William Mallory Kent - Criminal Appeal Lawyer

Because there was not sufficient evidence presented at trial that the bank's deposits were insured by the FDIC and because the Government's use of an affidavit to present sufficient evidence violated Sandles' right to confront witnesses against him, Sandles' conviction must be reversed. The Government must prove that the deposits of the bank were insured by the FDIC at the time that Sandles robbed the bank. See United States v. Wood, 780 F.2d 555, 556 (6th Cir.1986) (per curiam).^FN2 The Government argues that there were three pieces of evidence presented at trial from which a reasonable jury could find beyond a reasonable doubt that the bank's deposits were insured by the FDIC: (1) York's personal knowledge of FDIC stickers at the bank deposit windows; (2) York's statement that the bank's deposits were FDIC-insured; and (3) Best's affidavit that her search of the FDIC records did not reveal that the bank's insurance had expired. Only York's testimony to having seen the stickers was competent evidence, and it was not, standing alone, sufficient evidence of the bank's insured status. The Government failed to demonstrate that York had personal knowledge that the bank's deposits were FDIC-insured, and the Government's use of an affidavit to establish the FDIC-insured element violated Sandles' constitutional right to confront witnesses against him. ^FN3

FN2. Although the Government sought to prosecute this case only under the theory that the bank's deposits were insured by the FDIC, the Government could have sought to prove that the bank was a member of the Federal Reserve System, or organized or operating under the laws of the United States. 18 U.S.C. § 2113(f) includes within the definition of “bank” “any member bank of the Federal Reserve System, and any bank ··· organized or operating under the laws of the United States.” The Government in its indictment, however, only sought to demonstrate that the bank's deposits were insured by the FDIC. The district court also instructed the jury only as to the FDIC definition of “bank.” Although the Michigan National Bank was likely organized and likely operates under the laws of the United States, the Government did not seek to prove this at trial.

FN3. We consider the issue of insufficient evidence even though Sandles did not object after the close of all of the evidence. Referring to United States v. Price, 134 F.3d 340, 350 (6th Cir.1998), the Government argues that we should review this sufficiency question for “miscarriage of justice” because Sandles did not renew his motion for acquittal after the close of all evidence. On the peculiar facts of this case, however, Sandles sufficiently objected to the Government's failure to prove the bank's insured status. Sandles objected to the lack of evidence on the FDIC-insured element at the close of the Government's case and in a motion after the jury convicted him. The Government never mentioned his failure to object in its responsive motion, and the district court issued a four-page written order denying the motion. Sandles' repeated objections at trial, his motion at the close of the Government's case, and his motion after his conviction gave the district court an adequate opportunity to consider the issue and rule on the merits.

*514
[3] York's personal knowledge of one fact-that the bank holds itself out as insured-is not by itself sufficient to establish that the bank's deposits were insured by the FDIC. York's testimony that she had viewed FDIC stickers at the bank's deposit windows was admissible evidence because York had seen the stickers and thus had personal knowledge of their existence. See Fed.R.Evid. 602. But, although we have previously held that a witness's viewing of the FDIC stickers along with other evidence is sufficient for a jury to find that a bank's deposits are FDIC-insured, we have never held that the presence of FDIC stickers alone is sufficient evidence that the bank's deposits were insured by the FDIC. For instance, in United States v. Babb, 77 Fed.Appx. 761, 768-69 (6th Cir.2003) (per curiam), this court held that testimony from a Michigan National Bank employee that there were signs around the bank indicating that the bank's deposits were FDIC-insured was, among other pieces of evidence, sufficient to find that the bank's deposits were insured by the FDIC. But Babb is distinguishable because there was also evidence in that case from two other employees testifying that the bank's deposits were FDIC-insured and testimony that the word “national” in the bank's title indicated that it was insured.^FN4 See id.; see also United States v. Maner, 611 F.2d 107, 110 (5th Cir.1980) (employees testified that they had viewed certificate of insurance). Simply put, some evidence is not necessarily sufficient evidence-the Government must proffer more than evidence of FDIC stickers to prove that the bank's deposits were insured by the FDIC.

