Court Opinion

ID: 73445
Source: CourtListenerOpinion
Date Created: 2010-04-26 08:08:38+00
Date Added: 2024-06-11T09:39:51.413293
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PUBLISH

                    IN THE UNITED STATES COURT OF APPEALS

                              FOR THE ELEVENTH CIRCUIT
                                                                           FILED
                                    _______________
                                                    U.S. COURT OF APPEALS
                                  No. 96-4225         ELEVENTH CIRCUIT
                                _______________            2/25/99
                                                       THOMAS K. KAHN
                     D. C. Docket No. 87-6034-CR-HOEVELER CLERK

UNITED STATES OF AMERICA,

                                                                   Plaintiff-Appellee,

                                           versus

DANA SCHEER,

                                                                  Defendant-Appellant.

                         ______________________________

               Appeal from the United States District Court
                   for the Southern District of Florida
                      ______________________________
                                 (February 25, 1999)

Before EDMONDSON and BIRCH, Circuit Judges, and LAWSON*, District
Judge.

       *
        Honorable Hugh Lawson, U. S. District Judge for the Middle District of Georgia, sitting
by designation.
BIRCH, Circuit Judge:

       Dana Scheer appeals his convictions for misapplication of

bank funds, 18 U.S.C. §§ 2 and 657, and making false statements

for the purpose of influencing a financial institution, 18 U.S.C. §§

1014 and 2. Scheer’s trial and convictions arise from his

participation in a series of transactions that culminated in the

insolvency of the Sunrise Savings and Loan Association. In this

appeal, Scheer raises numerous issues concerning the fairness of

his trial, several of which relate to alleged prosecutorial

misconduct. Having reviewed the record with respect to each of

these claims, we conclude that Scheer’s claim regarding

prosecutorial intimidation of a witness sufficiently undermines our

confidence in the integrity of Scheer’s trial and in the verdict to

warrant reversal of Scheer’s convictions and, therefore, remand

this case for a new trial.1

       1
        Because we set aside Scheer’s convictions based on this single issue, we decline to
address the other enumerations of error that Scheer raises on appeal.

                                               2
                         I. BACKGROUND

     The facts surrounding the formation and eventual failure of

Sunrise Savings and Loan Association (“Sunrise”) have been

detailed extensively in several of our prior opinions, see, e.g.,

United States v. Foxman, 87 F.3d 1220 (11th Cir. 1996) and

United States v. Jacoby, 955 F.2d 1527 (11th Cir. 1992). We

briefly summarize the facts and allegations relevant solely to the

charges against Scheer and the specific issues raised in this

appeal: In 1984, the year in which most of the events pertinent to

this action transpired, Scheer worked as an associate at the law

firm of Blank, Rome, Comiskey, and McCauley (“Blank, Rome”).

Scheer’s immediate supervisor at that time was Kenneth

Treadwell, a partner at Blank, Rome. Among his duties as an

attorney, Scheer routinely handled real estate closings on behalf

of Sunrise, which had been founded by another Blank, Rome

partner, Michael Foxman. In 1984, Robert Jacoby was the

president and chairman of the board of directors at Sunrise. Early

                                  3
in that same year, Sunrise’s board of directors entered into a

supervisory agreement with the Federal Savings and Loan

Insurance Corporation (FSLIC) and the Florida Comptroller’s

Office pursuant to which, inter alia, all future Sunrise loans

exceeding a specified amount would require board approval and

“specific supporting documentation demonstrating compliance

with underwriting and credit requirements.” Jacoby, 955 F.2d at

1531.

     William Frederick and Thomas Moye were co-owners of

Commercial Center Development Corporation, a real estate

company that developed commercial properties. Frederick and

Moye began borrowing money from Sunrise in 1980 and, over the

course of the next five years, Sunrise became their exclusive

lending institution. By 1983, Frederick and Moye had fallen

behind substantially on the interest payments on their loans but,

to maintain the appearance that the accounts were current,

obtained additional loans through overdrafts, or unsecured lines of

                                  4
credit, that were approved by individuals within Sunrise. By the

summer of 1984, Sunrise had loaned Frederick, Moye, and their

business concerns over $150 million. At the same time, Sunrise’s

outside auditors discovered that Frederick and Moye’s personal

accounts collectively were overdrawn by more than $4 million. As

a result, the auditors advised Jacoby that, unless the overdrafts

were satisfied by August 30th, the auditors would not certify

Sunrise’s financial statements for that fiscal year. R34 at 2911.

According to testimony adduced at trial, Jacoby, Frederick, and

several other individuals associated with Sunrise2 discussed

various options for eliminating the Frederick and Moye overdrafts.

See R34 at 2913. The participants at the meeting agreed that

Sunrise would extend loans in the amount of $500,0003 to various

       2
        Trial testimony from several witnesses consistently showed the following individuals to
have been present at this meeting: Jacoby; Frederick; William Frame, Sunrise’s executive vice-
president for lending operations and a co-defendant at Scheer’s trial; Joseph Taber, also a
Sunrise executive vice-president; Thomas Skubal, a Sunrise Mortgage Corporation vice-
president; and Ron Berkovitz, a representative from Alpha Capital Group, which arranged
financing for developers. See e.g., R39 at 3579; R34 at 2912.
       3
        According to the government’s theory of the case at trial, setting the amount of the loans
at $500,000.00 or less enabled the various individuals who implemented this plan to circumvent
both the documentation required by the supervisory agreement and the requirement that the loan

                                                5
personal acquaintances or relatives of those attending the

meeting; these borrowers would use the funds to purchase

property from Frederick and Moye, who would in turn use those

proceeds to cover the overdrafts in their accounts with Sunrise.

