United States v. George R. Cavallo , 790 F.3d 1202 ( 2015 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
Nos. 12-15660 & 13-12009
________________________
D.C. Docket No. 8:10-cr-00550-EAK-MAP-6
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
GEORGE R. CAVALLO,
PAULA L. HORNBERGER,
JOEL A. STREINZ.
Defendants - Appellants.
________________________
Appeals from the United States District Court
for the Middle District of Florida
________________________
(June 22, 2015)
Before TJOFLAT and JULIE CARNES, Circuit Judges, and DUBOSE ∗, District
Judge.
∗
Honorable Kristi K. DuBose, United States District Judge for the Southern District of
Alabama, sitting by designation.
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JULIE CARNES, Circuit Judge:
The defendants in this case—George Cavallo, his wife Paula Hornberger,
and Joel Streinz—were players in one of the most long-lasting mortgage fraud
conspiracies in the history of central Florida. From approximately October 1997
through March 2008, these three defendants, along with about a dozen other
people, conspired to solicit and assist friends, family members, and business
associates to fraudulently purchase and sell over thirty residential real estate
properties that were ultimately used as primary residences or for investment
purposes.
Fifteen of the defendants’ cohorts pled guilty either to the conspiracy count
or to at least one substantive count. Only Cavallo, Hornberger, and Streinz went to
trial,1 and, after a three-month trial, the jury convicted each of them on the count
charging conspiracy to commit wire fraud and to make false statements to an
FDIC-insured bank in violation of 18 U.S.C. § 371. Cavallo and Hornberger were
also convicted of one substantive count of making false statements to an FDIC-
insured bank in violation of 18 U.S.C. § 1014.
Cavallo was sentenced to 120-months imprisonment. Hornberger was
sentenced to twelve months and one day imprisonment. Both were ordered to pay
1
Richard Bobka pled guilty shortly after the trial had begun.
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over $13 million in restitution. Streinz was sentenced to 60-months imprisonment
and ordered to pay $2,322,676 in restitution. All three appeal their convictions.
Cavallo and Hornberger also appeal their sentences. After careful consideration of
the record and all the briefs, we affirm Cavallo’s and Hornberger’s convictions and
sentences, except that we vacate and remand the orders of restitution issued as to
them. We reverse and vacate Streinz’s conviction.
I. BACKGROUND
The leader of the conspiracy, Craig Adams, devised and led the fraud
scheme, which was referred to at trial as “Craigonomics.” The conspirators would
fraudulently obtain the maximum amount of possible loans for each property by
using false statements on mortgage applications, allowing the conspirators to
minimize the funds needed for closing. The parties would then sell, or “flip,” the
properties to turn a profit. To accomplish this objective, the conspirators would
falsely inflate the sale price of properties in the loan documents they submitted to
lenders and then resell the properties either among themselves, as “friendly”
buyers and sellers, or to others outside the conspiracy. To further reduce the
amount of money needed for closing, the conspirators sometimes obtained second
mortgages from different lenders without disclosing the first mortgage.
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The loan applications contained material falsehoods concerning: (1) the
purchaser’s and/or buyer’s income, assets, and liabilities; (2) the purchase or sale
price; (3) the amount and source of the down-payment; (4) the identity of the seller
and purchaser/borrower; (5) the familial relationship of the parties; (6) the
purchaser’s/borrower’s intended use of the property; and (7) the disbursement of
the loan proceeds. Some conspirators lived in the fraudulently-acquired homes,
but because most could not afford the mortgage payments and maintenance costs
of the properties, they rented out the homes for additional income. Even then, the
borrowers experienced cash flow problems, and they often took out home equity
loans on their existing properties or acquired new properties and fraudulently
extracted cash from them.
The leader of the scheme, Craig Adams, initiated and orchestrated the
conspiracy by locating properties and recruiting individuals to participate. Adams,
who pled guilty, recruited Richard Bobka, who is defendant Cavallo’s brother, to
act as a real estate agent, buyer, and seller. Bobka then partnered with Cavallo and
Cavallo’s wife, defendant Hornberger, to fraudulently obtain more properties. On
several occasions, Hornberger served as a friendly buyer because she had a good
credit score. Cavallo handled the bookkeeping, banking, and taxes for many
properties that he and Hornberger acquired with Bobka. Cavallo and Hornberger
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listed several of the fraudulently-acquired properties on their joint tax returns by
claiming rental income and expenses. Cavallo, Bobka, and Hornberger maintained
a joint bank account that they used to hold the fraudulently-acquired loans. Bobka
also recruited defendant Joel Streinz to participate in the conspiracy as a friendly
buyer and seller for two properties.
On appeal, the three defendants before us raise several issues. Streinz
argues that the district court violated his Sixth Amendment right to counsel when
the court prohibited him from consulting with his attorney during the time period
in which he was testifying: a period that covered three days of trial and two
overnight recesses. Cavallo argues (1) that there was insufficient evidence to
convict him of making false statements to an FDIC-insured bank in violation of 18
U.S.C. § 1014 and (2) that his sentence is substantively and procedurally
unreasonable. Cavallo and Hornberger, together, argue that the district court erred
in (1) ordering and calculating restitution and (2) using sidebar conferences in
violation of their Sixth Amendment right to a public trial. Finally, all three
defendants argue that the district court erred by: (1) failing to fully investigate
possible juror misconduct; (2) failing to conduct an evidentiary hearing on
allegations of witness misconduct in grand jury; and (3) failing to conduct an
evidentiary hearing on alleged defense witness intimidation. We address first any
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contentions that challenge the validity of a conviction, after which we turn to
challenges to the sentences imposed.
II. STREINZ’S ACCESS TO COUNSEL CLAIM
A. Background
After his co-defendants had rested their cases, Streinz informed the court
that he wanted to testify on his own behalf. That testimony was delayed, however,
because on the morning that Streinz’s testimony was scheduled to begin,
Government counsel informed the trial court that Streinz had just produced
documents that were pertinent to his testimony and that should have been provided
much earlier, during discovery. The district court convened a hearing, and Streinz
testified that he had recently found the documents at home, while preparing for
trial. At the Government’s request, the court ordered Streinz, his attorney, the
prosecutor, and a federal agent to go to Streinz’s house to retrieve any other
documents that were subject to discovery. The court recessed the proceedings,
postponing Streinz’s testimony and directing him “not to communicate with
anyone whatsoever with regard to the documents located at your home.”
Accompanied by the prosecutor, a detective, a federal agent, and his own
attorney, Streinz traveled to his home. Upon entering the house, the group went
directly to an office that contained stacks of papers that Streinz had been
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examining in preparation for trial. The situation became heated, with Streinz
asserting that the officers were engaging in a more intrusive search than was
appropriate for their limited mission, and with the detective, who contended that
Streinz was not complying with the officer’s directives, ultimately calling for
backup. To prevent matters from getting further out of hand, Streinz’s attorney
quickly tried to identify any pertinent documents and brought those documents to
the courtroom, where the prosecutor began reviewing them. While examining
these papers, the prosecutor saw a handwritten notation indicating that the
documents contained Streinz’s work product. Concerned that he might be
improperly examining a defendant’s work product, the prosecutor ceased his
review and asked Streinz’s attorney to keep the documents in a box in the
courtroom in case an issue arose.
Streinz’s attorney moved for a mistrial the next morning, arguing that his
defense had been compromised by the document retrieval and review procedure.
The court denied the motion and asked Streinz if he still wanted to testify. Streinz
indicated that he did, although he expressed concern that his defense had been
“jeopardized” by the previous day’s events. Streinz’s direct examination then
began. As the trial recessed at the end of the day, the court instructed Streinz that
he could not discuss his testimony with “anyone,” but that he could talk to his
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lawyer about his “constitutional rights.” The court did not, however, explain what
that phrase might mean.
Prior to resuming his direct testimony the next day, Streinz sent a letter
directly to the court expressing distress at his situation. As set out in that
document, Streinz noted uncertainty whether it was appropriate to send the judge a
letter, but, given the court’s earlier restriction on conversations with his attorney,
he felt that he could not talk with the latter about his concerns without “cross[ing] a
line of violating the court[’s] restrictions.” Streinz stated, among other things, that
his preparation, particularly for cross-examination, had been hampered because he
had been deprived of trial documents that were “seized without any advance
notice,” thereby preventing him from being able to inventory or make copies of the
documents.
The court acknowledged Streinz’s letter and, while the other trial
participants remained waiting in the courtroom, allowed Streinz, on his own and
without any consultation with his attorney, to review the documents taken from his
home. After he had finished reviewing the documents in the courtroom, Streinz
completed his direct examination, and cross-examination began. Streinz was still
on the stand being cross-examined when the trial day ended. The district court
again reminded him that, although he could talk to his lawyer about “constitutional
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rights” during the overnight recess, he could not talk to his lawyer “about the
case.” Again, the court did not explain what a discussion about Streinz’s
constitutional rights might entail.
The next morning, Streinz sent a second letter to the court. In this letter,
Streinz expressed his anxiety that, because the court would not allow him talk to
his lawyer, no one was “looking out” for his “interests and due process.” He also
advised the court that the time he had been given to review his documents in court
on the previous day was insufficient, considering that he had been deprived of the
documents for three days. In particular, he noted, the Government had referenced
one of those documents in court the day before and likely would do so again, and
Streinz had no access to that document to better prepare himself for cross-
examination. He concluded by suggesting that errors made by the Government, his
attorney, and the court were “sabotaging [his] ability to be prepared and properly
defend [his] case.”
The district court acknowledged Streinz’s complaint but indicated that the
documents had been available to Streinz ever since his attorney, in the company of
Government personnel, had retrieved them from Streinz’s home. (But as Streinz
was not supposed to be talking to his attorney about the case, it is unclear how
Streinz would have known that he could have requested his lawyer to hand over
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the documents to him.) Regarding the impact of any errors on Streinz’s right to
testify, the court reminded Streinz that it had previously informed him that he had a
constitutional right not to testify. Then, after giving Streinz forty additional
minutes to review the documents in the courtroom, cross-examination began again.
B. Discussion
Streinz argues that his Sixth Amendment rights were violated by the trial
court’s refusal to allow him to confer with counsel during the two overnight
recesses while he was testifying. We agree.
We review Streinz’s Sixth Amendment claim pursuant to a de novo
standard. See United States v. Williams, 527 F.3d 1235, 1239 (11th Cir. 2008)
(reiterating that claims of constitutional error are reviewed de novo). A trial is
deemed unfair if the accused is denied counsel at a critical stage of his trial. See
United States v. Cronic, 466 U.S. 648, 659 (1984). The question here is whether,
by prohibiting Streinz from speaking to his attorney about his case during the three
days he was on the witness stand—including the two overnight recesses—the
district court deprived Streinz of assistance of counsel at a critical stage of the
proceedings. We conclude that the district court’s restriction did so deprive
Streinz.
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This conclusion is dictated, for the most part, by the Supreme Court’s
decision in Geders v. United States, 425 U.S. 80, 91 (1976). In Geders, which was
also tried in the Middle District of Florida, the district court had directed defendant
Geders not to talk to his attorney “about anything” 2 during a seventeen-hour
overnight recess between his direct and cross-examination. Id. at 83 n.1. Geders’
attorney objected, explaining that he had a right to talk to his client about matters
other than the imminent cross-examination. The district court declined counsel’s
request, noting that the latter could talk to Geders, while remaining in the
courtroom, about the witnesses to be called the next day, but nothing more than
that. Further, the court assured counsel that he would be able to consult with
Geders once the latter’s cross-examination had concluded and before redirect
examination, and the court did allow that post-cross-examination consultation the
next day. Id. at 82–85.
In determining whether the district court’s sequestration of Geders from his
own attorney during the overnight recess violated Geders’ constitutional right to
counsel, the Supreme Court acknowledged that, as a general rule, valid reasons
2
In directly addressing defendant Geders at the conclusion of the colloquy on this
matter, the district court stated: “[Mr. Geders] . . . I direct you not to discuss your testimony in
this case with anyone until you are back here tomorrow morning . . . for the purpose of being
cross-examined.” Geders, 425 U.S. at 83 n.1 (emphasis added). Based on its review of the
totality of the discussion and the court’s earlier statements, the Supreme Court concluded that the
actual message communicated to the defendant was that he was not to talk to his attorney about
anything. Id. (“The ambiguity of this colloquy appears to be resolved by the direction that
petitioner ‘not talk to you (counsel) about anything.’”).