FN4. Even if is true that the word “national” in a bank's name indicates that it is insured, we may not take judicial notice of this fact because whether the bank's deposits are FDIC-insured is an element of the offense for the jury to decide. See United States v. Mentz, 840 F.2d 315, 322 (6th Cir.1988) (stating that a district court cannot take judicial notice of a bank's FDIC status without informing the jury that it can, but does not have to, accept that noticed fact).

[4] Although the Government argues that York's testimony that the bank's deposits were FDIC-insured was an additional piece of evidence that the jury could properly consider, York never established her personal knowledge of that fact. The Government is correct that a witness's unchallenged statement that the bank's deposits are FDIC-insured is sufficient evidence for a jury to find that a bank's deposits are insured by the FDIC. See Wood, 780 F.2d at 557; United States v. Gallop, 838 F.2d 105, 111-12 (4th Cir.1988). But the Government forgets that “[a] witness may not testify to a matter unless evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter.” Fed.R.Evid. 602. In both Wood and Gallop, the defendants did not argue that the witness lacked personal knowledge, and thus the statements that the bank's deposits were FDIC-insured were admissible. But, here, Sandles repeatedly objected to *515
York's lack of personal knowledge of the bank's insured status, and thus the testimony was admissible only if the Government established that York had personal knowledge that the bank's deposits were FDIC-insured. This the Government did not do.

The Government argues that York had personal knowledge that the bank's deposits were FDIC-insured by testifying that she had seen the 1987 FDIC certificate at the bank, that she knew that the bank had been insured for over twenty-three years, and that she had viewed the stickers at the bank's deposit windows. These arguments are unavailing. First, the district court correctly determined that York had no personal knowledge concerning the meaning of the 1987 insurance certificate. Moreover, the bank's insured status more than twenty years before the robbery does not establish that the bank's deposits were FDIC-insured at the time of Sandles' robbery. See United States v. Shively, 715 F.2d 260, 265 (7th Cir.1983) (“But there is no way in which a certificate of insurance issued in 1969 could be taken to refer to a bank's insured status in 1978 without any other evidence.”). Similarly, York's knowledge that the bank had been insured in the past does not mean that the bank was insured at the time of the robbery. A witness cannot establish personal knowledge of a fact by merely saying that he or she has known that fact for a long time. Such a foundation is circular and does not establish why or how the witness knows the challenged fact. Finally, knowledge of FDIC stickers at the bank does not mean that one has knowledge of the bank's insured status. See United States v. Cooper, 375 F.3d 1041, 1044-45 (10th Cir.2004) (noting that the district court held that a bank employee could not testify that she knew that the bank was insured merely because she had viewed FDIC stickers at the bank). The Government simply did not establish a proper foundation for York's testimony as to the bank's FDIC status.

[5] [6] The Government's final proffered piece of evidence-Best's affidavit-was not competent evidence because, even under plain error review, its use violated Sandles' right to confront witnesses against him. The district court found that it had admitted the affidavit of Valerie Best in a packet of papers as Exhibit 4, of which only the 1987 certificate was actually admitted when it was presented to York during her testimony; the affidavit in the packet was never mentioned until closing arguments. Best declared in her affidavit that her research of FDIC records did not indicate that the bank's insurance policy had been cancelled. We review this claim for plain error because Sandles did not object to the admission of the affidavit on the grounds that the affidavit's use violated his constitutional right to confront witnesses against him. See United States v. Matheny, 450 F.3d 633, 642 (6th Cir.2006). “When reviewing for plain error, this court must decide whether (1) there was an error in the district court, (2) the error was plain, (3) the plain error affected the defendant's substantial rights, and (4) the plain error seriously affected the fairness, integrity or public reputation of judicial proceedings.” United States v. Fraser, 448 F.3d 833, 841 (6th Cir.2006). The admission of Best's affidavit satisfies each of these four criteria.

