Court Opinion

ID: 618164
Source: CourtListenerOpinion
Date Created: 2011-12-01 20:52:55+00
Date Added: 2024-06-11T17:50:43.497421
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 10-4732

UNITED STATES OF AMERICA,

                Plaintiff – Appellee,

           v.

MICHAEL DERRICK PENINGER,

                Defendant – Appellant.

Appeal from the United States District Court for the District of
South Carolina, at Charleston.    Patrick Michael Duffy, Senior
District Judge. (2:09-cr-00034-PMD-1)

Argued:   October 28, 2011               Decided:   December 1, 2011

Before GREGORY, SHEDD, and DAVIS, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Thomas Aull Withers, Sr., GILLEN, WITHERS & LAKE, LLC,
Savannah, Georgia, for Appellant.   Michael Rhett DeHart, OFFICE
OF THE UNITED STATES ATTORNEY, Charleston, South Carolina, for
Appellee. ON BRIEF: William N. Nettles, United States Attorney,
Columbia, South Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.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

      A federal jury found that Michael Derrick Peninger operated

a    fraudulent     investment        and    commodity      trading    scheme    and,

accordingly, convicted him of eight counts of mail fraud, in

violation of 18 U.S.C. § 1341 and 18 U.S.C. § 2, and one count

of making a false statement to a federal officer, in violation

of 18 U.S.C. § 1001.            Peninger absconded prior to sentencing,

but he was eventually apprehended and sentenced to 240 months

imprisonment       and    3   years     supervised       release.       On   appeal,

Peninger   raises        numerous   issues       regarding    his   conviction   and

sentence, and, considering each argument in turn, we affirm. 1

                                            I.

      We first consider Peninger’s contention that the district

court abused its discretion in granting the Government’s motion

in   limine   to    exclude     testimony        by   Dr.    Leonard   Mulbry,   the

psychiatrist who performed Peninger’s pretrial competency exam.

See United States v. Iskander, 407 F.3d 232, 238 (4th Cir. 2005)

      1
       Peninger raises a total of nine issues.    In addition to
the four addressed herein, Peninger also challenges the denial
of a motion for continuance; the limiting of his cross-
examination of a witness; and the denial of his motion for a new
trial based upon newly discovered evidence.        Peninger also
challenges the procedural reasonableness of his sentence and
contends that the Assistant United States Attorney’s opening
remarks constituted prosecutorial misconduct.   We have reviewed
each of these contentions and find them to be without merit.

                                            2
(noting that we review exclusion of expert testimony for abuse

of discretion).         In a pretrial proffer, Dr. Mulbry testified

that    because    of     Peninger’s     severe    narcissistic           personality

disorder, many of the fraudulent statements attributed to him

were “most likely due to his mental illness,” rather than an

intent to defraud.        (J.A. 119).        The district court excluded the

testimony, concluding that it was “simply diminished capacity

evidence or some other form of justification in disguise,” and

that “[t]he fact that [Peninger’s condition] may motivate that

behavior in some way . . . does not negate the specific intent

of doing it.”      (J.A. 129).

       We   conclude    that   the     district   court    did      not    abuse    its

discretion    in   excluding     the    testimony.        In   United      States    v.

Worrell,     313   F.3d    867   (4th     Cir.    2002),       we   addressed       the

admission of diminished capacity testimony in cases, such as

this, where the defendant was not pursuing an insanity defense.

We started with a discussion of the Insanity Defense Reform Act

(IDRA), which provides:

       (a) Affirmative defense.-It is an affirmative defense
       to a prosecution under any Federal statute that, at
       the time of the commission of the acts constituting
       the offense, the defendant, as a result of a severe
       mental disease or defect, was unable to appreciate the
       nature and quality or the wrongfulness of his acts.
       Mental disease or defect does not otherwise constitute
       a defense.

                                         3
       (b) Burden of proof.-The defendant has the burden of
       proving   the  defense  of  insanity  by  clear  and
       convincing evidence.