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exist for disallowing a witness who is testifying from speaking to trial counsel at
recess periods during that testimony. The main justification for this prohibition is
the interest in deflecting efforts by third-parties to coach the witness before he
returns to the stand the next day to face cross-examination. Id. at 87. Yet, as the
Court noted, a criminal defendant is not just another witness. Although a non-
party witness will likely have little to discuss with trial counsel other than his
upcoming testimony, an accused and his attorney will often have many other
matters to discuss during an overnight recess. Indeed, the Court noted, “[s]uch
recesses are often times of intensive work, with tactical decisions to be made and
strategies to be reviewed.” Id. at 88. For example, defense counsel “may need to
obtain from his client information made relevant by the day’s testimony, or he may
need to pursue inquiry along lines not fully explored earlier. At the very least, the
overnight recess during trial gives the defendant a chance to discuss with counsel
the significance of the day’s events.” Id.Although it was sympathetic to a district court’s desire to minimize the
opportunities for a witness to be coached during a long recess, the Supreme Court
nonetheless determined that an accused’s right to confer with counsel trumps a
court’s concerns about such consultation. Specifically, when there is a conflict
between a testifying defendant’s right to consult with his attorney during “a long
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overnight recess” and the prosecutor’s desire to eliminate the risk that defense
counsel will coach his client before the latter’s cross-examination, “the conflict
must, under the Sixth Amendment, be resolved in favor of the right to the
assistance and guidance of counsel.” Id. at 91.
Geders’ conviction was overturned because the trial court would not let him
talk to his lawyer during one overnight recess. The district court here, in effect,
restricted Streinz from talking to his attorney during two overnight recesses that
occurred while he was testifying. 3 Thus, on its face, Geders appears to call for
reversal of Streinz’s conviction. The Government, however, disagrees that Geders
requires a conclusion that Streinz’s right to counsel was violated, and we now turn
to those distinctions that the Government says exist between this case and Geders.
First, the Government cites language, here and there, from Perry v. Leeke,
488 U.S. 272 (1989), in support of its argument that Streinz’s right to counsel was
not compromised by the district court’s broad embargo on conversations between
Streinz and his attorney. But it is difficult to discern how Perry bolsters the
Government’s position. In Perry, the trial court had only prohibited the defendant
from consulting with his attorney during a fifteen-minute recess that occurred after
3
As noted, on the first night, while Streinz was still testifying on direct, the court told
him that he could not discuss his testimony with “anyone,” but that he could talk to his lawyer
about his “constitutional rights.” On the second night, the district court reminded Streinz that he
could not talk to his lawyer “about the case,” although he could talk to his lawyer about his
“constitutional rights.”
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the defendant’s direct testimony had concluded and before cross-examination was
to begin. Id. at 280. Given the timing and short duration of the recess, the
Supreme Court distinguished Geders and concluded that the defendant’s right to
assistance of counsel had not been compromised by sequestration from his attorney
during such a brief period of time.
In reaching this conclusion, the Court noted that a defendant has no
constitutional right to consult with his lawyer while testifying. Id. at 281. In other
words, if a defendant gets in a tight spot on cross-examination, “neither he nor his
lawyer has a right to have the testimony interrupted in order to give him the benefit
of counsel’s advice.” Id. Were a defendant allowed to huddle with his lawyer
whenever the going gets tough, the truth-seeking function of the trial would be
impeded.4 And if a defendant has no right to call a time-out to talk with counsel
during his testimony, he similarly has no right to take advantage of a fortuitously-
timed recess “in which there is a virtual certainty that any conversation between
the witness and the lawyer would relate to the ongoing testimony.” 5 Id. at 283–84.
4
This is so not so much because of the fear of unethical coaching by counsel, but
because consultation with counsel “grants the witness an opportunity to regroup and regain a
poise and sense of strategy that the unaided witness would not possess. . . . [T]he discovery of
truth [is less likely when] a witness [] is given time to pause and consult with his attorney.”
Perry, 488 U.S. at 282.
5
It should be noted, though, that the Supreme Court made clear that it was not criticizing
judges who do permit criminal defendants to consult with counsel during a short trial recess.
The Court merely held that “the Federal Constitution does not compel every trial judge to allow
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But, in terms of the right to assistance of counsel, a period of silence
between a criminal defendant and his attorney during a short recess was a far
different matter for the Perry court than would be a similar quarantine during an
overnight recess. Reaffirming Geders, the Court noted that during an overnight
recess, normal consultation between defendant and counsel would “encompass
matters that go beyond the content of the defendant’s own testimony,” including
the availability of other witnesses, trial tactics, or even negotiating a plea
agreement. Id. at 284. And the “fact that such discussions will inevitably include
some consideration of the defendant’s ongoing testimony does not compromise
that basic right.” Id.In short, we read Perry as reaffirming the validity of the Geders principle.
The district court’s restriction on Streinz’s ability to consult with his attorney
during two overnight recesses clearly “falls on the Geders side of the line and
violates the Sixth Amendment.” United States v. Sandoval-Mendoza, 472 F.3d
645, 651 (9th Cir. 2006) (holding that Geders precludes “any overnight ban on
communication”); see also Perry, 488 U.S. at 284 (“It is the defendant’s right to
unrestricted access to his lawyer for advice on a variety of trial-related matters that
is controlling in the context of a long recess.”).
the defendant to consult with his lawyer while his testimony is in progress” just because a short
recess has been called. Id. at 284–85.
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In fact, this case involves the kind of communications that Geders intended
to protect. The day before Streinz began his direct examination, the Government
had taken documents and work product from Streinz’s house that he needed to
prepare for his testimony. Thereafter, and throughout his direct and cross-
examination, Streinz’s access to the documents was limited to brief, in-court
review sessions. As both Streinz and his attorney interpreted the court’s
instruction, Streinz could not confer with his attorney even to determine whether or
how he could regain possession of the documents. Nor could he discuss with his
attorney the likelihood that his defense had been compromised by the
Government’s retrieval and review process, or any means to reduce that threat. See
Geders, 425 U.S. at 88 (“At the very least, the overnight recess during trial gives
the defendant a chance to discuss with counsel the significance of the day’s events.
. . . [T]he role of counsel is important precisely because ordinarily a defendant is
ill-equipped to understand and deal with the trial process without a lawyer’s
guidance.”).
The Government argues that the district court did not actually prevent
Streinz from conferring with counsel during overnight recesses, or even during in-
court recesses, because the court told Streinz several times that he could discuss
with his lawyer his “constitutional rights.” We do not know what the district court
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meant by this exemption, and it appears obvious that neither did Streinz. Clearly,
Streinz was of the impression that the court had forbidden him from consulting at
all with his attorney about his case, which was not an unreasonable assumption
because those were the court’s exact words. Otherwise, he would not have felt
compelled, during the course of his testimony, to write the court two letters
revealing his concerns, and particularly his need for access to documents that the
Government had taken from his home on the day his direct examination was to
have begun. Indeed, Streinz told the judge, outright, that he had written the letter
rather than dealing through counsel because he did not want to run afoul of the
court’s order against communications between him and his attorney.
As to what one could reasonably assume the district court to have meant by
the phrase “constitutional rights,” when the court told Streinz not to speak to his
attorney about anything except those rights, the court had previously and
consistently used this term to refer to Streinz’s Fifth Amendment right against self-
incrimination.6 But any discussion about Streinz’s right against self-incrimination
6
On the day that Government counsel complained that Streinz had not turned over all
discovery, which was prior to Streinz’s direct examination, Streinz gave a sworn “proffer”
outside of the jury’s presence as to this matter. Before that proffer, the district court inquired
whether it was his intention to waive his “constitutional rights, not exercise [his] Fifth
Amendment rights and to testify.” Afterward, the district court reminded Streinz that just
because he had waived his constitutional rights by giving a testimonial proffer, he could rescind
that waiver and “exercise his constitutional right” not to testify before the jury. Just prior to this
exchange, at a sidebar conference, the court had advised defense counsel that Streinz’s
constitutional rights were at stake once he took the stand.
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would have been a very short conversation because Streinz had already begun
testifying, and any right he might have earlier had not to incriminate himself had,
by that time, become a moot point.
And even if we assume that the district court intended to permit
communication on a broader array of subjects than just Streinz’s right against self-
incrimination, its instruction that Streinz should not talk to his attorney about “the
case” during an overnight recess did not comply with Geders. See Perry, 488 U.S.
at 284 (noting the wide variety of trial-related communications that are protected
by Geders and stating that the “fact that such discussions will inevitably include
some consideration of the defendant’s ongoing testimony does not compromise” a
defendant’s right to assistance of counsel during an overnight recess).
Finally, citing Crutchfield v. Wainwright, 803 F.2d 1103 (11th Cir. 1986)
(en banc), the Government makes a two-fold argument (1) that Streinz failed to
preserve this issue on appeal because he did not object to the district court’s
On the next day, right before Streinz took the stand to testify before the jury, the court
stated: “Now, this will be the third time I believe that I have advised you of your constitutional
rights. You have a Fifth Amendment constitutional right against self-incrimination . . . . Now,
since the last time that I advised you of your constitutional rights have you had . . . an
opportunity to counsel with your attorney with regard to whether or not you should testify?”
After Streinz’s second letter, the court responded to his complaint that his ability to
defend his case had been sabotaged by stating: “Sir, I told you before you had a constitutional
right to testify or not to testify.”
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restriction and (2) that there is no indication that Streinz actually wanted to talk to
his attorney during the overnight recesses. In Crutchfield, the state trial court
called a brief recess during defendant Crutchfield’s direct testimony and instructed
defense counsel not to discuss the defendant’s testimony with him during that
break. Crutchfield did not object. Id. at 1104. After conviction, and relying on
Geders, Crutchfield filed a federal habeas corpus petition, arguing that the trial
court’s restriction on his communication with his attorney deprived him of the
assistance of counsel.
The en banc court unanimously agreed that the conviction should not be
vacated, but three opinions were issued, with each opinion reflecting different
reasoning in support of this outcome. A six-judge plurality of the en banc court
concluded that Geders applied even to short recesses within a trial day and
assumed that the trial court’s admonition to Crutchfield did unconstitutionally
restrict his right to the assistance of counsel during that recess. Id. at 1104–1111.
But in Geders, the defendant had objected to the proscription again consultation.
Crutchfield neither objected to the court’s instruction nor did the record reflect that
there was a desire to consult by either him or his counsel. Accordingly, because a
defendant must show that the prohibition against consultation actually prevented
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him from conferring with counsel, the plurality concluded that Crutchfield had
failed to show a deprivation of his right to assistance of counsel. Id. at 1109–11.
The five-judge concurring opinion read the plurality opinion as establishing
a per se rule that any restriction by the trial court on the ability to confer with
counsel during any recess, no matter how short in duration, constitutes a
deprivation of counsel. Id. at 1116. Viewing that analysis as too simplistic, the
concurring opinion indicated that when dealing with a non-overnight recess, one
should look at several factors. And given the relatively short recess and the limited
admonition by the trial court, the concurring opinion concluded that Crutchfield
had not suffered a constitutional deprivation of the right to counsel. Id. at 1115–
16. Further, the concurring opinion not only disagreed with the plurality opinion’s
application of a per se rule to the question whether an error had occurred, but also
found fault with the latter’s application of a per se rule requiring a
contemporaneous objection to preserve that error for review. Id. at 1118. The
concurring opinion noted that the plurality’s rule would mean that a trial court
could prevent a defendant from speaking to counsel during a week-long recess—
which under Geders would clearly constitute a constitutional error—but if no
objection were made, the error would not be deemed preserved: a result that the
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concurring opinion concluded would not be consistent, in all cases, with
established principles concerning the waiver of constitutional rights. 7 Id.As noted, two years after this Court’s decision in Crutchfield, the Supreme
Court issued its decision in Perry, concluding that a trial court’s restriction of
consultation between a testifying defendant and his counsel during a brief recess
does not constitute a deprivation of the defendant’s right to counsel. Thus, that
part of the Crutchfield plurality decision holding invalid even a brief restriction of
consultation between a defendant and his attorney is no longer good law. As to the
plurality’s requirement that a contemporaneous objection be lodged to preserve
error when such restrictions on consultations are imposed by a trial court, we need
not decide whether such an objection would be required in all circumstances
because we conclude that Streinz did object to the district court’s imposition of a
restriction on his right to consult with counsel and that the prohibition against
consultation actually prevented Streinz from conferring with his attorney.
