United States v. Keith McCloud , 585 F. App'x 881 ( 2014 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 14a0735n.06
No. 13-2056
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT FILED
Sep 22, 2014
UNITED STATES OF AMERICA, ) DEBORAH S. HUNT, Clerk
)
Plaintiff-Appellee, )
) ON APPEAL FROM THE
v. ) UNITED STATES
) DISTRICT COURT FOR THE
) EASTERN DISTRICT OF MICHIGAN
KEITH McCLOUD, )
)
Defendant-Appellant. )
—————————————————————————————————————
BEFORE: BOGGS, BATCHELDER, and WHITE, Circuit Judges.
BOGGS, Circuit Judge: Keith McCloud appeals his convictions of wire fraud, bank
fraud, and making false statements in connection with fraudulent real estate transactions. For the
reasons discussed below, we affirm McCloud’s conviction.
I
In December 2010, McCloud was indicted on one count of conspiring to commit wire
fraud, in violation of 18 U.S.C. § 1349, and three counts of bank fraud, in violation of 18 U.S.C.
§ 1344. A superseding indictment followed less than a week later. It added three counts of false
statement, in violation of 18 U.S.C. § 1014.
From 2005 to 2006, McCloud made a series of ill-fated real-estate purchases in Detroit,
Michigan. An acolyte of Carlton Sheets, a well-known real-estate investment guru, McCloud
sought to purchase real estate according to a system that required little or no money in down-
payment and promised to generate immediate income. (Appellant’s Br. at 1). In all, McCloud
bought fourteen properties in Detroit, all of which he obtained by financing. His speculative
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ventures were not to last long, however. In short order, McCloud found himself unable to service
so much mortgage debt (over $1,000,000) and soon all of his properties went into foreclosure.
McCloud eventually declared bankruptcy.
As an officer in the Detroit Police Department, McCloud had neither income nor savings
commensurate with the amount of debt he sought to carry. In order to obtain the financing
necessary to effect his real estate purchases, McCloud lied to his lenders, misrepresenting or
failing to disclose financial transactions and conjuring income, savings, and lease revenue out of
whole cloth. All the while, McCloud attested to the accuracy of the information provided and
when asked by lenders for supporting information, he invented it. As the scheme involved many
separate transactions, we recount a few illustrative examples of the misrepresentations by which
McCloud obtained financing.
McCloud lied to prospective lenders about his assets, claiming to have $58,000 in savings
when in reality he had only $2,000. He failed to disclose the $5,000 payments provided by the
sellers following closing. McCloud should have recorded these payments on his HUD-1 forms
that ought to reflect all payments between the parties to a real-estate sale. Additionally, the
checks by which the payments were remitted typically bore fraudulent descriptions on the memo
line indicating that they were for expenses like “repairs.” McCloud also lied about his income,
claiming revenue from rental properties that did not exist. In one case, when lenders asked for
verification of McCloud’s rental information, he provided forged leases to support the
misrepresentations he made on the loan application. Had McCloud not misrepresented his
income and assets and had he not provided falsified documentation, the lenders would not have
funded his real estate purchases.
2
Following a jury trial, McCloud was found guilty on all counts. He was sentenced to one
day of imprisonment with time served, supervised release for three years, and restitution of just
over $27,000. McCloud timely appealed.
II
A
McCloud’s first argument on appeal is that the prosecution’s use of three of his signatures
on required court documents amounts to unconstitutionally compelled testimony in violation of
the Fifth Amendment’s protection against self-incrimination. It does not.
We review McCloud’s claim of a violation of the right against self-incrimination for
harmless error. Arizona v. Fulminante, 499 U.S. 279, 310 (1991) (“When reviewing the
erroneous admission of an involuntary confession, the appellate court, as it does with the
admission of other forms of improperly admitted evidence, simply reviews the remainder of the
evidence against the defendant to determine whether the admission of the evidence was harmless
beyond a reasonable doubt.”).
Before we determine if an error is harmless, we must ascertain whether any error was
committed at all. The Fifth Amendment protects defendants from compelled self-incrimination.
However, not all compelled acts fall under the Fifth Amendment—the protection only attaches to
“compulsion of an accused’s communications . . . and the compulsion of responses which are
also communications . . . not compulsion which makes a suspect or accused the source of real or
physical evidence.” Gilbert v. California, 388 U.S. 263, 266 (1967) (internal quotation marks
omitted).
