
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 94-1343                              UNITED STATES OF AMERICA,                                      Appellee,                                          v.                                  HAROLD F. CHORNEY,                                Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF RHODE ISLAND                [Hon. Raymond J. Pettine, Senior U.S. District Judge]                                          __________________________                                 ____________________                                        Before                                Boudin, Circuit Judge,                                        _____________                           Campbell, Senior Circuit Judge,                                     ____________________                              and Stahl, Circuit Judge.                                         _____________                                 ____________________            Scott A. Lutes for appellant.            ______________            Sean   Connelly,  Department   of  Justice,   with  whom   Sheldon            _______________                                            _______        Whitehouse,  United  States  Attorney,  Seymour  Posner  and  Margaret        __________                              _______________       ________        Curran,  Assistant  United States  Attorneys,  were on  brief  for the        ______        United States.                                   ____________________                                   August 24, 1995                                 ____________________                 BOUDIN,  Circuit  Judge.   Appellant Harold  Chorney was                          ______________            convicted  of  seven counts  of  making  false statements  or            reports to a federally insured bank, 18 U.S.C.   1014, and he            now appeals  to challenge  both his conviction  and sentence.            We set forth  the evidence in the light most favorable to the            verdict.  United States v. Tuesta-Toro, 29 F.3d 771, 773 (1st                      _____________    ___________            Cir. 1994), cert. denied, 115 S. Ct. 947 (1995).                        ____________                 Chorney was president and owner of Cumberland Investment            Corporation  ("Cumberland"),  a  coin-trading   company  that            specialized  in  U.S.  silver  dollars.   During  the  1980s,            Cumberland  obtained a series of loans from the Eastland Bank            in Woonsocket, Rhode Island.   To secure such loans, Eastland            Bank required pledged assets worth twice as much as the loans            themselves.  Most of Cumberland's collateral comprised silver            dollars.  The gravaman of the charge against Chorney was that            he engineered a false appraisal.                 The  pledged silver  dollars  were appraised  by William            Tebbetts of  the Mayflower Coin  and Stamp Company.   Chorney            submitted  the  Tebbetts  appraisal to  Eastland  Bank, which            relied upon the  appraisal in  deciding how much  to loan  to            Chorney.  The value of an uncirculated silver dollar turns on            its condition, which is rated on a "mint state" ("MS") scale.            A  silver dollar in MS-65 condition is considered a "gem" and            is  worth substantially more than  a coin of  MS-64 or lesser            quality.                                         -2-                                         -2-                 Tebbetts  testified that  in March  1985 he  purchased a            coin  business, renamed Mayflower, with money given to him by            Chorney.  Tebbetts assigned all his rights in the business to            Cumberland, and  Cumberland employed him at  a weekly salary.            In  June  1985, Tebbetts  examined  hundreds  of the  pledged            silver dollars  being held by  Eastland Bank and  graded them            all  between MS-62 and MS-64.   According to Ann Fiumefreddo,            Chorney's secretary, Chorney directed her to type a letter to            Eastland Bank on Mayflower letterhead stating that all of the            silver  dollars  that Tebbetts  had  examined  were of  MS-65            quality.  Tebbetts  stated that he signed the  letter because            he wanted to "keep [his] job."                 In  August   1985,  Tebbetts  signed  an   appraisal  on            Mayflower  letterhead  appraising Cumberland's  silver dollar            collection,  including  the coins  pledged to  Eastland Bank.            Tebbetts graded all the coins as being MS-65, because Chorney            told him to  do so even  though Tebbetts  knew that this  was            untrue.   The  letter identified  Tebbetts as the  chief coin            appraiser  for Mayflower  but did  not disclose  that Chorney            owned  Mayflower and  employed  Tebbetts.   Fiumefreddo,  who            typed the  appraisal for  Tebbetts, asked Chorney  whether he            could have  a company that he owned  appraise another company            that  he owned.    Chorney replied,  "You're  better off  not            knowing or don't ask questions; something to that effect."                                         -3-                                         -3-                 In mid-1985, Cumberland already had  an outstanding loan            balance  from Eastland Bank  of over half  a million dollars.            