Court Opinion

ID: 182543
Source: CourtListenerOpinion
Date Created: 2011-01-10 20:48:21+00
Date Added: 2024-06-11T17:26:00.062783
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 09-4704

UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

           v.

RICHARD ADOLPHUS FORDE, a/k/a Euburn Richard A. Forde,

                Defendant - Appellant.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.     Anthony J. Trenga,
District Judge. (1:08-cr-00401-AJT-1)

Argued:   October 27, 2010                 Decided:   January 10, 2011

Before TRAXLER, Chief Judge, DAVIS, Circuit Judge, and Damon J.
KEITH, Senior Circuit Judge of the United States Court of
Appeals for the Sixth Circuit, sitting by designation.

Affirmed by unpublished per curiam opinion.

ARGUED: Elita C. Amato, Arlington, Virginia, for Appellant.
Thomas Higgins McQuillan, OFFICE OF THE UNITED STATES ATTORNEY,
Alexandria, Virginia, for Appellee. ON BRIEF: Neil H. MacBride,
United States Attorney, Alexandria, Virginia, for Appellee.

Unpublished opinions are not binding precedent in this circuit.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

       Richard Adolphus Forde was convicted of bankruptcy fraud,

see 18 U.S.C.A. § 157 (West Supp. 2010); conspiracy to commit

bankruptcy fraud, see 18 U.S.C.A. § 371 (West 2000); and bank

fraud,    see   18   U.S.C.A.    §   1344      (West   2000).     Forde   appeals,

raising    various    challenges      to       his   convictions.       Finding   no

reversible error, we affirm.

                                        I.

       Viewed in the light most favorable to the government, the

evidence presented at trial established the following.                      In the

fall of 2001, Forde was facing substantial financial problems

and was on the verge of losing his multi-million-dollar home

through foreclosure.         Forde and his wife filed a Chapter 11

bankruptcy petition, and Forde also began working with mortgage

broker David Freelander to try to refinance his mortgage.                     When

it became clear that refinancing would not be possible, Forde

began seeking a buyer for his house.

       Forde contacted Allodean Allobaidy, a real estate broker

who had previously expressed interest in buying the house.                    When

Allobaidy told Forde that he could not afford the house (which

Forde said was worth more than $2 million), Forde responded,

“Don’t worry about it.          I do have someone who could help you out

with   that.”        J.A.   525.      Forde,         Allobaidy,   and   Freelander

                                           2
thereafter began discussions about Allobaidy buying the house.

During the course of the negotiations, Allobaidy made it clear

to Forde and Freelander that he would not qualify for a mortgage

loan, that he would not make a down payment, that he would not

make    any    mortgage    payments,      and     that    he       should    receive    a

commission for the sale of the house.                    The parties ultimately

came up with a deal, and Allobaidy and Forde signed a contract

for the sale of the property.

       The    contract,    which    was        drafted    by       Leslie    Lickstein,

Forde’s       bankruptcy    attorney,          listed    the        sales      price   as

$5,495,000,      and   required     from       Allobaidy       a    down    payment    of

$450,000; a conventional loan in the amount of $3,846,500, to be

secured by a first mortgage; and a promissory note payable to

Forde in the amount of $1,099,000, to be secured by a second

mortgage.      An addendum to the contract established what can only

be described as a “slush fund,” providing that approximately

$700,000 of funds that Forde would receive at closing would be

placed in a separate account as a “move-in and fix-up allowance”

for Allobaidy.         J.A. 1326.       Allobaidy testified, however, that

the real purpose of the slush fund was to provide funds with

which the first-mortgage payments would be made.                       Allobaidy also

testified      that,   despite    the   terms      of    the       contract,    everyone

involved in the transaction knew and agreed that he would not be

                                           3
making any down payment, mortgage payments, or payments on the

promissory note.

      Lickstein submitted the sales contract to the bankruptcy

court    and   obtained   approval         for   the   sale     of   Forde’s     house.