In other words, requiring defendants to produce “real” or “physical” evidence is not a
violation of the Fifth Amendment. See United States v. Euge, 444 U.S. 707 (1980) (allowing
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IRS to require handwriting samples); United States v. Wade, 388 U.S. 218 (1976) (allowing
compulsion of a voice exemplar); United States v. Mara, 410 U.S. 19 (1973) (allowing
compulsion of a handwriting exemplar); Schmerber v. California, 384 U.S. 757 (1966) (allowing
compulsion of a blood sample). Fundamentally, a defendant is not protected from compulsion
“where the evidence is not related to some communicative act.” United States v. Williams,
704 F.2d 315, 317 (6th Cir. 1983) (internal quotation marks and alterations omitted).
The three signatures provided by McCloud were on his acknowledgement of the
indictment, a document for his appearance bond, and on his acknowledgement of the superseding
indictment. McCloud argues, reasonably, that the signatures were compelled because if he did
not provide them, he would not have been released from custody. (Appellant’s Br. at 25).
However, these signatures were the very type of handwriting exemplar that falls outside the
protection of the Fifth Amendment. They were signatures used by the prosecution for their
physical characteristics and not for their content as communicative expression. Gilbert, 388 U.S.
at 266–67 (“A mere handwriting exemplar, in contrast to the content of what is written, like the
voice or body itself, is an identifying physical characteristic outside [the Fifth Amendment’s]
protection.”).
McCloud is correct that there are cases where the compulsion of writing moves from the
realm of the physical into the testimonial, as in United States v. Campbell, 732 F.2d 1017, 1021
(1st Cir. 1984). There, the handwriting sample consisted of a dictated statement taken for the
purpose of demonstrating how the defendant spelled particular words. This violated the Fifth
Amendment because it was a communicative act and not merely a handwriting sample. Ibid.To rescue his claim on appeal, McCloud attempts to argue that the signatures conveyed
communicative content like the sample in Campbell. He argues that, since one of his defenses
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was that he was too unsophisticated to understand what he was signing, the compelled signatures
on the court documents say that he was, in contrast, sufficiently sophisticated to understand his
indictments and bond requirements. (Appellant’s Br. at 27). That is not what the signatures
convey. They were introduced as signature exemplars to compare to the signed real-estate
documents that McCloud disavowed and were thus not communicative in their own right, even
in the context in which they appeared. Accordingly, there was no error and we need not continue
to the second step of harmless-error review.
B
McCloud next argues that the prosecution engaged in misconduct throughout the trial by
(1) soliciting false testimony by the prosecution’s witnesses; (2) failing to conduct a thorough
investigation (3) using prejudicial language; and (4) withholding the production of discovery
material until too late in the trial. “Allegations of prosecutorial misconduct contain mixed
questions of law and fact that we usually review de novo.” United States v. Henry, 545 F.3d
367, 376 (6th Cir. 2008).
1
First, McCloud claims that agent Carty, the prosecution’s witness, lied in his testimony.
McCloud correctly recited the requirements to establish a claim of prosecutorial misconduct for
false testimony. Such a demonstration requires the satisfaction of three conditions: “[T]he
defendant must show that the statement in question was false, that the prosecution knew it was
false, and that it was material.” Byrd v. Collins, 209 F.3d 486, 517 (6th Cir. 2000). Further, the
defendant must show that the statement was “indisputably false.” United States v. Lochmondy,
890 F.2d 817, 823 (6th Cir. 1989).
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Four statements were identified by McCloud to support this claim. (1) Carty’s admission
that he misidentified Nick Wilson as Nick Lemmons to the grand jury; (2) an alleged
misrepresentation by Carty of McCloud’s statements regarding a letter by McCloud in evidence;
(3) Carty’s statement that he did not call Mortgage Max, one of the brokers McCloud frequently
did business with, a “crooked” company; and (4) Carty’s statement that the defendant referred to
his unrecorded $5,000 payments as “kickbacks,” which Carty later retracted. (Appellant’s Br. at
32–33).
McCloud necessarily fails to demonstrate prosecutorial misconduct in the case of all four
statements because, though he claims the statements to be “indisputably false” (satisfying the
first condition), he offers no argument or evidence either that the statements were known by the
prosecution to be false or that the statements were material. (Appellant’s Br. at 31–34).
2
The second basis advanced to support McCloud’s claim of prosecutorial misconduct is
the prosecutor’s alleged “failure to investigate” a litany of various people and events connected
to McCloud’s real-estate practices. (Appellant’s Br. at 30–31). The argument set forth is
minimal, to say the least.1 McCloud is correct, however, when he states that “there is no specific
requirement that the government investigate other potential perpetrators.” (Appellant’s Br. at
36–37). Prosecutors have no duty to bring charges or launch investigations into anyone. See
United States v. Batchelder, 442 U.S. 114, 124 (1979) (“Whether to prosecute and what charge
to file or bring before a grand jury are decisions that generally rest in the prosecutor's
discretion.”).
