Court Opinion

ID: 2994900
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:17:17.774984+00
Date Added: 2024-06-11T09:55:10.992638
License: Public Domain

In the
United States Court of Appeals
For the Seventh Circuit

No. 00-2440

United States of America,

Plaintiff-Appellee,

v.

Michael R. Lamarre,

Defendant-Appellant.

Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 99-CR-185--John C. Shabaz, Chief Judge./1

Argued March 7, 2001--Decided April 20, 2001

  Before Diane P. Wood, Evans, and Williams, Circuit
Judges.

  Evans, Circuit Judge. Over 200 years ago, Edmund
Burke proclaimed "the age of chivalry is
dead."/2 And it hasn’t made much of a comeback.
Certainly our appellant, Michael Lamarre, will
win no awards for chivalry as his defense to an
indictment charging him with five counts of bank
fraud and one of using a phony social security
number to obtain a loan was to try and pin the
rap on his wife. A jury, apparently determining
Mr. and Mrs. Lamarre were in cahoots, found him
guilty, and he appeals. Although we conclude that
the district judge erred in keeping from the jury
a bit of evidence Lamarre wanted to offer to
bolster his defense, we conclude the error was
harmless.

  The events that led to Michael Lamarre’s trial
began in Florida in 1986, where he and Carla, his
wife, were known as Robert and Carla Harrell./3
Together they borrowed $200,000 from Farm Credit
of Southwest Florida to purchase 203 head of
cattle for their dairy farm business, Bristol
Dairy, Inc. In return, the Harrells pledged the
cattle and their farm equipment as security for
the loan. This deal was destined to go sour as
the Harrells provided a wealth of false
information on their loan application, including
false social security numbers, descriptions of
assets they did not own, and grossly inflated
earnings figures. Later, Farm Credit discovered
that the Harrells were not caring for the cattle,
so it obtained a writ of replevin and attempted
to seize the herd. The Harrells filed for
bankruptcy, but the bankruptcy court later
dismissed their petition when they failed to
attend a meeting of creditors. When the bank
eventually seized its collateral, it discovered
that 74 cows and various items of pledged farm
equipment were missing. Thirty cows that were
found did the bank little good as they had to be
destroyed due to illness.

  The Harrells missed the Florida meeting of
creditors because they fled to Wisconsin. In
September 1997 Carla, then using the surname
Lamarre, contacted Mark Binversie, the president
of Investor’s Community Bank in Manitowoc,
Wisconsin. She told him that she and her husband
were planning to relocate their dairy farming
business, which she called "Northern Star Farms,"
to Oconto, Wisconsin, and they were interested in
borrowing money to purchase a herd of dairy
cattle. Carla represented that she and Michael
had substantial dairy experience and that her
husband was still employed on a large farm in
Florida. Binversie was impressed and told her
that their farm experience was an important
factor in the bank’s consideration of the loan
request. Carla and Michael, also then using the
surname Lamarre, applied for the loan and
submitted financial statements, federal income
tax returns, information about their Florida
loans, letters of recommendation, and a business
plan naming Michael as the CEO of the business.
Almost all of this information was false: the
financial reports substantially inflated their
financial status and did not disclose that they
had declared bankruptcy; the social security
numbers on the loan application were not theirs;
the federal tax returns were never submitted to
the IRS; the information about their Florida
banker was false; and one of the letters of
recommendation was from "John Harrell." The bank
did not verify this information prior to
approving a loan for $180,000.

  The Lamarres gave the bank security interests
in their soon-to-be-purchased real estate,
cattle, farm equipment, and proceeds from the
sale of milk. A loan closing was held on December
1, 1997, and that was the first time Binversie
met Michael. Binversie explained the loan
agreement to the Lamarres line-by-line and read
aloud every word of the agreement. He recalled
that Michael appeared to understand both the
agreement and the paperwork he signed. At the
Lamarres’ request, the bank advanced $16,500 on
the day of closing to enable them to purchase 15
cows. The Lamarres asked Binversie to make the
check payable to "John Harrell," who they said
was the seller of the cattle. Later, Michael took
the check to Florida and used it and another
false social security number to open a bank
account in the name of John Harrell. Michael
endorsed the check with the name "Michael
Harrell," and in the teller’s presence he
endorsed it again as "Robert Harrell." He
deposited $100 in the new account and took the
rest in cash, telling the bank that he was a
truck driver and that he needed the cash to
repair his truck. Six days later he closed the
account and returned to Wisconsin. Back in
Wisconsin, the bank paid out the remainder of the
loan, and the Lamarres used the money to purchase
cattle.

