-11T09:39:17.489084
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PUBLISH

               IN THE UNITED STATES COURT OF APPEALS

                      FOR THE ELEVENTH CIRCUIT

                 _____________________________________

                              No. 96-8780
                 _____________________________________

                        D. C. Docket No. 3:94-CR-5

UNITED STATES OF AMERICA,

                                                 Plaintiff-Appellee,
     versus

GEORGE CONDON, SAMUEL WILLIAM BRAWNER,

                                                 Defendants-Appellants.

                 ______________________________________

                 Appeals from the United States District Court
                     for the Northern District of Georgia
                 _______________________________________

                             (January 8, 1998)

Before EDMONDSON and HULL, Circuit Judges, and CLARK, Senior Circuit Judge.
PER CURIAM:

      Defendants-appellants        George

Condon   and   Samuel   William   Brawner

appeal from jury convictions for making

false statements to the Small Business

Administration (“SBA”), in violation of 15

U.S.C. § 645(a), and conspiracy to do the

same. Because none of Defendants’ issues

merits reversal, we affirm.

               Background

                    2
   In 1989 Defendants became involved in

a real estate deal.       Defendant Condon

(“Condon”) agreed to sell land and a building

to Defendant Brawner (“Brawner”), on

which   Brawner    intended   to   operate   a

restaurant.   The two were assisted in the

transaction by Condon’s attorney, Marc

Acree (“Acree”).

   To finance the purchase, Brawner was

relying on a loan -- of which 85% would be

guaranteed by the SBA.     In the process of

                      3
finalizing the involvement of the SBA,

both     Condon        and       Brawner         signed

documents             and       made         certain

representations -- some of which later

turned     out   to   be    false.     The   relevant

statements       included       the   amount     to   be

personally invested by Brawner (a down

payment and working capital); the amount

actually    paid      to   Condon      as    a    down

payment; the manner in which some of

the funds were to be used; and the terms of

                            4
repayment on an additional construction

loan (loaned to Brawner by a third party).

   As   it   turned   out,   Brawner   never

invested his own funds in the restaurant,

but instead borrowed the money necessary

both to acquire and to run the restaurant

-- contrary to the representations made

by Brawner and Condon to the SBA.        The

restaurant suffered financially and was

destroyed by fire soon after it opened.

Brawner was charged with arson, making

                      5
false   statements       to    the   SBA    (and

conspiracy), insurance fraud, and mail

fraud   (related   to   his   transmission      of

documents to the SBA through the mail).

Condon was charged only with making false

statements to the SBA and conspiracy.

   Defendants were tried together.          Both

Defendants were found guilty of making

false   statements      to    the   SBA   and   of

conspiracy to defraud the SBA with these

                        6
statements. They appeal their convictions

                      1
on several grounds.

   Both Defendants challenge the district

court’s jury instructions for failure to

    1
     Brawner argued on appeal that the
district court erred in its determination
of the amount of restitution that should be
paid by Brawner. But, the failure to raise
this issue in the district court makes it an
improper claim in this court.       FDIC v.
Verex Assurance, Inc., 3 F.3d 391, 395 (11th
Cir. 1993) (court will generally not consider
on appeal issues not raised before the
district court). Thus, we do not discuss that
issue.   We also find Brawner’s sufficiency
of the evidence claim to lack merit and do
not address that issue in this opinion.

                          7
include an instruction that materiality

was an element of the offense under 15

U.S.C.   §   645(a).      In   addition,   Condon

challenges the district court’s decision to

give no jury instruction about good faith

reliance on the advice of counsel; and he

challenges the district court’s failure to

sever his trial from Brawner’s.

                       Discussion

                           8
I.   Materiality

     Defendants argue that the failure to

include materiality as an element under

15 U.S.C. § 645(a) requires reversal of their

convictions for making false statements

to the SBA.     Whether materiality is an

element of 15 U.S.C. § 645(a) is a question of

law, which we review de novo.       See United

States v. De Castro, 113 F.3d 176, 178 (11th Cir.

1997).

