PUBLISH
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_____________________________________
No. 96-8780
_____________________________________
D. C. Docket No. 3:94-CR-5
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
GEORGE CONDON, SAMUEL WILLIAM BRAWNER,
Defendants-Appellants.
______________________________________
Appeals from the United States District Court
for the Northern District of Georgia
_______________________________________
(January 8, 1998)
Before EDMONDSON and HULL, Circuit Judges, and CLARK, Senior Circuit Judge.
PER CURIAM:
Defendants-appellants George
Condon and Samuel William Brawner
appeal from jury convictions for making
false statements to the Small Business
Administration (“SBA”), in violation of
15
U.S.C. § 645(a), and conspiracy to do the
same. Because none of Defendants’ issues
merits reversal, we affirm.
Background
2
In 1989 Defendants became involved in
a real estate deal. Defendant Condon
(“Condon”) agreed to sell land and a building
to Defendant Brawner (“Brawner”), on
which Brawner intended to operate a
restaurant. The two were assisted in the
transaction by Condon’s attorney, Marc
Acree (“Acree”).
To finance the purchase, Brawner was
relying on a loan -- of which 85% would be
guaranteed by the SBA. In the process of
3
finalizing the involvement of the SBA,
both Condon and Brawner signed
documents and made certain
representations -- some of which later
turned out to be false. The relevant
statements included the amount to be
personally invested by Brawner (a down
payment and working capital); the amount
actually paid to Condon as a down
payment; the manner in which some of
the funds were to be used; and the terms of
4
repayment on an additional construction
loan (loaned to Brawner by a third party).
As it turned out, Brawner never
invested his own funds in the restaurant,
but instead borrowed the money necessary
both to acquire and to run the restaurant
-- contrary to the representations made
by Brawner and Condon to the SBA. The
restaurant suffered financially and was
destroyed by fire soon after it opened.
Brawner was charged with arson, making
5
false statements to the SBA (and
conspiracy), insurance fraud, and mail
fraud (related to his transmission of
documents to the SBA through the mail).
Condon was charged only with making false
statements to the SBA and conspiracy.
Defendants were tried together. Both
Defendants were found guilty of making
false statements to the SBA and of
conspiracy to defraud the SBA with these
6
statements. They appeal their convictions
1
on several grounds.
Both Defendants challenge the district
court’s jury instructions for failure to
1
Brawner argued on appeal that the
district court erred in its determination
of the amount of restitution that should be
paid by Brawner. But, the failure to raise
this issue in the district court makes it an
improper claim in this court. FDIC v.
Verex Assurance, Inc.,
3 F.3d 391, 395 (11th
Cir. 1993) (court will generally not consider
on appeal issues not raised before the
district court). Thus, we do not discuss that
issue. We also find Brawner’s sufficiency
of the evidence claim to lack merit and do
not address that issue in this opinion.
7
include an instruction that materiality
was an element of the offense under
15
U.S.C. § 645(a). In addition, Condon
challenges the district court’s decision to
give no jury instruction about good faith
reliance on the advice of counsel; and he
challenges the district court’s failure to
sever his trial from Brawner’s.
Discussion
8
I. Materiality
Defendants argue that the failure to
include materiality as an element under
15 U.S.C. § 645(a) requires reversal of their
convictions for making false statements
to the SBA. Whether materiality is an
element of
15 U.S.C. § 645(a) is a question of
law, which we review de novo. See United
States v. De Castro,
113 F.3d 176, 178 (11th Cir.
1997).
9
In United States v. Wells,
117 S.Ct. 921
(1997), we believe the Supreme Court has
effectively guided us. In Wells, the Court
addressed the issue of whether
18 U.S.C. § 1014
-- prohibiting false statements made to
federally insured banks -- included a
materiality element. The Court concluded
that materiality was no element under
section 1014.
Id. at 923.
Section 1014 contains language
substantially similar to the language in
10
the statute underlying this prosecution,
15
U.S.C. § 645(a). Compare
18 U.S.C. § 1014:
Whoever knowingly makes any false
statement or report . . . for the
purpose of influencing in any way the
action of . . . any institution the
accounts of which are insured by the
Federal Deposit Insurance Corporation
. . . shall be . . . imprisoned not more
than 30 years . . . . (emphasis added);
with
15 U.S.C. § 645(a):
Whoever makes any statement
knowing it to be false, . . . for the
purpose of influencing in any way
the action of the [Small Business]
Administration . . . shall be punished
. . . by imprisonment for not more
than two years . . . . (emphasis added).