  On December 17, 1997, the Lamarres attended the
closing on an Oconto dairy farm they had
contracted to buy. Although they had agreed to
make a $50,000 down payment on the property,
Michael wanted to renegotiate the terms of the
contract at the closing. The seller’s attorney
testified that Michael appeared to fully
understand the transaction and the terms of the
contract and that Michael did most of the
negotiating. After some haggling, the sellers
agreed to sell their farm to the Lamarres for
$350,000 with no down payment.

  The Lamarres also applied for and received
several credit cards from Binversie’s Manitowoc
bank. After the loan closing they took out a
$9,500 cash advance on one of the cards. Michael
took out another $3,000 cash advance on another
card, which he used as a down payment on a hog--
not a farm animal but a $24,500 Harley Davidson
motorcycle. Michael then leased a $25,000 Ford
pickup and a $29,500 Oldsmobile sport utility
vehicle. On all three contracts Michael provided
false social security numbers and false
information about his income, past employment,
bankruptcy history, and education. The finance
managers of the Ford and Oldsmobile dealerships
testified that they completed lease applications
for Michael based on his oral answers to their
questions, and each stated that Michael appeared
to understand the terms of the contracts. The
Harley Davidson dealer testified that Michael
inquired about the specifications of several
cycles, haggled with him over the purchase price,
and negotiated the down payment and interest rate
of his installment contract.

  All the while, the Lamarres attempted to
conduct a dairy business. But by the spring of
1998 Binversie, himself a dairy farmer, became
suspicious of the Lamarres’ ability to run a
dairy farm. Binversie had on several occasions
taken Michael to look at cattle to purchase. Each
time, Michael failed to inspect the "working end"
of the cattle and purchased them without first
inspecting their health records. Additionally,
the terms of the loan required the Lamarres to
deposit the proceeds of their milk sales into a
bank account, and Binversie observed that their
deposits were too small for the amount of milk
the Lamarres were supposed to be selling.
(Unbeknownst to Binversie, the Lamarres diverted
milk proceeds to accounts at other banks.) When
Binversie visited the farm to see what was going
on, he discovered the cows living in unhealthy
conditions. Binversie also noticed that the
encumbered farm equipment was not there. Michael
told him it was in the process of being shipped
from out of state, but on later visits Binversie
never saw it.

  Later, the Lamarres deposited a $23,240 check
from "Bristol Dairies," their defunct Florida
business, in their Manitowoc bank account. Carla
said the money was proceeds from the sale of
cattle in Florida. The check bounced because the
Bristol bank account no longer existed, but not
before the Lamarres wrote several other checks on
the account. Binversie confronted Michael about
the bounced check and Michael expressed surprise,
telling Binversie that Bristol had always been a
reliable customer. Binversie, now concerned about
his security, quickly obtained a writ of replevin
to seize the collateral. On May 4, 1998, the bank
seized 117 unhealthy cows from the Lamarre’s
farm. But 23 cows were missing. The bank seizures
prompted the Lamarres to flee to Florida with the
Ford, Oldsmobile, and Harley Davidson.

  A grand jury indicted both Michael and Carla.
Michael was charged with five counts of
defrauding a federally insured banking
institution in violation of 18 U.S.C. sec. 1344
and one count of using a false social security
number to obtain a loan from a bank in violation
of 42 U.S.C. sec. 408(a)(7)(B). The FBI arrested
Michael and seized the vehicles in Florida a year
later. When arrested, Michael had his legitimate
social security card in his wallet.

