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USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 94-1343
UNITED STATES OF AMERICA,
Appellee,
v.
HAROLD F. CHORNEY,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Raymond J. Pettine, Senior U.S. District Judge] __________________________
____________________
Before
Boudin, Circuit Judge, _____________
Campbell, Senior Circuit Judge, ____________________
and Stahl, Circuit Judge. _____________
____________________
Scott A. Lutes for appellant. ______________
Sean Connelly, Department of Justice, with whom Sheldon _______________ _______
Whitehouse, United States Attorney, Seymour Posner and Margaret __________ _______________ ________
Curran, Assistant United States Attorneys, were on brief for the ______
United States.
____________________
August 24, 1995
____________________
BOUDIN, Circuit Judge. Appellant Harold Chorney was ______________
convicted of seven counts of making false statements or
reports to a federally insured bank, 18 U.S.C. 1014, and he
now appeals to challenge both his conviction and sentence.
We set forth the evidence in the light most favorable to the
verdict. United States v. Tuesta-Toro, 29 F.3d 771, 773 (1st _____________ ___________
Cir. 1994), cert. denied, 115 S. Ct. 947 (1995). ____________
Chorney was president and owner of Cumberland Investment
Corporation ("Cumberland"), a coin-trading company that
specialized in U.S. silver dollars. During the 1980s,
Cumberland obtained a series of loans from the Eastland Bank
in Woonsocket, Rhode Island. To secure such loans, Eastland
Bank required pledged assets worth twice as much as the loans
themselves. Most of Cumberland's collateral comprised silver
dollars. The gravaman of the charge against Chorney was that
he engineered a false appraisal.
The pledged silver dollars were appraised by William
Tebbetts of the Mayflower Coin and Stamp Company. Chorney
submitted the Tebbetts appraisal to Eastland Bank, which
relied upon the appraisal in deciding how much to loan to
Chorney. The value of an uncirculated silver dollar turns on
its condition, which is rated on a "mint state" ("MS") scale.
A silver dollar in MS-65 condition is considered a "gem" and
is worth substantially more than a coin of MS-64 or lesser
quality.
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Tebbetts testified that in March 1985 he purchased a
coin business, renamed Mayflower, with money given to him by
Chorney. Tebbetts assigned all his rights in the business to
Cumberland, and Cumberland employed him at a weekly salary.
In June 1985, Tebbetts examined hundreds of the pledged
silver dollars being held by Eastland Bank and graded them
all between MS-62 and MS-64. According to Ann Fiumefreddo,
Chorney's secretary, Chorney directed her to type a letter to
Eastland Bank on Mayflower letterhead stating that all of the
silver dollars that Tebbetts had examined were of MS-65
quality. Tebbetts stated that he signed the letter because
he wanted to "keep [his] job."
In August 1985, Tebbetts signed an appraisal on
Mayflower letterhead appraising Cumberland's silver dollar
collection, including the coins pledged to Eastland Bank.
Tebbetts graded all the coins as being MS-65, because Chorney
told him to do so even though Tebbetts knew that this was
untrue. The letter identified Tebbetts as the chief coin
appraiser for Mayflower but did not disclose that Chorney
owned Mayflower and employed Tebbetts. Fiumefreddo, who
typed the appraisal for Tebbetts, asked Chorney whether he
could have a company that he owned appraise another company
that he owned. Chorney replied, "You're better off not
knowing or don't ask questions; something to that effect."
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In mid-1985, Cumberland already had an outstanding loan
balance from Eastland Bank of over half a million dollars.
But after the false appraisal just recounted, Eastland Bank
made additional extensions and renewals of the loans in late
1985 and again in each of the next four years. As the bank
increased and renewed its loans, it took additional coins
from Cumberland. By May 1989, the balance stood at $2.5
million. Bank officials testified that, starting in the fall
of 1985, the bank relied on the Tebbetts appraisal in making
the loan extensions and renewals.
Ultimately, in 1989, Sotheby's auction house appraised
the silver dollars--now numbering 7,820--that Chorney had
pledged to Eastland over the years as collateral to secure
the loans. The Sotheby's appraisal determined that of the
7,820 coins, only one percent were in MS-65 condition and
that the overwhelming majority of the coins were MS-63 or
lower. In the wake of that information, Cumberland went
bankrupt, defaulted on the loans, and criminal proceedings
against Chorney followed.