Lickstein testified that the down-payment and the seller-held

promissory note were very important terms of the contract from

the   bankruptcy     perspective      because      the    down-payment       and     the

payments to be made under the note would be available to Forde’s

creditors.

      Freelander     worked    to    obtain      the    first    mortgage      through

Lehman    Brothers     Bank.         Allobaidy         testified      that     he    and

Freelander, with Forde’s knowledge, provided Lehman with false

documents      and   false     information        to    make     Allobaidy       appear

qualified for the loan.             Among the documents that Freelander

submitted to Lehman was the sales contract.                      Before submitting

the contract to Lehman, however, Freelander removed the addendum

that established the slush fund, telling Forde and Allobaidy

that Lehman probably would not approve the loan if it knew about

the slush fund.

      Lehman approved the loan to Allobaidy, and the sale closed

on June 28, 2002, in Lickstein’s office.                        The terms of the

contract had changed by the time of closing, calling for a sales

price    of    $5,995,000;     a    down    payment      of    $550,000;     a      first

mortgage in the amount of $3,896,750; and a promissory note from

                                           4
Allobaidy in the amount of $1,498,750.                 The slush fund provided

for in the addendum was reduced from the original $700,000 to

just over $477,000.

       The HUD-1 closing statement, which was signed by Forde,

Forde’s wife, and Allobaidy, showed a down payment of $550,000,

even   though    no    down    payment    was     in   fact   made.     The   HUD-1

statement also showed that a portion of the mortgage proceeds

($539,000) was used to satisfy a lien filed against the property

by Isaac Archibald in connection with a loan Archibald made to

Forde.     The   government’s        evidence,     however,    established      that

there had never been a loan from Archibald to Forde and that the

Archibald lien had actually been filed against the property by

Lickstein at Forde’s direction.               After closing, Lickstein wired

the $539,000 into an account controlled by Freelander, who in

turn   paid   out     some    of   the   funds    in   accordance     with   Forde’s

directions and used some of the funds for his own benefit.                      The

money for the slush fund was initially maintained in Lickstein’s

escrow    account.            At   Forde’s       direction,    Lickstein      later

transferred the funds to a brokerage account in Forde’s name.

       Forde and his wife remained in the house after the sale.

Allobaidy never took possession of the house, and Forde never

paid him rent.        Payments on the Lehman first mortgage were made

from the slush fund for a period of time, but the slush fund

eventually ran out and the mortgage went into default.

                                          5
      In November 2002, the bankruptcy court converted Forde’s

Chapter 11 proceeding to a Chapter 7 proceeding.                        The Chapter 7

trustee     began   looking        into    the     sale   of   Forde’s       house    and

ultimately filed a civil action against Forde to recover for the

benefit of Forde’s creditors the monies Forde received from the

sale of the house.           Counsel for the trustee sought to depose

Forde, Freelander, and Allobaidy (among others), and the three

men   met   to    discuss     how    the     depositions       should    be    handled.

Freelander asked Allobaidy to lie and say that he had made the

down payment.       Allobaidy in fact did testify at his deposition

that he had made the down payment.

      Forde      later   brought          Barton    Gold,      who    had     solicited

investors     for   Forde’s    online       business      Tutornet.com,       into    the

scheme,     convincing      Gold    to     sign    back-dated,       false    documents

showing that the $539,000 Archibald loan had actually been made

by Gold and only guaranteed by Archibald.                       At the deposition

conducted on behalf of the bankruptcy trustee, Forde offered up

the Gold/Archibald story and documents to explain the $539,000

distribution made at closing.                   Gold later gave similar false

testimony in his own deposition.

      The   bankruptcy      trustee’s       investigation       into    the    sale    of

Forde’s house ultimately led to the filing of criminal charges

against Forde, Freelander, Lickstein, and Allobaidy.                         Freelander

pleaded guilty to charges of bank fraud and bankruptcy fraud;

                                            6
Lickstein and Allobaidy pleaded guilty to conspiracy to commit

bank    fraud.        Forde        proceeded           to    trial,     and       Freelander,

Lickstein, and Allobaidy all testified against him.                                    The jury

convicted Forde of bank fraud, bankruptcy fraud, and conspiracy

to commit bankruptcy fraud.                  The district court sentenced Forde

to 42 months’ imprisonment.              This appeal followed.