Here, although Streinz’s two letters to the district court did not contain the
phrase, “I object,” he clearly conveyed the distress and confusion that the court’s
restrictions were causing him. See United States v. Johnson, 267 F.3d 376, 380
7
The third opinion in the case, authored by a single judge, disagreed with the plurality
opinion’s announcement of a per se rule as to the existence of error in this context and further
concluded that a defendant should be required to show prejudice if error did occur. Id. at 1118–
21.
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(5th Cir. 2001) (holding that, after the district court prohibited counsel from
consulting with the defendant during two overnight recesses occurring while the
defendant was testifying, counsel “made clear his desire to confer with [the
defendant],” and was not required to “preface his remarks with the magic words, ‘I
object.’”); United States v. Isom, 88 F.3d 920, 923 n.7 (11th Cir. 1996) (explaining
that although appellants did not use the words “double jeopardy” in their objection
below, the substance of their argument was sufficient to preserve a claim under the
Double Jeopardy Clause); see also United States v. Munoz, 430 F.3d 1357, 1374
(11th Cir. 2005) (agreeing that a defendant may preserve a constitutional objection
“in a number of ways, and need not object explicitly on constitutional or Sixth
Amendment grounds”).
Streinz’s two letters and his colloquies with the trial court adequately
conveyed his request to confer with counsel and his belief that his rights were
being violated as a result of the court’s refusal to allow him to do so. He therefore
alerted the court to the problem and gave it an opportunity to correct any error. See
United States v. Turner, 474 F.3d 1265, 1276 (11th Cir. 2007) (noting that one of
the “fundamental purposes” of the contemporaneous objection rule is to give the
trial court an opportunity to address and avoid errors). The district court failed to
do so and we therefore conclude that the trial court’s orders prohibiting him from
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conferring with counsel during two overnight recesses impermissibly infringed on
Streinz’s fundamental right to counsel. Geders, 425 U.S. at 91; see also Perry, 488
U.S. at 284 (reaffirming that Geders controls in the context of a long recess). For
this reason, we REVERSE Streinz’s conviction and remand for a new trial.8
III. ALLEGED GRAND JURY MISCONDUCT
A. Background
Defendants Cavallo and Hornberger (“Defendants”) contend that, while
testifying before the grand jury that indicted them, a federal agent perjured himself
when responding to a grand juror’s question. They appeal the district court’s
denial of their motions 9 to dismiss the indictment based on this alleged
misconduct. The pertinent facts are as follows.
During the course of a day-long grand jury session focusing on the present
case, an FBI agent testified about the many documents related to the mortgage
fraud conspiracy. After he had discussed at length a specific overt act related to a
property on 1762 Southpointe Drive, which overt act was also charged as a
substantive offense in Count 37, a grand juror asked the agent a question:
8
Streinz has asserted other errors, including an allegation that the retrieval of his
documents at his home was improper. Given our reversal of his conviction on the ground
discussed in text, we do not decide any other issues he has raised in this appeal.
9
Defendants moved to dismiss the indictment on this ground, both prior to trial and at
the close of all the evidence during trial.
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GRAND JUROR: On all these – on all these documents that have
been signed by these people who are named in the indictment, in each
count of the indictment, has it been verified that Bobka, Cavallo, and
Hornberger in Count 37 actually signed the documents that they are
alleged to have signed? I mean, their name’s been verified that, yeah,
that’s truly that person’s signature and they weren’t forged by
somebody else?
WITNESS: Right. Through the investigation, yes sir, we’ve done
that, either through interviews of people, and again, I’ll go back, you
know, sometimes – many times admissions that they, going right
through it, yes, that’s my signature. Yes, that’s my signature. And
many times throughout – the total information that we have from
witnesses about who the parties were involved, who was at the
closing, what was observed and seen in terms of signing.
GRAND JUROR: Okay.
WITNESS: So we’ve done it through that way. We – that would be
the way that we’ve done it.
In their motions to dismiss, Defendants argued that, through this response,
the agent essentially testified that every signature on every relevant document in
this case had been verified as belonging to the purported signer. This, they argue,
was not accurate and thus the agent made a perjurious statement. In support of this
assertion, they cite Hornberger’s testimony at trial that a number of signatures on
loan documents bearing her name and Cavallo’s name were forged by Richard
Bobka, who had recruited Hornberger and Cavallo to participate in the scheme and
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who was substantially involved in the purchase, sale, and management of
properties with Hornberger and Cavallo. Additionally, Streinz testified that he did
not sign several documents bearing his name related to properties on
Commonwealth Drive and Anchorage Drive.
B. Discussion
We review a district court’s denial of a motion to dismiss an indictment for
abuse of discretion but, in determining whether the court abused its discretion, we
resolve issues of law de novo. United States v. Schwartz, 541 F.3d 1331, 1355
n.69 (11th Cir. 2008). Likewise, we review a claim of prosecutorial misconduct
de novo because it is a mixed question of law and fact. United States v. Duran,
596 F.3d 1283, 1299 (11th Cir. 2010).
As a general matter, to establish prosecutorial misconduct for the use of false
testimony, a defendant must show that the prosecutor knowingly used perjured
testimony or failed to correct what he subsequently learned was false testimony,
and that the falsehood was material. United States v. McNair, 605 F.3d 1152, 1208
(11th Cir. 2010). When the alleged prosecutorial misconduct occurs in the context
of a grand jury proceeding, we dismiss the indictment only when the misconduct
“substantially influenced the grand jury’s decision to indict” or when there is
“grave doubt that the decision to indict was free from the substantial influence of
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such violations.”10 Bank of Nova Scotia v. United States, 487 U.S. 250, 256 (1988)
(internal quotations omitted). Accord United States v Verbitskaya, 406 F.3d 1324,
1336 and n.13 (11th Cir. 2005); United States v. Vallejo, 297 F.3d 1154, 1166
(11th Cir. 2002).
As to the elements of perjury, “perjury” is testimony “given with the willful
intent to provide false testimony and not as a result of a mistake, confusion, or
faulty memory.” United States v. Ellisor, 522 F.3d 1255, 1277 n.34 (11th Cir.
2008). Yet, an agent’s inadvertent giving of false testimony before the grand jury
does not warrant dismissal of an indictment. United States v. DiBernardo, 775
F.2d 1470, 1475 (11th Cir. 1985).
With the above standards in mind and upon examination of the testimony at
issue, we conclude that Defendants have failed to show that the agent’s answer to
the grand juror’s question was untruthful. Even if one could assume some
inaccuracy in the agent’s response to the grand juror’s imprecisely-worded
question, Defendants have failed to demonstrate that the agent intentionally made a
false statement, or that the prosecutor would so interpret his testimony. It is
Defendants’ thesis that, in response to a spontaneous question by the grand juror,
10
Prejudice is not required to be shown, however, if the error has so compromised the
structural protections of the grand jury “as to render the proceedings fundamentally unfair,” in
which case there is “a presumption of prejudice.” Bank of Nova Scotia v. United States, 487 U.S.
250, 257 (1988).
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the agent falsely told the grand jurors that investigators had verified that each
signature on every pertinent document in the entire case had actually been made by
the purported signer. But that is not a fair reading of the question to which the
agent was responding. As set out above, the grand juror’s question specifically
referenced Count 37, which charged Bobka, Cavallo, and Hornberger with making
and causing to be made false statements in connection with a loan application
submitted in Hornberger’s name. As the Government noted in its response to
Defendants’ pretrial motion to dismiss the indictment, there was ample evidence to
indicate that Hornberger had, in fact, signed this document. The Government’s
contention is borne out by the fact that at trial, the jury found, beyond a reasonable
doubt, that Hornberger was guilty of Count 37.
And to the extent that the agent’s answer might arguably seem broader than
just a reference to Count 37, it is apparent that he was not actually vouching for
each signature on every document as, just minutes before this response, the agent
had advised the grand jurors that Bobka had, in fact, forged Hornberger’s name on
other documents. That the agent would thereafter immediately contradict his own
testimony and assert that every signature in the case had been verified is
implausible, as is the notion that the grand jury would so understand his testimony.
In short, Defendants failed to demonstrate that the agent knowingly lied before the
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grand jury or that the prosecutor would understand the agent to have done so. The
district court therefore did not err in denying the motions to dismiss the indictment.
IV. ALLEGED EXTRINSIC INFLUENCE ON JURY
Defendants Cavallo and Hornberger 11 argue that their convictions should be
reversed because, during deliberations, a juror allegedly went on the internet and
learned that a testifying (and cooperating) co-conspirator had received only house
arrest based on his conviction. Yet, because Defendants had obtained this
information only as a result of Cavallo’s violation of a local rule forbidding contact
with jurors, the district court struck the evidence that Cavallo offered in support of
his allegation of extrinsic influence and denied Defendants’ motion for a new trial.
In addition, the court concluded that the extrinsic information was not harmful to
Defendants. We find no error in the district court’s decision.
A. Background
At the beginning of the sentencing hearing on October 26, 2012, the
prosecutor informed the court that he had just observed Cavallo and Hornberger’s
counsel, Ms. Unger, speaking with a juror from the trial in the hallway. Unger
explained that the juror, Juror George, had approached her in the hallway and
asked if they could speak. According to Unger, just as she was telling George that
11
Defendant Streinz likewise raises this claim, but as noted supra, we have reversed his
conviction on a different ground.
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she could not talk to jurors, the prosecutor arrived on the scene. After hearing
Unger’s explanation, the court addressed Juror George, who was present in the
courtroom, and directed him not to communicate with anyone involved in the case.
George confirmed that he understood the instruction, and the sentencing
proceeded.
On February 20, 2013, which was four months after the sentencing and over
nine months after the jury had returned its verdict, Unger forwarded an email to
prosecutors that she had received from Juror George that day. We summarize this
single-spaced missive. 12 The juror’s email begins with compliments for the good
12
The full email reads as follows:
OK, WHERE TO START I HAVE NO IDEA SO I,LL [sic] JUST START
TYPING, FIRST OF ALL I THOUGHT YOU DID A GREAT JOB
DEFENDING YOUR CLIENTS, FROM THE START I COULD SEE YOU
WERE GOING TO HAVE AN UPHILL BATTLE WITH ALL THE MONEY
AND RESOURCES THE GOVERNMENT HAS, I WAS GLAD TO SERVE ON
THE JURY, AFTER GETTING TO KNOW THE OTHER MEMBERS OF THE
JURY I COULD TELL THEY HAD NO IDEA OF HOW THE JUSTICE
SYSTEM WORKED. I FEEL SOME AGREED WITH THE GOVERNMENT
JUST BECAUSE THEY WERE THE GOVERNMENT, BUT THEY DON,T
[sic] REALIZE HOW RUTHLESS THEY CAN BE, FACE IT THEY ARE
THERE TO PAINT THE WORST PICTURE OF THE DEFENDANTS AS
THEY CAN SO THAT THEY CAN GET A CONVICTION. THE THINGS I,VE
[sic] LEARNED SINCE THE TRIAL WAS OVER ONLY WAS AT BEST
SHOCKING. I SPOKE TO GEORGE [CAVALLO] TODAY AND I,M [sic]
GLAD WE GOT IN TOUCH TO DISCUSS SOME OF THE THINGS THAT
TRANSPIRED. ON MY PART I FELT THE DEFENSE YOU WERE TRYING
TO GET ACROSS TO US THE JURY WAS THAT RICHARD WAS THE
CAUSE OF THERE [sic] DOWNFALL, WHICH I BELIEVE, HE USED HIS
BEING A FAMILY MEMBER TO INFLUENCE EVERYONE INVOLVED
FOR HIS OWN MONETARY GAIN. ALSO USING HIS FRIENDS TO DO
THE SAME. AS FOR THE JURY I HELD OUT ON CONVICTING THEM AS
LONG AS I COULD AND KNEW THEY WOULD SOONER OR LATER
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job that Unger had done at trial and an observation about the naiveté of fellow
jurors, who purportedly did not know how the justice system works and, in
particular, that prosecutors “can be ruthless” and try “to paint the worst picture of
the defendants.”