The borrowers chosen for these transactions were Charles

Powell, an associate of Ron Berkovitz at Alpha Capital Group;

Virginia Valosin, Frederick’s cousin and employee; and Meryl

Wood, Frederick’s yacht broker. According to the testimony of

Taber, at the conclusion of the meeting Jacoby requested that

those present “get it done.” Id. at 2918. It is undisputed that on

August 30th and 31st, Sunrise extended lines of credit for real

estate, guaranteed by Frederick, to Meryl Wood, Charles Powell,

and Virginia Valosin, and that Scheer acted as the closing

attorney for these transactions (“the August 30th transactions”). It

was the government’s contention at trial that the loans to each of

these individuals constituted sham transactions, whereby Powell,

be approved by Sunrise’s board of directors.

                                               6
Wood, and Valosin acted as nominee borrowers to enable

Sunrise to extend further credit (that Sunrise would otherwise be

precluded from extending by virtue of the supervisory agreement)

to Frederick and Moye.

     In addition, the government introduced evidence at trial

demonstrating that, subsequent to the August 30th transactions,

Sunrise purchased from Frederick and Moye a property, referred

to by the parties as “Seawalk,” for $13.5 million. See e.g., R34 at

2957. The government argued at trial that Sunrise purchased

Seawalk for more than its fair market value; that this constituted

another attempt to cover the increasingly delinquent interest

payments accruing in Frederick’s and Moye’s accounts with

Sunrise; and that Scheer facilitated this scheme by acting as

closing attorney on the real estate purchase.

     The government indicted and prosecuted Scheer for thirteen

counts of conspiracy to misapply bank funds, misapplication of

bank funds, and aiding and abetting the making of false

                                 7
statements on a loan application in relation to both the August 30th

and Seawalk transactions. R1 at 436. After a lengthy trial, the jury

convicted Scheer of conspiracy to misapply bank funds, as well as

two counts of misapplication of bank funds and two counts of

aiding the making of false statements in connection with the

extension of credit to Wood and Valosin on August 30th, 1984; the

jury acquitted Scheer of all counts related to the Seawalk

purchase.

     In a post-trial order, the district court set aside the conspiracy

conviction with respect to Scheer (as well as his two co-

defendants) after finding a variance in the indictment and the

proof adduced at trial that substantially prejudiced the defendants.

Specifically, the court determined that the indictment alleged that

part of the conspiracy count involved another savings and loan

institution, referred to by the parties as “Crusader,” in which these

defendants unambiguously never participated and which occurred

prior to their tenure with Sunrise; that the prosecutor argued his

                                  8
intention to “link up” the evidence but, in fact, never showed any

relationship between the events surrounding Crusader and the

evidence that arguably implicated these defendants; and that the

prosecutor made repeated reference to Crusader in his opening

and closing statements and in questions to witnesses,

notwithstanding the fact that—as found by the district court—there

was no connection between Crusader and any of the allegations

regarding Scheer or his co-defendants.

     In its order, the district court further remarked upon multiple

instances of prosecutorial overzealousness and excess, see e.g.,

R4 - 817 at 37 (“Apparently, one of the prosecution’s motivations

for introducing Crusader evidence was to prejudice these

defendants by tainting them with crimes in which they played no

role.”); id. at 42 (“The enthusiasm and aggressiveness with which

the prosecution pursued this case . . . ultimately led to excesses,

some, but certainly not all, of which have been outlined.”); id. at

28 (“The vigor and enthusiasm which powers the successful

                                  9
prosecution of those guilty of criminal conduct is commendable

and should be encouraged. We must never, however, sanction

the excesses which result form [sic] unchecked

enthusiasm—excesses which lead to justifications of the type

presented [by the prosecution] here.”). The court, however, found

the evidence sufficient to sustain the remaining convictions

against Scheer for misapplication and false statements in

connection with the August 30th loans to Wood and Valosin.

     Prominent among the instances of possible prosecutorial

overreaching described by the district court in its post-trial

memorandum, the court noted that, during the trial, the lead

prosecutor apparently issued a verbal threat to a critical witness,

Robert Jacoby, who testified on behalf of the government. The

district court held a hearing on the allegation and decided that,

although the incident did “appear[] to be an instance of

prosecutorial intimidation of a witness,” id. at 45, the defendants

had not shown that Jacoby had changed his testimony as a result

                                  10
of the threat. Finding no connection between the prosecutor’s

threat and Jacoby’s testimony, the court let the convictions stand.

Although we note that the district court’s handling of this unwieldy

and contentious trial from start to finish was often exemplary, the

following discussion outlines our basis of disagreement with the

court’s disposition of this particular issue.

                           II. DISCUSSION

     Scheer presents his claim of prosecutorial misconduct under

the rubric of Brady v. Maryland, 373 U.S. 83, 83 S. Ct. 1194, 10

L.Ed.2d 215 (1963). Scheer argues that, in withholding

information regarding the prosecutor’s threatening remarks to a

key prosecution witness, the government failed to divulge material

impeachment evidence that was, in essence, exculpatory by

virtue of its ability to cast substantial doubt on the credibility of the

witness. The facts and allegations underlying this contention are

described briefly below.

                                   11
A. The Conversation Between Jacoby and Genge

       Jacoby was on probation when he testified at Scheer’s trial

and at the post-trial evidentiary hearing. At the hearing, Jacoby

testified that, during the week end that intervened between the

first and second day of his testimony, he met with Assistant

United States Attorney Genge and another member of the

prosecution team, David Batlle, to go over his testimony. Jacoby

testified that, during that conversation,

              [Mr. Genge] at some point kind of turns to me
              and says—he has a funny way of
              pointing—kind of points at me and says,
              “Now, I know you are going to come through
              for us or for me. I know you are going to
              come through on that, and if you don’t come
              through on that, Tony4 is going to put the
              cuffs on you and you are going to be out of
              there in 45 seconds.”

                   He kind of rocks back and smiles. He
              may have done it twice, rocked back and
              smiles. I turned to David. I looked at Dave,
              kind of like, “What is that?” Dave looked at

       4
      Genge’s reference to “Tony” referred to an agent of the Federal Bureau of Investigation,
Tony Yanketis. See R64 at 27.

                                              12
          me. He didn’t smile. He just kind of looked
          sheepishly away, and then we went on.