                       9
   In United States v. Wells, 117 S.Ct. 921

(1997), we believe the Supreme Court has

effectively guided us.       In Wells, the Court

addressed the issue of whether 18 U.S.C. § 1014

-- prohibiting false statements made to

federally    insured    banks     --   included   a

materiality element.         The Court concluded

that materiality was no element under

section 1014.   Id. at 923.

   Section       1014    contains        language

substantially similar to the language in

                        10
the statute underlying this prosecution, 15

U.S.C. § 645(a).   Compare 18 U.S.C. § 1014:

   Whoever knowingly makes any false
   statement            or       report     .   .   .   for   the
   purpose of influencing in any way the
   action    of     .   .    .   any    institution           the
   accounts of which are insured by the
   Federal Deposit Insurance Corporation
   . . . shall be . . . imprisoned not more
   than 30 years . . . . (emphasis added);

with 15 U.S.C. § 645(a):

   Whoever         makes              any   statement
   knowing it to be false, . . . for the
   purpose of influencing in any way
   the action of the [Small Business]
   Administration . . . shall be punished
   . . . by imprisonment for not more
   than two years . . . . (emphasis added).

                                 11
   The language of section 1014 played a big

part in the Supreme Court’s conclusion

that materiality was no element for that

statute:

   Nowhere does [section 1014] say that
   a material fact must be the subject
   of the false statement or so much
   as mention materiality.                  To the
   contrary,     its    terms       cover    ‘any’
   false   statement         that    meets     the
   other requirements in the statute,
   and     the   term    ‘false     statement’
   carries no general suggestion of
   influential significance.

Wells, 117 S.Ct. at 927 (footnote omitted)

(citation omitted) (emphasis added).            “Nor

have respondents come close to showing

                        12
that   at    common         law    the   term    ‘false

statement’ acquired any implication of

materiality that came with it into § 1014.”

Id.    The Court finished by noting that

Congress was fully able to be clear when

materiality was an element of a crime,

because     other    statutory      sections     about

false statements are explicit in their

requirement of materiality. Id. at 928 &

n.11; see also 18 U.S.C. § 1621 (prohibiting

statements          under        oath    about     “any

material     matter     which       [one]   does   not

                            13
believe    to    be     true”);     18   U.S.C.    §   1001

(prohibiting       “knowingly            and      willfully

falsif[ying] . . . a material fact”).

   The same observations made by the

Court in Wells apply to the statute in this

case, 15 U.S.C. § 645(a).         Section 645(a) also

fails     to    mention            materiality         and

expressly prohibits “any” false statements

made to the SBA.

   After       Wells,   we        examined        another

statute for a materiality element. See De

                             14
Castro, 113 F.3d 176 (determining whether

materiality is element of 18 U.S.C. § 1010).

We decided that section 1010 also includes no

materiality             element.            Again,     that

section’s       language         is    similar    to      the

                                        2
language in section 645(a).

 2
  Section 1010 provides that:
     Whoever,           for     the     purpose      of
     obtaining any loan . . . from any
     person . . . with the intent that such
     loan   .   .   .   shall   be    offered   to   or
     accepted       by    the        Department      of
     Housing and Urban Development for
     insurance . . . or for the purpose of
     influencing in any way the action
     of such Department, makes, passes,

                                15
   Because of the similarities among 15

U.S.C. § 645(a) and 18 U.S.C. §§ 1010 and 1040,

and in the light of Wells and De Castro, we

conclude   that    section      645(a)   does   not

include the element of materiality. So, the

district   court’s    instruction         on    the

elements      of   the        offense    was    not

erroneous.

   utters, or publishes any statement,
   knowing the same to be false . . .
   shall be fined . . . or imprisoned . . .,
   or both.
18 U.S.C. § 1010 (emphasis added).

                         16
II.     Advice of Counsel Instruction

      Condon argues that the district court

erred when it failed to instruct the jury

about his claim of good-faith reliance on

the advice of his counsel.            We review a

district court’s refusal to give a requested

jury instruction for abuse of discretion.

United States v. Wescott, 83 F.3d 1354, 1357

(11th   Cir.   1996).   There   was   no   abuse   of

                          17
discretion    in     this   case:    no     such

instruction was required.