11
The language of section 1014 played a big
part in the Supreme Court’s conclusion
that materiality was no element for that
statute:
Nowhere does [section 1014] say that
a material fact must be the subject
of the false statement or so much
as mention materiality. To the
contrary, its terms cover ‘any’
false statement that meets the
other requirements in the statute,
and the term ‘false statement’
carries no general suggestion of
influential significance.
Wells,
117 S.Ct. at 927 (footnote omitted)
(citation omitted) (emphasis added). “Nor
have respondents come close to showing
12
that at common law the term ‘false
statement’ acquired any implication of
materiality that came with it into § 1014.”
Id. The Court finished by noting that
Congress was fully able to be clear when
materiality was an element of a crime,
because other statutory sections about
false statements are explicit in their
requirement of materiality. Id. at 928 &
n.11; see also
18 U.S.C. § 1621 (prohibiting
statements under oath about “any
material matter which [one] does not
13
believe to be true”);
18 U.S.C. § 1001
(prohibiting “knowingly and willfully
falsif[ying] . . . a material fact”).
The same observations made by the
Court in Wells apply to the statute in this
case,
15 U.S.C. § 645(a). Section 645(a) also
fails to mention materiality and
expressly prohibits “any” false statements
made to the SBA.
After Wells, we examined another
statute for a materiality element. See De
14
Castro,
113 F.3d 176 (determining whether
materiality is element of
18 U.S.C. § 1010).
We decided that section 1010 also includes no
materiality element. Again, that
section’s language is similar to the
2
language in section 645(a).
2
Section 1010 provides that:
Whoever, for the purpose of
obtaining any loan . . . from any
person . . . with the intent that such
loan . . . shall be offered to or
accepted by the Department of
Housing and Urban Development for
insurance . . . or for the purpose of
influencing in any way the action
of such Department, makes, passes,
15
Because of the similarities among
15
U.S.C. § 645(a) and
18 U.S.C. §§ 1010 and 1040,
and in the light of Wells and De Castro, we
conclude that section 645(a) does not
include the element of materiality. So, the
district court’s instruction on the
elements of the offense was not
erroneous.
utters, or publishes any statement,
knowing the same to be false . . .
shall be fined . . . or imprisoned . . .,
or both.
18 U.S.C. § 1010 (emphasis added).
16
II. Advice of Counsel Instruction
Condon argues that the district court
erred when it failed to instruct the jury
about his claim of good-faith reliance on
the advice of his counsel. We review a
district court’s refusal to give a requested
jury instruction for abuse of discretion.
United States v. Wescott,
83 F.3d 1354, 1357
(11th Cir. 1996). There was no abuse of
17
discretion in this case: no such
instruction was required.
To be entitled to a good-faith reliance
instruction, a defendant must show that (1)
he fully disclosed all material facts to his
attorney; and (2) he relied in good faith
on advice given by his attorney. See
United States v. Johnson,
730 F.2d 683, 686
(11th Cir. 1984). “[A]n instruction should not
be given if it lacks evidentiary support or
is based upon mere suspicion or
18
speculation.” United States v. Lindo,
18 F.3d
353, 356 (6th Cir. 1994) (citation omitted).
Condon failed to introduce evidence
that he fully disclosed all material facts to
his attorney, Acree, or that he acted in
good faith reliance on the advice of Acree.
At the trial, neither Condon nor Brawner
testified. Thus, the only evidence about the
relationship between the Defendants and
Acree came from the attorney’s own
testimony.
19
Condon and Brawner came to Acree
for assistance with the sale of Condon’s
property to Brawner. Acree had never
before represented either Defendant.
Acree told Defendants that he “did not
handle SBA loans,” had no experience with
the SBA and knew nothing about SBA loans.
It was Acree’s understanding that
Brawner -- it was Brawner’s SBA loan --
was dealing with the SBA “directly” and
that Acree “was not going to be doing the
20
SBA loan.” Acree, however, agreed to
represent Condon, as the seller, in the sale
of the land: “preparing the documents
necessary . . . to be able to sell the
property,” to draft “a sales contract,” “to
find out who owned the property,” “to find
out the description of the property,” and
the like.
During this representation of Condon,
Acree was told something about the
Defendants’ dealings with the SBA. But,
21
Acree testified that he was never told that
Condon received none of the $100,000 down
payment that was required (the down
payment was represented to the SBA as
having been paid):
I believed that Mr. Condon had at
the time of the . . . closing received
$50,000 from Samuel Brawner. I
also believed that Mr. Brawner had
gotten $100,000 or thereabouts from
[a] relative, which had -- part of it
had remained with Mr. Condon and
part of it paid back to Mr. Brawner
[for working capital as required by
the SBA and the lender].