R64 at 81. Jacoby suggested that he inferred from these remarks

that Genge was directing him to state in his testimony that

Jacoby had defrauded Sunrise, see id. at 121, a position that

Jacoby had not taken at his own trial. Jacoby offered conflicting

testimony as to whether he had regarded Genge’s comments as a

threat that had real possible consequences. Jacoby testified that

he had related this entire event to Frame and Thomas Skubal, a

defendant in an earlier criminal proceeding involving Sunrise.

Jacoby suggested, however, that he may have exaggerated his

description of his own response to Genge’s remarks to “mollify,

placate, or in other words, otherwise deal with Mr. Skubal . . .

[who] is a lot more emotionally involved in this case.” Id. at 83.

Later in his testimony, Jacoby stated that he “embellished” the

importance of the event in order to “help” Frame prepare for a

conviction in this case. See id. at 140-42. In response to yet

                                 13
another round of questioning about Jacoby’s perception of

Genge’s remarks, Jacoby testified that “I still don’t think it was a

joking matter in the sense that it is somebody in my spot wouldn’t

take it necessarily as a joke.” Id. at 138-39. Jacoby also offered

the following observations regarding the effect of Genge’s

comments on his trial testimony:

             I wasn’t—what is the word? I wasn’t
             influenced by it. It did not make me change
             my testimony. I didn’t lie because of it. I
             didn’t do anything because of it, but it did
             upset me, and I would use a different word if I
             wasn’t in the court. I thought it was
             insensitive, but again that is probably
             irrelevant.

Id. at 83.

     Jacoby acknowledged in his testimony that, although the

relevant conversation with Genge took place in October, at the

same time he was giving testimony in the case, it is likely that he

did not tell Frame about it until the jury deliberations began in

January. See id. at 109. Jacoby also agreed that he had refused

                                   14
to speak to any of the defendants’ lawyers prior to the evidentiary

hearing and, similarly, had refused to speak to the Justice

Department regarding its earlier investigation of Genge. See id.

at 94-98.

       Thomas Skubal, one of Jacoby’s former Sunrise associates,

also testified at the evidentiary hearing. Skubal stated that he had

met with Frame and Jacoby at a bar to discuss business5

sometime during or after the trial. Skubal offered the following

account of what transpired during that meeting:

              A: Well, [Jacoby] had told Frame and myself
              that Mr. Genge pulled him aside after one of
              his days of testimony, and told him that if he
              didn’t start cooperating, shaking his finger at
              Jacoby, that he would have the FBI Agent
              Yanketis take him back to Eglin, or take him
              back to prison. I am sorry.

R64 at 27. Skubal testified that Jacoby recounted that Genge

intended for Jacoby to be taken “[o]ff the stand” and back to

       5
       At time of the hearing, Skubal operated a pool hall located in a shopping center that
Jacoby managed.

                                               15
prison if Jacoby did not “start cooperating.” Id. Skubal further

testified that Jacoby had interpreted the prosecutor’s comment as

a directive to testify that Jacoby had knowingly and intentionally

defrauded the directors of Sunrise and government officials. Id. at

29. Skubal also noted that, in a subsequent conversation held

closer to the time of the hearing, Jacoby told him that “in Mr.

Genge’s mind he may have been joking, but there is no way that

he [Jacoby] took it as a joke.” Id. at 35.6

       Frame’s lawyer, with whom Jacoby spoke briefly about the

incident, testified that Jacoby had told him that “any reasonable

person would conclude that what Mr. Genge had said to him was

a threat.” Id. at 69-70. He also stated that Jacoby had indicated

that he would not provide an affidavit describing the incident until

the trial was over. Id. at 70.

       6
        In addition, Skubal testified that, while in prison together, he and Jacoby had coined an
expression, “the wrath of Genge,” to refer to the fact that “if we did not cooperate with Mr.
Genge, we did not know what was going to happen to us.” Id. at 32.

                                                16
     Scheer argues that Genge’s remarks constituted critical

impeachment evidence that the government, by concealing this

incident, withheld from Scheer at the time of the trial. The

potentially exculpatory nature of these remarks derives from the

possibility that Jacoby may have felt compelled to fully implicate

himself, as president of Sunrise, in the knowing, intentional

defrauding of the bank at the risk of having his probation revoked.

The import of such a “confession” would be to fully implicate the

defendant-lawyers, who were admittedly involved in the day-to-

day operations of the bank, as equally knowing participants in

Jacoby’s plan to commit bank fraud. Had Scheer been able to

bring out in his cross-examination of Jacoby the fact that Jacoby

had been intimidated by the assistant U.S. attorney prosecuting

this case, the value of Jacoby’s testimony would have been

considerably diminished.

     The government contends on appeal, as it did at the

evidentiary hearing, that Scheer (and his co-defendants)

                                 17
waived this claim by failing to raise it immediately when they

learned of the alleged threats to Jacoby. The district court held

its evidentiary hearing regarding the allegation of prosecutorial

intimidation of Jacoby several months after the trial had

concluded. At that hearing, the defendants’ lawyers indicated to

the judge that, during the third week of jury deliberations, Jacoby

had advised one of the defendants, William Frame, that he had

been threatened by one of the assistant United States attorneys,

Lothar Genge, who was prosecuting the case. Jacoby

subsequently spoke to Frame’s lawyer, who notified the attorneys

for Scheer and the remaining co-defendant, Kenneth Treadwell.

Immediately following the trial, a representative from the law firm

of Treadwell’s lawyer asked the Office of Professional

Responsibility (“OPR”), a division of the United States Department

of Justice, to investigate the allegation. OPR referred the matter

to the Justice Department’s Office of Public Integrity to conduct a

criminal investigation, but the Justice Department declined to

                                 18
press criminal charges against the prosecutor. Before this

investigation had been completed, however, the defendants had

filed with the district court a motion for a new trial based on these

same allegations.