     To be entitled to a good-faith reliance

instruction, a defendant must show that (1)

he fully disclosed all material facts to his

attorney; and (2) he relied in good faith

on advice given by his attorney.            See

United States v. Johnson, 730 F.2d 683, 686

(11th Cir. 1984). “[A]n instruction should not

be given if it lacks evidentiary support or

is    based   upon     mere     suspicion    or

                       18
speculation.” United States v. Lindo, 18 F.3d

353, 356 (6th Cir. 1994) (citation omitted).

   Condon    failed   to    introduce   evidence

that he fully disclosed all material facts to

his attorney, Acree, or that he acted in

good faith reliance on the advice of Acree.

At the trial, neither Condon nor Brawner

testified. Thus, the only evidence about the

relationship between the Defendants and

Acree   came   from    the    attorney’s    own

testimony.

                       19
     Condon and Brawner came to Acree

for assistance with the sale of Condon’s

property to Brawner.         Acree had never

before   represented       either   Defendant.

Acree told Defendants that he “did not

handle SBA loans,” had no experience with

the SBA and knew nothing about SBA loans.

It    was   Acree’s   understanding       that

Brawner -- it was Brawner’s SBA loan --

was dealing with the SBA “directly” and

that Acree “was not going to be doing the

                      20
SBA    loan.”             Acree,     however,      agreed      to

represent Condon, as the seller, in the sale

of   the    land:         “preparing        the   documents

necessary         .   .    .   to    be   able    to   sell   the

property,” to draft “a sales contract,” “to

find out who owned the property,” “to find

out the description of the property,” and

the like.

     During this representation of Condon,

Acree       was       told      something         about       the

Defendants’ dealings with the SBA.                            But,

                                    21
Acree testified that he was never told that

Condon received none of the $100,000 down

payment    that   was   required   (the   down

payment was represented to the SBA as

having been paid):

   I believed that Mr. Condon had at
   the time of the . . . closing received
   $50,000 from Samuel Brawner.           I
   also believed that Mr. Brawner had
   gotten $100,000 or thereabouts from
   [a] relative, which had -- part of it
   had remained with Mr. Condon and
   part of it paid back to Mr. Brawner
   [for working capital as required by
   the SBA and the lender].

                     22
      Acree also testified that he -- in the

presence      of   Defendants      --   reviewed   a

letter from Brawner’s lender to Brawner

in which it was written that “Mr. Condon

had    been   paid   $100,000     and   he   was   to

refund    back     $50,000   to   Mr.    Brawner.”

Again, nobody mentioned to Acree that the

$100,000 had not actually been paid.           That

Condon never received a down payment

and, thus, Brawner never invested -- or

put at risk -- his own funds went to the

                        23
heart of the misrepresentations made by

Condon to the SBA.      The record shows that

material    facts      related    to   Condon’s

misrepresentations were not disclosed to

Condon’s attorney.

   Condon has never contended that his

attorney    actually    told     him   that   the

$100,000 misrepresentation was lawful:

Condon says he should be able to rely on

Acree’s silence on the subject.    In addition

to his failing to disclose the pertinent

                       24
facts to Acree, Condon has failed to point

us to evidence in the record which could

support the idea that reliance on Acree’s

silence was reasonable and in good faith.

   Three weak points face us.     First, in

claiming that he relied on the silence of

an expert, Condon must have evidenced

that he could reasonably believe Acree to be

an expert in the area of SBA financing.

This means the record needs to show it was

                    25
reasonable for Condon to view Acree as

such    an     expert,    even    given        Acree’s

uncontroverted           testimony       that       both

Defendants knew that Acree did not do SBA

loans. Second, the record scarcely supports

the    conclusion        that   Acree’s      duty    of

representation of Condon extended to the

SBA     loan    to   Brawner.         And,   Condon’s

reliance would have been on the lawyer’s

silence about a subject which, at best, was

on     the   periphery     of   the    scope   of    his

                          26
representation.         Third, Condon does not

dispute    that    he   was    never      paid   the

necessary $100,000 down payment; yet, he

wishes to claim good faith reliance on

advice (or, more correctly, on the lack of

an advisory warning) that lying about

this simple fact would not be unlawful. We

have      said    before   that    reliance      on

approving        advice    about   such    obvious

dishonesty “would clearly be outside of the

‘good faith’ prong of the expert advice

                          27
defense.”     Johnson, 730 F.2d at 687 n.3.

