Court Opinion

ID: 4160546
Source: CourtListenerOpinion
Date Created: 2017-04-14 20:00:53.390078+00
Date Added: 2024-06-11T07:46:46.597793
License: Public Domain

NOT PRECEDENTIAL

                        UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT
                                 ______________

                                       No. 16-1285
                                     ______________

                            UNITED STATES OF AMERICA

                                             v.

                                 RICHARD J. HARLEY,
                                                   Appellant
                                    ______________

                     On Appeal from the United States District Court
                         for the Middle District of Pennsylvania
                           (M.D. Pa. No. 3-12-cr-00224-001)
                      Honorable A. Richard Caputo, District Judge
                                    ______________

                       Submitted under Third Circuit LAR 34.1(a)
                                   February 7, 2017

              BEFORE: MCKEE, COWEN, and FUENTES, Circuit Judges

                                  (Filed: April 14, 2017)
                                     ______________

                                        OPINION*
                                     ______________

COWEN, Circuit Judge.

       Richard J. Harley appeals from the criminal judgment and the order denying his

*
 This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
post-trial motions entered by the United States District Court for the Middle District of

Pennsylvania. We will affirm.

                                             I.

       Harley was charged with fifteen counts of wire fraud in violation of 18 U.S.C. §

1343, one count of bank fraud in violation of 18 U.S.C. § 1344, two counts of bankruptcy

fraud in violation of 18 U.S.C. § 157(1), and five counts of making false statements in

bankruptcy filings in violation of 18 U.S.C. § 152(3). He filed a motion to suppress

evidence seized from his home and statements obtained in the course of the seizure.

After conducting an evidentiary hearing, the District Court denied Harley’s motion. See

United States v. Harley, No. 3:12-CR-224, 2014 WL 1405145 (M.D. Pa. Jan. 27, 2014).

       The jury returned a guilty verdict against Harley on all counts. The District Court

sentenced him to a total of 144 months of imprisonment on each of the wire and bank

fraud counts and 60 months’ imprisonment on each of the bankruptcy-related charges (all

to run concurrently). Harley was also sentenced to serve three years of supervised release

and to pay $323,800.00 in restitution. Harley moved for a judgment of acquittal or a

new trial. He also filed a pro se motion to dismiss the indictment. Both motions were

denied. See United States v. Harley, NO. 12-CR-224, 2016 WL 374456 (M.D. Pa. Feb.

1, 2016).

                                            II.

       Initially, Harley challenges the sufficiency of the evidence. The twenty-two

counts implicated three schemes: (1) a scheme by Harley to defraud individuals and

financial institutions by claiming that his company, RJH & Company (“RJH”), owned

                                             2
over one billion dollars in Texas oil in order to solicit loans and investments; (2) a

scheme in which he falsely claimed that RJH owned Federal Reserve Bank instruments

totaling more than a billion dollars and solicited financial and lending institutions to

negotiate, deposit, manage, and loan money against these funds; and (3) a scheme in

which he attempted to defraud creditors by filing false and fraudulent bankruptcy

petitions. Considering the evidence in a light most favorable to the verdict, we agree

with the District Court that a reasonable jury could have found the contested elements

beyond a reasonable doubt.1 See, e.g., United States v. Wise, 515 F.3d 207, 214 (3d Cir.

2008).

         We begin with the oil scheme. There was sufficient evidence to establish beyond

a reasonable doubt that Harley knew the Texas oil investment was fraudulent and that he

willfully intended to defraud others. “First, the Government accurately points out that

Harley’s claim that he owned over one billion dollars ($1,000,000,000.00) of oil located

in Texas is sufficiently incredulous that any reasonable juror could have disbelieved it.”