                                             II.

       Forde first contends that the evidence was insufficient to

support the conviction for bank fraud.                       “A defendant challenging

the sufficiency of the evidence faces a heavy burden, because

the    jury’s     verdict    must       be    upheld         on    appeal        if    there    is

substantial       evidence    in       the    record        to    support    it.”         United

States v. Young, 609 F.3d 348, 355 (4th Cir. 2010) (citation and

internal quotation marks omitted).                      “Our review is thus limited

to determining whether, viewing the evidence and the reasonable

inferences to be drawn therefrom in the light most favorable to

the government, the evidence adduced at trial could support any

rational    determination          of   guilty         beyond     a   reasonable         doubt.”

Id. (internal quotation marks and alteration omitted).

       Section     1344    imposes       criminal           penalties       on    anyone       who

“knowingly       executes,        or    attempts        to       execute,     a       scheme   or

artifice”    in    order     to    “defraud        a    financial       institution,”           18

U.S.C.A. § 1344(1), or to “obtain any of the moneys, funds,

                                              7
credits,        assets,    securities,          or     other    property     owned    by,    or

under the custody or control of, a financial institution, by

means      of    false    or    fraudulent           pretenses,      representations,        or

promises,” id. § 1344(2).                  As to § 1344(1), Forde contends that

it   was    Freelander         who    concocted        and     executed     the    scheme    to

defraud Lehman.            According to Forde, “[i]t was Freelander who

dealt with the bank, knew what they required and made decisions

of   how    to    conform      with       the   bank’s       requirements.”         Brief    of

Appellant at 15.           With regard to § 1344(2), Forde contends that

he, personally, did not make any false statements to Lehman,

because it was Freelander, not Forde, who provided the false

information and documents to Lehman.                           While Forde acknowledges

that Freelander told him about the problems that the slush fund

addendum could cause if the bank knew about it, Forde insists

that it was Freelander, “not Mr. Forde[,] who either made the

decisions that something should be handled a certain way or that

documents should not be provided to the bank or information not

revealed.”        Id.     We find these arguments unpersuasive.

      Preliminarily,           we     note      that    while       Forde    may   not     have

personally submitted any documents to Lehman, he certainly made

false      representations           in    documents         that    he     knew   would    be

provided to Lehman -- Forde signed the sales contract, which

called for a down payment by Allobaidy and payments by Allobaidy

under a promissory note that the parties to the contract knew

                                                 8
would   never      be   made;   and   Forde    signed      the    HUD-1   statement,

which, among other things, showed the down payment as having

been made.         Even assuming that this conduct somehow does not

amount to the making of false representations within the meaning

of § 1344(2), the government’s evidence was more than enough to

support Forde’s conviction under § 1344(1).

       “The        government      need       not         offer      evidence     of

misrepresentations or a disclosure duty to prove a violation of

§ 1344.”       United States v. Colton, 231 F.3d 890, 907 (4th Cir.

2000); see United States v. Celesia, 945 F.2d 756, 758 (4th Cir.

1991) (“[O]ne may commit a bank fraud under Section 1344(1) by

defrauding a financial institution, without making the false or

fraudulent promises required by Section 1344(2).”).                         “What is

essential is proof of a ‘scheme or artifice to defraud,’ which

can be shown by deceptive acts or contrivances intended to hide

information, mislead, avoid suspicion, or avert further inquiry

into a material matter.”           Colton, 231 F.3d at 901.

