Court Opinion

ID: 2961869
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:49:03.591427+00
Date Added: 2024-06-11T11:21:27.544109
License: Public Domain

USCA1 Opinion

	

        March 30, 1993      UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 92-1790                              UNITED STATES OF AMERICA,                                      Appellee,                                          v.                                   JOHN M. CRONIN,                                Defendant, Appellant.                                _____________________        No. 92-1791                              UNITED STATES OF AMERICA,                                      Appellee,                                          v.                                  ROBERT E. STARCK,                                Defendant, Appellant.                                 ____________________        No. 92-1792                              UNITED STATES OF AMERICA,                                      Appellee,                                          v.                                NATHANIEL M. MENDELL,                                Defendant, Appellant.                                 ____________________                    APPEALS FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                     [Hon. William G. Young, U.S. District Judge]                                             ___________________                                 ____________________                                 ____________________                                        Before                                 Breyer, Chief Judge,                                         ___________                            Aldrich, Senior Circuit Judge,                                     ____________________                              and Selya, Circuit Judge.                                         _____________                                 ____________________            Annemarie Hassett with  whom Federal Defender Office was on  brief            _________________            _______________________        for appellant John M. Cronin.            Richard C. Driscoll, Jr.,  with whom Driscoll  and Mattingly, P.C.            ________________________             _____________________________        was on brief for appellants Robert E. Starck and Nathaniel M. Mendell.            Mark  J.  Balthazard,  Special Assistant  United  States Attorney,            ____________________        with whom A. John Pappalardo, United States Attorney, was on brief for                  __________________        appellee.                                 ____________________                                    March 30, 1993                                 ____________________                      ALDRICH,  Senior Circuit Judge.  Defendants Cronin,                                ____________________            Starck and Mendell were  variously convicted on some 15  of a            20 count  indictment for  mail fraud and  inducing interstate            transportation to obtain property by fraud, 18 U.S.C.    1341            and  2314.  Cronin was  sentenced as an  organizer or leader;            Starck and Mendell as managers or supervisors.   They appeal,            claiming that the evidence did not warrant findings of guilt,            or, in any event,  justify these added characterizations, and            that the orders for  restitution were excessive.  We  affirm,            except as to the last.                      The  fraud  involved  sales  of time  shares  in  a            proposed Cape Cod resort, Village Green.  Although there were            many  subsidiary misrepresentations of consequence, the basic            ones  were   that  Village   Green  was  a   sound  long-term            investment;  that  its  property,  then  a  motel,  would  be            renovated for the  1989 season; and that  it was a  member of            RCI, Resort  Condominium International, Inc.   Membership  in            RCI would permit exchanging  time at Village Green for  other            resorts, and was a  most attractive inducement.  In  point of            fact  Village Green had  no financing even  sufficient to get            off the  ground; initial obligations  were not met,  and, not            long  after the  start, foreclosure  and bankruptcy  were not            only  inevitable,  but imminent.    Second,  with respect  to            renovation,  there was  no  bona fide  prospect of  financial            ability  to accomplish it.  Third, the sales pitch was larded                                         -3-            with  RCI  posters;  brochures  were offered  many  customers            (contrary  to RCI's instructions),  and the  sales agreements            recited   membership,  whereas,   in  fact,   the  membership            application was never  completed, and was  rejected.  In  sum            total,  some  $272,000  was  collected of  which  little  was            returned,  with sales  continuing while  other protests  were            ignored.                      Each defendant denies guilt, or, at the least, says            that the  others were more responsible.  According to Cronin,            "[T]he prosecution's  evidence amounted to  nothing more than            mere association between defendant and the sales people (sic)            who  made the  misrepresentations. . .  .    The  prosecution            presented  no substantial  evidence that  defendant had,  or,            more importantly, exercised control  over the manner in which            the  time shares were sold. . .   There was  no evidence that            defendant  read, reviewed, discussed,  or otherwise  knew the            contents of the sales documents. . .   The evidence was  that            the  salespeople   . . .  not  defendant,   told  prospective            purchasers  that  Village Green  was  a member  of  RCI . . .            These  salespeople   were  under  the  direct   and  constant            supervision of Hart, the Project Director."                      In point  of fact Cronin was the  originator of the            development.   He had made contact with one Hatfield, who led            him  to  Starck  and  Mendell  to  provide  financing.    