Harley, 2016 WL 374456, at *2. Even the lowest valuation ($250 million) is absurdly

high, especially given Harley’s failure to explain to FBI Special Agent Vincent Browning

the consideration he gave to obtain a purported $200 million note from Enpetro. “In light

of this evidence that Harley never called his two hundred million dollar

($200,000,000.00) note due despite having no source of income besides five hundred and

thirty-five dollars ($535.00) per month in Social Security income, the jury could have

         1
        The District Court possessed subject matter jurisdiction pursuant to 18 U.S.C. §
3231, and we have appellate jurisdiction under 28 U.S.C. §1291.
                                              3
reasonably inferred that Harley knew that his note and collateral were worthless.” Id. As

the District Court recognized, Harley purportedly had his own reasons for not cashing the

note (i.e., he did not believe that Enpetro had the money to pay it and preferred to borrow

against its value), but the jury was free to reject this explanation. In addition, David

Kesterson (an oil geologist) testified that, even though there had been no oil production

since 1993, “Harley falsely told him that the wells were in production as of 1999.” Id. at

*3 (citing A1316). According to Harley, the record included “reports from Kesterson

that there was as much as $1,000,000,000.00 in oil reserves in the property involved.”

(Appellant’s Brief at 16 (citing A2376-A2468).) Yet the FBI found documents in

Harley’s home indicating that he had been researching prior fraudulent schemes

involving the use of bogus assets. Explaining how the evidence showed that Harley

intended to defraud his victims, the District Court observed that Harley, although he

obtained money from his victims for use as investments, spent the funds for his own

personal benefit. He also lied about his wealth and background.

       We likewise agree with the District Court that there was sufficient evidence to

support the bank fraud conviction as well as the wire fraud convictions arising out of

Harley’s Federal Reserve scheme. According to Harley, “the only evidence of what

Harley truly believed about [the Federal Reserve checks] came from the testimony of

Edward Siegel of State Street Bank and Richard Jones of the Federal Reserve Bank,”

who both testified that Harley “believed that the Federal Reserve checks were legitimate

business opportunities.” (Appellant’s Brief at 14 (citing A149-A157, A402).) However,

the government presented evidence indicating that Harley was told on numerous

                                              4
occasions that the checks and associated documents were bogus. Furthermore, Browning

found a number of incriminating documents in Harley’s residence. For example, he had a

printout from the Federal Reserve Bank of New York, which advised the public of the

fraudulent nature of this check scam.

       Harley asserts that the two RJH bankruptcy petitions did not constitute substantial

evidence of fraudulent intent because he had a constitutional and statutory right to file

these petitions and that, with respect to the allegedly false statements set forth in his

bankruptcy filings, the record contained no evidence that they were anything other than

mistakes by a layperson acting without the benefit of counsel. As the District Court

explained, there was sufficient evidence from which a reasonable juror could find beyond

a reasonable doubt that the two RJH petitions were filed in order to defraud Marshall

Silverstein (one of Harley’s victims). The 2010 petition was filed shortly before a

scheduled pre-trial conference on Silverstein’s request for sanctions and entry of a

judgment on account of Harley’s refusal to appear for depositions. The conference was

cancelled, and the bankruptcy case was dismissed for failure to pay the filing fee.

Similarly, the 2011 petition was filed a day before the rescheduled sanctions hearing, the

hearing was cancelled, “Harley testified under oath [in the bankruptcy proceeding] that

one of the reasons he filed the second bankruptcy petition was to prevent the hearing,”

and the bankruptcy petition was dismissed. Id. at *5 (citing A522). With respect to the

false statement charges, we note that, in light of our assessment of the oil scheme, there

was sufficient evidence to establish that Harley did not commit a simple mistake when he

falsely stated that RJH had assets totaling $765 million (including ten million barrels of

                                               5
proven reserves). The evidence also indicated that Harley was well aware of judgments

entered in favor of Silverstein, the United States, and the Securities and Exchange

Commission (for instance, Harley had listed Silverstein as a creditor in the 2011 petition).

Yet he failed to identify these creditors in his 2012 personal bankruptcy petition. Finally,

Harley failed to acknowledge that he was an officer of RJH (even though he “repeatedly

told his victims that he was the Chief Executive Officer of RJH and signed all of his

correspondence using that title, including his prior corporate bankruptcy petitions,” id. at

*6), and failed to list all of his personal property (including several bank accounts).