George then reports to Unger that he has learned some “shocking” things
and, in fact, had just spoken to Cavallo that very day. He notes that he believed
that co-defendant Richard Bobka had been the cause of everyone’s “downfall.”
BEGIN TO NEGOTIATE, I KNEW THE CONSEQUENCES OF BEING
CONVICTED WOULD BE DEVISTATING [sic] TO YOUR CLIENTS, AT
THE END THERE WAS 2 OF US HOLDING OUT, MY REASON WAS I
WASN,T [sic] CONVINCED THE GOVERNMENT PROVED TO ME
BEYOND A REASONABLE DOUBT. BUT THEY SURE PUT UP A
CONFUSING SMOKESCREEN. NOW HERE GOES THERE WAS A JUROR
WHO HELD OUT, REASON BEING SHE BELEF/ED [sic] THAT IF SHE
HUNG THE JURY THAT THE GOVERNMENT WOULD NOT RETRY
THEM. I TRIED TO CONVINCE HER OTHERWISE BUT IT TOOK A FEW
DAYS TO GET HER TO SEE IT MY WAY. I FOUND OUT SHE WAS
HOLDING OUT FOR A HUNG JURY, ALSO SHE LOOKED UP THINGS ON
INTERNET EVEN THOUGH WE WERE TOLD NOT TO, I FOUND OUT SHE
KNEW ONE OF THE DEFENDANTS THAT PLEAD [sic] GUILTY ONLY
RECEIVED HOUSE ARREST AND NO JAIL TIME, SO SHE TOUGHT [sic]
BY HANGING THE JURY THERE WOULD BE NO RETRIAL, I TOLD HER
THAT THE GOVERNMENT WOULDN,T [sic] BACK DOWN AND IF
CONVICTED AT ANOTHER TRIAL THE DEFENDANTS WOULD
RECEIVE HARSHER SENTENCES. STILL NOT BELEIVING [sic] THAT
OTHERS CAME TO ME ABOUT THE SITUATION A [sic] I STATED THAT
SOON SOMEONE ELSE WOULD BE FACING JUDGE K, I GUESS THEY
CONVINCED HER I WAS SERIOUS, SHE THEN VOTED TO CONVICT
ALONG WITH THE REST. I ONLY WANTED TO AGREE TO ONE
CHARGE BUT COULDN,T [sic] GET THEM TO ALL AGREE. SORRY, I
KNEW THAT CONSPIRACY CHARGE WAS A BAD ONE TO GET BUT
THEY INSISTED. PLESE [sic] FEEL FREE TO CONTACT ME IF YOU
HAVE ANY QUESTIONS.
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Further, before finally voting to convict, George, along with another juror, had
held out as long as they could, knowing that the “consequences of being convicted
would be devistating [sic]” to the defendants.
George explains that he had initially held out because he was not sure that
the prosecution had proved its case beyond a reasonable doubt, but instead had
only put up a “confusing smokescreen.” As to the female juror who had been
holding out with him, she was hopeful that if she hung the jury, the Government
would not retry the defendants. She was encouraged in this hope, having learned
from the internet that one of the testifying co-conspirators who had pled guilty had
received only house arrest. But George, who apparently by this time had decided
to vote guilty on some counts, argued to this juror that the Government would not
back down and that, if convicted, the defendants would receive harsher sentences
at a second trial. Eventually, the jury unanimously agreed to convict Defendants
on one substantive count each, as well as on the conspiracy count.
George closes the email by expressing his regret that he could not convince
his fellow jurors to convict on just one count and also that they insisted on a
conviction on the conspiracy count, which he knew was “a bad one to get.”
Finally, he advises Unger to feel free to contact him with any questions.
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Upon receiving this email from defense counsel, the Government filed a
notice of juror communications with the district court, and Defendants moved for
an evidentiary hearing to investigate potential juror misconduct. The court held an
organizational meeting with the parties on March 7, 2013 and ordered all future
proceedings in the matter to be sealed and all papers to be filed in camera. No one
objected. The court also ordered the parties to submit questions for the court to ask
Juror George, and all parties complied.
On March 28, 2013, the court held the first of two in camera hearings.
Government counsel, appellate counsel for each defendant, and Juror George and
his appointed counsel were present. In response to some preliminary questions by
the court, George testified that he had known the court was open to receiving
messages from the jury, including during deliberations, and that if there had been a
problem, he should have contacted the court, which he did not attempt to do at any
point. He further testified that no juror attempted to discuss the case with him; no
one provided him with any extrinsic evidence during trial; and he did not
personally consult any outside sources or observe any other juror doing so.
Regarding his encounter with defendant Cavallo and Cavallo’s attorney, Ms.
Unger, immediately before sentencing, George testified that he had introduced
himself to Cavallo, and Cavallo had returned his greeting. Then Unger told
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George that she wanted to talk to him and ask him questions, but they did not have
an opportunity to talk further. George testified that although the hallway encounter
was the only direct communication he had with Unger, four months later, in
February 2013, he received a telephone call from Cavallo “out of the blue.”
During that call, Cavallo told George that he had obtained George’s phone number
from a newspaper reporter, Mike Braga, who had covered the trial. Cavallo also
explained how devastating the conviction had been for him and his wife, co-
defendant Hornberger, noting that the Government was taking their family’s home,
had “hit [their] bank accounts on Thanksgiving Day,” and was “going after
everything they have.” Cavallo then asked George about the case and the jury’s
deliberations, and George discussed that with him.
George testified that Cavallo called him multiple times after the initial call.
During one of those calls, Cavallo stated that he had spoken with Unger, and that
Unger wanted George to email her about the jury deliberations. Cavallo gave
Unger’s email address to George, and George emailed Unger, as Cavallo
requested. Cavallo later called George to confirm that he had sent the email.
During one phone call, George asked Cavallo why he had suddenly started
receiving phone calls from a reporter named Braga, and Cavallo admitted that he
had told Braga everything about the jury deliberations. George told Cavallo he
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was not comfortable with Braga’s involvement and that he “did not want anything
published.” Finally, George testified that he stood by the verdict rendered at trial.
As noted, Defendants had made no objection when the district judge had
announced, at the organizational meeting two weeks prior to the hearing, that she
intended to “seal” the proceedings. Instead, they waited until the end of the
hearing, to object, for the first time, to the proceedings being sealed and to
Defendants themselves not being present. The district court ruled that Defendants
had waived any objection to the proceedings being sealed. As to Defendants being
present at any future hearing, the court instructed counsel to submit briefs if they
wished to be present. Defendants filed no briefs.
On April 9, 2013, the court conducted a follow up in camera hearing with
the same parties present, and noted that Defendants had waived their objection to
being present because they had failed to brief the issue, as directed by the court.
As to evidentiary matters handled at this second hearing, Cavallo’s counsel offered
Cavallo’s cell phone records to the court covering the dates on which Cavallo and
George had communicated. The phone records reflected fewer communications
between Cavallo and George than the latter had recalled in his testimony. These
records showed that Cavallo sent one text message to George on February 19, and
George sent one text message back that day. On February 20 and 21, George
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called Cavallo once, and Cavallo telephoned George twice. In short, the records
revealed five communications between the two men: none of which had received
prior court approval.
After the court reviewed the phone records, the judge again questioned
George, and the latter reaffirmed his earlier testimony that when he and Cavallo
had spoken on the phone, they discussed the information that he subsequently put
in the email to Unger concerning the jury’s deliberations. None of the defendants
objected to the questions posed by the court, nor did they request that the court ask
additional questions or call additional witnesses.
Their earlier silence notwithstanding, over a week later, on April 19, 2013,
Defendants filed an objection to the manner in which the court conducted its
inquiry, and they moved to subpoena and question Braga, the news reporter, and
the female juror who had allegedly conducted internet research. Defendants also
argued for the first time that the court should have asked George more specific
questions about the contents of his email. Albeit George had offered live
testimony concerning his interactions with Unger and defendant Cavallo, the latter
merely submitted affidavits containing their versions of their interactions with
George. They made no request or offer to provide live testimony concerning their
version of these events. Moreover, Unger’s affidavit was short and bereft of much
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detail, 13 stating only that her sole exchange with George was on the day of the
sentencing hearings, when George exited the elevator and greeted her, and that she
neither instructed nor directed anyone to send the email she received from George.
Unger never discussed whether she had conferred with Cavallo concerning the
latter’s plan to contact George and the conversations between the two men.
As to Cavallo’s affidavit, he stated that George approached him and
Hornberger outside the courtroom at sentencing to introduce himself. Cavallo
sensed that George wanted to discuss something important, but they did not have
an opportunity to speak further because Government counsel appeared. Cavallo
was “haunted” by what George might have wanted to say to him, so “without
anyone’s advice or encouragement,” he looked up George’s telephone number on
Google, contacted a news reporter to obtain George’s email address, and then sent
a text message to two of George’s telephone numbers on February 19. The next
morning, Cavallo received a text message response from George and a phone call
from George shortly thereafter. Cavallo stated that when he answered the phone,
George, without solicitation, began to excitedly tell him about the things that took
place during jury deliberations, including that a juror named Patricia looked up the
13
Oddly, Cavallo argues that the district court should not have criticized Unger’s
affidavit for being “vague and unsupported” because he, Cavallo, would not waive the attorney-
client privilege, thereby freeing up Unger to be more forthcoming. Cavallo does not explain why
he would not do so nor offer an explanation why he did not seek to testify to rebut Juror
George’s testimony. For that reason, it is difficult to understand why he faults the district court
for this self-inflicted evidentiary lapse in his case.
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sentence of Mike Bangasser, who had reportedly received only four months home
detention. 14 Then George asked for Unger’s contact information, and Cavallo gave
George what he thought was Unger’s email address. George asked Cavallo to call
him back to confirm Unger’s contact information, which is why Cavallo called
George that afternoon. Cavallo admits that he encouraged George to call, write, or
email anyone who might have had an interest in the proceedings but contends that
he did not urge George to email Unger. Cavallo learned George had emailed
Unger the next morning on February 21, and he called George that day to tell him
that they could not speak again.
After hearing and reviewing all this evidence, the district court issued an
order in which it credited George’s sworn testimony about his encounters with
Unger and Cavallo and concluded that the latter had violated the Middle District of
Florida local rule restricting parties’ and attorneys’ contact with jurors, absent
court permission. Indeed, as the court noted, despite Cavallo’s tepid efforts in his
affidavit to discredit George’s testimony, the version of events presented in
Cavallo’s affidavit actually supported George’s testimony that Cavallo contacted
14
As it turns out, Juror Patricia could not have been referring to co-conspirator Mike
Bangasser, who, in fact, received a sentence of fifteen months imprisonment—not home
confinement—and who was sentenced six months after the jury returned its verdict in this case.
Instead, the parties now appear to agree that the person whom the juror thought had been
sentenced to house arrest was, in fact, a testifying co-conspirator named Craig Whitehead who
had been charged in a different case, pled guilty, and was sentenced to time served and three
months home detention about five weeks before the conclusion of Cavallo’s trial.
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him “out of the blue” to discuss the case. As a sanction for violating Middle
District of Florida Rule 5.01(d), which prohibits such party-juror communications,
the court excluded George’s email against Cavallo and Hornberger, who are
married and who were represented by the same counsel at trial. The court did not
strike the email against Streinz because neither he nor his counsel were involved in
the rule violation, but it found that any exposure of a juror to the extrinsic
information alleged in the email, if such occurred, was not prejudicial to
Defendants. Accordingly, the court denied all of Defendants’ requests for relief
based on juror misconduct.
B. Discussion
Cavallo and Hornberger seek a reversal of their convictions based on the
information about jury deliberations provided by Juror George in Cavallo’s
conversations with George. To the extent that this information was insufficient to
warrant the granting of a new trial, they also contend that the district court should
have conducted a more thorough investigation of the alleged juror misconduct. We
review the denial of a motion for new trial based on alleged juror misconduct for
an abuse of discretion. United States v Venske, 296 F.3d 1284, 1290 (11th Cir.