18 U.S.C.A. § 17.             As we explained, “[t]he language of the

statute leaves no room for a defense that raises ‘any form of

legal    excuse       based   upon    one’s     lack    of    volitional    control’

including ‘a diminished ability or failure to reflect adequately

upon the consequences or nature of one’s actions.’”                         Worrell,

313 F.3d at 872 (quoting United States v. Cameron, 907 F.2d

1051, 1061 (11th Cir. 1990).

       Applying Worrell, we conclude the district court was within

its discretion to exclude Dr. Mulbry’s testimony.                     The evidence

of Peninger’s mental illness did not negate the specific intent

to    defraud   his     victims.      In    Worrell,    we    suggested    testimony

might be admissible if it was being offered “to show he did not

do it, not that he could not help it.”                         Id. at 874.          Dr.

Mulbry’s testimony falls short of this standard because it does

not suggest that Peninger did not defraud his victims or mean to

defraud them.         As the district court noted, the testimony is the

very    type     of    “volitional”        evidence     Worrell    and     the   IDRA

prohibit—a suggestion for why he committed fraud or why he could

not    help    himself    commit     fraud.      As    we    succinctly    stated   in

Worrell, “IDRA bars a defendant who is not pursuing an insanity

defense from offering evidence of his lack of volitional control

as an alternative defense.”            Id. at 875.

                                            4
                                        II.

       Next, Peninger contends that the district court abused its

discretion    in    admitting       certain    bank   records    through   an   FBI

agent.     See United States v. Blake, 571 F.3d 331, 346 (4th Cir.

2009) (noting that a district court’s evidentiary rulings are

reviewed for abuse of discretion).                At trial, the Government’s

case    agent,     Agent    Derr,    compared    the    investment     statements

Peninger issued to his investors with the investors’ actual bank

records.     This comparison illustrated that Peninger sent false

statements to his investors, claiming their accounts had much

more money than they actually did.                    Agent Derr received the

actual bank statements by way of subpoena.                Peninger objected to

the admission of these statements, arguing that someone had to

“lay a foundation as to who received it, where it came from.”

The    district    court    overruled    the    objections,      concluding     that

anything received from a grand jury subpoena could be admitted

through Agent Derr.

       Peninger now argues that the bank statements are hearsay

not subject to Federal Rule of Evidence 803(6), the business

records    exception.        Peninger,    however,      failed    to   raise    this

objection below.           Instead, as noted above, Peninger asserted

only the Government’s duty to authenticate the evidence and the

agent’s lack of personal knowledge regarding it.

                                         5
      Because       Peninger    failed       to    specifically      object     on    the

grounds    raised     on    appeal,    we    review     this   argument     for      plain

error.     See Fed. R. Crim. P. 52(b).                 Peninger cannot meet this

rigorous standard.          In this appeal, the Government has filed a

supplemental appendix noting that, before trial, the Government

attorneys and Peninger’s counsel communicated by email that the

records would be admitted under Federal Rule of Evidence 902(11)

and   that    the     Government      made       the   records     and    the   written

documents authenticating them available at the pretrial exhibit

conference.     Certification under Rule 902(11) obviates the need

for the Government to authenticate business records at trial and

permitted the bank records admission under Rule 803(6).                                See

Fed. R. Evid. 902(11) (noting business records are admissible

without authentication at trial if accompanied “by a written

declaration     of     [the]    custodian         or   other     qualified      person”

attesting    that     the    records    satisfy        the   requirements       of    Rule

803(6)).

                                         III.

      Peninger also challenges the district court’s decision to

permit the testimony of Kara Mucha, a trading investigator with

the   Commodities       Futures       Trading      Commission      (CFTC).           Mucha

testified    regarding       trading     logs      that   showed    the    numbers     of

commodity     futures       Peninger     was      trading.       These     logs      were

obtained by subpoena from other commodity futures trading firms.

