
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                FOR THE FIRST CIRCUIT                                 ____________________        No. 96-1219                              UNITED STATES OF AMERICA,                                      Appellee,                                          v.                                     SCOTT FRAZA,                                Defendant, Appellant.                                _____________________        No. 96-1220                              UNITED STATES OF AMERICA,                                      Appellee,                                          v.                                     JAMES FRAZA,                                Defendant, Appellant.                                 ____________________                    APPEALS FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF RHODE ISLAND                [Hon. Raymond J. Pettine, Senior U.S. District Judge]                                          __________________________                                 ____________________                                        Before                                 Selya, Circuit Judge,                                        _____________                            Aldrich, Senior Circuit Judge,                                     ____________________                              and Boudin, Circuit Judge.                                          _____________                                 ____________________                                 ____________________            W. Kenneth O'Donnell with whom D'Agostino &  O'Donnell and Anthony            ____________________           _______________________     _______        M. Traini were on brief for appellant Scott Fraza.        _________            Anthony M. Traini with whom W.  Kenneth O'Donnell and D'Agostino &            _________________           _____________________     ____________        O'Donnell were on brief for appellant James Fraza.        _________            Ira Belkin,  Assistant United States  Attorney, with whom  Sheldon            __________                                                 _______        Whitehouse, United States Attorney, was on brief for appellee.         __________  ______________________                                 ____________________                                  February 18, 1997                                 ____________________                      ALDRICH, Senior Circuit Judge.  James Fraza and his                               ____________________            son  Scott ("James"  and "Scott,"  collectively "defendants")            were indicted  on various  counts of  fraud, 18  U.S.C.    2,            1041, 1341,  1344, 1346,  and violations of  the Taft-Hartley            Act,  18 U.S.C.    371, arising  from a  scheme to  defraud a            credit union.  After  a four day jury trial,  both defendants            were  found  guilty  on  all  counts  and  now  appeal  their            convictions  and   sentences.    We  affirm,   with  a  minor            exception.                                    I.  Background                                        __________                      In 1989, James offered to purchase 80 acres of land            in  Coventry, Rhode  Island, from  George  Dupont ("Dupont").            The  agreed upon  price  was $120,000,  financing to  include            Dupont  holding  a  mortgage  of $60,000.    James  signed  a            Purchase and Sale agreement and gave Dupont a  $2,000 deposit            check, but  it required additional financing  to complete the            sale.                      In April  of 1990, James  met with officers  of the            Coventry Credit Union ("CCU").   During this meeting  he told            the  officers that  the purchase  price  of the  property was            $205,000 and that he  was seeking to finance $160,000.   They            informed him that due  to his prior bankruptcy, no  such loan            could  be granted.  James  then suggested that  his son Scott            purchase  the property and take  the loan.   The CCU officers            agreed  to consider  the  request, but  cautioned that  Scott                                         -3-            would likely require a  co-signer due to his youth  and short            credit history.                      In  May  of  1990,  James and  Dupont  attended  an            informal "closing" in the back seat of the car of  Leo Dailey            ("Dailey"), an  attorney whose  firm had represented  CCU for            over  twenty years.  Dupont signed  two closing statements --            one reflecting the  actual purchase price of $120,000 and the            other blank.  Dailey  told Dupont he needed the blank form to            make  a correction to  a tax computation.   At the same time,            Dupont  endorsed a  deed  conveying the  property to  Scott's            construction  company.   No  money  or financial  instruments            changed hands  at this  time.   After two  abortive attempts,            James found  a co-signer  and  CCU approved  a $160,000  loan            based  on the  inflated purchase  price of  $205,000.   CCU's            appraisal of the fair market value of the property came in at            $225,000.                      The "formal" closing was held on June  15.  Present            were James,  Scott, Scott's co-signer, a CCU loan officer and            Dailey who was  acting as CCU's  attorney.  Dailey  explained            that  Dupont was  unavailable and  produced the  signed blank            closing  form.   He  then filled  in  the purchase  price  as            $205,000.   