United States v. Richard Garries , 452 F. App'x 304 ( 2011 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-4968
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
RICHARD N. GARRIES,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Newport News. Rebecca Beach Smith,
District Judge. (4:08-cr-00050-RGD-JEB-1)
Argued: September 23, 2011 Decided: October 25, 2011
Before TRAXLER, Chief Judge, and WILKINSON and NIEMEYER, Circuit
Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Lawrence Hunter Woodward, Jr., SHUTTLEWORTH, RULOFF,
SWAIN, HADDAD & MORECOCK, PC, Virginia Beach, Virginia, for
Appellant. Brian James Samuels, OFFICE OF THE UNITED STATES
ATTORNEY, Newport News, Virginia, for Appellee. ON BRIEF: Neil
H. MacBride, United States Attorney, Alexandria, Virginia,
Katherine Reynolds, Third Year Law Student, OFFICE OF THE UNITED
STATES ATTORNEY, Newport News, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Richard Garries was indicted on twenty-four counts,
including conspiracy to commit mail and wire fraud, and multiple
counts each of mail fraud, wire fraud, and making false
statements. The charges arose from a wide-ranging scheme to
defraud that centered on real estate transactions funded by sub-
prime mortgages arranged by Garries. The jury convicted Garries
of all counts, and the district court sentenced him to 240
months’ imprisonment. Garries appeals. Finding no reversible
error, we affirm.
I.
We briefly summarize the evidence presented at trial,
viewing the evidence, as we must, in the light most favorable to
the government. See, e.g., United States v. Young, 609 F.3d
348, 355 (4th Cir. 2010).
In 2003, Garries pleaded guilty to wire fraud, after
selling forged and fraudulent vehicle financing contracts on the
secondary market. Garries was sentenced to twenty-five months’
imprisonment, followed by a term of supervised release.
After he was released from prison in 2005, Garries began
working as a mortgage originator for Security First Funding, a
mortgage brokerage company in Newport News, Virginia. Security
First and the mortgage lenders with which it had relationships
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focused on “sub-prime” mortgages -- mortgages offered to higher-
risk borrowers. The government’s evidence established that
Garries and his staff did whatever was necessary to make a given
client appear to qualify for a loan. Garries (or his staff at
his direction) inflated the income of loan applicants so the
applicants would meet the lender’s required debt-to-income
ratio. They altered or created out of whole cloth any documents
necessary to support the inflated income or to meet other lender
requirements, sometimes forging the applicant’s signature and
other times cutting a legitimate signature from one document and
pasting it onto a forged document. For applicants who did not
have enough money in the bank to meet the lender’s requirements,
Garries gave them “show money” for deposit in their accounts and
took the money back after the lender verified the account
balance.
Garries also worked as a “flipper,” buying houses to
renovate and resell. Many of Garries’ Security First clients
were seeking investment properties to rent or resell, and
Garries frequently steered these clients to properties he owned.
Garries encouraged the clients to buy the houses by falsely
promising, inter alia, to give the buyers cash back after
closing, to provide a renter for property, or to make any
necessary repairs after closing. Appraisals for these
properties often stated that the house had certain equipment or
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fixtures that were not present when the buyer took possession,
or indicated that various repairs had been done that in fact had
not been done. Because of the true condition of the homes, most
of the buyers were unable to resell the houses for a profit or
rent the houses at a price that covered the high-interest
mortgages Garries had placed them in, and they generally lost
the investment properties to foreclosure.
Stuart Gordon was a “hard money” lender who provided short-
term high-interest loans for Garries to buy and repair the
houses he flipped. After learning that Garries was inflating
his estimates for repairs and seeking draws for repairs that had
not been done, Gordon began requiring Garries to show city
inspection stickers and verifications before he would release
money from escrow. That did not prove to be much of an obstacle
for Garries -- he simply forged the inspection documents.