     Although we are cognizant both of the duty of a defendant

to bring to the trial court’s attention any perceived violations or

objections that potentially undermine the integrity of the

process and the concomitant probability that the defendant’s

failure to voice these challenges in a timely fashion may result

in waiver, see Watkins v. Bowen, 105 F.3d 1344, 1352 n.16

(11th Cir. 1997), we conclude that the facts of this case militate

against the formulaic application of this well-established

procedural principle. As noted by Scheer’s trial counsel at the

court’s hearing, Jacoby’s communication to one of Scheer’s co-

defendant placed the defendants in a peculiarly difficult

dilemma: On the one hand, they faced the prospect that, by

failing to raise this allegation, they might waive the issue

                                  19
altogether. On the other hand, they also knew that (1) neither

Jacoby nor the prosecutor who allegedly issued the threat

would talk to defense counsel during the trial and, as a result,

there was no way to corroborate the allegation; (2) Jacoby may

have remained genuinely fearful that the prosecutor would

revoke his probation if he testified at an evidentiary hearing

regarding this threat; and (3) this entire trial had been

characterized by a considerable rancor between defense

counsel and the lead prosecutor, thereby rendering potentially

suspect any serious allegations of prosecutorial misconduct

that lacked substantiation or corroboration. See R64 at 15-16.

Bearing these particular facts in mind, it was reasonable for

defense counsel to attempt, in the first instance, to bring the

entire matter to the Justice Department in the hopes of

obtaining truthful testimony from Jacoby without fear of

retaliation or repercussion from the same prosecutor who had

issued the threat.

                                 20
B. The Legal Principles Governing this Case

     We determine, at the outset, that some version of the

comments by the assistant U.S. attorney, as described in

various accounts at the evidentiary hearing, actually occurred.

Genge, the assistant U.S. attorney who allegedly made the

remarks, was present at the evidentiary hearing but did not

testify. The government has never argued that the incident did

not occur. The district court, for purposes of its post-trial order,

assumed that the conversation did take place and, after hearing

Jacoby’s testimony at the evidentiary hearing, noted that “[t]he

Court has little doubt that Jacoby construed the prosecutor’s

statement as a threat.” R4-817 at 45. Although we

acknowledge that there are slightly different versions of what

Genge said to Jacoby on this particular occasion, the fact that

this assistant U.S. attorney made a remark to Jacoby that

reasonably could be construed as an implicit—if not an

                                 21
explicit—threat regarding the nature of Jacoby’s upcoming

testimony remains uncontroverted.

      As previously noted by both our court and the Supreme

Court “regardless of request, favorable, exculpatory or

impeachment evidence is material, and constitutional error results

from its suppression by the government, if there is a reasonable

probability that, had the evidence been disclosed to the defense,

the result of the proceeding would have been different.” United

States v. Noriega, 117 F.3d 1206, 1218 (11th Cir. 1997) (quoting

Kyles v. Whitley, 514 U.S. 419, 433, 115 S. Ct. 1555, 1565, 131

L.Ed.2d 490 (1995)) (internal markings and quotation marks

omitted). A reasonable probability of a different result is shown

when the government’s evidentiary suppression undermines

confidence in the outcome of the trial. Kyles, 514 U.S. at 434,

115 S. Ct. at 1566 (quotation marks and citation omitted). In the

case of impeachment evidence, a constitutional error may derive

from the government’s failure to assist the defense by disclosing

                                 22
information that might have been helpful in conducting the cross-

examination. United States v. Bagley, 473 U.S. 667, 678, 105 S.

Ct. 3375, 3381, 87 L.Ed.2d 871 (1985). In rejecting any

distinction between impeachment evidence and exculpatory

evidence in the Brady context, the Supreme Court has observed

that “[t]he jury’s estimate of the truthfulness and reliability of a

given witness may well be determinative of guilt or innocence, and

it is upon such subtle factors as possible interest of the witness in

testifying falsely that a defendant’s life or liberty may depend.”

Napue v. Illinois, 360 U.S. 264, 269, 79 S. Ct. 1173, 1177, 3

L.Ed.2d 1217 (1959).

     In Hays v. Alabama, 85 F.3d 1492 (11th Cir. 1996), we

explicitly set forth the factors, as established by the Supreme

Court in Kyles, that necessarily must guide our determination as

to the materiality of evidence: First, “‘a showing of materiality does

not require demonstration by a preponderance that disclosure of

the suppressed evidence would have resulted ultimately in the

                                   23
defendant’s acquittal,’” id. at 1498 (quoting Kyles, 514 U.S. at

434, 115 S. Ct. at 1566). “Thus, undisclosed evidence can

require a new trial even if it is more likely than not that a jury

seeing the new evidence would still convict.” Id. Second, “a

defendant need not show there was insufficient evidence to

convict in view of the suppressed evidence.” Id. Third, “there is

no harmless error review of Bagley errors.” Id. Fourth,

“materiality is to be determined collectively, not item-by-item.” Id.

(internal citation and quotation marks omitted). We review de

novo the district court’s determination as to whether a reasonable

probability exists that the suppressed evidence would have

change the outcome. Id.

     We conclude that the district court did not properly apply

either the “materiality” or “reasonable probability” analysis

established by the Supreme Court in Kyles. The district court

found, for instance, that because Jacoby testified that he was

upset but not influenced by Genge’s remarks, “[t]he necessary

                                   24
connection between the prosecutor’s threats and Jacoby’s

testimony, therefore, appears to be absent.” R4-817 at 45. The

court further observed that, even if Jacoby had altered his

testimony in response to a perceived act of intimidation, “other

evidence against Scheer . . . was sufficiently compelling to convict

[him].” Id. Under both Kyles and Hays, however, Scheer need

not prove that Jacoby in fact changed his testimony. Scheer also

is not required to show that, had the government not suppressed

this evidence, other evidence in the case standing alone would

have been insufficient to convict. The relevant inquiry, rather, is

whether the suppression of this information undermines our

confidence in the trial. See Kyles, 514 U.S. at 434, 115 S. Ct. at

1566.