                                             6
The purpose of this testimony was to show that Peninger traded

far   fewer   commodity       futures     than    he   told    his    investors    and

clients.

      Peninger objected that Mucha’s testimony was hearsay, an

objection     which    the    district     court    overruled        after   it   asked

several questions to lay a foundation.                 Mucha told the district

court that the documents were records maintained by companies at

the direction of the CFTC, that the companies maintained the

documents as business records, and that the companies had to

forward these trading documents to the CFTC upon request.                         Mucha

did not testify, however, as to how these individual trading

firms maintained the records.             The Government also noted that it

had offered Peninger the opportunity to review these records

months before trial, but Peninger had declined to do so.

      The Government contends that Mucha’s testimony was properly

admissible     under    Rule        803(6).       Peninger    argues     that     these

documents do not meet the requirements of 803(6) because Mucha

was neither the “custodian” of the trading logs nor a “qualified

witness.”      Courts        have    recognized     that     “[a]    foundation    for

admissibility may at times be predicated on judicial notice of

the nature of the business and the nature of the records as

observed by the court, particularly in the case of bank and

similar statements.”           Federal Deposit Ins. Corp. v. Staudinger,

797 F.2d 908, 910 (10th Cir. 1986) (internal quotation marks

                                              7
omitted).      Thus, records and testimony are admissible if there

are sufficient “circumstances demonstrating the trustworthiness

of the documents.”          United States v. Johnson, 971 F.2d 562, 571

(10th Cir. 1992).        Applying this rationale in Johnson, the Tenth

Circuit      found   admissible      bank       receipts    that    showed      certain

transactions between investors and the criminal defendants.                           The

court noted:

      There is simply no dispute that the transactions shown
      by the receipts took place as recorded.       As noted
      above, bank records are particularly suitable for
      admission under Rule 803(6) in light of the fastidious
      nature of record keeping in financial institutions,
      which is often required by governmental regulation.

Id.

      Like    banks,     commodity      futures     trading      firms    are    highly

regulated by the federal government, and in this case there are

sufficient “circumstances demonstrating the trustworthiness of

the documents” to permit Mucha’s testimony.

      Moreover,      even    assuming       this    testimony      was    erroneously

admitted     under   Rule     803(6),    any       error   is    harmless       for   two

reasons.      First, courts have found that erroneous Rule 803(6)

rulings are harmless when the evidence was otherwise admissible

under Rule 807, the catchall provision.                     See Karme v. C.I.R.,

673 F.2d 1062, 1064-65 (9th Cir. 1982); United States v. Jacobs,

No. 94-5055, 1995 WL 434827, *2 (4th Cir. 1995) (unpublished)

(noting      incorrect      admission    of      evidence       under    Rule    803(6)

                                            8
harmless when evidence was “both material and probative and the

interests of justice were well served by their admission” and

“nothing in the record . . . suggest[s] that the documents were

other than what they purported to be”).

       Second,       Mucha’s   testimony        regarding       Peninger’s    trading

records was largely duplicative of evidence presented by the FBI

that       indicated    only   $60,000     of     the    $7.2     million    Peninger

obtained      from     investors   was    ever     transferred         to   investment

companies for trading.          (J.A. 564-65).          Mucha actually testified

to a higher volume of trades, and her testimony in some regards

benefitted       Peninger’s     contention        that    he     was    trading   his

investors’ money. 2

                                         IV.

       Peninger      also   contends     that    the    district    court     violated

Federal Rule of Criminal Procedure 32(h) 3 by failing to provide

notice of an upward departure.                   Sentencing in this case was

       2
        The Government accounts for this discrepancy by noting
that Mucha’s records included trades by another individual named
Michael Peninger, who was unrelated to this investigation.
     3
       Rule 32(h) provides:
     Before the court may depart from the applicable
     sentencing range on a ground not identified for
     departure either in the presentence report or in a
     party’s prehearing submission, the court must give the
     parties reasonable notice that it is contemplating
     such a departure. The notice must specify any ground
     on which the court is contemplating a departure.