After  Scott signed,  the loan  officer disbursed            $160,000  to Dailey  who  then paid  the  closing costs,  the            existing  $58,740  mortgage  on  the property  and  gave  the            remaining  approximately $95,000  to Scott  who in  turn paid                                         -4-            Dailey  $5,000 for  his  work.   A  short time  later  Dupont            received Scott's  signed promissory note and  mortgage in the            amount of $60,000 in the mail.   Dupont was not informed that            CCU held a $160,000 first mortgage on the property.                      Within  six months  of  the sale,  Scott filed  for            bankruptcy.     As  part  of  bankruptcy   proceedings,  both            defendants,  represented by Dailey, gave deposition testimony            that  they had  given CCU  an inflated  price for  the Dupont            property.   At approximately the same time, Dailey's law firm            mailed Dupont a tax form indicating  that Dupont had received            $205,000 from  Scott  for  the  property.    In  response  to            Dupont's  complaints, he  was provided  with a  corrected tax            form but,  along with it, he  received a copy  of the closing            statement stating the purchase price as $205,000.                      Also  about this  time,  the loan  to Scott  became            delinquent and CCU discovered  that the actual purchase price            of the  property  was $120,000  instead of  $205,000 and  the            existence of two different  closing statements.  Dailey's law            firm,  wanting  to keep  CCU as  a  client, arranged  for its            pension fund to pay CCU $160,000 and take over the mortgage.                      In  October  1993,  James, Scott  and  Dailey  were            indicted on  charges of bank fraud, mail  fraud, making false            statements to a federally insured lending institution, aiding            and abetting,  and conspiracy  under the Taft-Hartley  Act to            commit  these offenses.  Dailey  died prior to  trial.  James                                         -5-            and Scott were found guilty on all counts and sentenced to 37            months  and 24 months respectively.  Both were also sentenced            to identical  terms of supervised release,  joint and several            restitution of $54,000 to Dupont, $200 in special assessments            and reimbursement  of all attorney's fees  and expert witness            fees paid pursuant to the Criminal Justice Act ("CJA").                                   II.  Discussion                                        __________                      Defendants   raise   multiple  grounds   on  appeal            encompassing  issues   relating  to  indictment,   trial  and            sentencing.  For  clarity's sake we  address these issues  in            chronological order.                      A.   Indictment                           __________                      Defendants  contend that Count II, knowingly making            false statements to a  federally insured lending institution,            18 U.S.C.    1014,  and  Count  III, bank  fraud,  18  U.S.C.              1344,  are multiplicitous,  thereby  violating  the  Double            Jeopardy Clause of the Fifth Amendment of the Constitution.                      Our  analysis begins  with application of  the test            laid  out  in  Blockburger v.  United  States,  284 U.S.  299                           ___________     ______________            (1932), which provides that double jeopardy is not implicated            if,  when comparing  two  offenses arising  out  of the  same            transaction, each offense  "requires proof  of an  additional            fact which the other does  not."  Id. at 304.   This analysis                                              ___            is sometimes referred to as the Blockburger "elements test."                                            ___________                                         -6-                      In United States v.  Norberg, 612 F.2d 1  (1st Cir.                         _____________     _______            1979), we set forth the elements to be proven under 18 U.S.C.              1014.  They are:                      (1)  that  the  [Institution's]  deposits                      were [federally insured];                      (2)   that   the  defendant   made  false                      statements to the [Institution];                      (3)   that   the   defendant   knew   the                      statements were false; and                      (4) that the  statements were  materially                      false  and   made  for  the   purpose  of                      influencing the [Institution]  to make  a                      loan or advance.            Id. at  3.  More  recently, in  United States v.  Brandon, 17            ___                             _____________     _______            F.3d  409 (1st Cir.), cert. denied,  ___ U.S. ___, 115 S. Ct.                                  ____________            80 (1994), we construed  the elements of bank fraud  under 18            U.S.C.   1344 as:                      (1) engag[ing] in a scheme or artifice to                      defraud, or ma[king] false  statements or                      misrepresentations to obtain money from;                      (2)   a   federally   insured   financial                      institution; and                      (3) d[oing] so knowingly.            Id. at 424.            ___                      Thus, on the plain  language of these statutes, the            requirements  of  Blockburger are  satisfied.   Section  1014                              ___________            contains an element not  contained in   1344, that is,  proof            that  the  statements  were "materially  false."    