     Although an evaluation of whether there is a reasonable

probability of a different result may necessitate an examination of

the other evidence presented at trial, the Supreme Court

                                 25
expressly has disavowed a simple “sufficiency of the evidence”

test in the Brady/Bagley context:

          The possibility of an acquittal on a criminal
          charge does not imply an insufficient
          evidentiary basis to convict. One does not
          show a Brady violation by demonstrating that
          some of the inculpatory evidence should have
          been excluded, but by showing that the
          favorable evidence could reasonably be
          taken to put the whole case in such a
          different light as to undermine confidence in
          the verdict.

See Kyles, 514 U.S. at 435, 115 S. Ct. at 1566. (footnote omitted).

     Having reviewed the extensive record in this case with

respect to both the trial and the evidentiary hearing held to

explore the relevant Brady violation, we conclude not only that

Genge’s threatening remark to Jacoby constituted material

impeachment evidence but, moreover, that disclosure of this

evidence to Scheer’s counsel would have made a different result

reasonably probable. Our conclusion is informed by the

                                 26
importance and specificity of Jacoby’s testimony, particularly

when compared with that of other prosecution witnesses.

C. Why the Prosecutor’s Undisclosed Remarks are Material and

Exculpatory

       Jacoby’s testimony was critically important to the

government’s case. At trial, Jacoby testified that he had

discussed with Scheer the existence of the Frederick overdrafts,

see R. Supp. 5 at 1198; that Scheer had attended meetings at

Sunrise at which possible solutions to the overdrafts were

discussed, see id. at 1276; and that Scheer had given Jacoby

advice regarding federal regulations governing the amount of

credit a bank could extend to a single borrower (the “loan-to-one”

regulations)7, see R. Supp. 8 at 1907. Jacoby also testified that

Joe Taber, a Sunrise executive, had told Jacoby that Scheer had

       7
          In response to cross-examination revealing that Jacoby had testified at his own criminal
trial that he probably didn’t consult Scheer “much” about loans-to-one borrower regulations,
Jacoby subsequently stated that “I didn’t say I spoke much to him. I said I spoke to him about it,
yes.” R. Supp. 8 at 1907.

                                               27
“chosen the individuals” later allegedly used by Sunrise as

nominee borrowers in the August 30th transactions.8 R. Supp. 5 at

1284. The government also used Jacoby as a vehicle for

introducing a memorandum written by Scheer that the

government suggested, through Jacoby’s testimony, constituted

evidence of Scheer’s efforts to conceal his involvement in the

August 30th transactions. That memorandum, dated August 29,

1984, and addressed to Scheer’s own file, stated, in pertinent

part:

                   I was requested by Rob Jacoby, in a
              telephone conversation on this date, (Rob
              Jacoby was in New York) to close each of
              these loans. Mr. Jacoby indicated that he

        8
         Interestingly, Taber did not corroborate this assertion in his own testimony at Scheer’s
trial. In his direct testimony, Taber stated that he had spoken to Scheer on the telephone
regarding the August 30th transactions. According to Taber, Scheer had told him in that
conversation that Scheer was “having a hard time securing Sunrise’s mortgage interest in one of
the properties that was supposed to secure one of the loans.” R34 at 2924. Taber also testified
extensively about a meeting held at Sunrise on August 27th, 1984, that Jacoby attended at which
the plan to create loans to nominee borrowers for the purpose of covering Frederick’s and
Moye’s overdrafts was discussed. On cross-examination by Scheer’s counsel, Taber agreed that
the prospective borrowers (including Valosin, Wood, and Powell) were proposed at that meeting;
that Scheer did not attend the meeting; and that Jacoby “actively participated” in the meeting.
See R37 at 3438-39. Taber also agreed that Jacoby was present when the August 30th borrowers
were chosen. Finally, in response to a direct question as to whether Taber had ever told Mr.
Jacoby “that Dana Scheer picked the borrowers,” Taber responded “No.” Id. at 3440.

                                               28
          had presented these loans before executive
          committee in evening session, August 28th,
          1984, and had received their approval.

                Mr. Jacoby indicated that upon his
          return to Palm Beach, he would immediately
          sign and forward a memo authorizing me to
          close these loans, notwithstanding having no
          surveys, appraisals, title commitments, utility
          letters, permit, opinions of counsel, and
          notwithstanding the fact that by making
          several of these loans, we might be violating
          doing business laws in the State of Maryland
          and placing mortgages on parcels which were
          not legally able to be subdivided in the event
          of foreclosure.

               Mr. Jacoby indicated that no board
          approval would be necessary for any of these
          loans, and that it was necessary to
          immediately close as soon as possible.

               A letter to file has been dictated by me
          and is in Mr. Jacoby’s office awaiting his
          return.

R. Supp. 8 at 1927-28. On direct examination, Jacoby read this

memorandum aloud and, in response to the prosecutor’s

questions regarding each paragraph, essentially discredited the

veracity of each statement in the memorandum. For example,

                                29
Jacoby testified that (1) he did not recall asking Scheer to close

the August 30th loans; (2) he did not believe that he had indicated

to Scheer that he had received the approval of the executive

committee for the loans; (3) he did not subsequently forward to

Scheer a memorandum authorizing the loans; and (4) he did not

receive a letter from Scheer when he returned from his trip to his

office.9 R. Supp. 5 at 1304-07.

       Finally, Jacoby offered the following testimony on redirect

examination:

               Q: Well, Mr. Jacoby, during the period of time
               beginning 1983 and continuing through 1984,
               sir, let me just ask you this:

       9
         It is interesting to note that at Jacoby’s own trial, at which Jacoby sought to shift
responsibility for many of Sunrise’s questionable transactions to bad (or nonexistent) legal
advice from Sunrise’s Blank, Rome lawyers, the government introduced the “Scheer
Memorandum” as evidence that Blank, Rome had acted in good faith with respect to Sunrise;
that Jacoby had not relied on his attorneys’ faulty legal judgment regarding the legality of these
transactions; and that the lawyers at Blank, Rome simply were executing the wishes of their
client, Sunrise. Indeed, it was Jacoby who sought unsuccessfully to exclude the Scheer
Memorandum from evidence at his trial, and the government that prevailed in introducing the
memorandum to demonstrate the law firm’s lack of culpability. Through Jacoby’s testimony at
Scheer’s trial, however, the government sought to demonstrate that, in composing this
memorandum, Scheer had attempted to “cover” his participation in the August 30th transactions
by making it appear that, notwithstanding Scheer’s legal advice to the contrary, Jacoby had
requested that he close the relevant loans.