1
In fact, the only law cited in this sub-section of his brief, United States v. Abboud, is a case concerned
with prosecutorial misconduct by prejudicial statements, not failure to investigate. 438 F.3d 554 (6th Cir. 2006).
6
If McCloud is trying to make out a claim for selective or discriminatory prosecution, such
a claim requires a showing, prima facie, “(1) that, while others similarly situated have not
generally been proceeded against because of conduct of the type forming the basis of the charge
against him, he has been singled out for prosecution, and (2) that the government's
discriminatory selection of him for prosecution has been invidious or in bad faith, i.e., based
upon such impermissible considerations as race, religion, or the desire to prevent his exercise of
constitutional rights.” United States v. Berrios, 501 F.2d 1207, 1211 (2d Cir. 1974) (internal
quotation marks omitted). If that was McCloud’s aim, he has failed to allege a single fact in
support of the second part of the test. There is no evidence of bad faith. The closest his
argument comes to is an allegation of incompetence. There is no merit in McCloud’s failure-to-
investigate claim.
3
McCloud also argues prosecutorial misconduct on the basis of prejudicial statements by
the prosecutor at trial. These included about a dozen occasions when the prosecutor referred to
the $5,000 time-of-closing payments as “kickbacks.” (Appellant’s Br. at 30).
In order to show that a prosecutor’s prejudicial statements amount to prosecutorial
misconduct, McCloud would have to “demonstrate that the prosecution’s conduct was both
improper and so flagrant as to warrant reversal.” Bates v. Bell, 402 F.3d 635, 641 (6th Cir.
2005). Flagrancy itself is determined by considering four factors: “(1) the likelihood that the
remarks of the prosecutor tended to mislead the jury or prejudice the defendant; (2) whether the
remarks were isolated or extensive; (3) whether the remarks were deliberately or accidentally
made; and (4) the total strength of the evidence against the defendant.” Ibid.7
As an initial matter, it is doubtful whether the prosecutor’s use of the term “kickback”
was improper at all. The government, convincingly, argues that the term kickback means “a
return of a portion of a monetary sum received, esp. as a result of coercion or a secret
agreement.” Black’s Law Dictionary (9th Ed. 2009); (Appellee’s Br. at 21). The facts of the
case, as admitted by McCloud, are that he was in the habit of taking payments of $5,000 from the
sellers of the houses at closing. McCloud also admits that these payments were not recorded as
required in the properties’ HUD-1 forms. (Appellant’s Br. at 4, 5, 9, 10). In other words, they
were secret.
Even if the use of “kickback” was improper, it also has to be flagrant in order to qualify
as prosecutorial misconduct. Examining the Bates factors, it is clear that the use of the term
kickback was not flagrant.
The first factor, whether the remark “tended to mislead the jury or prejudice the
defendant” is either very slightly in favor of flagrancy or wholly neutral. If the term “kickback”
is an accurate description of the payments, it cannot be said to mislead the jury nor, for that
matter, prejudice them. Jurors will get an accurate understanding of the nature of the payment
from a term that is correctly chosen to describe it. If, on the other hand, it was not an accurate
description, then the pejorative connotations of “kickback” could prejudice a jury. However, the
effects are probably not that great, especially given a relatively few uses of the term during the
course of a trial involving multiple undisclosed payments.
The second factor weighs against a finding of flagrancy. The prosecutor used the term
“kickback” only twice while putting on his case following the defendant’s initial objection. He
used it once again in closing arguments when he summarized the evidence that had been
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presented at trial. Three uses of the term “kickback” in the course of a multi-day trial is hardly
“extensive.”
The third factor, whether the comments were deliberately or accidentally made, weighs
strongly against a finding of flagrancy. Following McCloud’s objection, the prosecutor only
used the term twice while putting on his case. Both times he spoke in error, calling the
references “a slip” and “a slip of the tongue.” In both cases he was immediately corrected by the
defendant’s objection. The final time he said “kickback” was in closing arguments when he was
under the impression that it was acceptable for him to characterize the evidence presented as he
did. Following objection from the defense, the prosecution submitted that the use of “kickback”
was an acceptable characterization of the evidence presented: “Your Honor, this is argument.
It’s proper argument.” Regardless, the court disagreed, sustaining the objection of the defense
and instructing the jury to disregard the use of the term “kickback.” In every case after the
defendant’s initial objection, the prosecution said “kickback” either by clear mistake or in
mistaken belief that it was acceptable to use the term at that phase of the trial.
The final factor, the total strength of evidence against the defendant, weighs heavily
against a finding of flagrancy. There was a great deal of evidence against McCloud in the form
of clandestine payments (the “kickbacks”), falsified rental agreements, and false statements to
lenders regarding the source of funds in his bank accounts. The three uses of the term
“kickback” were not grave compared to the overwhelming evidence that was put before the jury.