Considering these points, the record will

not support that Condon’s reliance on the

lawyer’s silence was reasonable and in

              3
good faith.

     3
      Although the district court did not
instruct the jury about good faith reliance
on   the advice of counsel, the court did
include an instruction on good faith in
general: “[G]ood faith is a complete defense
to the charges in the indictment since good
faith on the part of the defendant is
inconsistent with intent to defraud or
willfulness       .   .   .    .”        The    district    court
adequately        addressed               the     concepts     of
willfulness       and         good       faith.    In      closing
argument,             Condon’s             trial     attorney

                                    28
      “Thus, since the record failed to show

adequate     evidentiary           support       for   the

instruction,       the    district       court   did   not

abuse its discretion in refraining from

charging the jury on advice of counsel.”

United States v. Durnin, 632 F.2d 1297, 1301

(5th Cir. 1980) (“[T]here is no evidence in

addressed the possibility that Condon may
have     relied,   in     good    faith,    on    Acree’s
silence. “So, the jury essentially considered
the    defense     of    good    faith    [reliance    on
advice of counsel] and rejected it when it
found [Condon] guilty.”            United States v.
Walker, 26 F.3d 108, 110 (11th Cir. 1994).

                           29
the record that [defendant] either sought

the advice of counsel, personally received

advice after full disclosure, or followed the

advice in good faith.”); see also Lindo, 18 F.3d

          4
at 357.

    4
       Condon argues that he did introduce
sufficient evidence for the instruction. He
points us to Acree’s admission that he
may have failed Condon in his duty to
prevent Condon from engaging in illegal
activity.     But, this conclusory testimony
does    not   support   the   contention   that
Acree was made aware of all material
facts of the transaction so that Condon
could have in good faith relied on Acree’s
failure to spot and then to inform Condon
of the illegality. That Acree now feels badly

                        30
III.    Severance

      Condon claims that his trial should have

been severed from Brawner’s, because of

the disparity in the charges against them:

only Brawner was charged with arson-

related offenses.         Condon chiefly argues

about what happened does not show that he
had    the   duty   --   given   the   scope    of   his
representation -- to do everything possible
to protect Condon from Condon’s own acts
and omissions about the SBA loan. Thus, the
evidence relied upon by Condon does not
demand       an     instruction    on    good    faith
reliance on the advice of counsel.

                           31
that   Brawner’s    defense   to   the   arson

charges -- that other persons had better

motives to have set the fire -- prejudiced

Condon.     We review the district court’s

refusal to sever the Defendants’ trials for

abuse of discretion. United States v. Cross,

928 F.2d 1030, 1037 (11th Cir. 1991) (citation

omitted).

   Condon’s main point is based on the

closing argument by Brawner’s attorney.

The relevant portion of that argument

                     32
stated   that    “there’s     going   to   be   some

money left over from the insurance if the

building burned down to the ground; and

this   money,     I     would   suggest    to     you,

certainly one person it could have gone to

is Mr. Condon.”       This statement came in

the middle of a discussion of several other

persons who could have burned down the

restaurant      and     of   persons   who      had   a

financial       stake    in     the    restaurant.

Brawner’s counsel continued by saying,

                         33
“I’m not suggesting -- we’re not trying to

prove that any particular person burned

that restaurant.      We are just trying to

show you there’s lots of reasonable doubt

that   Mr.    Brawner       did;   and     only   Mr.

Brawner is on trial for that . . . .”