Likewise,              1344 encompasses  a "scheme or artifice  to defraud," which            is not an  element of   1014.   Defendants, nonetheless, urge                                         -7-            us to adopt the opinion of a divided Second Circuit in United                                                                   ______            States v.  Seda, 978 F.2d 779 (2d Cir. 1992), which held that            ______     ____               1014 and  1344, when  arising from  the same  offense, are            multiplicitous.  978 F.2d at 781.  We do not agree.                      In   Seda,  the  court   moved  beyond  Blockburger                           ____                               ___________            statutory  analysis,  relying  instead on  Whalen  v.  United                                                       ______      ______            States, 445 U.S. 684 (1980), where the Court held that counts            ______            of rape and felony murder were not  separate offenses because            in  that case  "proof of  rape [was]  a necessary  element of            proof  of the  felony murder."   445  U.S. at  694.   We read            Whalen,  however,  as the  rule only  in  cases of  lesser or            ______            greater included  offenses, see  United States v.  Dixon, 509                                        ___  _____________     _____            U.S.  688, 698  (1993),  for  which  rape and  felony  murder            qualify,  but bank  fraud and  making false  statements to  a            federally  insured lending  institution do  not.   Indeed, in            Dixon,  the Court overruled the  "same conduct" test of Grady            _____                                                   _____            v.  Corbin,  id.  at  711-12, and  reaffirmed  the  mandatory                ______   ___            application of  Blockburger statutory analysis.   Id. at 696;                            ___________                       ___            cf.  United States v. Wolfswinkel, 44 F.3d 782, 785 (9th Cir.            ___  _____________    ___________            1995)  (finding  Seda  non-viable  in  the  wake  of  Dixon).                             ____                                 _____            Although  the Blockburger  elements test  is mechanistic  and                          ___________            often  criticized, we are already  bound by it.   Rossetti v.                                                              ________            Curran, 80 F.3d 1, 6 (1st Cir. 1996); United States v. Black,            ______                                _____________    _____            78 F.3d 1,  4 (1st Cir.), cert. denied, ___  U.S. ___, 117 S.                                      ____________            Ct. 254 (1996).   Because  it is possible  to violate  either                                         -8-            statute without violating the other, we believe the best view            is that these two counts are not multiplicitous.                      B.   Trial                           _____                      First, defendants contend that as regards Count IV,            Mail Fraud, there was  no evidence that co-conspirator Dailey            mailed, or caused to be mailed, the  mortgage to Dupont.  The            evidence,  however,  shows  that  when  Dupont  received  the            mortgage  in the mail, the return address on the envelope was            that  of  Dailey's law  firm.   In  addition, the  jury heard            evidence  that  Dailey  acted  as closing  attorney  in  this            transaction and recorded the mortgage.  From this testimony a            reasonable jury  could infer that Dailey  mailed the mortgage            to Dupont.                      Defendants next maintain that  deposition testimony            given by each defendant during  Scott's bankruptcy proceeding            was non-admissible  as former  testimony under Fed.  R. Evid.            804(b)(1) because neither defendant had motive or opportunity            to cross-examine the other.  This is a misconception.  In the            first place, each  deposition was redacted  to apply only  to            the  deponent.    Against  him  it  was  clearly  admissible;            anything affecting  its weight  could be  offered separately.            If the other defendant  was entitled to have it  limited, and            not  apply  to  him, it  was  his  obligation  to request  an            instruction.   United States v.  Barnett, 989  F.2d 546,  558                           _____________     _______            n.14 (1st  Cir. 1993);  United States v.  Mateos-Sanchez, 864                                    _____________     ______________                                         -9-            F.2d 232,  238 (1st Cir.  1988); Fed. R. Evid.  105.  Neither            did.                      Defendants next object to the introduction of their            deposition  testimony by  claiming violations of  their Fifth            Amendment  privilege  against  self-incrimination.     It  is            elementary that the privilege must be asserted at the time of            the  questioning.  Minnesota v.  Murphy, 465 U.S. 420, 429-30                               _________     ______            (1984).   Defendants  seek  to excuse  themselves by  blaming            their failure  to assert  on their attorney  Dailey, claiming            that  he failed  to  advise  them  due  to  his  conflict  of            interest.     We   give  present   counsel  high   marks  for            imagination, but  nothing else.   The deposition  inquiry was            not  by a government official  and therefore not  an abuse of            defendants'  Fifth   Amendment  rights.    