  The district court severed Michael’s and Carla’s
trials, and Carla later pleaded guilty. Michael’s
defense theory was that he was incapable of
reading or understanding the various loan
documents he signed and therefore could not have
formed the specific intent to defraud the bank.
His defense was that Carla "masterminded" the
fraud and that he blindly signed documents at her
instruction. In support of his theory, he
proffered the opinion of Dr. Christopher Ovide,
a board-certified clinical psychologist. Dr.
Ovide tested Michael after his indictment and
offered to testify that he had an IQ of 70,
placing Michael in the second percentile for
adults his age. Dr. Ovide described Michael as
being in the "borderline intellectual functioning
range of intelligence." Dr. Ovide also determined
that Michael had a second-grade reading ability
and a first-grade spelling and arithmetic
aptitude. The district judge, however, excluded
Dr. Ovide as a witness, believing that his
testimony would invade the province of the jury
and would do nothing more than suggest that
Michael was not intelligent enough to lie and
defraud.

  Michael’s stepchildren, Angel and Alan Lamarre,
testified on his behalf. Angel testified that she
never saw Michael read a book or newspaper--
although she admitted that she had seen him read
classified advertisements--and that she often
assisted her stepfather in filling out the
simplest of forms. Angel also stated that Carla
handled all the household paperwork and financial
matters, and she suggested that Carla had engaged
in suspicious financial activity long before she
married Michael. Alan confirmed Angel’s testimony
and stated that in the 15 years he knew Michael
he had never seen him read a book or newspaper.
Neither Michael nor Carla testified.

  The jury found Michael guilty on all counts. A
presentence investigation report (PSR)
recommended an adjusted offense level of 16 and
9 criminal history points, placing Michael in
criminal history category IV with a sentencing
range of 33 to 41 months. The government,
however, believed that the recommended criminal
history category did not adequately reflect
Michael’s past criminal conduct and recommended
adjusting his criminal history under U.S.S.G.
sec.4A1.3(e) to come up to a total of 15 points.
The judge agreed, and Michael wound up in
criminal history category VI with a sentencing
range of 46 to 57 months. He was sentenced to a
term at the top of the range.

  Michael argues that the district judge abused
his discretion by excluding Dr. Ovide’s testimony
because the judge misunderstood the purpose for
which it was offered. He asserts that Dr. Ovide
would have testified only that Michael lacked the
intellectual capability to understand the nature
of the various financial transactions that gave
rise to his crimes, not that he was not
intelligent enough to commit fraud. And because
he was accused of committing specific intent
crimes, Michael contends that the exclusion of
Dr. Ovide’s testimony denied him the opportunity
to challenge the government’s evidence of his
mental state. We review evidentiary rulings for
abuse of discretion. United States v. Byrd, 208
F.3d 592, 594 (7th Cir. 2000).
  The parties confined most of their argument in
the district court on this issue to whether
Michael gave the government sufficient notice
under Federal Rule of Criminal Procedure
16(b)(1)(C) of his intent to call Dr. Ovide as an
expert witness and whether Dr. Ovide’s testimony
would be sufficiently reliable under the
principles of Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993). The
district judge chose not to address these
arguments and rejected the proffer on its merits,
stating:/4

The Court differs with both counsel. It believes
that this type of opinion evidence goes--invades
the common sense inquiry of jurors as to the
circumstances under which a party may have been
acting. And the fact is to indicate that because
he has a second grade level of education that
accordingly that suggests that he cannot be
involved in a fraudulent activity is so far from
what the Court believes to be appropriate in a
matter of this nature that I have no qualms
whatsoever in excluding this type of testimony.
I can imagine that it’s going to be brought
forward in practically 40 percent of all the
cases which this Court ever has the opportunity
to try.

And it would appear that the defense is that
you’ve got a low level of education, you don’t
read very well, you don’t write very well and,
ergo, you certainly can’t commit any fraudulent
conduct and the Court does not believe that that
is appropriate testimony. It believes it is not
relevant to the actions of which the defendant is
charged. And the fact of the matter is, I have to
take some judicial notice, even though I guess I
shouldn’t, but my nine-year-old who’s in the
third grade may have that level also but he sure
knows what it is to tell an untruth.

Now I realize this is an oversimplification and
the Court’s going to be criticized for that, but
from all the documents which this Court has read
in this matter this Court believes that this is
not an area for an expert to testify where the
jury may use its common sense inquiry and they as
untrained layman are able to make those
determinations without the necessity of expert
testimony. I realize that’s not the argument of
the government but it jumps out at the Court when
addressing a matter of this nature, and
accordingly I’m going to exclude the testimony.