   To be entitled to severance, and to

overcome the presumption that jointly

indicted     defendants     be     tried   together,

Condon       must   show     actual,     compelling

prejudice.    See United States v. Gonzalez,

                       34
940 F.2d 1413, 1428 (11th Cir. 1991); United

States v. Castillo-Valencia, 917 F.2d 494,

498-99 (11th Cir. 1990).        Condon argues that

such prejudice can be found in Brawner’s

                           5
closing      argument.                 But,   limiting

 Condon also argues that he was prejudiced
 5

by the inability to introduce evidence that
he was misled by Brawner about the loans.
But    in    the   light   of    the    overwhelming
evidence against Condon in this case, the
absence of this evidence cannot amount
to    compelling     prejudice.          Much   of   the
evidence Condon claimed was improperly
excluded went to his defense that Brawner
misled      him    about   the    contents      of   the
documents they both signed. Some evidence
to that fact was admitted, but the district

                           35
instructions       were       given      about      the

importance of applying evidence of the

arson charge only to Brawner.                Limiting

instructions of this kind are presumed to

protect against prejudice in joint trials.

Gonzalez, 940 F.2d at 1428.

court excluded testimony that Brawner had
later   told   people   that    he    used   the   loan
money “to take trips, to pay for his wife’s
tuition, [and] to go to Georgia football
games.”        None     of    this    evidence     was
exculpatory      for    Condon,        and    Condon
presented no defense that was mutually
exclusive of Brawner’s.              Thus, severance
was not required.            Cf. Zafiro v. United
States, 113 S.Ct. 933 (1993).

                         36
      The cautionary instructions given by

the    district    court    in   this    regard   were

adequate.      And, the trial was distinctly

separated into two segments: the portion

for the false-statement charges and the

portion against Brawner for arson and

mail fraud.       At several points during the

trial, the court explained that evidence

admitted for the purpose of proving the

arson,    or      other    charges      pending   only

against Brawner, was not to be used in

                           37
the    consideration          of    Condon’s      guilt    or

innocence. For example, before the arson

portion of the trial the court told that jury

that:

            Mr. Sam Brawner is charged in
      this case with arson . . . in addition
      to the conspiracy in making false
      statements         concerning         the   S.B.A.
      loan.
            On the other hand, Mr. George
      Condon        is    charged      only       with
      conspiracy         to   make    and    making
      false statements to the S.B.A., and is
      not charged with any of the arson-
      related charges.
            Now, you have already heard and
      you     are   about      to    hear    further
      evidence       regarding        the     arson-

                              38
related charges.          This evidence is
admitted         solely    against           Mr.
Brawner and is not admitted and
should not be considered by you in
any    respect     with    regard       to   Mr.
Condon.     It is your duty to give
separate            and          personal
consideration to the case of each
individual defendant.
   When      you     do    so,    you    should
analyze what the evidence in the
case   shows     with     respect   to       that
individual defendant, leaving out of
consideration             entirely           any
evidence admitted solely against the
other defendant.
   In     this   case,    the    evidence      of
alleged arson and insurance fraud
should not be considered at all for
any purpose against Mr. Condon.

                     39
At    the    trial’s    end,   the   district      court

further explained the proper use of the

evidence        of      arson        in     its     jury

instructions:

        In certain instances, evidence
     may be admitted only concerning a
     particular      party     or    only   for     a
     particular         purpose       and         not
     generally against all parties or for
     all purposes.
        For    example,        you   have    heard
     substantial evidence regarding a
     fire at the restaurant involved in
     this case and the cause of this fire.
     The government contends that Mr.
     Brawner      is    responsible       for     this
     fire.        Mr.      Brawner          denies
     responsibility.

                          40
            Mr. Condon is not charged with
      responsibility for this fire.         None
      of the evidence received concerning
      the    fire   is   admissible   as   to   Mr.
      Condon and should not be considered
      by you in any respect in deciding
      the charges against Mr. Condon.

      These instructions are good enough; and

the     instructions,            along     with       the

overwhelming evidence against Condon,

demonstrate that no compelling prejudice

was suffered by Condon as a result of the

joint trial.

                            41
               Conclusion

   Because we find no reversible errors

in the trial of either Condon or Brawner,

we affirm their convictions.

   AFFIRMED.

                   42