                                                30
          Did you knowingly and intentionally cause
          false internal reports, such as loan to one
          borrower reports, to be filed at Sunrise. Yes
          or no?

          A: I participated in that, yes.

          Q: And did you do that knowingly and
          intentionally?

          A: I was conscious of it, yes.

          Q: Did you take those actions, sir, with intent
          to defraud Sunrise?

          A: Some of the actions I took I knew I was
          doing something that was not to the benefit of
          Sunrise.

          Q: Did you know it was wrong?

          A: I knew some of it was wrong, yes.

R. Supp. 10 at 2386. Jacoby further testified that he consciously

acted to misapply funds in connection with the August 30th loan

closings; that he intentionally misapplied funds in connection with

the Seawalk purchase. See id. at 2387-88. Jacoby noted that

                                  31
Scheer was “involved” in these wrongful acts, “[m]ore so as to the

August 30th. I am not certain at all as to Seawalk.” Id. at 2388.

       Although we do not apply a “sufficiency of the evidence” test

to the testimony of other witnesses at Scheer’s trial, we do note

that the importance of Jacoby’s testimony—and his credibility in

relation to that testimony—cannot be evaluated in isolation from

the less conclusive testimony offered by other witnesses. Several

of the individuals who borrowed money from Sunrise in relation to

the August 30th transactions, denominated by the government as

“nominee borrowers,” testified at Scheer’s trial. Virginia Valosin,

for instance, testified that, on August 31st, 1984, she signed a

series of documents at the office of Commercial Development

Corporation10 that effectively granted to her a line of credit of

$500,000.00. Valosin further stated that, at the time she signed

       10
         Valosin had gone to the office of Blank, Rome with Moye’s sister, Sandy, on the
previous day, August 30th, at Frederick’s direction, presumably to execute these same
documents. After arriving at the Blank, Rome offices, however, Moye and Treadwell had a
heated argument that caused Moye to inform Valosin that they would have to leave. By the next
day, Moye apparently had changed his mind about Valosin signing the documents necessary to
close the loan. See R40 at 3872-74.

                                             32
these papers, her net worth was approximately $1,000.00; that

she had never actually applied for the loan she received, nor

provided any financial documentation to support the loan; and that

she signed a document stating that she, as the applicant of the

loan, was not acting as an agent or nominee on behalf of another

person, although she knew that this statement was false. On

cross-examination, however, Valosin indicated that she may

not have read most of the documents she signed and that she

assumed the transactions were valid because she trusted

Frederick. See R40 at 3918. In response to Scheer’s inquiry as

to whether Valosin believed that she was actually purchasing

property, identified as the “Greentree parcel,” Valosin stated that

she was familiar with the property in question; that she

understood that she “was borrowing $500,000.00 that would have

been guaranteed by a portion of property that they were

transferring to [Valosin’s] name,” id. at 3920; that she knew that

Frederick had guaranteed the loan; and that Frederick’s

                                 33
guarantee of the loan made her “more secure” in signing the

documents. Id. at 3920-22. During Valosin’s testimony, the

government placed into evidence the closing papers on Valosin’s

loan indicating that Scheer was the closing attorney and had

witnessed Frederick’s signature as guarantor on the loan. Valosin

testified that she had no actual communication or contact with

Scheer regarding the loan documents she had signed. Id. at

3920.

     Wood testified that, on August 30th, 1984, he met in a Blank,

Rome conference room with Scheer and Frederick to execute

what he believed to be a valid real estate transaction involving the

extension of credit to Wood for approximately $305,000.00.

Wood testified that Scheer and Frederick instructed him to sign or

initial a stack of documents; that he attempted to read the

documents but was instructed by Scheer, jokingly, to “sign. Don’t

read.” R39 at 3656-57. Wood also testified that, in response to

his request that he receive copies of the documents he had

                                 34
signed, Scheer laughed. See id. Wood stated that, at the time he

signed these loan documents, Scheer knew that Wood was

Frederick’s yacht broker. Id. at 3658-59.

     Powell’s account of his August 30th meeting with Scheer

differed sharply from that offered by Wood. Powell, a real estate

broker, testified that at the time he purchased the Frederick

properties, he understood that Frederick would be liable for the

interest on the loan in exchange for Powell giving him the option

to purchase back the property. See R48 at 6011. Powell further

noted that, based on his experience at numerous real estate

closings, this particular closing was not unusual; that Scheer and

Treadwell had suggested that Powell read the documents he was

signing; and that Powell did read the documents and found them

to be satisfactory. Id. at 6017-18. Powell also stated that, at the

time of the closing, he believed that he was receiving free and

clear title to the properties he had purchased. See R49 at 6363.

                                 35
     Lucy Holton, a Blank, Rome real estate paralegal, testified

that she had worked closely with Scheer on many real estate

transactions. Holton stated that she had been present during the

real estate closing with Wood but did not elaborate as to her

specific recollection of that meeting. Holton agreed when asked,

however, that Scheer customarily “explain[ed] to borrowers who

were asking questions, to answer their questions about the details

of their loans . . . [and to] give copies to borrowers of their loan

documents.” R33 at 2663-64. During Holton’s testimony, the

government introduced two series of checks pertaining to the

August 30th transactions that bore Scheer’s signatures; the first

set contained the description “Frederick Workout” and the name

of the borrower in the check legend, but this identification, along

with Scheer’s signature, had been removed. The second series

of checks identified in the same space the name of the borrower

and the purchased properties. See id. at 2599. The government

also introduced carbon copies of these checks, in which

                                   36
information in the memorandum section had been crossed out.