  When faced with a proffer of expert testimony
under Federal Rule of Evidence 104(a), trial
judges must ensure that the expert’s testimony is
reliable and relevant. United States v. Cruz-
Velasco, 224 F.3d 654, 660 (7th Cir. 2000).
Daubert, 509 U.S. at 597, and Kumho Tire Co. v.
Carmichael, 526 U.S. 137, 147 (1999), supply the
reliability test. The government and Michael now
both agree that Dr. Ovide’s testimony would have
been scientifically valid and thus reliable under
Daubert and, since the district judge made no
findings on the validity of the doctor’s
scientific methodology, we won’t question it. But
before proceeding to relevance, we wish to
reiterate the importance of applying the Daubert
framework in cases such as this. Not only does
the Daubert framework help judges distinguish
between real and "courtroom" science, see Rosen
v. Ciba-Geigy Corp., 78 F.3d 316, 318 (7th Cir.
1996), but we have also stressed its importance
in helping trial judges understand the purpose of
the expert evidence, see United States v. Hall,
93 F.3d 1337, 1345 (7th Cir. 1996). This is
perhaps most important when dealing with experts
in the field of social science. Parties typically
offer experts in human behavior and mental
disorders to testify about everyday subjects.
Certainly laypersons are qualified to evaluate
things within their everyday experience, but
scientifically valid social science can be
offered to show a jury that their commonly held
beliefs are incorrect. See Tyus v. Urban Search
Mgmt., 102 F.3d 256, 263 (7th Cir. 1996); United
States v. Hall, 165 F.3d 1095, 1118-19 (7th Cir.
1999) ("Hall II") (Easterbrook, J., concurring);
Hall, 93 F.3d at 1345; Krist v. Eli Lilly & Co.,
897 F.2d 293, 296-97 (7th Cir. 1990); Carroll v.
Otis Elevator Co., 896 F.2d 210, 215 (7th Cir.
1990).

  We think that is precisely the case here. Dr.
Ovide proposed to testify that Michael had a very
low IQ and the reading ability of a second
grader. One of the facts at issue was whether
Michael understood that his conduct was designed
to defraud the banks. He wanted to prop up his
claim that it was Carla’s show, not his. Michael
presented witnesses who testified that he truly
was a dairy farmer, albeit not a very good one.
It is also undisputed that Carla controlled the
books and financial records. On the other hand,
the government presented several witnesses who
testified that Michael appeared to understand the
documents he signed. Dr. Ovide, however, would
have testified that Michael’s low cognitive
skills made him dependent on Carla to conduct
their financial business. He believed that
Michael’s personality suggested that he was
somewhat "interpersonally dependent" and felt a
"need to please others and avoid doing things
that would alienate the person or persons he
depends on." The judge thought that the jury had
the common sense to determine whether Michael
understood that he was defrauding a bank. They
did, but that alone does not justify excluding
Dr. Ovide’s testimony. Trial courts are not
compelled to exclude all expert testimony merely
because it overlaps with matters within the
jury’s experience. Hall, 93 F.3d at 1342, 1344.

  Moreover, the government would have been free
to challenge the weight of his report summarizing
his evaluation of Michael on cross-examination.
In the report, Dr. Ovide noted several possible
inconsistencies with Michael’s purported mental
functioning. For instance, on two tests that
explored Michael’s ability to recognize spacial
relationships, he scored "unusually low" on Block
Design, yet he tested strongly on Object
Assembly. Further, Dr. Ovide noticed that
Michael’s intellectual ability was "far below
what was expected given his history and general
mental status and social interaction." Dr. Ovide,
however, also cautioned that Michael’s
personality pattern suggested that he may have
exaggerated his responses on some of the tests,
although Dr. Ovide thought that the level of
exaggeration was probably consistent with a
person "facing his current situation," i.e., an
indictment charging six felonies. We therefore
conclude that the district court erred in
excluding this testimony for the reason given by
the judge. Whether it should have been excluded
on notice grounds, as the government argued at
trial, is a matter we need not consider for
reasons that will soon become clear.

  Evidentiary errors, of course, are subject to
harmless error review. United States v. Wesela,
223 F.3d 656, 663 (7th Cir. 2000). We will not
reverse unless the error affected substantial
rights, Byrd, 208 F.3d at 594, or had a
"substantial or injurious effect or influence on
the jury’s verdict," United States v. Jarrett,
133 F.3d 519, 529 (7th Cir. 1998).