On May 27, 1993, the jury found Chorney guilty of seven
counts of making a false report and statement to a federally
insured bank. 18 U.S.C. 1014. Chorney was acquitted on a
related conspiracy count, 18 U.S.C. 371, and on ten counts
of mail fraud, 18 U.S.C. 1341. On May 9, 1994, the
district court sentenced Chorney to 27 months' imprisonment,
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followed by three years' supervised release, and ordered him
to pay $569,469 in restitution to the Federal Deposit
Insurance Corporation (Eastland Bank's successor in
interest), and $28,000 to cover the cost of his court-
appointed attorney.
1. On this appeal, Chorney's opening set of challenges
is to his conviction. The first of these--that the district
court erred in denying his motion to appear as co-counsel--
need not detain us long. We have held that "hybrid
representation," by counsel and the defendant, "is to be
employed sparingly and, as a rule, is available only in the
district court's discretion." United States v. Nivica, 887 _____________ ______
F.2d 1110, 1121 (1st Cir. 1989), cert. denied, 494 U.S. 1005 ____________
(1990).
Here, Chorney's request was based primarily on his
desire to present certain constitutional issues in the pre-
trial phase, although there was also some reference to
Chorney's desire to cross-examine witnesses. The district
court gave defense counsel additional time to present the
constitutional issues, none of which are pressed on this
appeal. We see neither an abuse of discretion nor any
indication of prejudice in the district court's decision not
to allow Chorney to act as his own counsel in presenting
those issues.
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Chorney's next claim of trial error, based on Brady v. _____
Maryland, 373 U.S. 83 (1963), concerns the government's ________
failure to provide him with videotapes, photographs and a
transcript; all were made in connection with the bankruptcy
trustee's seizure of assets, including 8,641 silver dollars,
from Cumberland's offices on August 17, 1990. Chorney says
that the government gave him one inadequate videotape but
that he did not learn of the additional materials until after
he filed this appeal.
The additional materials are not part of the record on
appeal, having never been filed in the district court. See ___
Fed. R. App. P. 10(a). The proper means for Chorney to raise
his contention was by a motion for a new trial under Fed. R.
Crim. P. 33. See United States v. Lau, 647 F. Supp. 33, 34 ___ _____________ ___
(D. P.R. 1986), aff'd, 828 F.2d 871 (1st Cir. 1987), cert. _____ _____
denied, 486 U.S. 1005 (1988). Rule 33 permits such a motion ______
to be made at any time within two years after judgment, and
that time has not yet expired.
The requirement of a motion in the district court is not
some esoteric formality. In present case, the government
argues that the materials in dispute were not covered by the
Brady doctrine, and several of the arguments (e.g., lack of _____ ____
materiality) involve issues of fact or fact-based judgments.
This court is not in a good position to resolve those issues
in the first instance, and there is every reason why they
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normally should be winnowed by the trial judge. Accordingly,
we decline to address the Brady issue at this time. See ___
generally UnitedStates v.Slade, 980F.2d 27,30 (1stCir. 1992). _________ ____________ _____
In his last claim of trial error, Chorney says that the
district court erred when it excused a juror during final
jury deliberations and permitted an 11-member jury to return
a verdict. Fed. R. Crim. P. 23(b) permits this course, in
the trial court's discretion, "if the court finds it
necessary to excuse a juror for just cause" after the case is
submitted to the full jury. Chorney objects that the court
abused its discretion and, in addition, failed to make a
formal finding of just cause.
The case was submitted to the jury on the afternoon of
Monday, May 24, 1993. Deliberations continued the next day.
On the morning of Wednesday, May 26, juror Giguere did not
appear because his eldest son had been killed while working
on a construction job. After Chorney declined to consent to
an 11-member jury, the trial judge said that he was inclined
to adjourn for six days (Monday, May 30, being a holiday) to
see whether Giguere would be able to rejoin the
deliberations, but the judge expressed some concerns about
this delay.
The court then summoned the jury, explained the
situation, indicated its tentative solution, but also said
that the delay "may be just enough to break the momentum, to
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break your chain of thought . . . ." Without objection by
either side, the court asked the jury to reflect and provide
its own assessment. The jury retired and returned to express
a preference for continuing its deliberations. After
reflecting, the district court allowed the jury to resume
deliberations on Thursday, May 27, and the verdict was
rendered later that day.