       The    government’s      evidence      was    certainly       sufficient   to

establish the existence of a scheme to defraud Lehman -- the

parties induced Lehman to make the loan by lying about a down

payment and by concealing the existence of the slush fund, facts

that    a    Lehman     employee   testified     were      material    to   Lehman’s

decision      to   make   the   loan.      See      id.   at   901   (“[A]ctive   or

elaborate steps to conceal information can constitute” a scheme

                                          9
to    defraud.     (internal           quotation          marks        omitted)).        The

government’s evidence was likewise sufficient to establish that

Forde was at least as involved as Freelander in hatching and

executing that scheme to defraud.                     Although Forde insists that

Freelander       came     up     with    the        scheme        to    defraud      Lehman,

Allobaidy’s testimony alone would have been enough for the jury

to    conclude     that        Forde    was        responsible         for   the    scheme.

Moreover, the government’s evidence established that Forde and

Freelander controlled the mortgage proceeds that were used to

“satisfy” the fictitious Archibald lien.                      At Forde’s direction,

the Archibald proceeds were wired to a bank account controlled

by Freelander, a portion of which were later wired to a bank

account belonging to Forde’s then brother-in-law, to keep the

money out of Forde’s bankruptcy estate and thus out of the reach

of    his   creditors.          The    slush       fund    proceeds       were     similarly

transferred to a brokerage account belonging to Forde.                              Because

the evidence showed that Forde and Freelander both controlled

and    received    the     benefit      of     these       misappropriated          mortgage

funds, the jury reasonably could have concluded that Forde and

Freelander both conceived and executed the scheme to defraud

Lehman.     We therefore conclude that the evidence was more than

sufficient to support Forde’s conviction for bank fraud. 1

       1
       Given our disposition of this claim, it is unnecessary for
(Continued)
                                              10
                                             III.

       Materiality is an element of bank fraud.                             See Neder v.

United States, 527 U.S. 1, 25 (1999); Colton, 231 F.3d at 903

n.5.    The district court instructed the jury that the government

was required to prove the materiality of the representations

made    to   Lehman    or       the     information         concealed       from    Lehman,

defining “material fact” as “a fact that would be of importance

to a reasonable person in making a decision about a particular

matter or transaction.”               J.A. 1225-26.          Forde argues on appeal,

however, that the district court’s definition of materiality was

insufficient     because        it     did    not     include    language          from    the

Supreme Court’s decision in Neder generally defining a material

statement as one that “has a natural tendency to influence, or

is capable of influencing, the decision of the decisionmaking

body   to    which    it    was       addressed.”           Neder,    527    U.S.     at     16

(internal     quotation         marks    and        alteration       omitted).            Forde

further argues that the instruction as given “in essence took

away   the   element       of   materiality,”         and    that    he     was    therefore

deprived of his Sixth Amendment right to a jury determination of

us to consider the government’s alternate argument that Forde’s
bank fraud conviction can be sustained because Forde caused
Freelander to commit bank fraud.    See 18 U.S.C.A. § 2(b) (West
2000) (“Whoever willfully causes an act to be done which if
directly performed by him or another would be an offense against
the United States, is punishable as a principal.”).

                                              11
each element of the bank fraud charge.                       Brief of Appellant at

25.     Because Forde did not object to the jury instruction below,

we review his claims for plain error only.

      We see no significant difference between the instruction

sought by Forde and the instruction given, because a fact that

would    be    important     when       making    a   decision     would     likewise    be

capable       of   influencing      a    decision.          See    Preston    v.   United

States, 312 F.3d 959, 961 & n.3 (8th Cir. 2002) (per curiam)

(concluding        that   instructions       defining       “material      fact”   as    “a

fact that would be important to a reasonable person in deciding

whether to engage or not to engage in a particular transaction”

were “consistent with those reaffirmed by the Supreme Court in

Neder”     (internal        quotation       marks        omitted)).        Because      the

instructions        as    given   “fairly        state[d]    the    controlling      law,”

United States v. McQueen, 445 F.3d 757, 759 (4th Cir. 2006)

(internal quotation marks and alterations omitted), there was no

error,    plain      or    otherwise,       in     the    court’s     instructions       on

materiality.         See United States v. Heppner, 519 F.3d 744, 749

(8th Cir. 2008) (finding no error in jury instruction defining

“material fact” as “a fact which would be of importance to a

reasonable person making a decision about a particular matter or

transaction” (internal quotation marks omitted)).