Fed. R. Crim. P. 32(h).

                                          9
scheduled for April 10, 2010.                     On that morning, in lieu of

reporting to court, Peninger absconded, remaining a fugitive for

more than one week.                After his capture, sentencing was set for

June 25, 2010.            Prior to this sentencing hearing, the Government

filed a motion for a two-level upward departure for obstruction

of justice.         The Government’s motion stated that “the Government

moves for a 2-level upward departure to account for [Peninger’s]

failure      to    appear     at    sentencing.”      (J.A.   949).       The   motion

recounted         that    Peninger     “already    received   an   enhancement     for

obstruction of justice when he was convicted of lying to the

FBI,”       and    that     Peninger    “obstructed     justice    again    when   he

committed perjury at trial.”                (J.A. 948-49).     At sentencing, the

Government         argued     that     an   upward   departure     was    appropriate

because Peninger committed perjury during trial and because he

absconded.           The     district       court,   concerned     with    punishing

Peninger for absconding when the Government had already filed a

new indictment against him for that offense, decided to apply an

upward departure because of Peninger’s perjured testimony. 4

        On appeal, the Government argues that its motion can be

fairly read to request an upward departure on both Peninger’s

        4
       The Presentence Report (PSR) recommended, and the district
court adopted, a two-level enhancement for obstruction of
justice for Peninger’s conviction for making a false statement
to the FBI. This upward departure was in addition to that two-
level enhancement.

                                             10
absconding and his trial testimony.             At sentencing, the district

court indicated that it read the Government’s motion to present

both arguments, but Peninger contends that the motion, fairly

read, only requests an upward departure for absconding.

     Even   assuming       the   Government’s    motion   failed   to    provide

proper notice, we believe any error is harmless.                     See United

States v. Davenport, 445 F.3d 366, 371 (4th Cir. 2006) (noting

Rule 32(h) errors can be harmless), overruled in part on other

grounds by Irizarry v. United States, 553 U.S. 708 (2008); Fed.

R. Crim. P. 52(a) (noting “[a]ny error, defect, irregularity, or

variance    that    does    not     affect   substantial    rights      must   be

disregarded”).      The Presentence Report recommended a two-level

enhancement   for    the    false    statement    conviction   and    also     for

Peninger’s numerous instances of perjury during trial.                  Peninger

was therefore on notice that his perjury was going to be used to

enhance his offense level in some way.             Moreover, at sentencing

the district court informed Peninger that it was considering a

departure or additional enhancement for perjury and permitted

Peninger to argue on this point. 5

     5
        This case is thus distinguishable from United States v.
Spring, 305 F.3d 276, 282-83 (4th Cir. 2002), on which Peninger
relies.     In Spring, the district court relied on a ground
presented in the PSR for an upward departure but at sentencing
failed to give the defendant the opportunity to present any
argument. Id. at 279-80.

                                        11
     In any event, we have recently indicated that “it would

make no sense to set aside [a] reasonable sentence and send the

case back to the district court since it has already told us

that it would impose exactly the same sentence, a sentence we

would    be   compelled   to    affirm.”     United    States   v.    Savillon-

Matute, 636 F.3d 119, 123 (4th Cir. 2011) (internal quotation

marks    omitted).        The    district    court     indicated     throughout

sentencing that it believed 240 months was the “appropriate”

sentence,     (J.A.   1034),     and   a    sentence    of   240     months   is

substantively reasonable. 6       See Savillon-Matute, 636 F.3d at 124.

Accordingly, to the extent the district court erred in providing

Rule 32(h) notice, any error is harmless.

                                       V.

     For the foregoing reasons, we affirm the conviction and

sentence.

                                                                       AFFIRMED

     6
       Even assuming we remanded for a violation of Rule 32(h),
the district court would not be prohibited from simply changing
the two-level upward departure into a variance sentence to reach
240 months.

                                       12