22
Acree also testified that he -- in the
presence of Defendants -- reviewed a
letter from Brawner’s lender to Brawner
in which it was written that “Mr. Condon
had been paid $100,000 and he was to
refund back $50,000 to Mr. Brawner.”
Again, nobody mentioned to Acree that the
$100,000 had not actually been paid. That
Condon never received a down payment
and, thus, Brawner never invested -- or
put at risk -- his own funds went to the
23
heart of the misrepresentations made by
Condon to the SBA. The record shows that
material facts related to Condon’s
misrepresentations were not disclosed to
Condon’s attorney.
Condon has never contended that his
attorney actually told him that the
$100,000 misrepresentation was lawful:
Condon says he should be able to rely on
Acree’s silence on the subject. In addition
to his failing to disclose the pertinent
24
facts to Acree, Condon has failed to point
us to evidence in the record which could
support the idea that reliance on Acree’s
silence was reasonable and in good faith.
Three weak points face us. First, in
claiming that he relied on the silence of
an expert, Condon must have evidenced
that he could reasonably believe Acree to be
an expert in the area of SBA financing.
This means the record needs to show it was
25
reasonable for Condon to view Acree as
such an expert, even given Acree’s
uncontroverted testimony that both
Defendants knew that Acree did not do SBA
loans. Second, the record scarcely supports
the conclusion that Acree’s duty of
representation of Condon extended to the
SBA loan to Brawner. And, Condon’s
reliance would have been on the lawyer’s
silence about a subject which, at best, was
on the periphery of the scope of his
26
representation. Third, Condon does not
dispute that he was never paid the
necessary $100,000 down payment; yet, he
wishes to claim good faith reliance on
advice (or, more correctly, on the lack of
an advisory warning) that lying about
this simple fact would not be unlawful. We
have said before that reliance on
approving advice about such obvious
dishonesty “would clearly be outside of the
‘good faith’ prong of the expert advice
27
defense.” Johnson,
730 F.2d at 687 n.3.
Considering these points, the record will
not support that Condon’s reliance on the
lawyer’s silence was reasonable and in
3
good faith.
3
Although the district court did not
instruct the jury about good faith reliance
on the advice of counsel, the court did
include an instruction on good faith in
general: “[G]ood faith is a complete defense
to the charges in the indictment since good
faith on the part of the defendant is
inconsistent with intent to defraud or
willfulness . . . .” The district court
adequately addressed the concepts of
willfulness and good faith. In closing
argument, Condon’s trial attorney
28
“Thus, since the record failed to show
adequate evidentiary support for the
instruction, the district court did not
abuse its discretion in refraining from
charging the jury on advice of counsel.”
United States v. Durnin,
632 F.2d 1297, 1301
(5th Cir. 1980) (“[T]here is no evidence in
addressed the possibility that Condon may
have relied, in good faith, on Acree’s
silence. “So, the jury essentially considered
the defense of good faith [reliance on
advice of counsel] and rejected it when it
found [Condon] guilty.” United States v.
Walker,
26 F.3d 108, 110 (11th Cir. 1994).
29
the record that [defendant] either sought
the advice of counsel, personally received
advice after full disclosure, or followed the
advice in good faith.”); see also Lindo,
18 F.3d
4
at 357.
4
Condon argues that he did introduce
sufficient evidence for the instruction. He
points us to Acree’s admission that he
may have failed Condon in his duty to
prevent Condon from engaging in illegal
activity. But, this conclusory testimony
does not support the contention that
Acree was made aware of all material
facts of the transaction so that Condon
could have in good faith relied on Acree’s
failure to spot and then to inform Condon
of the illegality. That Acree now feels badly
30
III. Severance
Condon claims that his trial should have
been severed from Brawner’s, because of
the disparity in the charges against them:
only Brawner was charged with arson-
related offenses. Condon chiefly argues
about what happened does not show that he
had the duty -- given the scope of his
representation -- to do everything possible
to protect Condon from Condon’s own acts
and omissions about the SBA loan. Thus, the
evidence relied upon by Condon does not
demand an instruction on good faith
reliance on the advice of counsel.
31
that Brawner’s defense to the arson
charges -- that other persons had better
motives to have set the fire -- prejudiced
Condon. We review the district court’s
refusal to sever the Defendants’ trials for
abuse of discretion. United States v. Cross,
928 F.2d 1030, 1037 (11th Cir. 1991) (citation
omitted).