But after  the false appraisal just  recounted, Eastland Bank            made additional extensions and renewals of the loans in  late            1985  and again in each of the next  four years.  As the bank            increased  and renewed  its loans,  it took  additional coins            from  Cumberland.   By May  1989, the  balance stood  at $2.5            million.  Bank officials testified that, starting in the fall            of  1985, the bank relied on the Tebbetts appraisal in making            the loan extensions and renewals.                 Ultimately,  in 1989, Sotheby's  auction house appraised            the  silver dollars--now  numbering  7,820--that Chorney  had            pledged to Eastland  over the years  as collateral to  secure            the loans.   The Sotheby's  appraisal determined that  of the            7,820 coins,  only one percent  were in  MS-65 condition  and            that the  overwhelming majority  of the  coins were MS-63  or            lower.   In  the wake  of that  information, Cumberland  went            bankrupt,  defaulted on  the loans, and  criminal proceedings            against Chorney followed.                 On  May 27, 1993, the jury found Chorney guilty of seven            counts  of making a false report and statement to a federally            insured bank.  18 U.S.C.   1014.  Chorney was  acquitted on a            related  conspiracy count, 18 U.S.C.   371, and on ten counts            of  mail fraud,  18  U.S.C.    1341.   On  May  9, 1994,  the            district  court sentenced Chorney to 27 months' imprisonment,                                         -4-                                         -4-            followed by three years'  supervised release, and ordered him            to  pay  $569,469  in  restitution  to  the  Federal  Deposit            Insurance   Corporation   (Eastland   Bank's   successor   in            interest),  and $28,000  to  cover  the  cost of  his  court-            appointed attorney.                 1.  On this appeal, Chorney's opening set  of challenges            is  to his conviction.  The first of these--that the district            court erred in denying his  motion to appear as  co-counsel--            need  not  detain  us  long.    We  have  held  that  "hybrid            representation,"  by counsel  and  the defendant,  "is to  be            employed sparingly and, as  a rule, is available only  in the            district court's  discretion."  United States  v. Nivica, 887                                            _____________     ______            F.2d  1110, 1121 (1st Cir. 1989), cert. denied, 494 U.S. 1005                                              ____________            (1990).                 Here,  Chorney's  request  was  based primarily  on  his            desire to  present certain constitutional issues  in the pre-            trial  phase,  although  there  was also  some  reference  to            Chorney's  desire to  cross-examine witnesses.   The district            court  gave defense  counsel additional  time to  present the            constitutional  issues, none  of  which are  pressed on  this            appeal.   We  see  neither an  abuse  of discretion  nor  any            indication of prejudice in  the district court's decision not            to  allow Chorney  to act  as his  own counsel  in presenting            those issues.                                         -5-                                         -5-                 Chorney's next claim of  trial error, based on  Brady v.                                                                 _____            Maryland,  373  U.S.  83  (1963),  concerns the  government's            ________            failure  to provide  him with  videotapes, photographs  and a            transcript; all  were made in connection  with the bankruptcy            trustee's seizure  of assets, including 8,641 silver dollars,            from  Cumberland's offices on August 17,  1990.  Chorney says            that  the government  gave him  one inadequate  videotape but            that he did not learn of the additional materials until after            he filed this appeal.                 The additional materials are  not part of the  record on            appeal, having never been  filed in the district court.   See                                                                      ___            Fed. R. App. P. 10(a).  The proper means for Chorney to raise            his contention was by a motion for a new trial  under Fed. R.            Crim. P. 33.  See United States  v. Lau, 647 F. Supp. 33,  34                          ___ _____________     ___            (D.  P.R. 1986), aff'd, 828  F.2d 871 (1st  Cir. 1987), cert.                             _____                                  _____            denied, 486 U.S.  1005 (1988).  Rule 33 permits such a motion            ______            to be made at  any time within two years after  judgment, and            that time has not yet expired.                   The requirement of a motion in the district court is not            some  esoteric formality.   In  present case,  the government            argues  that the materials in dispute were not covered by the            Brady doctrine,  and several of the arguments  (e.g., lack of            _____                                           ____            materiality) involve issues of fact or  fact-based judgments.            This court  is not in a good position to resolve those issues            in the first  instance, and  there is every  reason why  they                                         -6-                                         -6-            normally should be winnowed by the trial judge.  