It is probable that there was no impropriety. It is certain that under Bates there was no
flagrancy and thus no prosecutorial misconduct based on prejudicial statements.
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4
The final basis alleged in support of McCloud’s claim of prosecutorial misconduct was
the prosecutor’s alleged failure to turn over discovery material. McCloud identifies two
categories of material that he alleges the prosecutor withheld. First, he points, rather vaguely, to
discovery material, including bank statements, that the government “withheld until the eve of
trial.” (Appellant’s Br. at 38). Second, McCloud claims that the rough notes of interviews
conducted by Agent Carty were withheld until midtrial. Because McCloud raised
contemporaneous objections to the timing of the prosecution’s production of the discovery
material, the admission of the evidence is reviewed for abuse of discretion while the court’s legal
conclusions are reviewed de novo.
Despite its characterization by McCloud, neither of the production claims are true Brady
claims. In order to establish a Brady violation, the defendant must show that a prosecutor’s
failure to produce meets the following three requirements: “[t]he evidence must be favorable to
the accused, either because it is exculpatory, or because it is impeaching; that evidence must
have been suppressed by the State, either willfully or inadvertently; and prejudice must have
ensued.” Strickler v. Greene, 527 U.S. 263, 280 (1999); see Brady v. Maryland, 373 U.S. 83(1963).
Were we to attempt to read a properly-articulated Brady claim into McCloud’s argument
on appeal, in the case of the bank statements, he fails on all three fronts. The evidence was not
favorable to McCloud, in fact it was deeply inculpatory, showing, among other things, that he
misrepresented to lenders both the balance of his savings accounts and the source of payments
from third parties. The evidence was not suppressed by the prosecution. It was obtained by the
prosecution and produced to the defense on the same day. Finally, there was no prejudice from
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the failure to produce. The court granted a one-day continuance in order to provide an
opportunity for the defense to review the bank statements.
The same is true of the handwritten notes produced by Carty during his interviews with
McCloud and Randy Day. They were produced, by order of the court, before the conclusion of
Carty’s testimony. The handwritten notes fail both parts of Brady. First, the evidence contained
within Carty’s notes was neither exculpatory nor was it usable for impeachment and, on appeal,
McCloud does not argue otherwise. Without explaining how the handwritten notes were
favorable to his case, McCloud claims misconduct based on no more than the mere fact that the
notes were produced during trial instead of before trial. Second, the evidence was not
suppressed. A typed report was provided in advance of trial that contained the information in the
notes and, when the notes were demanded by the defense, they were provided by the prosecution
while the trial was still ongoing. Since they were provided before the conclusion of trial, and
cross-examination was still available to the defense regarding any subject that might have
appeared in the notes, there was no prejudice.2
C
Finally, McCloud appeals his conviction based on a claim of insufficiency of the
evidence. When sufficiency of the evidence “is challenged on appeal, the standard of review is
whether, after viewing the evidence in the light most favorable to the prosecution, any rational
trier of fact could have found the essential elements of the crime.” United States v. Jones,
102 F.3d 804, 807 (6th Cir. 1996) (internal alterations omitted).
2
It is true that the prosecution has an obligation under Rule 16(a) to disclose “the portion of any written
record containing the substance” of a defendant’s oral statement. Fed. R. Crim. P. 16(a)(1)(B)(ii). However, the
production of such evidence during trial does not necessarily cause prejudice especially, as in this case, when the
substance of the record had been produced before trial began in the form of the prosecution’s typewritten report.
See United States v. Clark, 385 F.3d 609 (6th Cir. 2004); see also United States v. Ganier, 468 F.3d 920, 927 (6th
Cir. 2006) (detailing the sanctions available for the prosecution’s failure to produce evidence in accordance with
Rule 16, including a three-factor test to determine if suppression is the correct remedy).
11
McCloud confines his argument on appeal to a claim that the prosecution did not present
sufficient evidence to demonstrate knowledge, an element common to all three offenses of which
McCloud was convicted. The question, therefore, is whether any “rational trier of fact” could
have found this element beyond a reasonable doubt.
A rational juror could have found knowledge. McCloud misrepresented important
information about his financial status on loan documents. He provided forged leases to bolster
an image of credit-worthiness. He hid the existence of the $5,000 payments by the sellers and
tried to obscure them by representing them as payments for repair work. McCloud claims that
the signatures on some of the documents were not his. Even if that is true, McCloud did provide
false financial information and he did hide financial transactions from his lenders and he did
produce false leases to demonstrate fictitious income. In light of so many deliberate acts, a
rational trier of fact could find that McCloud had the requisite knowledge to support his
convictions.
III
For these reasons, we AFFIRM the district court’s judgment.
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