Condon’s main point is based on the
closing argument by Brawner’s attorney.
The relevant portion of that argument
32
stated that “there’s going to be some
money left over from the insurance if the
building burned down to the ground; and
this money, I would suggest to you,
certainly one person it could have gone to
is Mr. Condon.” This statement came in
the middle of a discussion of several other
persons who could have burned down the
restaurant and of persons who had a
financial stake in the restaurant.
Brawner’s counsel continued by saying,
33
“I’m not suggesting -- we’re not trying to
prove that any particular person burned
that restaurant. We are just trying to
show you there’s lots of reasonable doubt
that Mr. Brawner did; and only Mr.
Brawner is on trial for that . . . .”
To be entitled to severance, and to
overcome the presumption that jointly
indicted defendants be tried together,
Condon must show actual, compelling
prejudice. See United States v. Gonzalez,
34
940 F.2d 1413, 1428 (11th Cir. 1991); United
States v. Castillo-Valencia,
917 F.2d 494,
498-99 (11th Cir. 1990). Condon argues that
such prejudice can be found in Brawner’s
5
closing argument. But, limiting
Condon also argues that he was prejudiced
5
by the inability to introduce evidence that
he was misled by Brawner about the loans.
But in the light of the overwhelming
evidence against Condon in this case, the
absence of this evidence cannot amount
to compelling prejudice. Much of the
evidence Condon claimed was improperly
excluded went to his defense that Brawner
misled him about the contents of the
documents they both signed. Some evidence
to that fact was admitted, but the district
35
instructions were given about the
importance of applying evidence of the
arson charge only to Brawner. Limiting
instructions of this kind are presumed to
protect against prejudice in joint trials.
Gonzalez,
940 F.2d at 1428.
court excluded testimony that Brawner had
later told people that he used the loan
money “to take trips, to pay for his wife’s
tuition, [and] to go to Georgia football
games.” None of this evidence was
exculpatory for Condon, and Condon
presented no defense that was mutually
exclusive of Brawner’s. Thus, severance
was not required. Cf. Zafiro v. United
States,
113 S.Ct. 933 (1993).
36
The cautionary instructions given by
the district court in this regard were
adequate. And, the trial was distinctly
separated into two segments: the portion
for the false-statement charges and the
portion against Brawner for arson and
mail fraud. At several points during the
trial, the court explained that evidence
admitted for the purpose of proving the
arson, or other charges pending only
against Brawner, was not to be used in
37
the consideration of Condon’s guilt or
innocence. For example, before the arson
portion of the trial the court told that jury
that:
Mr. Sam Brawner is charged in
this case with arson . . . in addition
to the conspiracy in making false
statements concerning the S.B.A.
loan.
On the other hand, Mr. George
Condon is charged only with
conspiracy to make and making
false statements to the S.B.A., and is
not charged with any of the arson-
related charges.
Now, you have already heard and
you are about to hear further
evidence regarding the arson-
38
related charges. This evidence is
admitted solely against Mr.
Brawner and is not admitted and
should not be considered by you in
any respect with regard to Mr.
Condon. It is your duty to give
separate and personal
consideration to the case of each
individual defendant.
When you do so, you should
analyze what the evidence in the
case shows with respect to that
individual defendant, leaving out of
consideration entirely any
evidence admitted solely against the
other defendant.
In this case, the evidence of
alleged arson and insurance fraud
should not be considered at all for
any purpose against Mr. Condon.
39
At the trial’s end, the district court
further explained the proper use of the
evidence of arson in its jury
instructions:
In certain instances, evidence
may be admitted only concerning a
particular party or only for a
particular purpose and not
generally against all parties or for
all purposes.
For example, you have heard
substantial evidence regarding a
fire at the restaurant involved in
this case and the cause of this fire.
The government contends that Mr.
Brawner is responsible for this
fire. Mr. Brawner denies
responsibility.
40
Mr. Condon is not charged with
responsibility for this fire. None
of the evidence received concerning
the fire is admissible as to Mr.
Condon and should not be considered
by you in any respect in deciding
the charges against Mr. Condon.
These instructions are good enough; and
the instructions, along with the
overwhelming evidence against Condon,
demonstrate that no compelling prejudice
was suffered by Condon as a result of the
joint trial.
41
Conclusion
Because we find no reversible errors
in the trial of either Condon or Brawner,
we affirm their convictions.
AFFIRMED.
42