                                            12
                                       IV.

       Forde next argues that the district court erred when it

stated, at the end of the instructions to the jury, that the

jury’s sole function “is to seek the truth from the evidence

received during the trial.”          J.A. 1233.      According to Forde, the

seek-the-truth         statement      negated       the     otherwise        proper

reasonable-doubt       instructions    by     permitting    jurors     to   convict

simply   because   they    believed     him    to   be    guilty,   even     if   the

jurors also thought that the government had not actually proved

Forde’s guilt beyond a reasonable doubt.

       Because   the    seek-the-truth       language     was   included     in   the

jury   charges   that    Forde     himself    sought,     see   J.A.   72,    Forde

arguably has waived the right to even seek review of the issue.

See United States v. Quinn, 359 F.3d 666, 674-75 (4th Cir. 2004)

(“[T]he record shows . . . that the district court’s instruction

on this issue was precisely the instruction that they requested.

. . . [A]ny error committed by the district court in giving this

instruction was invited error and is not subject to review.”).

In any event, the district court repeatedly informed the jury

that Forde was presumed innocent, and the court mentioned the

requirement that the government must prove Forde’s guilt beyond

a   reasonable     doubt     more     than      twenty     times     during       its

instructions.      Under    these     circumstances,       we   cannot      conclude

that the single seek-the-truth reference, which the court made

                                       13
in the course of admonishing individual jurors not to surrender

their honest convictions, negated or undermined the otherwise

proper   reasonable-doubt             instructions     or    otherwise      amounted   to

error.       See United States v. Gonzalez-Balderas, 11 F.3d 1218,

1223 (5th Cir. 1994) (“There is no reasonable likelihood that

the jury inferred that the single reference at the end of the

charge to ‘seeking the truth,’ rendered as it was in the context

of an admonition to ‘not give up your honest beliefs,’ modified

the reasonable doubt burden of proof.”).

                                             V.

       As previously mentioned, the Chapter 7 bankruptcy trustee

investigated        the    sale    of   Forde’s     house     and    brought     a   civil

action against Forde to recover funds associated with the sale

of the house.            That action ended with Forde signing a consent

judgment     obligating         him    to   pay   $800,000.         The    attorney    who

represented         the     bankruptcy       trustee        testified       at   Forde’s

criminal         trial    and     briefly    mentioned       the    $800,000     consent

judgment in his testimony.

       On appeal, Forde claims the testimony about the consent

decree violated Rule 408 of the Federal Rules of Evidence.                             See

Fed.   R.    Evid.       408(a)    (prohibiting       evidence      of    compromise   or

offers      to    compromise       “when    offered    to    prove       liability    for,

invalidity of, or amount of a claim that was disputed as to

                                             14
validity or amount, or to impeach through a prior inconsistent

statement or contradiction”).                  Forde also claims that even if

testimony about the consent judgment was proper under Rule 408,

the testimony was too prejudicial and therefore should have been

excluded    under    Rule    403.        See    Fed.   R.    Evid.       403    (“Although

relevant, evidence may be excluded if its probative value is

substantially       outweighed      by    the    danger      of    unfair       prejudice,

confusion    of     the     issues,      or     misleading         the    jury,      or   by

considerations       of   undue     delay,       waste      of    time,    or     needless

presentation of cumulative evidence.”).

     We     disagree.         Assuming,         without          deciding,      that      the

admission of the testimony amounted to error under Rule 403 or

Rule 408, any such error would be harmless.                          The government’s

evidence of bankruptcy fraud was exceptionally strong, and the

testimony about the consent judgment was minimal.                               Moreover,

counsel for Forde during cross-examination established that the

bankruptcy    proceedings       were      civil    and      governed      by     a   lesser

burden of proof.          Under these circumstances, we think it clear

that the jury’s verdict was not “substantially swayed” by any

error in admitting the evidence of the consent judgment.                             United

States v. Heater, 63 F.3d 311, 325 (4th Cir. 1995) (“[I]n order

to find a district court’s error harmless, we need only be able

to say with fair assurance, after pondering all that happened

without stripping the erroneous action from the whole, that the

                                           15
judgment was not substantially swayed by the error.” (internal

quotation marks omitted)).