2002). Finding no abuse of discretion, we affirm the district court’s denial of
Defendants’ motion for a new trial.
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1. Federal Rule of Evidence 606(b)’s Limitations on Judicial Inquiry
Into Jury Deliberations
“District courts are subject to very stringent limitations on their authority to
question jurors about their deliberations,” and since 1915 “the Supreme Court has
recognized a near-universal and firmly established common-law rule flatly
prohibiting the use of juror testimony to impeach a verdict.” United States v.
Siegelman, 640 F.3d 1159, 1185 (11th Cir. 2011) (emphasis in original). Absent
such a prohibition, “[j]urors would be harassed and beset by the defeated party in
an effort to secure from them evidence of facts which might establish misconduct
sufficient to set aside a verdict.” Id. at 1186 (quoting McDonald v. Pless, 238 U.S.
264, 267–68 (1915)). To invalidate an undesirable verdict, allegations of juror
misconduct would become commonplace and such scrutiny would discourage “full
and frank discussions in the jury room, jurors’ willingness to return an unpopular
verdict, and the community’s trust in a system that relies on the decisions of
laypeople.” Id. at 1185 (quoting Tanner v. United States, 483 U.S. 107, 120–21
(1987)).
Therefore, in an effort to protect the integrity of the jury system and to
forestall endless attacks on a jury’s verdict, the Federal Rules of Evidence have
codified the common law rule against the admission of a juror’s testimony to
impeach the jury’s verdict. Id. at 1186. Rule 606(b) provides:
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(b) During an Inquiry Into the Validity of a Verdict or Indictment.
(1) Prohibited Testimony or Other Evidence.
During an inquiry into the validity of a verdict . . . a juror may not
testify about any statement made or incident that occurred during the
jury’s deliberations; the effect of anything on that juror’s or another
juror’s vote; or any juror’s mental processes concerning the
verdict . . . . The court may not receive a juror’s affidavit or evidence
of a juror’s statement on these matters.
(2) Exceptions. A juror may testify about whether:
(A) extraneous prejudicial information was improperly
brought to the jury’s attention;
(B) an outside influence was improperly brought to bear
on any juror; or
(C) a mistake was made in entering the verdict on the
verdict form.
Fed. R. Evid. 606(b).
In short, except for testimony concerning extraneous prejudicial information
or improper outside influence, Rule 606(b)(1) prohibits a juror from providing
testimony or other evidence about anything that happened or occurred during
deliberations, including a juror’s mental processes or the reasons the jury reached a
particular verdict. With only one exception, the information provided by George
to Cavallo, and then to Cavallo’s attorney, was nothing but a description of the
thought process of jury members—and mostly George’s own thought process—
meaning this information was inadmissible to attack the jury’s verdict. The sole
exception was George’s disclosure that a juror had learned from the internet that
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another co-conspirator who had pled guilty had received only house arrest and no
jail time. 15 Because this information was “extraneous,” and perhaps prejudicial,
Rule 606(b) does not prohibit a juror from testifying about it. Accordingly, the
district court correctly ruled that it was only this last disclosure, to which we now
turn, that was subject to scrutiny by the court.
2. Violation of Local Rule 5.01(d) by Defendants
As noted, Rule 606(b) sets out a broad prohibition against questioning jurors
about their deliberations or reasons for a particular verdict, with the exception that
a juror may testify as to whether extraneous prejudicial information was
improperly brought to his attention or outside influence was improperly exerted
against him. There is no allegation of outside influence here, but Defendants have
argued that their verdict should be vacated because the jurors received extraneous
prejudicial information. As a general matter, information is deemed to be
“‘extraneous’ if it derives from a source ‘external’ to the jury. ‘External’ matters
include publicity and information related specifically to the case the jurors are
meant to decide . . . .” Warger v. Shauers, 574 U.S. ___, 135 S. Ct. 521, 529
(2014) (internal citations omitted).
15
This may have been what the juror told George, but in fact Whitehead was sentenced
to time served, plus three-months home confinement. See supra at n.14.
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The district court, however, found it inappropriate to explore the allegedly
“extraneous prejudicial information” that may have found its way to George or the
female juror who initially wanted to hang the jury because Cavallo uncovered this
information only by brazenly violating a local court rule that flatly forbade the
contact that Cavallo made with George. We agree with the district court.
Middle District of Florida Rule 5.01(d) (“Local Rule 5.01(d)”) restricts
attorneys’ and parties’ contacts with jurors absent prior court approval. The rule
provides:
No attorney or party shall undertake, directly or indirectly, to
interview any juror after trial in any civil or criminal case except as
permitted by this Rule. If a party believes that grounds for legal
challenge to a verdict exist, he may move for an order permitting an
interview of a juror or jurors to determine whether the verdict is
subject to the challenge. The motion shall be served within fourteen
(14) days after rendition of the verdict unless good cause is shown for
the failure to make the motion within that time. The motion shall state
the name and address of each juror to be interviewed and the grounds
for the challenge that the moving party believes may exist. The
presiding judge may conduct such hearings, if any, as necessary, and
shall enter an order denying the motion or permitting the interview. If
the interview is permitted, the Court may prescribe the place, manner,
conditions, and scope of the interview.
To translate, neither an attorney nor a party may, directly or indirectly,
attempt to interview a juror after trial unless that person first obtains the court’s
permission to do so. A motion seeking that permission must be filed within
fourteen days after the verdict, absent a showing of good cause for a tardy filing.
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In addition, the motion must state not only the name of the juror to be interviewed,
but also the basis for the request. In ruling on the motion, the district court is
empowered to set limits on the scope or manner of the interview.
Here, the district court concluded that Cavallo and, to some extent, Unger,
engaged in conduct that violated this rule. As to the court’s conclusion regarding
the conduct of these two, this is a factual finding that we reverse only if clearly
erroneous. See United States v. Floyd, 281 F.3d 1346, 1348 (11th Cir. 2002).
Further, we accord great deference to a district court’s credibility determinations,
United States v. Clay, 376 F.3d 1296, 1302 (11th Cir. 2004), and we will not
reverse a district court’s factual finding concerning credibility unless the finding is
“contrary to the laws of nature, or is so inconsistent or improbable on its face that
no reasonable factfinder could accept it.” United States v. Pineiro, 389 F.3d 1359,
1366 (11th Cir. 2004) (quotations omitted).
Here, the district court found to be truthful George’s testimony that Cavallo
contacted George, engaged the latter in conversations about the jury’s
deliberations, and told him that counsel Unger wanted George to email her with
this information. The court also credited George’s testimony that Unger had told
George at the time of the sentencing hearing that she would like to ask him
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questions. We do not find the district court’s conclusions on these matters to be
clearly erroneous.
Nor are we persuaded by Defendants’ argument that the district court should
not have credited George’s testimony without first hearing directly from Cavallo
and Unger, both of whom chose to file affidavits. If Cavallo or Unger wanted to
testify, they should have asked to do so. Had Cavallo requested the opportunity to
contradict George’s testimony with his own testimony, there is no reason to believe
that anyone would have tried to stop him. Moreover, as noted supra, Cavallo has
explained that he would not waive attorney-client privilege to allow Unger to
testify, which suggests that Cavallo had his own reasons to be reticent about
testifying on this matter and subjecting himself to cross-examination. Perhaps
most significantly, Cavallo’s own affidavit confirms George’s testimony that it was
Cavallo who initiated contact with George about jury deliberations.
Defendants argue that, even if one accepts as true George’s testimony,
Cavallo’s exchange with George did not violate the local rule, as a legal matter.
Specifically, Defendants argue that Local Rule 5.01(d) prohibits only the
“interviewing” of a juror, but that it does not outlaw merely “communicating” with
a juror, which they contend is all that Cavallo did. We give “great deference to a
district court’s interpretation of its local rules,” Clark v. Hous. Auth. of City of
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Alma, 971 F.2d 723, 727 (11th Cir. 1992), and we conclude that Cavallo’s
argument fails to meet the straight-face test. Obviously, the only thing that George
and Cavallo had in common was the trial where George served on the jury that
found Cavallo guilty. Clearly, Cavallo was not interested in discussing the
weather, politics, or sports with George. The jury’s deliberations were the only
topic that would be of interest to him, and, in fact, it appears to be the only topic
that the two men discussed. We find unpersuasive Cavallo’s parsing of the Local
Rule’s description of the conduct that it prohibits, and we concur with the district
court’s conclusion that Cavallo violated the rule.
Finding no good reason to disturb the district court’s determination that
Cavallo violated Local Rule 5.01(d), then the next question is whether the court’s
striking of evidence procured only through Cavallo’s violation of the rule
constituted a proper sanction for the latter’s breach. On this question, our
precedent squarely supports the district court’s decision. In United States v.
Venske, 296 F.3d 1284 (11th Cir. 2002), a case which also arose out of the Middle
District of Florida, two defendants sought a new trial before the district court,
arguing that jurors had been exposed to prejudicial extrinsic information and
supporting that contention with an affidavit that the court concluded they had
obtained by violating the court’s local rule forbidding contact with jurors, absent
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prior court approval. Because the defendants had “knowingly and intentionally
engaged in a scheme to defy the [local rule],” the district court excluded the
affidavit and refused to conduct an evidentiary hearing on the allegation. Id. at
1289.
We rejected the defendants’ argument challenging the power of a district
court to enact a local rule restricting communications with jurors or to exclude
evidence obtained in violation of such a rule. Id. at 1291. In affirming the district
court’s decision to exclude evidence in the Venske case, we explained the strong
policy interests in preventing the type of conduct engaged in by the defendants
there, and by Defendants here. Those words bear repeating. As we noted, the
judicial system has a “strong interest in protecting jurors from threats and needless
harassment from unsuccessful parties.” Id. at 1291–92. Another interest is the
need to preserve finality in a jury’s verdict. Because jurors are routinely instructed
that their deliberations are secret and that they will never have to explain their
verdict to anyone, a process that gives losing parties free rein to contact jurors “at
will in an effort to . . . upset the jury’s verdict,” id. at 1292, arguably functions as a
bait-and-switch that undermines the integrity of the court’s assurances to the jury.
At bottom, many jurors would “no doubt feel threatened or intimidated” by
interrogation leveled at them by a losing party, and a rule that “effectively deters
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such contacts . . . preserves the integrity of our judicial process.” Id. As we
concluded in Venske, we likewise decide here that, in adjudicating a motion for
new trial based on the jury’s alleged exposure to extrinsic information, the district
court properly struck evidence that was obtained in violation of the local rule
restricting communications between a party and jurors.
In addition, the district court did not abuse its discretion in excluding the
evidence against Hornberger, as well as Cavallo, even though Hornberger did not
personally contact George. The district court concluded that, in sleuthing to
uncover secret information about jury deliberations, Cavallo was also acting on
behalf of his wife and co-defendant, Paula Hornberger,16 and had he been
successful, Hornberger would have similarly benefited. Moreover, Unger, who
purportedly solicited George’s email conveying information about the jury’s
deliberations, was joint trial counsel for both Cavallo and Hornberger. 17 See
16
Cavallo also acted on Hornberger’s behalf when he asked the court for leniency in
setting her sentence. See discussion infra.
17
As noted, because Streinz was not involved in the decision to contact George in
violation of the local rule, the district court did consider the information contained in George’s
email as to defendant Streinz, but ultimately decided that the extraneous evidence learned by the
female juror did not prejudice him or any of the defendants. The district court noted that, if
anything, the extrinsic information was helpful to the defendants. The Government joins in that
assessment, noting that the defense had emphasized in closing argument that the co-conspirator-
witness was testifying pursuant to a cooperation agreement; had admitted that he was hoping for
a reduced sentence; and was therefore motivated to shade his testimony in the Government’s
direction. Confirmation that this witness had, in fact, received a lenient sentence was helpful to
the defense and bolstered its argument. There is resonance to the Government’s argument, but as
we have reversed Streinz’s convictions on another ground, supra, we do not need to resolve this
question.