See id. at 2607. These carbons did not contain Scheer’s

signature. In response to Scheer’s questions regarding the

duplicate set of checks, Holton testified that she had ordered new

checks from Blank, Rome’s bookkeeping department with respect

to the August 30th transactions to reflect the proper names of the

borrowers; that nobody had told her to obliterate information on

the checks; and that Scheer had never told her to conceal any

information regarding these closings. Id. at 2658-60.11

       It is clear that the government presented some testimony

that implicated Scheer in the relevant Sunrise transactions. This

testimony, however, was neither uniform nor overwhelming in

showing that Scheer knowingly misapplied funds; more

importantly, it was not cumulative in relation to Jacoby’s

testimony. Jacoby was central to the government’s case precisely

       11
        Although many other witnesses testified at the trial of Scheer and his two co-
defendants, we have excerpted or summarized portions of the trial transcript containing
testimony described by both Scheer and the government as highly relevant (and, in some cases,
damaging) to Scheer.

                                              37
because he was an “insider” with respect to each and every

aspect of this case. In theory, Jacoby, as president of Sunrise,

was uniquely positioned to know the precise involvement of each

banker or lawyer in each transaction alluded to by the

government. Moreover, by acknowledging on redirect full

culpability for his conduct at Sunrise (though reluctantly, to be

sure), Jacoby effectively undermined Scheer’s effort to distance

himself from any intentional scheme to misapply funds or to

argue that he was unaware that the loans he had closed were

illegitimate. Finally, Jacoby’s testimony discrediting Scheer’s

memorandum to Jacoby potentially invalidated a piece of

evidence that would have been critical in showing that Jacoby had

requested Scheer to close the August 30th loans notwithstanding

Scheer’s advice to the contrary.

     In short, Jacoby was a crucial prosecution witness. Again,

we do not imply that he was the only witness who testified

against Scheer, nor do we suggest that there was not other

                                   38
compelling testimony that could support Scheer’s conviction.

Rather, it is because of the relative importance of Jacoby’s

testimony that we view his credibility to the jurors as so

fundamental to Scheer’s convictions. See Kyles, 514 U.S. at

436 115 S. Ct. at 1569 (where Court determined that

government’s non-disclosure of exculpatory statements by

eyewitnesses undermined confidence in verdict, Court

observed that “[d]isclosure of [these] statements would have

resulted in a markedly weaker case for the prosecution and a

markedly stronger one for the defense.”). It is worth observing

that the government chose to begin and end its summation with

a pointed recapitulation of Jacoby’s testimony. Toward the

beginning of his closing statement, Genge discussed in depth

the reasons why the jury should credit Jacoby’s testimony and,

shortly thereafter, read extensive quotations from Jacoby’s

testimony directly implicating Scheer. See R57 at 7777-80.

Genge concluded his summation by reading, again, directly

                                39
from Jacoby’s testimony, quoted earlier here, in which Jacoby

stated not only that he had acted with intent to defraud Sunrise

but, moreover, that he had done so with the “involvement” of

Scheer and his co-defendants. See id. at 7878-79. Finally,

after completing his reading of relevant portions of Jacoby’s

testimony, Genge stated:

                That was Mr. Jacoby. You heard him.
          You saw him. It is for you to judge his
          testimony and to evaluate it in light of
          everything else you have heard in this case.
          Was he, is he, did he lie before you? He is
          trying to pull the wool over your eyes, or
          somebody else?

               I respectfully submit to you and I leave
          you with this final thought. In assessing Mr.
          Jacoby’s testimony, assess his by the same
          standards that you are going to apply to Mr.
          Powell’s testimony, and if you do that in all
          respects, I am confidant that you will return
          a true and just verdict in this case and we
          cannot ask for anything more. Thank you
          very much.

Id. at 7879.

                               40
       It is thus reasonable to infer that the government, too,

viewed both the content of Jacoby’s testimony and his

credibility before the jury as vital for obtaining convictions

against the defendants. At the close of a trial that lasted more

than three months and involved numerous witnesses, it was of

Jacoby’s testimony that the prosecutor sought to remind the

jury as deliberations began.12

       For the sake of clarity, we observe, again, that Genge’s

intimidating remarks to Jacoby were potentially exculpatory in

nature because knowledge of this incident would have allowed

Scheer powerfully to impeach the credibility of Jacoby—a

witness whose credibility was central to the prosecutorial effort

here. In fact, the extent to which the jury should credit Jacoby’s

testimony was a recurring theme at different points in the trial.

       12
         Indeed, it is interesting that Jacoby testified that Scheer was more involved in the
August 30th loans than in the Seawalk purchase and, consistent with this characterization, the
jury convicted Scheer of the August 30th transactions but acquitted him of any involvement in
Seawalk. Similarly, Jacoby testified that one of Scheer’s co-defendants, Treadwell, was less
involved in the August 30th loans but very involved in Seawalk; the jury convicted Treadwell of
the events surrounding Seawalk but acquitted him of the August 30th deals.

                                               41
Jacoby testified repeatedly that he had been given immunity

from future prosecution if he testified truthfully at Scheer’s trial,

but had no other agreement with the government in exchange

for testimony. Jacoby testified extensively as to false

statements he had given at his own trial, see R. Supp. 6 at

1428-32, and conceded that Genge had referred to him as “a

brazen perjuror” in a sentencing memorandum, id. at 1563.

Jacoby testified that, although he hoped his testimony at

Scheer’s trial would result in a reduction in his probation,

neither he nor his lawyers had, thus far, discussed this

possibility with the government. See R. Supp. 7 at 1644-45. In

the context of Jacoby’s testimony before the grand jury, Jacoby

also stated that, although he had an expectation that Genge

would report his cooperation to the district court, he was

unaware that he would not get a reduction in sentence without

the government’s support.13 See R. Supp. 6 at 1579. As

       13
       Jacoby’s assertion that he did not necessarily understand the importance of receiving
government support in obtaining a reduction in sentence or probation strains credulity. Jacoby

                                               42
alluded to earlier, Genge spoke for several minutes during his

closing argument at Scheer’s trial explicitly about Jacoby’s

credibility. As part of his discussion regarding Jacoby’s

credibility, Genge stated, for example:

                      And also, you will recall Mr. Nathan
               [Treadwell’s lawyer] pointed out for you that
               at Mr. Jacoby’s sentencing, I referred to him
               or I characterized his own testimony at his
               trial as perjurious and I characterized him
               as a perjurious witness at that point.