Accordingly,            we decline  to address  the Brady  issue at this  time.   See                                                                      ___            generally UnitedStates v.Slade, 980F.2d 27,30 (1stCir. 1992).            _________ ____________   _____                 In  his last claim of trial error, Chorney says that the            district court  erred when  it excused  a juror  during final            jury deliberations and permitted  an 11-member jury to return            a verdict.  Fed.  R. Crim. P.  23(b) permits this course,  in            the  trial  court's  discretion,   "if  the  court  finds  it            necessary to excuse a juror for just cause" after the case is            submitted to the full  jury.  Chorney objects that  the court            abused  its discretion  and, in  addition,  failed to  make a            formal finding of just cause.                 The case was submitted  to the jury on the  afternoon of            Monday, May 24, 1993.   Deliberations continued the next day.            On  the morning of Wednesday,  May 26, juror  Giguere did not            appear  because his eldest son  had been killed while working            on  a construction job.  After Chorney declined to consent to            an  11-member jury, the trial judge said that he was inclined            to adjourn for six  days (Monday, May 30, being a holiday) to            see   whether   Giguere  would   be   able   to  rejoin   the            deliberations, but  the judge  expressed some  concerns about            this delay.                 The   court  then  summoned   the  jury,  explained  the            situation, indicated  its tentative solution,  but also  said            that the delay "may be just  enough to break the momentum, to                                         -7-                                         -7-            break your  chain of thought .  . . ."   Without objection by            either  side, the court asked the jury to reflect and provide            its own assessment.  The jury retired and returned to express            a   preference  for  continuing  its  deliberations.    After            reflecting,  the district  court allowed  the jury  to resume            deliberations  on  Thursday,  May  27, and  the  verdict  was            rendered later that day.                 In managing juries,  trial judges  are constantly  faced            with  practical   problems,  ranging  from   jurors'  dentist            appointments to personal disputes  among jury members to rare            family  tragedies like this one.   Quite often  some costs or            risks  attend every alternative open to the court.  Where the            trial judge  takes the time to hear  counsel and thoughtfully            weighs the  options, we  will not  second guess  the decision            unless the balance struck is manifestly unreasonable.  Accord            United States v. Doherty,  867 F.2d 47, 71 (1st  Cir.), cert.            _____________    _______                                _____            denied, 492 U.S. 918 (1989).            ______                 The facts  already described  make it evident  that this            was a classic close call.  It is true, as  Chorney says, that            the  district   court  did   not  seek  to   contact  Giguere            immediately  to see  whether he  thought he  could resume  on            Tuesday; but  whatever the answer, the  substantial delay and            the disruption of ongoing deliberations would  have occurred.            As  for  the  lack of  a  formal  "just  cause" finding,  the            standard is not  especially informative and we think that the                                         -8-                                         -8-            finding   is   implicit   in   the  trial   court's   careful            consideration of the matter.                 2.   At sentencing,  the district  court began  with the            base offense level of  six for bank fraud, U.S.S.G.    2F1.1,            and added two levels for more than minimal planning, U.S.S.G.               2F1.1(b)(2).1    The  court  found  that  the   amount  of            financial loss involved was $569,469, and added an additional            eight levels for that loss, U.S.S.G.    2F1.1(b)(1)(I), for a            total offense level of  16.  Chorney challenges the  district            court's calculation of loss.                 Application Note 7(b) to   2F1.1 provides:                      In fraudulent loan application  cases and                      contract procurement cases,  the loss  is                      the actual loss to  the victim (or if the                      loss has not yet come about, the expected                      loss).    For  example,  if  a  defendant                      fraudulently    obtains    a   loan    by                      misrepresenting the value of  his assets,                      the loss  is the  amount of the  loan not                      repaid  at  the   time  the  offense   is                      discovered,  reduced  by  the amount  the                      lending institution has recovered (or can                      expect  to  recover)   from  any   assets                      pledged to secure the loan.            U.S.S.G.      2F1.1,  comment   (n.7(b))  (1992).     