The conduct outlined above provided the factual basis for
most of the charges alleged in the indictment. The false-
statement charges, however, were based on statements Garries
made to the probation officer to whom Garries reported while on
supervised release following his 2003 wire-fraud conviction. As
to those charges, the government’s evidence established that
Garries made numerous false statements about his residence,
income, assets, bank accounts, and various business entities he
owned or operated.
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Over Garries’ objection, the district court permitted
Horace Goins to testify about his business dealings with
Garries. The Goins transactions were not charged in the
indictment, but they were very similar to the charged conduct
and occurred during the same time frame as the actions charged
in the indictment.
Goins testified that he received more than $80,000 through
a cash-out refinancing loan arranged by Garries. Garries
persuaded Goins to invest the loan proceeds in Williamsburg
Restaurant Equipment and Supply, a company incorporated and
operated by Garries. Garries told Goins that there was a big
market for used restaurant equipment, that the company had
already lined up several lucrative contracts, and that he needed
capital to renovate the retail store and build an inventory. As
it turned out, only a few pieces of equipment were ever bought,
the company never began operations, the promised contracts never
materialized, and the shares of stock promised to Goins were
never issued. Not surprisingly, Goins lost all the money he had
invested in the company. Goins also testified about two houses
he bought through Garries that he intended to use as rental
properties. Garries made false promises to Goins about the
condition of the houses and their rental potential. When Goins
discovered the true condition of the houses, Garries refused to
make any repairs, and Goins was forced to spend significant sums
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to make the houses habitable. Goins ultimately lost all of his
retirement savings, and he was forced to declare bankruptcy.
II.
Under the Federal Rules of Evidence, “[e]vidence of other
crimes, wrongs, or acts is not admissible to prove the character
of a person in order to show action in conformity therewith,”
but such evidence is admissible “for other purposes, such as
proof of motive, opportunity, intent, preparation, plan,
knowledge, identity, or absence of mistake or accident.” Fed.
R. Evid. 404(b). On appeal, Garries challenges on Rule 404(b)
grounds the district court’s decisions to admit the testimony of
Horace Goins and to admit evidence about Garries’ 2003 wire
fraud conviction.
A.
Garries was not charged with any crimes relating to his
dealings with Horace Goins, and Garries therefore argues that
the Goins evidence should have been excluded under Rule 404(b).
We disagree.
Rule 404(b)’s limits on admissibility do not apply to
evidence of conduct that is intrinsic to the crimes charged.
See United States v. Lighty, 616 F.3d 321, 352 (4th Cir.) (“Rule
404(b) limits only the admission of evidence of acts extrinsic
to the one charged, but does not limit the admission of evidence
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of intrinsic acts.”), cert. denied, 131 S. Ct. 846 (2010), and
80 U.S.L.W. 3015 (U.S. Oct. 17, 2011) (No. 10-1010). Uncharged
conduct is intrinsic and thus not subject to Rule 404 “if the
uncharged conduct arose out of the same series of transactions
as the charged offense.” United States v. Siegel, 536 F.3d 306,
316 (4th Cir. 2008) (internal quotation marks omitted). Garries
was charged with conspiracy to commit mail and wire fraud, and
the Goins transactions arose out of the same series of
transactions as the charged conspiracy. The Goins transactions
were thus intrinsic to the crimes charged, and the district
court properly admitted the evidence. See United States v.
Muscatell, 42 F.3d 627, 631 (11th Cir. 1995) (in case where
defendants “were charged with conducting a continuing scheme to
defraud, characterized by land flip transactions, inflated
appraisals, buyer-rebates, and fraudulent loan applications,”
evidence of uncharged transaction that was largely identical to
those charged in the conspiracy was properly admitted as
intrinsic to the crimes charged).
B.
Garries also contends that the district court erred under
Rule 404(b) by allowing the government to present evidence
related to his 2003 conviction for wire fraud. Given the
factual basis for the false-statement charges -- false
statements Garries made to his probation officer, Garries
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concedes that evidence of his supervised release status was
admissible. He argues, however, that the government should not
have been permitted to introduce evidence about the underlying
conviction itself or details of the conditions of his supervised
release and his compliance with those conditions. According to
Garries, the only purpose of this detailed evidence was to
assail his character, which is prohibited by Rule 404(b). We
disagree.