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Cuevas v. United States, 317 F.3d 751, 752–53 (7th Cir. 2003) (finding that
evidence of juror misconduct was properly excluded where the defendant’s family
members hired a private investigator to interview jurors in violation of a local rule
prohibiting juror-party communication). In summary, we conclude that the district
court did not err in denying a motion for new trial, or further evidentiary hearing,
based on Defendants’ allegation of extrinsic influence on the jury.
V. SUFFICIENCY OF THE EVIDENCE AGAINST CAVALLO
Having made the appropriate motions for a judgment of acquittal at trial,
Cavallo likewise argues on appeal that the evidence was insufficient to convict him
on Count 28: the sole substantive count on which he was convicted. Count 28
charged that, when applying for a loan from Washington Mutual to purchase a
home at 3550 Kenmore Drive, Cavallo knowingly made false statements to
influence the actions of an FDIC-insured lender, in violation of 18 U.S.C. § 1014.
Specifically, the indictment charged that Cavallo falsely claimed that he would use
the home as his primary residence and that his monthly income was over $27,000,
when in fact his income was much lower and he planned to rent out the home.
To convict Cavallo on this count, the Government was required to prove
beyond a reasonable doubt that: “(1) [he] knowingly made a false statement or
report; and (2) he did so for the purpose of influencing the conduct of a federally-
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insured bank with respect to an application, advance, commitment, or loan.”
United States v. Hill, 643 F.3d 807, 857 (11th Cir. 2011). We review de novo
sufficiency of the evidence claims, “viewing all the evidence in the light most
favorable to the government and drawing all reasonable inferences and credibility
choices in favor of the jury’s verdict.” United States v. Taylor, 480 F.3d 1025,
1026 (11th Cir. 2007). We will affirm a conviction if “any rational trier of fact
could have found the essential elements of the crime beyond a reasonable doubt.”
United States v. Hunt, 187 F.3d 1269, 1270 (11th Cir. 1999) (internal quotations
omitted) (emphasis in original). After reviewing the evidence, we conclude that
the Government presented sufficient evidence to prove the above elements as to
Count 28.
At trial, Hornberger testified that the Kenmore Drive property was used as a
rental property, not as a residence, thereby establishing the first alleged
misstatement. As to Cavallo’s income being less than $27,000 per month
($324,000 annually), Cavallo and Hornberger’s 2005 and 2006 joint income tax
returns showed that they earned much less than $100,000 each year. In fact, their
2006 tax return stated that their combined wages were only $23,243, which yielded
zero taxable income.
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Despite the above facts, Cavallo certified several times that all of the
information he provided in connection with the loan application was accurate. On
February 24, 2006, he signed an Occupancy Misrepresentation and Nondisclosure
Affidavit and Agreement, which stated on the first page that “[f]alse swearing may
constitute perjury under applicable laws, and misrepresentations in th[e] document
[might] constitute fraud.” He acknowledged in the affidavit that if a lender issued
him a loan, the lender would do so “in reliance upon [his] representations,
warranties and agreements stated [t]herein and that [he was making] such
representations and warranties in order to induce the Lender to make the Loan.”
Based on Cavallo’s false representations in multiple documents, Washington
Mutual Bank loaned Cavallo $256,000 to purchase 3550 Kenmore Drive.
Cavallo argues, however, that proof of the falsity of statements about his
income and intended residency are insufficient to prove him guilty because the
Government failed to prove that: (1) he personally signed the loan application; (2)
he was aware of the loan application’s typed misrepresentations relating to income
and intent to occupy the home as a primary residence; or (3) given the fact that the
application was filled out with a mortgage broker rather than the FDIC-insured
Washington Mutual, he willfully influenced an FDIC-insured institution.
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As to his claim that the Government failed to prove that he signed the
pertinent loan documents, Cavallo faults the Government for failing to call a
handwriting expert or to prove that he was in the city where the documents were
signed on the relevant date. But the Government was not required to produce a
handwriting expert. See United States v. Bell, 833 F.2d 272, 276 (11th Cir. 1987)
(finding that a jury is competent to compare signatures and draw its own
conclusions); see also Fed. R. Evid. 901(b)(3) (recognizing that the trier of fact is
competent to compare authenticated samples). The Government presented
numerous documents containing Cavallo’s known signature, including two driver’s
licenses, seven tax returns, and other notarized documents. Through a comparison
of these known signatures to those on the fraudulent documents, there was ample
evidence from which the jury could conclude that the signatures on the fraudulent
documents belonged to Cavallo.
As to his argument that the Government should have affirmatively shown
that he actually read the documents that he signed, Cavallo relies on United States
v. Phillips, 731 F.3d 649, 656 (7th Cir. 2013) (en banc), which he says held that if
a defendant signs a loan document without reading it or knowing its contents, he
cannot be held to have adopted the false statements in it pursuant to 18 U.S.C.
§ 1014. But Cavallo’s reliance on this out-of-circuit case is misplaced. Phillips
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did not concern a sufficiency of the evidence issue. Instead, it addressed an
evidentiary ruling preventing a defendant from testifying that, when completing a
loan application, she relied on a mortgage broker’s instruction; this testimony, the
Seventh Circuit ruled, should have been allowed because it potentially negated the
defendant’s “intent to influence.” Id. Here, Cavallo did not testify, and no
evidence suggested that he failed to read the relevant documents before signing
them. To the contrary, he was an experienced real estate investor who participated
in obtaining loans for numerous properties. From the evidence presented, a
reasonable jury could conclude that Cavallo was aware of the contents of the
documents he signed.
Finally, because he provided the false information to a mortgage broker, not
directly to a covered institution, Cavallo argues that the Government failed to
prove that he had acted with the purpose of influencing an FDIC-insured
institution. We have held, however, that to prove that a defendant made a false
statement for purposes of influencing a covered institution, the Government does
not have to show that the defendant directly presented the document containing the
false statement to that institution. Instead, the Government need only prove that
the defendant was on “notice sufficient to create a reasonable expectation that the
statement would reach an institution of the type included in the statute.” United
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States v. Greene, 862 F.2d 1512, 1517 (11th Cir. 1989) (quoting United States v.
Lentz, 524 F.2d 69, 71 (5th Cir. 1975)).
Obviously, one submits a loan application for the purpose of persuading a
bank to approve and issue a loan. And here Cavallo signed multiple documents
that specifically identified “Washington Mutual Bank, FA” as the “Lender.” Thus,
a jury could have found that Cavallo had a reasonable expectation that his loan
application, containing the above-described misrepresentations, would reach
Washington Mutual. Accordingly, we AFFIRM Cavallo’s conviction on Count
28.
In summary, we reject Cavallo and Hornberger’s challenges to the validity
of their convictions,18 and we affirm those convictions.
VI. CAVALLO’S APPEAL OF HIS SENTENCE
A. Background and Standard of Review
Following review of the presentence investigation report (PSR) and a
sentencing hearing, the district court concluded that Cavallo’s total offense level
18
Defendants have also argued that the district court erred (1) by failing to hold an
evidentiary hearing following Defendants’ complaint that FBI agents had intimidated two
defense witnesses that Defendants intended to call, and whom they ultimately did call to testify,
and (2) by holding sidebar conferences in violation of Defendants’ right to a public trial. We
find both claims to be without merit.
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was 34, 19 which, with a criminal history category of I, resulted in a Guidelines
range of 151 to 188 months. The district court granted Cavallo a downward
variance and sentenced him to 120-months imprisonment, which variance
translates to an approximate two-level reduction.
On appeal, Cavallo argues that the district court incorrectly calculated the
amount of loss attributable to him under the Sentencing Guidelines. As to
challenges not involving a calculation of the Guidelines, he contends that the
district court impermissibly considered his sex when imposing his sentence and
that the court imposed a disparately high sentence, as compared to the sentences of
his co-defendants.
We review the reasonableness of a sentence for an abuse of discretion using
a two-step process. United States v. Cubero, 754 F.3d 888, 892 (11th Cir. 2014),
cert. denied, 135 S. Ct. 764 (2014). We first look to whether the district court
committed any significant procedural error, such as miscalculating the advisory
Guideline range or selecting a sentence based on clearly erroneous facts. Id.19
The PSR reached this calculation by starting with a base offense level of 7
(§ 2B1.1(a)(1)); adding 20 levels for loss exceeding $7,000,000 (§ 2B1.1(b)(1)(K)); adding two
levels for making a misrepresentation or other fraudulent action during a bankruptcy proceeding
(§ 2B.1.1(b)(9)(B)); adding two levels for use of “sophisticated means” (§ 2B1.1(b)(10)(C)); and
finally adding three levels because Cavallo was a manager or supervisor during the conspiracy
that involved five or more participants (§ 3B1.1(b)).
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Then, we examine whether the sentence is substantively reasonable in light
of the totality of the circumstances and the 18 U.S.C. § 3553(a) factors.20 Id. The
party challenging a sentence has the burden to show that the sentence is
unreasonable. United States v. Pugh, 515 F.3d 1179, 1189 (11th Cir. 2008). We
will reverse only if “left with the definite and firm conviction that the district court
committed a clear error of judgment in weighing the § 3553(a) factors by arriving
at a sentence that lies outside the range of reasonable sentences dictated by the
facts of the case.” Id. at 1191 (quotation marks omitted).
After carefully considering the record, we affirm Cavallo’s sentence.
B. Loss Calculation
The Government bears the burden of establishing the loss attributable to the
defendant by a preponderance of the evidence, and we review a district court’s
determination of monetary loss for clear error. United States v. Barrington, 648
F.3d 1178, 1197 (11th Cir. 2011). The Sentencing Guidelines do not require a
precise determination of loss. Id. Instead, “[a] sentencing court need only make a
reasonable estimate of the loss, given the available information.” Id. Loss is
20
The § 3553(a) factors include: (1) the nature and circumstances of the offense and the
history and characteristics of the defendant; (2) the need to reflect the seriousness of the offense,
to promote respect for the law, and to provide just punishment for the offense; (3) the need for
deterrence; (4) the need to protect the public; (5) the need to provide the defendant with needed
educational or vocational training or medical care; (6) the kinds of sentences available; (7) the
Sentencing Guidelines range; (8) pertinent policy statements of the Sentencing Commission; (9)
the need to avoid unwarranted sentencing disparities; and (10) the need to provide restitution to
victims. 18 U.S.C. § 3553(a).
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calculated as “the greater of actual loss or intended loss.” U.S.S.G. § 2B1.1 cmt.
n.3(A). “Intended loss” is the pecuniary harm that was intended to result from the
offense. Id. at cmt. n.3(A)(ii). “Actual loss” is the reasonably foreseeable
pecuniary harm that resulted from the offense, which is the correct standard in this
case. Id. at cmt. n.3(A)(i). The Guidelines acknowledge that a sentencing judge is
in a unique position to assess the evidence and estimate the loss, and therefore “the
court’s loss determination is entitled to appropriate deference.” Id. at cmt. n.3(C).
We address each of Cavallo’s loss calculation arguments in turn and find no clear
error.
1. Consideration of Acquitted Conduct
First, Cavallo complains that the district court included in its loss
calculations the loss for properties named in counts on which he was acquitted. As
noted, Cavallo was convicted of conspiracy and one substantive count—Count
28—that was related to the 3350 Kenmore Drive property. He was acquitted of all
other substantive counts in which he was charged. In calculating relevant conduct
for all defendants in the case, the PSR identified twenty-nine properties involved in
the fraudulent conduct that lay at the heart of the conspiracy. The PSR held
Cavallo accountable for losses attributable to ten of these properties. One of these
properties was the subject of Count 28, on which he was convicted; seven
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properties were named in substantive counts on which he had been acquitted; two
others were not included in any substantive counts in which Cavallo was named.
All but one of the properties were listed in overt acts in the conspiracy charge.
Adding together the loss on each of these ten properties, the PSR calculated the
total amount of loss attributable to Cavallo as $7,454,210.74. This loss figure
added seven levels to Cavallo’s offense level. See U.S.S.G. § 2B.1.1.
The methodology in calculating loss was as follows. If the home had been
sold, the PSR calculated loss by subtracting the sale price from the loan amount. If
the home had not yet been sold, the PSR looked to the market value of the property
at the time of sentencing, as set by the Sarasota County Property Appraiser, and
subtracted that market value from the loan amount.