Because            Application  Note  7(b),  as  quoted,  went  into  effect  on            November 1, 1992, it  was not in the guidelines  edition used                                            ____________________                 1Because of  ex post facto concerns,  the district court                              _____________            used the  1987 edition of the Sentencing Guidelines in effect            during the period in which the offenses were committed rather            than the version applicable  at the time of sentencing.   See                                                                      ___            United States v. Harotunian, 920 F.2d 1040, 1041-42 (1st Cir.            _____________    __________            1990).   Citations are  to the 1987  edition unless otherwise            indicated.                                         -9-                                         -9-            by  the  district  court.   Nevertheless,  Note  7(b) can  be            considered  because it generally  represents a clarification,            not  a substantive change.  United States v. Bennett, 37 F.3d                                        _____________    _______            687, 694-95 n.11 (1st Cir. 1994).                 When the offense was discovered in May 1989, the balance            of unpaid loans  was about $2.5  million.   To arrive at  the            loss figure  of $569,469,  the court  first reduced the  $2.5            million by the value  of the silver dollars and  other assets            that Chorney had pledged to secure the loan.  Next, the court            subtracted from the balance an additional $336,951, the value            of  the 8,641 unpledged  silver dollars that  had been seized            from Cumberland.   Chorney claims the  $336,951 figure should            have been higher.                 The $336,951  figure represents  the value of  the 8,641            coins, as stipulated to by the parties, when they were seized            on August 17,  1990.   Chorney says that  the district  court            should have valued those  coins as of May 5, 1989,  when they            were worth  $590,602.30, again by stipulation.  Had the court            used the May  5, 1989,  date, Chorney's  total offense  level            would have been 15 instead of 16, and  would have resulted in            a sentencing range of  18 to 24 months, instead  of the range            of 21 to 27 months actually employed.                 The   declining  value  of   the  coins   resulted  from            fluctuations in  the market for  silver dollars.   During the            sentencing  hearing, the government argued that the unpledged                                         -10-                                         -10-            coins should  be valued as  of February 4,  1994, the  day of            sentencing, when their stipulated value had  declined further            to $284,401.  By  contrast, Chorney pressed for the  court to            use the May 5, 1989 date, the date the fraud  was discovered.            The district  court observed  that prior  to the  August 1990            seizure of  the coins, the  unpledged silver dollars  were in            Chorney's possession; by contrast, once the coins were seized            by the  bankruptcy trustee, they were  removed from Chorney's            control and more likely  to be available to satisfy  Eastland            Bank's claims.                 Obviously, in a case like this one, the selection of any            specific date  has an element of  arbitrariness; the property            in question  declined in  value because of  market conditions            and  no actual  sale  price was  available  to fix  the  loss            definitively.  On the  other hand, the defendant's misconduct            in the  first instance  deprived the  bank of pledged  assets            that,  if they had  been as  falsely represented,  would have            given  the bank  a 100  percent margin of  protection against            declines.  As  for the  unpledged assets,  they could  hardly            have  been used to offset  the bank's losses  until they came            into the possession of the trustee.                 We are dealing here with an issue part way between a raw            question of  law and one  of concrete fact; the  issue is the            application  of  generally   phrased  guideline  language  to            specific, but undisputed  facts.  It  is sufficient that  the                                         -11-                                         -11-            district court  reached a reasonable outcome.   See generally                                                            _____________            Reich v. Newspapers of New England, Inc., 44 F.3d 1060, 1069-            _____    _______________________________            70 (1st Cir. 1995).  As there was no cross-appeal, we have no            occasion to consider various arguments of the government that            suggest  that  the  district  court was  unduly  generous  to            Chorney  both in  its valuation  date and  in giving  him any            credit at all for the seized but unpledged coins.                 As to the loss computations, Chorney also complains that            the district court refused to allow him to call witnesses who            would have testified that Cumberland assets  had been sold by            the trustee  in an  unreasonable manner for  less than  their            fair value.  The only specific assets to which Chorney points            are  coins  that were  pledged  to another  bank.   