The            financing was never  completed, as he knew, and Hatfield told                                         -4-            him it was essential.   Cronin obtained a sizeable  six month            loan  at 24%  interest  annually, subject  to endorsement  by            Starck  and  Mendell.   He was  to  receive $400,000  for his            contribution to the  development, and was  said not to  share            with Starck and  Mendell as  owners because he  had had  some            difficulty at the  Registry of  Deeds.   He took  a note  and            third mortgage, which, surely, maintained his interest.                      As  to Cronin's  innocence  of what  was going  on,            Hart, the  Project Director,  was partly  hired  by him,  and            reported  to  him.    Cronin,  in  fact,  was  in  charge  of            marketing, and was said to be present every day.  He had been            in  charge of marketing at an earlier development, and was no            amateur.   He  could not  help but  see  the RCI  posters and            brochures having,  in fact,  directed the installation  of an            RCI room, and he told at least one salesman they were already            a member.   (Others said he  said it was  going through as  a            matter of course, which  was equally untrue.)  The  rosy view            painted in his brief is not  what we consider.  The most that            might be said is that the enterprise may have started on good            intentions,  but when that paving ran out it proceeded on the            backs of prone customers.                      We  mention briefly Cronin's objection to testimony            that he instructed  the contract secretary to  place the name            Bernard Cohen on the weekly payroll request at $1,500, at the            same time  telling her that Cohen  was a dead friend  of his.                                         -5-            Cronin  asserts  this  to  have been  irrelevant  and  highly            prejudicial.  Rather, it was highly relevant.  In addition to            showing  that  Cronin  was  improperly  milking  the  scheme,            contrary to  his denial "that money was  paid [him]" (payroll            distributions were in cash), it showed the degree to which he            was in charge.  The court's finding that  relevancy prevailed            over prejudice was well warranted.                      We  pause here to say that enough has been shown to            justify the court's finding, with reference to sentence, that            Cronin was an organizer or leader.  U.S.S.G.   3B1.1(a).                      Turning to Starck  and Mendell, they,  as trustees,            were  the  title  owners,  and had  personally  endorsed  the            purchase note.  The jury  found in their favor on  some early            counts.   They contend, for this and other reasons, that they            did  not  "devise  the  scheme."    Passing  the   fact  that            defendants  can take no  comfort from  inconsistent verdicts,            Harris  v.  Rivera,  454 U.S.  339,  345  (1981),  it is  not            ______      ______            necessary that  a defendant be an original organizer.  United                                                                   ______            States v. Serrano,  870 F.2d 1,  6 (1st Cir.  1989).  On  the            ______    _______            issue  of the RCI alone there were ample incidents to warrant            conscious deceit.  On top of this, these defendants could not            have been  ignorant of the many  financial difficulties that,            in due course, presaged ruin.                      As  to   the  sentencing  increase   because  these            defendants were found to be managers or supervisors, U.S.S.G.                                         -6-              3B1.1(b), Starck  and Mendell were, after  all, the owners.            We review  only  for clear  error,  United States  v.  Panet-                                                _____________      ______            Collazo, 960 F.2d 256, 261 (1st Cir.), cert. denied sub nom.,            _______                                _____________________            Diaz v. United States, 113 S.Ct. 220 (1992), and we see none.            ____    _____________            Manifestly they  cannot  deny responsibility  for  deliberate            misrepresentation by salesmen of  which they were aware, even            to the point  of receiving complaints,  simply on the  ground            that they were not  the ones who devised the procedure.  This            would be a happy day for vendors with loose consciences.  The            record   is   replete   with   misrepresentations,   and   of            defendants', at  least  occasional,  awareness  and  lack  of            concern.                      With  reference  to sentences,  Starck  and Mendell            complain  that  the  court   charged  them  with  points  for            obstructing  justice  by  committing  perjury.     Our  prior            rejection  of  this  contention,  United  States v.  Batista-                                              ______________     ________            Polanco, 927 F.2d 14,  21-22 (1st Cir. 1991), has  since been            _______            confirmed.   United  States  v. Dunnigan,  122  L. Ed.2d  445                         ______________     ________            (1993).                      Next, defendants  complain  that their  scheme  had            commenced  prior  to  the  Guidelines.    As  to  the  prison            sentences, they  were concurrent, and even  though mail fraud            counts are separate offenses, see United States v. Lilly, 983                                          ___ _____________    _____            F.2d   300  (1st  Cir.  1992),  there   can  be  no  possible            constitutional question.   There  is a problem,  though, with                                         -7-            regard to restitution.  Although Starck  and Mendell state in            their brief that  the court ordered restitution for  the full            amount obtained, this was not  so individually.  