As an initial matter, we note that much of the testimony
about the terms of Garries’ supervised release and his
compliance with those terms was intrinsic to the false-statement
charges and therefore was not, as discussed above, subject to
the proscriptions of Rule 404(b). See Lighty, 616 F.3d at 352
(“Evidence is inextricably intertwined with the evidence
regarding the charged offense [and thus intrinsic] if it forms
an integral and natural part of the witness’s accounts of the
circumstances surrounding the offenses for which the defendant
was indicted.” (internal quotation marks and alteration
omitted)). And as we explain, the challenged evidence that was
not intrinsic was properly admitted under Rule 404(b).
To be admissible under Rule 404(b), prior bad acts evidence
must be relevant to an issue other than character, such as
identity or motive; necessary to prove an element of the crime
charged; and reliable. See United States v. Blauvelt, 638 F.3d
8
281, 292 (4th Cir. 2011), cert. denied, 79 U.S.L.W. 3712 (U.S.
Oct. 3, 2011) (No. 10-1473); Siegel, 536 F.3d at 317-18. Rule
404(b) is “an inclusive rule, admitting all evidence of other
crimes or acts except that which tends to prove only criminal
disposition.” United States v. Young, 248 F.3d 260, 271–72 (4th
Cir. 2001) (emphasis added; internal quotation marks omitted).
Given Garries’ denial of involvement in the forging and
altering of loan documents at issue in this case, evidence about
the prior conviction was probative of his intent and knowledge
on the various mail and wire fraud counts. See United States v.
Queen, 132 F.3d 991, 996 (4th Cir. 1997) (“Once an act is
assumed to be done, the prior doing of other similar acts is
useful as reducing the possibility that the act in question was
done with innocent intent.” (internal quotation marks and
alteration omitted)). Evidence of the restitution award was
likewise probative of Garries’ motive for the false statements
counts, by showing why he lied to the probation officer about
his bank accounts and income. Under these circumstances, we
cannot say that the district court’s decision to admit the
challenged evidence was arbitrary or irrational. See Blauvelt,
638 F.3d at 292 (“Because judgments of evidentiary relevance and
prejudice are fundamentally a matter of trial management, we
defer to the discretion of trial courts and will not vacate a
conviction unless we find that the district court judge acted
9
arbitrarily or irrationally in admitting evidence.” (internal
quotation marks and alterations omitted)).
III.
The district court frequently interrupted and questioned
Garries during his testimony, and Garries argues that the
court’s interference deprived him of a fair trial. ∗ Because
counsel for Garries did not object to the court’s questioning,
see Fed. R. Evid. 614(c) (“Objections to the calling of
witnesses by the court or to interrogation by it may be made at
the time or at the next available opportunity when the jury is
not present.”), we review this claim for plain error only, see
United States v. Godwin, 272 F.3d 659, 672 (4th Cir. 2001).
There is no question that a trial judge has the authority
to question witnesses. See Fed. R. Evid. 614(b) (“The court may
interrogate witnesses, whether called by itself or by a
party.”); Godwin, 272 F.3d at 672 (“[A] trial judge possesses
broad authority to interrogate witnesses.”). When exercising
this authority, however,
the trial judge must always remember that he occupies
a position of preeminence and special persuasiveness”
in the eyes of the jury, and, because of this, he
∗
The presiding judge became ill after the close of
testimony, and Judge Smith took over the case at the jury-
instruction phase.
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should take particular care that his participation
during trial -- whether it takes the form of
interrogating witnesses, addressing counsel, or some
other conduct -- never reaches the point at which it
appears clear to the jury that the court believes the
accused is guilty.
United States v. Parodi, 703 F.2d 768, 775 (4th Cir. 1983)
(citation, internal quotation marks, and alteration omitted).