In managing juries, trial judges are constantly faced
with practical problems, ranging from jurors' dentist
appointments to personal disputes among jury members to rare
family tragedies like this one. Quite often some costs or
risks attend every alternative open to the court. Where the
trial judge takes the time to hear counsel and thoughtfully
weighs the options, we will not second guess the decision
unless the balance struck is manifestly unreasonable. Accord
United States v. Doherty, 867 F.2d 47, 71 (1st Cir.), cert. _____________ _______ _____
denied, 492 U.S. 918 (1989). ______
The facts already described make it evident that this
was a classic close call. It is true, as Chorney says, that
the district court did not seek to contact Giguere
immediately to see whether he thought he could resume on
Tuesday; but whatever the answer, the substantial delay and
the disruption of ongoing deliberations would have occurred.
As for the lack of a formal "just cause" finding, the
standard is not especially informative and we think that the
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finding is implicit in the trial court's careful
consideration of the matter.
2. At sentencing, the district court began with the
base offense level of six for bank fraud, U.S.S.G. 2F1.1,
and added two levels for more than minimal planning, U.S.S.G.
2F1.1(b)(2).1 The court found that the amount of
financial loss involved was $569,469, and added an additional
eight levels for that loss, U.S.S.G. 2F1.1(b)(1)(I), for a
total offense level of 16. Chorney challenges the district
court's calculation of loss.
Application Note 7(b) to 2F1.1 provides:
In fraudulent loan application cases and
contract procurement cases, the loss is
the actual loss to the victim (or if the
loss has not yet come about, the expected
loss). For example, if a defendant
fraudulently obtains a loan by
misrepresenting the value of his assets,
the loss is the amount of the loan not
repaid at the time the offense is
discovered, reduced by the amount the
lending institution has recovered (or can
expect to recover) from any assets
pledged to secure the loan.
U.S.S.G. 2F1.1, comment (n.7(b)) (1992). Because
Application Note 7(b), as quoted, went into effect on
November 1, 1992, it was not in the guidelines edition used
____________________
1Because of ex post facto concerns, the district court _____________
used the 1987 edition of the Sentencing Guidelines in effect
during the period in which the offenses were committed rather
than the version applicable at the time of sentencing. See ___
United States v. Harotunian, 920 F.2d 1040, 1041-42 (1st Cir. _____________ __________
1990). Citations are to the 1987 edition unless otherwise
indicated.
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by the district court. Nevertheless, Note 7(b) can be
considered because it generally represents a clarification,
not a substantive change. United States v. Bennett, 37 F.3d _____________ _______
687, 694-95 n.11 (1st Cir. 1994).
When the offense was discovered in May 1989, the balance
of unpaid loans was about $2.5 million. To arrive at the
loss figure of $569,469, the court first reduced the $2.5
million by the value of the silver dollars and other assets
that Chorney had pledged to secure the loan. Next, the court
subtracted from the balance an additional $336,951, the value
of the 8,641 unpledged silver dollars that had been seized
from Cumberland. Chorney claims the $336,951 figure should
have been higher.
The $336,951 figure represents the value of the 8,641
coins, as stipulated to by the parties, when they were seized
on August 17, 1990. Chorney says that the district court
should have valued those coins as of May 5, 1989, when they
were worth $590,602.30, again by stipulation. Had the court
used the May 5, 1989, date, Chorney's total offense level
would have been 15 instead of 16, and would have resulted in
a sentencing range of 18 to 24 months, instead of the range
of 21 to 27 months actually employed.
The declining value of the coins resulted from
fluctuations in the market for silver dollars. During the
sentencing hearing, the government argued that the unpledged
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coins should be valued as of February 4, 1994, the day of
sentencing, when their stipulated value had declined further
to $284,401. By contrast, Chorney pressed for the court to
use the May 5, 1989 date, the date the fraud was discovered.
The district court observed that prior to the August 1990
seizure of the coins, the unpledged silver dollars were in
Chorney's possession; by contrast, once the coins were seized
by the bankruptcy trustee, they were removed from Chorney's
control and more likely to be available to satisfy Eastland
Bank's claims.
Obviously, in a case like this one, the selection of any
specific date has an element of arbitrariness; the property
in question declined in value because of market conditions
and no actual sale price was available to fix the loss
definitively. On the other hand, the defendant's misconduct
in the first instance deprived the bank of pledged assets
that, if they had been as falsely represented, would have
given the bank a 100 percent margin of protection against
declines. As for the unpledged assets, they could hardly
have been used to offset the bank's losses until they came
into the possession of the trustee.