In objecting to the loss calculation, Cavallo offered at sentencing a general
objection to the inclusion of loss amounts for properties named in counts on which
he had been acquitted. In the more specific sentencing memorandum submitted
prior to the sentencing hearing, he contended that the Government had failed to
prove by a preponderance of the evidence his involvement in relevant fraudulent
conduct concerning any property other than the Kenmore Drive property. The
district court explicitly adopted the facts contained in the PSR, which established a
factual basis for inclusion of all relevant conduct attributed to Cavallo, and
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accepted the PSR’s loss calculation. Moreover, the district judge had done more
than just read a presentence report. Having presided over the three-month trial in
this case, she was well-equipped to evaluate the evidence.
Cavallo has offered no persuasive argument to undermine a conclusion that
the Government proved all the losses attributed to him by at least a preponderance
of the evidence. Indeed, he does not try to make such an argument on appeal.
Moreover, he acknowledges case authority that permits a judge, in determining
relevant conduct, to rely on conduct for which a defendant has been acquitted. In
particular, he notes that the Supreme Court has held that “a jury’s verdict of
acquittal does not prevent the sentencing court from considering conduct
underlying the acquitted charge, so long as that conduct has been proved by a
preponderance of the evidence.” United States v. Watts, 519 U.S. 148, 157 (1997).
Likewise, this Court has noted that “[u]nder our long-standing precedent, relevant
conduct of which a defendant was acquitted [] may be taken into account in
sentencing for the offense of conviction, as long as the Government proves the
acquitted conduct relied upon by a preponderance of the evidence.” United States
v. Faust, 456 F.3d 1342, 1347 (11th Cir. 2006) (alteration adopted and internal
quotations omitted) (quoting United States v. Barakat, 130 F.3d 1448, 1452 (11th
Cir. 1997)).
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Instead of arguing that a preponderance of the evidence did not support the
district’s court inclusion of these loss amounts, Cavallo argues for the first time on
appeal that the district court should have used a clear and convincing standard, not
a preponderance of the evidence standard, in calculating loss amount. We review
arguments not raised before the district court only for plain error. United States v.
Perez, 661 F.3d 568, 583 (11th Cir. 2011), cert. denied, 132 S. Ct. 1943 (2012).
As to the substance of his argument, Cavallo notes that some circuits have required
use of a clear and convincing evidence standard before considering acquitted
conduct in certain circumstances. He cites Watts, in which the Supreme Court
recognized a circuit split concerning “whether, in extreme circumstances, relevant
conduct that would dramatically increase the sentence must be based on clear and
convincing evidence.” 519 U.S. at 156.
Yet, our Court has never held that a clear and convincing standard applies to
consideration of acquitted conduct. Further, “[i]t is the law of this circuit that . . .
there can be no plain error where there is no precedent from the Supreme Court or
this Court directly resolving [an issue].” United States v. Lejarde-Rada, 319 F.3d
1288, 1291 (11th Cir. 2003). There being no controlling precedent resolving
Cavallo’s present claim, the district court’s error, if any, on the standard of proof is
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not “obvious” or “clear under current law.” United States v. Humphrey, 164 F.3d
585, 588 (11th Cir. 1999). Thus, any error is not plain.
We also note the aptness of a plain error standard here. First, as far as we
know, the district court may well have concluded that the loss evidence here
satisfied not only a preponderance standard, but also a clear and convincing
standard. But because Cavallo never raised this as an issue below, the district
court was not prompted to articulate whether it was employing a preponderance or
a more exacting standard. And had Cavallo raised this issue, the district court
would have then been on notice to indicate whether the evidence would have also
met the higher standard of proof.
In summary, the district court did not err in considering the above relevant
conduct in calculating Cavallo’s loss amount. 21
2. Ridgewood Lane and Contendo Drive Properties
Cavallo next contends that the district court erred by including in the actual
loss calculation two properties on which he was not charged in a substantive count:
21
Cavallo also contends that the district court committed error under United States v.
Booker, 543 U.S. 220 (2005), and Apprendi v. New Jersey, 530 U.S. 466 (2000), when it failed to
group and calculate Cavallo’s offender score for Count 1 separately from his offender score for
Count 28. This claim also fails. Cavallo faced a statutory maximum of five years’ imprisonment
on Count 1 and thirty years’ imprisonment on Count 28. See 18 U.S.C. §§ 371, 1014. The court
sentenced him to serve five years on Count 1 and a concurrent term of ten years on Count 28.
Both terms fall within the statutory maximum authorized by the jury’s verdict.
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1516 Ridgewood Lane and 927 Contendo Drive.22 Removal of these two
properties from the calculation would be helpful to Cavallo because their inclusion
raised the total loss amount over the $7 million threshold, causing Cavallo’s
offender score to increase by two additional levels. See U.S.S.G. § 2B1.1(b)(1)(J),
(K). Without the inclusion of these two properties, his offense level and
Guidelines range would have decreased to a level 32 and a 121–151 month range,
respectively.
Cavallo contends that he was tied to these properties only as a matter of
“guilt by association.” But Cavallo was convicted of conspiracy to commit wire
fraud, which means that the evidence at trial showed more than mere association,
as a general matter. As to these specific properties, Richard Bobka, Cavallo’s
brother, participated in fraudulent transactions with respect to both properties,
which Cavallo does not dispute. Cavallo and Bobka operated as partners in their
real estate investments, which included the Contendo and Ridgewood properties.
Cavallo actively took part in managing these two properties through his partnership
with his brother, and the evidence showed that Cavallo, Bobka, and Hornberger
shared a bank account through which they jointly funneled money for the
transactions. Indeed, Hornberger referred to Bobka as Cavallo’s “business
22
Conduct regarding these two properties was included in overt acts in the conspiracy
count on which Cavallo was convicted.
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partner.” Moreover, Cavallo and Hornberger reported ownership of both
properties and the expenses incurred in renting out each property on their 2006 and
2007 joint tax returns. Based on this evidence, the court did not err in attributing
the losses stemming from the Ridgewood and Contendo properties to Cavallo as
being within the scope of the criminal activity that Cavallo had agreed to
undertake.
3. Foreseeability and Timing of Property Valuations
Cavallo also contends that it was not “reasonably foreseeable” to him that
lenders, stuck with these properties on whose loans Cavallo and his cohorts had
defaulted, would suffer such large losses because he could not have anticipated that
the real estate market would take a sharp downturn, thereby causing real estate
values to fall. This is a rather audacious position to take, given that Cavallo’s
participation in fraudulent activities involving over thirty properties in the Sarasota
area contributed to the very economic downturn he claims was unforeseeable.
Moreover, “[u]nlike the application note regarding the determination of loss, the
application note regarding credits against loss does not speak in terms of
foreseeability. The sentencing guidelines, therefore, require foreseeability of the
loss of the unpaid principal, but do not require foreseeability with respect to the
future value of the collateral.” United States v. Wendlandt, 714 F.3d 388, 394 (6th
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Cir. 2013) (citation omitted) (emphasis in original); see U.S.S.G. § 2B1.1 cmt.
n.3(A), (E).
Cavallo further argues that he could not have reasonably foreseen losses to
the successors in interest of original lenders. Yet, he signed a host of documents in
which he acknowledged that the documents would bind any successors or assigns
of the original lenders and that subsequent holders of the notes or mortgages would
rely on the truthfulness of his statements. In short, we find no merit in Cavallo’s
argument that he could not have foreseen the possibility of large financial losses as
a result of his and his co-conspirators’ long-term fraudulent activities or the
possibility that someone other than the original lender might someday be left
holding the bag.
Cavallo’s final argument also fails. He contends that because he withdrew
from the conspiracy in August 2007, the district court should have used property
values in effect at that time to calculate loss, not property values in effect at the
time of sentencing. Use of the former would have resulted in a lower loss amount
because property values in 2007 had not sunk to the depths they had reached by the
time of conviction. Yet, neither the Guidelines nor common sense supports
Cavallo’s argument. Guidelines commentary that took effect within one week
after Cavallo’s sentencing hearing provided that, for purposes of calculating loss of
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undisposed collateral, the sentencing court should use the fair market value of that
collateral as of the date on which guilt was established, which here would be the
date of the guilty verdict. See U.S.S.G. § 2B1.1 cmt. n.3(E)(iii) (Nov. 1, 2012). 23
Commentary in effect at the time of Cavallo’s sentencing hearing was no more
helpful. This earlier iteration provided that the fair market value should be
assessed at the time of sentencing. See U.S.S.G. § 2B1.1 cmt. n.3(E)(ii) (Nov. 1,
2011). The commentary was amended, in part, to avoid the need for a probation
officer to continuously reassess property values in the months leading up to the
sentencing date. See Amendments to the Sentencing Guidelines, Policy
Statements, and Official Commentary at 7 (effective Nov. 1, 2012). Cavallo has
not argued that there was a meaningful difference in the values of the property
between the date of his conviction, on May 3, 2012, and the date of his sentencing
hearing, on October 26, 2012.
Further, the evidence does not support Cavallo’s theory that he withdrew
from the conspiracy in August 2007. To establish withdrawal, a defendant must
23
[I]n the case of a fraud involving a mortgage loan, if the collateral has not been
disposed of by the time of sentencing, use the fair market value of the collateral as
of the date on which the guilt of the defendant has been established . . . . In such a
case, there shall be a rebuttable presumption that the most recent tax assessment
value of the collateral is a reasonable estimate of the fair market value . . . .
U.S.S.G. § 2B1.1 cmt. n.3(E)(iii) (Nov. 1, 2012).
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prove: “(1) that he has taken affirmative steps, inconsistent with the objectives of
the conspiracy, to disavow or to defeat the objectives of the conspiracy; and (2)
that he made a reasonable effort to communicate those acts to his co-conspirators
or that he disclosed the scheme to law enforcement authorities.” United States v.
Starrett, 55 F.3d 1525, 1550 (11th Cir. 1995). Cavallo took neither of these steps.
He contends that he withdrew from the conspiracy by moving away from Sarasota
to Washington and filing for bankruptcy, but that is not enough. Cf. United States
v. Dabbs, 134 F.3d 1071, 1083 (11th Cir. 1998) (finding that a defendant had not
withdrawn from the fraud conspiracy where his “argument rest[ed] solely on his
physical distance from, rather than his repudiation of, the actions of his co-
conspirators”). Further, the evidence showed that during the bankruptcy
proceeding, he and Hornberger hid their involvement with fifteen of the properties
obtained during the course of the conspiracy. Finally, that Cavallo may have
ceased his day-to-day support of the conspiracy when he moved across the country
does not erase his responsibility for losses that resulted from his own prior criminal
conduct. Once the fraudulent acts that led to the ultimate losses on these properties
were complete, it did not help the victims a whit whether Cavallo chose to stay in
town or not. For all these reasons, the district court did not clearly err in making a
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reasonable estimate of the loss amount for purposes of calculating Cavallo’s
Guidelines score.
C. Non-Guidelines Challenges to Sentence
Cavallo contends that his sentence is substantively unreasonable because it
is contrary to 18 U.S.C. § 3553(a)(6), which requires the sentencing court to
consider “the need to avoid unwarranted sentence disparities among defendants
with similar records who have been found guilty of similar conduct.” We review
the reasonableness of a sentence under a deferential abuse of discretion. See
United States v. Pugh, 515 F.3d 1179, 1191 (11th Cir. 2008). The party
challenging the sentence has the burden of establishing that the sentence was
unreasonable. See id. at 1189. We may “set aside a sentence only if we determine,
after giving a full measure of deference to the sentencing judge, that the sentence
imposed truly is unreasonable.” United States v. Irey, 612 F.3d 1160, 1191 (11th
Cir. 2010) (en banc), cert. denied, 131 S. Ct. 1813 (2011). We determine whether
a sentence is substantively reasonable in light of the totality of the circumstances
and the § 3553(a) factors. Id. The district court must impose a sentence that is
“sufficient, but not greater than necessary, to comply with the purposes” listed in
§ 3553(a)(2), which include the need for the sentence to reflect the seriousness of
the offense, to promote respect for the law, to provide just punishment for the
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offense, to deter criminal conduct, and to protect the public from the defendant’s
future criminal conduct. See 18 U.S.C. § 3553(a)(2)(A)–(C). The sentencing court
must also consider the nature and circumstances of the offense, the history and
characteristics of the defendant, the kinds of sentences available, the applicable
Guideline range, the need to avoid unwarranted sentencing disparities, and the
need to provide restitution to victims. See 18 U.S.C. § 3553(a)(1), (3)–(7).