       In addition to challenging the sufficiency of the evidence, Harley argues that the

District Court should have granted him a new trial because evidence of his prior

involvement with the criminal justice system was presented to the jury. “Specifically,

during the testimony of Karen Musloski, Government Ex. 20.6E was displayed to the

jury, which reflects a ‘criminal’ docket number for the monetary judgment that Musloski

was testifying about.” Id. No objection was made at the time, and the parties agreed to

redact the word “criminal” before the document went to the jury (and, although the

District Court indicated it would give a curative instruction, the defense declined). Under

these circumstances, the District Court did not commit any reversible error. See, e.g.,

United States v. Vazquez, 271 F.3d 93, 99 (3d Cir. 2001) (stating that, under plain error

standard of review, there must be error and that error must be plain, affect substantial

rights, and seriously affect fairness, integrity, or public reputation of judicial

proceedings). As the District Court aptly noted, this Court has held that more serious

disclosures than a brief display of a document with a criminal docket number were

                                               6
harmless. See, e.g., United States v. Self, 681 F.3d 190, 199 (3d Cir. 2012) (testimony

indicating that defendant was “already in jail”); United States v. Greenstein, 322 F.

App’x 259, 264-65 (3d Cir. 2009) (not precedential) (use of terms “police photo” and

“weapons violation”).

       The District Court appropriately disposed of Harley’s motion to suppress.2 Noting

that a failure to provide a copy of the warrant at the time of the search does not constitute

grounds for suppression unless the defendant demonstrates legal prejudice or bad faith,

Harley asserts that the District Court failed to make any findings with respect to prejudice

or bad faith. See, e.g., Harley, 2014 WL 1405145, at *2 (“Absent a demonstration of

prejudice or bad faith—neither of which is present here—suppression of evidence is not

the proper remedy for a violation of [Federal Rule of Criminal Procedure] 41.” (quoting

United States v. Lipford, 203 F.3d 259, 270 (4th Cir. 2000))). He also takes the District

Court to task for purportedly failing to apply several factors to resolve the dispute as to

whether a search warrant had in fact been issued before the search occurred. See, e.g., id.

at *1 (identifying indicia to be considered in determining whether warrant was issued in

absence of signature). During the suppression hearing, the government submitted a

search warrant—signed, dated, and filed (and assigned a case number) by the Magistrate

Judge two days before Harley’s home was searched. In addition, Harley does not point to

any evidence of prejudice or bad faith. See, e.g., United States v. Hall, 505 F.2d 961, 964

(3d Cir. 1974).

       2
         We review the District Court’s denial of a suppression motion for clear error as
to the factual findings, while exercising plenary review as to legal issues. See, e.g.,
United States v. Silveus, 542 F.3d 993, 999 (3d Cir. 2008).
                                              7
       Finally, Harley filed a pro se motion to dismiss the indictment and set aside the

verdict, claiming that the government introduced perjured testimony.3 Specifically,

“Stanley Dedmond, the owner of Enpetro testified [before the grand jury] that he never

sent an original of the promissory note to anyone,” while “William Trantham, an attorney

for Enpetro who signed the promissory note testified that the original note was not sent to

Harley.” (Appellant’s Brief at 25 (citing A14).) Harley claims that Dedmond made a

statement to the FBI indicating that he sent the note to Harley, and Browning “found

more than one original Enpetro note during the search.” (Id. at 25-26 (citing A23-A77,

A1115-A1172.) “[E]ven assuming that they were false statements, there is no indication

of how any of these statements ‘substantially influenced the grand jury’s decision to

indict,’ nor did these statements create ‘grave doubt’ that the grand jury’s decision to

indict was free from the substantial influence of the purportedly perjured testimony.”

Harley, 2016 WL 374456, at *9 (quoting Bank of Nova Scotia v. United States, 487 U.S.

250, 256 (1988)).

                                            III.

       We will affirm the judgment of the District Court as well as its order denying

Harley’s post-trial motions.

       3
         We review a district court’s factual findings with respect to a motion to dismiss
an indictment for clear error, while its legal conclusions are subject to plenary review.
See, e.g., United States v. Bergrin, 650 F.3d 257, 264 (3d Cir. 2011).
                                             8