No defendant            was convicted on  all counts,  and as to  each defendant  the            court  ordered deducted from the full amount the counts as to            which he  had been acquitted.   This, however,  still charged            him  for more than  the counts on  which he was  convicted --            there  had been  much more  collected than  was named  in the            indictment's  20  counts.    The government  argued  that  in            determining the length of  sentence it was proper to  look at            the entire picture.   This is correct, United States  v. Fox,                                                   _____________     ___            889 F.2d  357 (1st  Cir. 1989);  indeed, even  to considering            offenses  found by  the court  though there  had been  a jury            acquittal.  United States  v. Mocciola, 891 F.2d 13,  17 (1st                        _____________     ________            Cir.  1989).   This,  however, is  for enhancement  of prison            terms  within  the guidelines.    Restitution  is a  separate            matter.  18 U.S.C.    3663.  In United States v.  Hughey, 495                                            _____________     ______            U.S. 411  (1990), the defendant, charged,  in several counts,            with  the  use of  stolen credit  cards,  pled guilty  to the            fraudulent  use of one.   The order  for restitution included            use  of others.  The  Court reversed, saying  the outer limit            was "the loss caused by the conduct underlying the offense of            conviction."   Id. at 420.   This decision,  however, did not                           __            entirely clear the air, and the circuits have split as to its            application in mail fraud cases.                                         -8-                      As of  the moment, five circuits  have answered, or            appear disposed  to answer, that the  "offense of conviction"            is  the particular  mailing charged.   See  United States  v.                                                   ___  _____________            Pivorotto, No. 92-3207,  1993 U.S. App.  LEXIS 2835, at  *10,            _________            n.5  (3d Cir. Feb. 22, 1993); United States v. Seligsohn, 981                                          _____________    _________            F.2d  1418, 1421 (3d Cir. 1992); United States v. Jewett, 978                                             _____________    ______            F.2d 248, 252  (6th Cir. 1992);  United States v.  Streebing,                                             _____________     _________            1993  U.S.  App. LEXIS  3303, at  *18-*24  (6th Cir.  Mar. 2,            1993); United  States v. Gravatt, 1991 U.S. App. LEXIS 30671,                   ______________    _______            at *10-*14 (6th  Cir. Dec.  27, 1991) (rep'd  mem., 951  F.2d                                                   __________            350);  United States v. Sharp, 941 F.2d 811, 814-15 (9th Cir.                   _____________    _____            1991); United  States v. Angelica,  951 F.2d 1007,  1009 (9th                   ______________    ________            Cir. 1991); United States v. Wainwright, 938 F.2d 1096, 1097-                        _____________    __________            98  (10th Cir. 1991); United  States v. Stone,  948 F.2d 700,                                  ______________    _____            703-04 (11th Cir. 1991); see also United States v. Marsh, 932                                     ___ ____ _____________    _____            F.2d  710, 712-13 (8th Cir. 1991) (Heaney, J., with the other            two  judges concurring in  the result).   Two  circuits have,            however, answered that the  offense includes the scheme as  a            whole.  See United  States v. Stouffer, 1993 U.S.  App. LEXIS                    ___ ______________    ________            4737,  *30-*34 (5th Cir. Mar. 16, 1993) (Garza, J., with whom            Smith, J.  concurred; Reavley,  J. dissented on  this issue);            United  States v. Bennett, 943 F.2d 738, 740 (7th Cir. 1991),            ______________    _______            cert.  denied,  112 S.  Ct.  2970  (1992); United  States  v.            _____________                              ______________            Brothers,  955 F.2d 493, 497 (7th Cir.), cert. denied, 113 S.            ________                                 ____________            Ct. 142 (1992); United States v. Langer, 962 F.2d 592, 600-01                            _____________    ______                                         -9-            (7th  Cir. 1992); United States v. Turino, 978 F.2d 315, 317-                              _____________    ______            19 (7th Cir. 1992).                      This  is   a  difficult  question,   and  we   well            understand the split.  Congress, meanwhile, since defendants'            offenses,  has   amended  the  statute  in   favor  of  broad            restitution.1   Under  these  circumstances  we forego  total            analysis, and  for the brief pre-amendment  period covered by            the present case are content  to accept the lenient  majority            view.   The  sentence  with respect  to  restitution must  be            limited  to the amounts in the counts on which the particular            defendant was found guilty.                      Affirmed, except remanded  for correction of orders                      ___________________________________________________            for restitution in accordance with this opinion.            _______________________________________________                                            ____________________            1.        (2)  For the purposes  of restitution,  a                      victim of an offense that involves as  an                      element  a  scheme,  a  conspiracy,  or a                      pattern  of  criminal activity  means any                      person directly harmed by the defendant's                      criminal conduct  in  the course  of  the                      scheme, conspiracy, or pattern.              3663(a)(2).   Added  by Pub.  L.  No. 101-647,    2509, 104            Stat. 4789, 4863 (Crime Control Act of 1990).                                         -10-