The ultimate inquiry is “whether the trial judge’s comments were
so prejudicial as to deny a party an opportunity for a fair and
impartial trial.” Godwin, 272 F.3d at 679 (internal quotation
marks omitted).
It is apparent from the record that Garries was a difficult
witness. He rarely gave a direct answer to a question, but
would instead spend paragraphs and paragraphs talking his way
around the question. The district court was understandably
frustrated with Garries’ conduct, and a great many of the
court’s interruptions were attempts to get Garries to answer the
question that had been asked. See, e.g., J.A. 1415-16 (“He just
asked you if you made any income. Just answer the question,
okay? Good speeches, but just answer the question. Then you
can explain it, all right?”); J.A. 1504 (“Stop. Just stop.
Answer questions.”). Some of the statements perhaps may have
been a bit intemperate, see J.A. 1626 (“Can you say, ‘No,’ N-O?
Can you?”), but the court’s efforts at keeping Garries focused
can in no sense be considered prejudicial. See United States v.
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Smith, 452 F.3d 323, 333 (4th Cir. 2006) (“[E]ven a stern and
short-tempered judge’s ordinary efforts at courtroom
administration do not establish bias or partiality. . . . A
tart remark or two might be what is needed to keep a lengthy
trial on track.” (internal quotation marks and alteration
omitted)).
Some of the court’s comments and questions, however, seem
to undermine the substance of Garries’ testimony. For example,
when Garries was testifying about Horace Goins’ investment in
the restaurant supply company, the court asked Garries whether
he had bought any restaurant equipment with Goins’ money.
Garries said that he had bought equipment, to which the court
responded, “Oh, you did. What did you do with the restaurant
equipment?” J.A. 1496. When Garries insisted that the company
had sold some equipment, the court asked, “Who was this person
who was purchasing . . . restaurant equipment? Name me just one
and how much they purchased.” J.A. 1497. Another problematic
exchange involved Garries’ testimony about Terance Boothe, who
worked with Garries as a loan processor and pleaded guilty to a
conspiracy charge arising from his conduct in this case. Boothe
testified that he had created a phony check to convince a
mortgage lender that a buyer had paid earnest money. Garries,
however, testified that the buyer had actually paid earnest
money -- not with the phony check that had been submitted to the
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lender, but with a legitimate check that had been held in the
file and not provided to the lender. The district court
interrupted Garries to say, “So Mr. Boothe did this himself, and
you had nothing to do with it. And he did it, and although
there was perfectly valid stuff in the file he did it to screw
up the transaction. Is that correct?” J.A. 1729.
We believe that the questions and comments of this nature
can be construed as reflecting the district court’s disdain for
Garries and disbelief of his testimony, sentiments to which the
jury should not have been privy. See Godwin, 272 F.3d at 678(“[C]ross-examination of a witness by the trial judge is
potentially more impeaching than such an examination conducted
by an adversary attorney. The judge, by his office, carries an
imprimatur of impartiality and credibility in the eyes of the
jury. In fact, a judge’s apparent disbelief of a witness is
potentially fatal to the witness’s credibility.” (emphasis
added; footnote omitted)); cf. Quercia v. United States, 289
U.S. 466, 470 (1933) (“It is important that hostile comment of
the judge should not render vain the privilege of the accused to
testify in his own behalf.”). Accordingly, we will assume that
Garries has satisfied his burden of demonstrating that plain
error occurred.
The existence of plain error, however, is not enough to
entitle Garries to relief; Garries must also show that the error
13
affected his substantial rights. See Godwin, 272 F.3d at 679.
An error affects a defendant’s substantial rights when the error
“actually affected the outcome of the proceedings.” United
States v. Hastings, 134 F.3d 235, 240 (4th Cir. 1998). We have
no difficulty concluding that any error in this case did not
affect the outcome of the trial.