Chorney's            position  is that,  if those  coins had  been sold  for their            proper value, there would have been money left over to reduce            the losses of Eastland Bank.                 Under Application Note 7 adopted in 1992  (and quoted in            text above),  the assets  pledged to  another  bank would  be            excluded  automatically because  they  were  not  pledged  to            Eastland Bank.  Without  mechanically reading this limitation            back into the 1987  edition of the guidelines, we  think that            the 1987  guidelines also should be read  to disallow general            excursions designed to explore a defendant's other assets not            pledged to  the lender.  Our reason for this view goes beyond                                         -12-                                         -12-            the   government's   legitimate   concern   with   protracted            proceedings to something more basic.                 The governing guideline's emphasis  on loss, as the main            variable in fixing the offense level, is primarily as a proxy            for the seriousness of  the fraud aimed at by  the defendant.            Indeed, from  the outset,  the guidelines have  directed that            "intended" loss be  used if greater  than actual loss.  E.g.,                                                                    ____            U.S.S.G.   2F1.1, comment (n.7) (1988).   A wealthy defendant            who  commits a  large  fraud is  not  entitled to  a  minimum            sentence  simply  because  the  victim can  recoup  from  the            defendant's  other assets.   Some might think  the crime even            more serious  on account of  a defendant's wealth;  few would            think it less so.                 Where a bank loan is fraudulently procured, the original            loan or  the outstanding balance  is a presumptive  proxy for            the actual or threatened  loss.  Reducing that amount  by the            value  of assets pledged to the lender reflects the fact that            the real sum at risk for the lender is the difference between            the  amount loaned  and  the collateral.    But to  give  the            defendant credit for other, unpledged assets is simply a free            ride  for the wealthy defendant  and wholly at  odds with the            underlying purpose of the guideline.                 This  is, of  course, a  generalization.   Perhaps there            might  be occasions, at least  for cases not  governed by the            1992 application note,  where a narrow argument might be made                                         -13-                                         -13-            for taking account of  unpledged assets, although none occurs            to us offhand.  Still, in the ordinary case it is the illegal            transaction  that is  to  be appraised--not  the  defendant's            overall  wealth--and no  reason  is provided  for making  any            exception here.                 Finally, Chorney  challenges the district  court's order            that he  pay,  as  a condition  of  his  supervised  release,            $28,000 to  cover the costs of  his court-appointed attorney.            The statute provides that  "[w]henever the . . .  court finds            that funds are available  for payment from or on  behalf of a            person  furnished representation," it may authorize or direct            payment to  the appropriate parties.   18 U.S.C.     3006A(c)            and  (f).  "Payment, however,  may not be  directed without a            finding  that the  funds are  available."   United States  v.                                                        _____________            Santarpio, 560  F.2d 448, 455  (1st Cir.), cert.  denied, 434            _________                                  _____________            U.S. 984 (1977).  Chorney says that the district court failed            to make this required finding.                 As Chorney did not object to the order below, our review            is for plain error.   Although the district  court apparently            did not formally find that Chorney had funds available to pay            the  cost of  his attorney,  the court  did make  the $28,000            payment subject to  periodic reviews  of Chorney's  financial            condition.   Although  this  extra safeguard  does not  quite            comport  with Santarpio,  it  does lessen  the impact  of the                          _________                                         -14-                                         -14-            district  court's  failure  to  determine   that  funds  were            available.                 In all events,  the issue of available  funds could have            been  resolved if  Chorney  had  raised  the issue  with  the            district court.   We conclude  that Chorney has  not met  his            burden under the plain error standard to demonstrate that the            order  "involve[ed]  either  a   miscarriage  of  justice  or            deviations that seriously impair the fundamental fairness and            basic  integrity of  the  trial proceedings."   E.g.,  United                                                            ____   ______            States  v. Bullard, 37 F.3d  765, 767 (1st  Cir. 1994), cert.            ______     _______                                      _____            denied, 115 S. Ct. 1809 (1995).            ______                 Affirmed.                  ________                                         -15-                                         -15-