We are dealing here with an issue part way between a raw
question of law and one of concrete fact; the issue is the
application of generally phrased guideline language to
specific, but undisputed facts. It is sufficient that the
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district court reached a reasonable outcome. See generally _____________
Reich v. Newspapers of New England, Inc., 44 F.3d 1060, 1069- _____ _______________________________
70 (1st Cir. 1995). As there was no cross-appeal, we have no
occasion to consider various arguments of the government that
suggest that the district court was unduly generous to
Chorney both in its valuation date and in giving him any
credit at all for the seized but unpledged coins.
As to the loss computations, Chorney also complains that
the district court refused to allow him to call witnesses who
would have testified that Cumberland assets had been sold by
the trustee in an unreasonable manner for less than their
fair value. The only specific assets to which Chorney points
are coins that were pledged to another bank. Chorney's
position is that, if those coins had been sold for their
proper value, there would have been money left over to reduce
the losses of Eastland Bank.
Under Application Note 7 adopted in 1992 (and quoted in
text above), the assets pledged to another bank would be
excluded automatically because they were not pledged to
Eastland Bank. Without mechanically reading this limitation
back into the 1987 edition of the guidelines, we think that
the 1987 guidelines also should be read to disallow general
excursions designed to explore a defendant's other assets not
pledged to the lender. Our reason for this view goes beyond
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the government's legitimate concern with protracted
proceedings to something more basic.
The governing guideline's emphasis on loss, as the main
variable in fixing the offense level, is primarily as a proxy
for the seriousness of the fraud aimed at by the defendant.
Indeed, from the outset, the guidelines have directed that
"intended" loss be used if greater than actual loss. E.g., ____
U.S.S.G. 2F1.1, comment (n.7) (1988). A wealthy defendant
who commits a large fraud is not entitled to a minimum
sentence simply because the victim can recoup from the
defendant's other assets. Some might think the crime even
more serious on account of a defendant's wealth; few would
think it less so.
Where a bank loan is fraudulently procured, the original
loan or the outstanding balance is a presumptive proxy for
the actual or threatened loss. Reducing that amount by the
value of assets pledged to the lender reflects the fact that
the real sum at risk for the lender is the difference between
the amount loaned and the collateral. But to give the
defendant credit for other, unpledged assets is simply a free
ride for the wealthy defendant and wholly at odds with the
underlying purpose of the guideline.
This is, of course, a generalization. Perhaps there
might be occasions, at least for cases not governed by the
1992 application note, where a narrow argument might be made
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for taking account of unpledged assets, although none occurs
to us offhand. Still, in the ordinary case it is the illegal
transaction that is to be appraised--not the defendant's
overall wealth--and no reason is provided for making any
exception here.
Finally, Chorney challenges the district court's order
that he pay, as a condition of his supervised release,
$28,000 to cover the costs of his court-appointed attorney.
The statute provides that "[w]henever the . . . court finds
that funds are available for payment from or on behalf of a
person furnished representation," it may authorize or direct
payment to the appropriate parties. 18 U.S.C. 3006A(c)
and (f). "Payment, however, may not be directed without a
finding that the funds are available." United States v. _____________
Santarpio, 560 F.2d 448, 455 (1st Cir.), cert. denied, 434 _________ _____________
U.S. 984 (1977). Chorney says that the district court failed
to make this required finding.
As Chorney did not object to the order below, our review
is for plain error. Although the district court apparently
did not formally find that Chorney had funds available to pay
the cost of his attorney, the court did make the $28,000
payment subject to periodic reviews of Chorney's financial
condition. Although this extra safeguard does not quite
comport with Santarpio, it does lessen the impact of the _________
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district court's failure to determine that funds were
available.
In all events, the issue of available funds could have
been resolved if Chorney had raised the issue with the
district court. We conclude that Chorney has not met his
burden under the plain error standard to demonstrate that the
order "involve[ed] either a miscarriage of justice or
deviations that seriously impair the fundamental fairness and
basic integrity of the trial proceedings." E.g., United ____ ______
States v. Bullard, 37 F.3d 765, 767 (1st Cir. 1994), cert. ______ _______ _____
denied, 115 S. Ct. 1809 (1995). ______
Affirmed. ________
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Document Info
Docket Number： 94-1343
Filed Date： 8/24/1995
Precedential Status： Precedential
Modified Date： 9/21/2015