The use of the affidavit was error because courts do not convict by affidavit. See Crawford v. Washington, 541 U.S. 36, 50-51, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004); see also id. at 53-54, 124 S.Ct. 1354 (“[T]he Framers would not have allowed admission of testimonial statements of a witness who did not appear at trial unless he was unavailable to testify, and the defendant*516
had had a prior opportunity for cross-examination.”); id. at 51, 124 S.Ct. 1354 (“ ‘Testimony,’ in turn, is typically ‘a solemn declaration or affirmation made for the purpose of establishing or proving some fact.’ ” (quoting 1 N. Webster, An American Dictionary of the English Language (1828))).^FN5 In its brief, the Government does not challenge this analysis. Instead, the Government argues that there are no Confrontation Clause problems with the admission of the 1987 FDIC certificate, a document distinct from Best's affidavit. See Gov't Br. at 23 (referring to United States v. Bellucci, 995 F.2d 157, 161 (9th Cir.1993)). We, however, are not concerned with the admission of the 1987 certificate. We are concerned with Best's affidavit, an affidavit of a Government employee used to establish a necessary fact in a criminal case for which the Government offers no exception to Crawford. Permitting the Government to rely on the affidavit during closing argument, therefore, was error.

FN5. Although the Supreme Court decided Crawford years after Sandles' trial, he is entitled to rely on Crawford. The Supreme Court has held that a defendant may rely on a case decided by the Supreme Court during the time that his case is pending on direct review if that case announces a new rule. Schriro v. Summerlin, 542 U.S. 348, 351, 124 S.Ct. 2519, 159 L.Ed.2d 442 (2004). The Supreme Court decided Crawford while Sandles' case was pending on direct appeal, and it announced a new rule by overruling Ohio v. Roberts, 448 U.S. 56, 100 S.Ct. 2531, 65 L.Ed.2d 597 (1980). See Davis v. Washington, --- U.S. ----, 126 S.Ct. 2266, 2275 n. 4, 165 L.Ed.2d 224 (2006).

The error was also plain because Crawford establishes at the time of this appeal that the affidavit was not admissible as evidence at a criminal trial. This court looks to the time of appeal to determine whether an error is plain. See United States v. Oliver, 397 F.3d 369, 379 (6th Cir.2005). By the time of this appeal, not only has the Supreme Court declared that out-of-court testimonial statements cannot be admitted against a defendant, see Crawford, 541 U.S. at 50-56, 124 S.Ct. 1354, but as far back as 1895, the Supreme Court in Mattox v. United States, 156 U.S. 237, 242, 15 S.Ct. 337, 39 L.Ed. 409 (1895), described the “primary object” of the Confrontation Clause as “prevent [ing] depositions or ex parte affidavits ··· [from] being used against the prisoner in lieu of a personal examination and cross-examination of the witness.” It was plain error to permit the Government to prove an element of a crime by affidavit.

This plain error also affected Sandles' substantial rights because, without the use of this affidavit, there was not sufficient evidence from which the jury could find that the bank's deposits were FDIC-insured. Finally, it “seriously affect[s] the fairness, integrity or public reputation of judicial proceedings,” Fraser, 448 F.3d at 841, to permit the use of an affidavit when it was included in a packet of documents, when it was not mentioned until closing arguments, and when Sandles objected as soon as he realized that the document had been admitted. For these reasons, it was error to permit the use of the affidavit, and thus it was not admissible evidence of the bank's insured status.

As one of our sister circuits has stated, “ ‘We have difficulty comprehending why the Government repeatedly fails to prove this element more carefully since the Government's burden is so simple and straightforward.’ ” United States v. Brown, 616 F.2d 844, 849 (5th Cir.1980) (quoting Maner, 611 F.2d at 112). The Government presented only one piece of competent evidence as to the bank's insured status, and that piece of evidence was insufficient to establish a necessary element of a federal bank-robbery charge. *517
Because the Government failed to present sufficient, competent evidence of the bank's FDIC status, the Government leaves us little choice but to reverse Sandles' conviction.




U.S. v. Sandles  469 F.3d 508, *513 -517 (C.A.6 (Mich.),2006)

Pursuant to his conditional guilty plea, Jones submitted to an interview by FBI agents and provided a detailed statement regarding his involvement in trafficking cocaine in the Knoxville, Tennessee, area. Under the terms of the plea agreement, the statement could not be used against Jones “unless the defendant violates the terms of this agreement.” J.A. at 134. In his trial following the withdrawal of his guilty plea, the District Court allowed prosecutors to introduce Jones's FBI statement against him. Since neither of Jones's arguments provides a basis for suppressing the FBI statement, the District Court's decision to admit it was not in error.