In Godwin, we applied plain-error review to questions and
comments made by the district court that were similar in nature
to the problematic comments at issue in this case. See Godwin,
272 F.3d at 674-76. While finding the court’s participation in
the trial “troublesome,” id. at 681, we nonetheless concluded
that the defendants could not establish that the outcome of the
trial was affected by the district court’s error: “In the face
of the overwhelming evidence presented against them by the
Government, there was no reasonable probability that the
[defendants’] good faith defense would succeed. Where the
evidence is overwhelming and a perfect trial would reach the
same result, a substantial right is not affected,” id. at 680(citation omitted).
As in Godwin, the government’s evidence in this case was
overwhelming. At trial, the government presented almost 300
exhibits and called twenty-six witnesses, including members of
Garries’ staff (one of whom was his daughter) who were involved
in the schemes and testified about their own wrongdoing and
14
Garries’ awareness of and involvement in the misconduct; law
enforcement officers who testified about obviously forged and
altered documents found in Garries’ trash and in his office
files; and representatives from the mortgage lenders that
approved loans in reliance on information that Garries
falsified. The government also called as witnesses many of
Garries’ clients, who gave wrenching testimony about losing
everything because they trusted the wrong man.
The only significant evidence countering the government’s
compelling evidence was Garries’ own testimony. Garries denied
being involved in any wrongdoing, but he offered no evidence to
substantiate his claims, frequently claiming that the government
had in its possession but refused to turn over the receipts or
other documents that would show he was telling the truth. His
testimony was often self-contradictory and at times was patently
incredible, and it simply failed to provide a coherent
explanation for the testimonial and documentary evidence
presented by the government. As in Godwin, there is no
reasonable probability that, had the improper questioning by the
district court not occurred, the jury would have accepted
Garries’ claims in the face of this overwhelming evidence.
Accordingly, Garries cannot establish that his substantial
rights were affected by the district court’s improper
15
participation in the trial, and his claim thus fails under
plain-error review.
IV.
Garries raises two other issues on appeal, neither of which
merits detailed discussion.
Garries first contends that the evidence was insufficient
to support his convictions. The government presented evidence
establishing each element of every charge against Garries, and,
as discussed above, that evidence overwhelmingly established
Garries’ guilt. See United States v. Beidler, 110 F.3d 1064,
1067 (4th Cir. 1997) (“Reversal for insufficient evidence is
reserved for the rare case where the prosecution’s failure is
clear.” (internal quotation marks omitted)).
Garries also contends that the mail and wire fraud statutes
are unconstitutionally vague as applied to him. The statutes’
prohibition of “any scheme or artifice to defraud, or for
obtaining money or property by means of false or fraudulent
pretenses, representations, or promises,” 18 U.S.C.A. §§ 1341,
1343 (West Supp. 2011), raises due process questions of
vagueness if applied in “honest services” cases not involving
bribery or kickbacks. See Skilling v. United States, 130 S. Ct.
2896, 2931 (2010). This case, however, did not involve honest-
services fraud but instead involved “a conventional fraudulent
16
scheme to obtain money,” a form of fraud that “is untouched by
Skilling and remains illegal.” United States v. Joshua, 648
F.3d 547, 553 (7th Cir. 2011). There is nothing vague about the
statutory prohibition when applied to the conduct at issue in
this case. See Skilling, 130 S. Ct. at 2927-28 (explaining that
a criminal statute is not vague if it “define[s] the criminal
offense [1] with sufficient definiteness that ordinary people
can understand what conduct is prohibited and [2] in a manner
that does not encourage arbitrary and discriminatory
enforcement”).
V.
To summarize, we find no error in the district court’s
admission of evidence about Garries’ prior conviction or his
business dealings with Horace Goins. The mail and wire fraud
statutes are not unconstitutional as applied to Garries, and the
evidence was more than sufficient to sustain each of the
convictions. While the district court may have erred in its
questioning of Garries, Garries cannot establish prejudice under
plain-error review, because the evidence of his guilt was
overwhelming. Accordingly, we affirm Garries’ convictions.
AFFIRMED
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