  A bank fraud conviction requires proof that a
defendant had the specific intent to defraud the
bank. United States v. Moede, 48 F.3d 238, 241
(7th Cir. 1995). "Specific intent to defraud"
means that a defendant acted willfully and with
specific intent to deceive or cheat, usually for
financial gain for one’s self or the causing of
financial loss to another. Id. Specific intent
may be established by circumstantial evidence and
inferences drawn from the scheme itself. See id.
We have specifically held that actions such as
knowingly depositing an NSF or forged check,
knowingly writing checks on an inadequate account
balance, and providing false information on loan
documents constitute circumstantial evidence of
specific intent to defraud. Id. at 242. Moreover,
the evidence here of uncharged acts (the Florida
matters and the vehicle deals) intricately
related to the acts charged in the indictment
were admissible to establish Michael’s fraudulent
intent. See United States v. Gibson, 170 F.3d
673, 680 (7th Cir. 1999); see also United States
v. Ryan, 213 F.3d 347, 351 (7th Cir. 2000)
(evidence casting doubt on credibility of
defendant’s claim that he was ignorant of
fraudulent aspects of transaction is probative of
specific intent to defraud).

  Despite the undisputed evidence that Carla was
the prime mover in this case, the testimony of
witnesses suggesting that Michael appeared to
understand the documents he signed was strong.
Michael also, without Carla’s heeding, endorsed
a bank check intended for the purchase of cattle
(the "John Harrell" check) over to himself, took
it to Florida, assumed a different name, and
cashed it, telling the bank he was a truck
driver. Michael also deposited a $23,000 check
drawn on a closed account from Bristol Dairies,
his Florida business. When confronted, he told
Binversie that he had never had trouble with
Bristol Dairies before as they were always a
reliable customer. He purchased and leased three
vehicles by providing false financial and
personal information. Michael used several false
social security numbers, even though it appears
he kept his legitimate social security card in
his wallet, or at least had it there when he was
arrested. The Lamarres also pledged farm
equipment that never materialized for the loan,
and, when confronted, Michael falsely told
Binversie that the equipment was being shipped
from out of state. Based on this evidence, we
believe that no rational jury would think that
Michael was ignorant of the fraud scheme, and
thus we conclude that the exclusion of Dr.
Ovide’s testimony was no more than harmless
error.

  Finally, Michael challenges his sentence. He
argues that he was entitled to have the facts
upon which the district court enhanced his
criminal history found by the jury beyond a
reasonable doubt under Apprendi v. New Jersey,
530 U.S. 466 (2000). He does not challenge the
district court’s decision to enhance his criminal
history category. Michael did not raise his
Apprendi argument at sentencing, so we review it
only for plain error. United States v. Jackson,
236 F.3d 886, 887 (7th Cir. 2001); United States
v. Nance, 236 F.3d 820, 824-25 (7th Cir. 2001).
But regardless of the scope of our review, our
cases compel us to reject his argument. Apprendi
holds that any fact (except the existence of a
prior conviction) that increases a sentence
beyond the statutory maximum for the particular
offense must be submitted to the jury and proved
beyond a reasonable doubt. Jackson, 236 F.3d at
887. Michael’s sentence does not exceed the
maximum term for bank fraud, see 18 U.S.C. sec.
1344, so Apprendi does not apply, United States
v. Williams, 238 F.3d 871, 877 (7th Cir. 2001).

  Accordingly, we AFFIRM Michael Lamarre’s
convictions and sentences.

/1 The Honorable John C. Shabaz, Chief Judge of the
Western District of Wisconsin, presiding.

/2 Edmund Burke, Reflections on the Revolution in
France (1790).

/3 To avoid confusion, we will refer to the
appellant as "Michael" and his wife as "Carla"
throughout the rest of this opinion. Generally,
Michael was known as "Robert Harrell" in Florida
and "Michael Lamarre" in Wisconsin. He was born
as Robert Edward LeDane, but he legally changed
his name to Robert Harrell in 1995. Michael later
attempted to legally change his surname to
"Lamarre," Carla’s maiden name, but apparently
never completed the process.

/4 We have reprinted the transcript as is, without
inserting any "sics."