                                 VI.

     Finally, Forde contends that the district court erred by

rejecting his post-verdict claims of juror misconduct.               In a

post-trial motion, Forde informed the district court that while

the trial was proceeding, a friend of the husband of the jury

foreperson posted on Twitter an explanation of the difference

between “assume” and “presume.” 2      Ford contended that, since the

posting occurred during trial, it was possible that the jury

foreperson had talked to her husband about the case, her husband

then talked to his friend about the case, the friend then posted

the statement on Twitter, and the foreperson saw the Twitter

posting.   Forde thus requested that the district court hold a

hearing to investigate the potential misconduct.              The district

court denied the request.

     On appeal, Forde contends that the district court erred by

denying the requested hearing.        We disagree.    A district court

is   obligated     to   investigate    colorable     claims     of   juror

misconduct.      See, e.g., Smith v. Phillips, 455 U.S. 209, 215

     2
       The posting stated, “assume: suppose to be the case,
without proof; presume: suppose that something is the case on
the basis of probability.” J.A. 1423.

                                  16
(1982)       (“This       Court       has     long     held       that   the        remedy    for

allegations         of    juror       partiality       is    a    hearing      in    which    the

defendant has the opportunity to prove actual bias.”); id. at

217 (“Due process means a jury capable and willing to decide the

case solely on the evidence before it, and a trial judge ever

watchful to prevent prejudicial occurrences and to determine the

effect       of     such           occurrences        when        they   happen.             Such

determinations may properly be made at a [post-trial] hearing .

. . .”).          However, “[t]he duty to investigate arises only when

the    party      alleging         misconduct        makes    an    adequate        showing   of

extrinsic         influence          to     overcome        the    presumption        of     jury

impartiality.            In other words, there must be something more than

mere speculation.”             United States v. Barshov, 733 F.2d 842, 851

(11th Cir. 1984) (citation omitted); accord United States v.

Vitale, 459 F.3d 190, 197 (2d Cir. 2006) (“[A] trial court is

required       to   hold       a    post-trial       jury     hearing     when       reasonable

grounds for investigation exist.                      Reasonable grounds are present

when there is clear, strong, substantial and incontrovertible

evidence,         that     a       specific,     nonspeculative           impropriety         has

occurred which could have prejudiced the trial of a defendant.”

(citation         and    internal         quotation     marks       omitted)).          Forde’s

string of possibilities about the origin of the Twitter posting

--    that    the       foreperson        possibly     talked       to   her   husband,       who

possibly talked to his friend, who possibly took to Twitter in

                                                17
response to what the husband possibly told him -- is nothing but

speculation and thus falls far short of establishing reasonable

grounds for investigation.            The district court therefore did not

err by denying Forde’s request for an evidentiary hearing to

investigate his claim.

     Forde     also     contends      that      the    district       court   erred    by

denying his post-verdict request for the issuance of subpoenas

directed to various internet service providers.                          Forde claims

that his business websites were viewed during the trial, and

that the subpoenas were necessary “to assess whether any of the

twelve   jurors    were    the      ones   who     had     accessed    the    sites   and

searched his name.”        Brief of Appellant at 40.               This argument is

utterly without merit, as it is even more speculative and less

grounded in fact than his other claim of juror misconduct.                            The

district   court       committed     no    error      by   refusing     to    issue   the

subpoenas necessary for Forde’s fishing expedition.

                                           VII.

     Because      we    find   no    reversible          error,   we    hereby   affirm

Forde’s convictions and sentence.

                                                                               AFFIRMED

                                           18