                     And Mr. Nathan is going to make a big
               issue out of that, but again, ultimately, it
               isn’t. That’s sort of a side issue in a sense,
               because ultimately it is important for you to
               determine whether Mr. Jacoby testified
               truthfully before you in this case. That’s
               going to be for you really to decide.

                    Now, clearly, I mean, Mr. Jacoby did
               commit perjury at his first trial and no one
               can condone that, but I think we can all to
               some extent perhaps understand that
               someone is going to lie to protect himself,
               but will that person also like [sic] under oath

had already received a substantial reduction in his sentence after the government filed a motion
under Federal Rules of Criminal Procedure 35(b), based on Jacoby’s substantial cooperation. It
is therefore unlikely that Jacoby did not comprehend the crucial role that the government plays
in sentence reductions.

                                               43
           to protect—not to protect, but, in fact, to
           convict innocent people?

R57 at 7758. Bearing in mind the considerable importance of

Jacoby’s testimony, Jacoby’s credibility thus was a focal point

for both the prosecution and the defense. The prosecution

expressly presented Jacoby as someone who had lied at his

own trial but, in this case, had no reason, motive, or inclination

to lie. The defense, in its attempts to impeach Jacoby’s

credibility, was armed with little more than a reiteration of the

prosecution’s openly acknowledged characterization of Jacoby

as a “brazen perjuror” at his criminal proceeding. Given the

fact that the government had elicited from Jacoby information

regarding his previous history of giving perjured testimony, it

was reasonable for the jury to assume that it now knew the

most damaging available information about Jacoby’s

believability.

                                 44
     In reaching a determination that the prosecutor’s remarks

in this instance constituted material impeachment evidence that

affected the integrity of these proceedings, it is important to

emphasize what the case is not about: Although Jacoby

testified under immunity, this case does not involve any other

type of cooperation agreement that Jacoby might have

breached while on the witness stand. Indeed, Jacoby

repeatedly disavowed the existence of any agreement or

promise by the government in exchange for his testimony. To

be sure, Jacoby may have hoped for or expected to derive

some future benefit from giving testimony favorable to the

government, but there was no outstanding agreement between

Jacoby and the government at the time of his testimony. We

reiterate this point for the following reason: Although we do not

countenance prosecutorial threats or intimidation of witnesses

under any circumstances, we do acknowledge that, where a

witness has agreed to cooperate with the government and give

                                 45
certain testimony in exchange for a reduction in sentence or

probation, for instance, but fails to give the proffered testimony,

it would hardly be unusual or inappropriate for the prosecutor to

remind the witness of the terms of their agreement. In this

instance, however, there was no agreement or promise about

which the prosecutor may have been “reminding” Jacoby. The

record is devoid of any reference or indication that Jacoby

reasonably should have feared that his probation would be

revoked entirely based on the nature of his testimony. It is

therefore difficult for us to construe Genge’s comments as

anything other than an attempt to intimidate Jacoby into

testifying “correctly.”

     It is also critical to observe that, whether Genge intended

his remark to intimidate Jacoby or, as Jacoby later testified, to

be a “joke” is immaterial to our analysis. The record supports

the inference that Jacoby understood the remark to be a threat,

and we have little difficulty concluding that Scheer could have

                                46
used this information to undermine the credibility of a witness

whose credibility was already a prominent issue in the case.

Moreover, it is worth noting that the record also supports the

inference that Jacoby had ample reason to take Genge’s

remarks seriously. Jacoby testified at the evidentiary hearing

that he was aware, while in prison, that the government had at

first given Treadwell, a Blank, Rome partner and one of

Scheer’s co-defendants, full immunity in exchange for his

cooperation but, subsequently, revoked the immunity and

indicted him along with Scheer. R64 at 133-34. For purposes

of this discussion, the fact that Jacoby knew—prior to his

conversation with Genge regarding the necessity that Jacoby

provide “cooperative” testimony---that the government had

revoked its promised immunity to Treadwell lends credence to

                                47
the possibility that Jacoby genuinely was fearful that Genge

could–and might–carry out his threat to return Jacoby to jail.14

       In sum, we are convinced that Scheer’s knowledge of the

incident between Genge and Jacoby, at which Genge intimated

that Jacoby’s failure to testify in a “cooperative” fashion might

result in his return to prison, was material information that might

have substantially undermined the critical value of Jacoby’s

testimony. As a result, the government’s failure to

communicate this information to Scheer effectively undermines

our confidence in the integrity of the verdict. See Kyles, 514

U.S. at 434, 115 S.Ct. 1566 (“One does not show a Brady

violation by demonstrating that some of the inculpatory

evidence should have been excluded, but by showing that the

favorable evidence could reasonably be taken to put the whole

case in such a different light as to undermine confidence in the

       14
         In its post-trial order, the district court found that the government had nullified
Treadwell’s immunity agreement in bad faith and had breached the terms of the agreement. R4-
817 at 20 & 28. Consistent with this determination, the court reinstated Treadwell’s immunity
and dismissed the indictment against him.

                                             48
verdict.”). Had Scheer been able to use knowledge of this

incident to impeach the credibility of this critically important

witness, whose credibility had already been called into question

by the government, there is a reasonable probability that the

outcome of the proceeding would have been different.

                        III. CONCLUSION

     Scheer asks that we set aside his convictions for

misapplication of bank funds and making false statements on

an application for funds to a bank. Having reviewed the

extensive record in this case, we conclude that the prosecutor’s

potentially intimidating remarks to a critical government witness

undermines our confidence in the verdict such that, had

information regarding this incident been known to Scheer at the

time the incident allegedly occurred, there is a reasonable

probability that the result of the proceeding would have been

                                 49
different. We therefore REVERSE Scheer’s convictions and

REMAND this case for a new trial.

                             50