Cavallo argues that because his sentence is harsher than the sentences
imposed on many of his co-conspirators, it is non-compliant with one of the factors
that a court is supposed to consider in imposing sentence: the need to avoid
unwarranted sentencing disparity, as set out in § 3553(a)(6). However, we have
stated that “[d]isparity between the sentences imposed on codefendants is generally
not an appropriate basis for relief on appeal.” United States v. Regueiro, 240 F.3d
1321, 1325–26 (11th Cir. 2001). Although Regueiro is a pre-Booker decision, the
circumstances of the present case provide no good reason for us to depart from the
above principle.
First, for purposes of § 3553(a)(6), a defendant who cooperates with the
Government and pleads guilty is not “similarly situated” to his co-defendant who
proceeds to trial. United States v. Docampo, 573 F.3d 1091, 1101 (11th Cir. 2009).
Thus, there is no unwarranted disparity even when a cooperating defendant
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receives a “substantially shorter” sentence than a defendant who goes to trial. Id.Accordingly, only three of Cavallo’s co-defendants could be considered “similarly
situated” to him: Richard Bobka, Streinz, and Hornberger. Bobka pled guilty four
days into trial and received a 180-month sentence, which is higher than Cavallo’s
120-month sentence. Streinz received a 60-month sentence, which was the
statutory maximum for his sole conspiracy count of conviction. See 18 U.S.C.
§ 371. Finally, while there is a large gap between Cavallo’s sentence and that of
Hornberger—Cavallo received a ten-year sentence and Hornberger received a one-
year sentence—Hornberger’s lenient sentence was at the behest of Cavallo, who
took full responsibility for Hornberger’s involvement and requested mercy for her
so that she could care for their minor son. Surely, Cavallo cannot seriously claim
now that he wishes the court had imposed a tougher sentence on his wife, just so
their two sentences would be more in line. If there is any “unwarranted disparity”
between their sentences, it was invited by Cavallo. See United States v. Brannan,
562 F.3d 1300, 1306 (11th Cir. 2009) (explaining that it is “common sense [] that
where a party invites the trial court to commit error, he cannot later cry foul on
appeal”); see also United States v. Parikh, 858 F.2d 688, 695 (11th Cir. 1988)
(holding that defense counsel invited the court’s error when he asked Government
witness to relay hearsay).
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Similarly without merit is Cavallo’s contention that the district court
impermissibly considered his sex when imposing his sentence: an issue that he did
not raise with the district court, and which we review only for plain error. United
States v. Bacon, 598 F.3d 772, 777 (11th Cir. 2010). An individual’s sex is an
impermissible factor under the Sentencing Guidelines, U.S.S.G. § 5H1.10, and a
sentence “can be unreasonable, regardless of length, if it was substantially affected
by the consideration of impermissible factors.” United States v. Clay, 483 F.3d
739, 745 (11th Cir. 2007).
The present claim arises out of the district judge’s sympathetic response to
remarks that Cavallo had made during his allocution, when he took responsibility
for his wife’s involvement and asked the court to show her mercy. 24 Later, when
she was about to impose sentence, the judge complimented Cavallo on his
solicitude for his wife, commenting that Cavallo comes “from the old school”
where “the man took the hit so that the lady in his life did not.” This remark,
Cavallo argues, suggested that the judge was taking into account his sex in
imposing sentence. We disagree. Clearly, this sentencing hearing had to be one of
the lowest points in Cavallo’s life. The judge’s acknowledgment that he had
24
Cavallo told the court that he took “full responsibility for [Hornberger] and why she’s
in this courtroom.” He also stated that she “trusted family members. And that is why she’s here.
That’s the only reason she’s in this room. And she trusted me and I failed her, Your Honor . . . .
I failed this woman here . . . . I don’t know what your plan is, but, please, I want my wife to be
at home with her son.” Cavallo said he was “owning up” and “taking responsibility” and asked
the court to impose a more lenient sentence on Hornberger because their son “needs his mom.”
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positive character traits, notwithstanding his criminal conduct, was a gesture of
kindness, not an act of sex discrimination. Nothing in the judge’s comments
suggested that she was sentencing him more harshly because he is a man. To the
contrary, the court granted him a two-level downward variance from his
Guidelines range. In short, the court did not impermissibly consider Cavallo’s sex
in imposing sentence.
For all the above reasons, we conclude that Cavallo has failed to show that
his 120-month sentence is substantively unreasonable.
VII. RESTITUTION ORDER
Pursuant to the Mandatory Victims Restitution Act (“MVRA”), persons
convicted of certain offenses are required to make full restitution to an identifiable
victim who has suffered a direct or proximate pecuniary loss. See 18 U.S.C.
§ 3663A(a)(1)–(2). The purpose of restitution “is not [] to provide a windfall for
crime victims but rather to ensure that victims, to the greatest extent possible, are
made whole for their losses.” United States v. Huff, 609 F.3d 1240, 1249 (11th
Cir. 2010) (internal quotations omitted). We review the legality of a restitution
order de novo and the factual findings underlying the restitution order for clear
error. See United States v. Rodriguez, 751 F.3d 1244, 1260 (11th Cir. 2014).
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Hornberger and Cavallo challenge the amount of restitution imposed by the
district court. At sentencing, the district court ordered restitution in the amount of
$13,229,100. 25 This number reflected the face amount of all loans for the ten
properties attributed to Defendants. Unlike the court’s loss calculation, the court’s
restitution computation did not reflect any credits against loss for the proceeds of
properties that had been sold or for the current fair market value of properties not
yet sold. Because the loss calculation for Guidelines’ purposes did properly factor
in those credits, that loss figure was only $7,454,210.74, which was about $6
million less than the amount of restitution imposed.
This is a striking difference, and one we find not to be justified by either the
law or the facts of this case. A restitution award under 18 U.S.C. § 3664 must be
based on the loss that a victim actually suffers, and the Government bears the
burden of proving that loss. See 18 U.S.C. § 3664(e); Huff, 609 F.3d at 1249. To
ensure that a victim is compensated only for its actual loss, the court must deduct,
as an offset, any value that the victim may have derived from the fraudulent
scheme. Huff, 609 F.3d at 1249. Otherwise, the victim will receive a windfall, id.,
as Defendants contend happened here.
25
Actually, the restitution amounts differ slightly between the two defendants, even
though the district court indicated that the number should be the same. The court imposed
restitution on Hornberger in the amount of $13,229,100 in both its oral pronouncement and its
written judgment. For Cavallo, the oral pronouncement and the written judgment set his amount
of restitution at $13,228,861.74.
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Proving actual loss for restitution purposes is largely the same as proving
actual loss for Guidelines’ loss calculation purposes. See United States v. Futrell,
209 F.3d 1286, 1290 (11th Cir. 2000) (rejecting argument that Government’s
burden to prove loss amount under the MVRA “is more exacting than its burden
under the Sentencing Guidelines”). And where the loss arises out of a fraudulent
mortgage transaction, the Guidelines make clear how one calculates that actual
loss. First, if the property that has been pledged as collateral for the loan has been
sold, the amount recovered from that sale shall be deducted from the amount of the
loan. U.S.S.G. § 2B1.1 cmt. n.3(E)(ii) (Nov. 1, 2011). If the property has not been
sold by the time of sentencing, one looks to the most recent tax assessment to
determine fair market value, 26 and then subtracts that fair market value from the
loan balance. Id.
Indeed, in a typical case where a defendant’s loss amount under the
Guidelines is determined by a calculation of actual loss, 27 the restitution figure
26
Although the Guidelines provide that there is a rebuttable presumption that the most
recent tax assessment is a reasonable estimate of the fair market value, a sentencing court may
consider factors that rebut the aptness of the tax assessment as a proxy for fair market value.
§ 2B1.1 cmt. n.3(E)(iii) (Nov. 1, 2012).
27
However, when intended loss—as opposed to actual loss—is used to calculate the loss
amount for Guidelines’ purposes, the restitution amount will presumably be less than the
Guidelines’ loss amount. See Huff, 609 F.3d at 1248–49 (noting that a court “could find that a
defendant intended a large amount of loss for sentencing purposes, but then order a much-
reduced amount in restitution in light of the actual losses suffered by the victims”) (quoting
United States v. Allen, 529 F.3d 390, 396–97 (7th Cir. 2008)). This is so because the Guidelines
provide that loss is the greater of intended loss or actual loss. See § 2B1.1 cmt. n.3(A)(i)–(ii).
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should usually 28 be the same as the loss amount. Huff, 609 F.3d at 1247. Yet,
although the district court here properly based its Guidelines’ calculations on
actual loss, it then ordered restitution in an amount exceeding actual loss by
approximately $6 million. The district court was aware of this issue. It recognized
that the restitution amount did not accurately reflect actual loss, and, apparently for
that reason, the written judgment included a statement that “[t]he defendant shall
receive credit for any principal paid on loans and credit for any proceeds from sale
of property.” It is not clear why the court did not go ahead and enter the actual loss
numbers that had already been determined at the sentencing. Whatever the reason,
the MVRA requires the district court at sentencing, or at a later hearing,29 to
determine the amount of loss suffered by victims. See 18 U.S.C. § 3663A(b).
So, by definition, if intended loss is the driver of the loss computation, that means it was
necessarily greater than the actual loss, and actual loss is the determiner of the amount of
restitution.
28
One exception to this general rule could occur when a court concludes that a victim’s
actual loss includes pre-judgment interest. The Guidelines explicitly exclude “interest of any
kind” from the calculation of loss. U.S.S.G. § 2B1.1 cmt. n.3(D)(i). Yet, actual loss for purposes
of restitution “may” include pre-judgment interest. Huff, 609 F.3d at 1248 n.4 (citing United
States v. Smith, 944 F.2d 618, 626 (9th Cir. 1991)). Here, the record does not indicate that pre-
judgment interest was considered in computing the restitution figure.
29
Pursuant to 18 U.S.C. § 3663(d)(5), where the appropriate amount of restitution is not
ascertainable at the time of sentencing, a district court may postpone the determination of
restitution for a period not to exceed ninety days. United States v. Rodriguez, 751 F.3d 1244,
1260 (11th Cir. 2014).
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There is no indication that an amended order has even been issued providing
Defendants with the appropriate credits.30
Because the restitution amount ordered by the district court does not take
into account the value of the collateral properties to the victims, it does not
represent the actual loss to the victims, but instead confers a windfall on them. See
Huff, 609 F.3d at 1249. For that reason, we conclude that the district court clearly
erred in its imposition of restitution on Defendants. We reverse and vacate that
part of the district court’s judgment ordering restitution and remand for the latter to
enter a restitution amount that reflects the actual loss to the victims. 31
VIII. CONCLUSION
For the reasons stated above, we REVERSE Streinz’s conviction and
remand for a new trial. We AFFIRM Cavallo and Hornberger’s convictions and
30
The Government does not disagree that the restitution amount set out in the judgment
greatly exceeds the actual loss suffered by the victims, but it argues that Defendants did not
object to the court handling the order of restitution as it did. But when the court first announced
that the restitution amount would be over $13 million, counsel for Defendants did point out the
court’s error: “Excuse me. None of us know where you got that 13 million. We’re looking at a
7,450,000 . . . .” The court seemingly acknowledged the correctness of counsel’s observation,
and said that this would be taken care of in the “body” (presumably, the body of the written
judgment). The written order did not, however, incorporate the actual loss figures, but repeated
the same raw loan figures, with no appropriate credits to yield an actual loss amount. Defendants
are appealing that written judgment.
31
Defendants have also complained that it is not clear which financial institutions were
the appropriate victims for restitution purposes, given the complicated and confusing purchase
history regarding some of the original lenders. The district court will be issuing a new restitution
order, and we leave to that court the task of sorting out the identities of the victims to be made
whole.
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sentences, except that we VACATE and REMAND that part of the judgment
ordering restitution.
AFFIRMED in part, REVERSED in part, VACATED and
REMANDED in part, with instructions.
75