As discussed in the previous section, when Jones withdrew his guilty plea, the plea agreement was nullified. Further, the agreement itself allowed the government to use the statement against Jones if he violated the terms of the agreement. Withdrawing his guilty plea, while completely within Jones's rights, did violate the express terms of the plea agreement, freeing the government of its contractual obligation not to use his statement against him. If Jones wanted to prevent the government from using his statement against him, he could have attempted to negotiate a provision in the plea agreement that barred use of the statement against him after a successful appeal. Alternatively, Jones could have pled guilty conditionally and chosen not to cooperate with the government. Instead, he chose to provide a statement to the government that could be used against him in the event of a successful appeal.

[4] Jones also argues that admitting his FBI statement violated Federal Rule of Evidence 410. Rule 410(3) prohibits the admission of statements “made in the course of” plea negotiations. The case law is clear that statements made to authorities pursuant to cooperation plea agreements are not protected because they are not “made in the course of plea discussions.” United States v. Marks, 209 F.3d 577, 582 (6th Cir.2000) (noting that Rule 410 was amended to overrule cases that had construed the rule more liberally). As in Marks, Jones provided information to the government pursuant to a cooperation plea agreement. Since these statements were made after and in furtherance of the plea agreement, they are not protected by Rule 410.



U.S. v. Jones  469 F.3d 563, *567 (C.A.6 (Tenn.),2006)

II. Collateral Offset

Mr. Small next argues that the district court erred by failing to reduce the amount of loss caused by his fraudulent activities by the amount of collateral pledged to secure the loans. He contends that the loss amount is below $20 million, which results in an enhancement of 20 levels rather than 22. Aplt. Br. at 16. Both parties agree that the district court correctly interpreted U.S.S.G. § 2B1.1 cmt. n.3(E)(ii), when it held that it “must consider collateral that benefits Flagstar in determining the amount of loss. Simply put, for any collateral value that Flagstar may be entitled to claim, the amount of loss should be reduced by that collateral.” Aplee. Supp.App. at 62. Notwithstanding, the district court made no adjustment for the value of any collateral because it deemed the collateral to be worthless. The district court held that Flagstar's security interest in the mortgage loans, related documents, payments, purchase commitments, and any proceeds thereof were all valueless because the mortgages were obtained by fraud and wholly fictitious. Id. at 63-66. The district court acknowledged that Flagstar claimed a senior security interest in many of the assets purchased by Mr. Small, notwithstanding that many of those assets were then subject to a forfeiture proceeding by the government and claims by others. Id. at 63.

We think the district court's methodology is plainly incorrect-Flagstar and IMPAC have argued all along that they have a security interest in not only the funds provided to Amerifunding conspirators but also Amerifunding's negotiable instruments, notes, mortgage loans, accounts, intangibles, receivables, both then-existing and after-acquired, as well as proceeds therefrom. Aplt.App. at 41-45. They also urged a constructive trust theory. Id. at 45 n.9. Subsequently, it appears that the government settled the multi-million dollar forfeiture action in favor of various creditors of Amerifunding (including Flagstar and IMPAC), retaining only $283,000. Aplt. Br. at Ex. 2 at 2. We do not think that the collateral argument can be dismissed so easily.

Mr. Small is correct that the government had the burden of proving the amount of loss, see United States v. Rockey, 449 F.3d 1099, 1005 (10th Cir.2006), and he is also correct that the loss amount should have been reduced by the value of any collateral. An incorrect application of the guidelines requires a remand unless we can determine that the error did not affect the sentence imposed. Williams v. United States, 503 U.S. 193, 203 (1992). Although Mr. Small's explanation of how the collateral will bring the loss below the threshold of $20,000,000 is certainly lacking, the government bears the burden of showing that the error in disregarding the collateral was harmless-viz., of showing by a preponderance of evidence that substantial rights were not affected. Martinez, 418 F.3d at 1135-36. We note that one Flagstar estimate of the net loss to all the victims was $22,625,000, Aplt.App. at 37, but in light of the importance of quantifying the amount of loss, we cannot say confidently that the error was harmless given the attendant standard or review. On remand, the district court should quantify the loss reduced by any collateral and, if necessary, resentence Mr. Small.

U.S. v. Small (C.A.10,2006)