See   Colorado  v.                                                       ___   ________            Connelly,  479 U.S. 157, 170 (1986) ("The sole concern of the            ________            Fifth Amendment . . . is  governmental coercion.").  Once the            answer was given, we know of no authority suggesting that the            government could not use it.                      C.   Sentencing                           __________                           1.    Calculation of the Loss                                 _______________________                      Defendants next  challenge the court's  seven level            enhancement  under  U.S.S.G.    2F1.1(b)(1),1  based  on  its                                            ____________________            1.  U.S.S.G.   2F1.1(b)(1) provides a sliding scale requiring            an increase to  the offense  level calculation  based on  the            amount  of the loss caused  by or intended  by the defendant.            Losses  greater than $120,000 but less than $200,000 call for            a seven level increase.                                         -10-            calculation of a $124,000 loss to  the victims of defendants'            fraud.2   They  maintain that  because Dailey's  pension fund            "purchased" Scott's mortgage from  CCU for the full $160,000,            this figure should not enter into the loss calculation.  This            was  not a  purchase  for  value,  however,  but  a  form  of            laundering.                      We   previously  examined  the  mechanics  of  loss            calculation as pertaining to   2F1.1 in some detail in United                                                                   ______            States v. Bennett, 37 F.3d 687 (1st Cir.  1994), and again in            ______    _______            United States v. Kelley, 76 F.3d 436 (1st Cir. 1996), and see            _____________    ______            no need to  engage in lengthy analysis here.   In Bennett, we                                                              _______            concluded that Application Note 7(b) controls the methodology            for calculating loss  under   2F1.1(b)(1).   37 F.3d at  695.            Note 7(b) provides  that in  the case of  a fraudulent  loan,            "[t]he 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."  Id. (emphasis supplied).                                                 ___            Because CCU  discovered the fraud before  Dailey's law firm's            pension  fund acquired  the mortgage,  the full  $160,000 was            correctly included in the loss calculation.                                            ____________________            2.  The court calculated the loss as of the time of discovery            of  the fraud as $160,000  for the CCU  mortgage plus $60,000            for Dupont's  mortgage, less $96,000, the  appraised value of            the property on that date.                                         -11-                      Defendants  also  contend that  the court  erred in            including the $60,000 Dupont mortgage in the loss calculation            because  the amount  of  the loss  attributed  to Dupont  was            speculative.   We  agree with  the government,  however, that            with  an appraised  value  of only  $96,000  at the  time  of            discovery  and  a  first  mortgage  to  the  pension fund  of            $160,000, Dupont's second mortgage was worthless.                                         -12-                      2.   Obstruction of Justice                           ______________________                      Defendants  next   complain   of  the   two   level            enhancement each  received for obstruction  of justice  under            U.S.S.G.    3C1.1.    We  review  factual  determinations  of            whether a defendant obstructed  justice only for clear error.            United States v.  Thomas, 86  F.3d 263, 263  (1st Cir.  1996)            _____________     ______            (citing United States v.  St. Cyr, 977 F.2d 698,  705-06 (1st                    _____________     _______            Cir.  1992)).    The  record  contains  evidence  of  several            independent   acts  by   the   defendants  supporting   these            enhancements, including submitting a false affidavit by James            (later admitted to  be untrue), witness  intimidation, albeit            after  the fact,  and  false objections  to the  Pre-Sentence            Report.       See   U.S.S.G.     3C1.1,   Application   Notes                          ___            3(a),(f),(h).   Faced  with multiple  reasons supporting  the            enhancement,  we cannot say that the  2 level enhancement for            obstruction of justice was error, clear or otherwise.                      3.   Role in the Offense Determinations                           __________________________________                      James  contests his two level enhancement for being            a  manager or  organizer  of the  criminal activity,  seeking            instead to award that role to Dailey.  We can dispose of this            contention forthwith.  Reviewing  again only for clear error,            United States v. Voccola, 99 F.3d  37, 44 (1st Cir. 1996), we            _____________    _______            find  that  James' admission  in  his  response to  the  Pre-            Sentencing  Report that  "to  the extent  that his  son Scott            Fraza is  involved in this  case, it  is solely due  to James                                         -13-            Fraza's fault and not Scott Fraza," is enough to  allow us to            say again that we discern no error here.                      Scott complains  of the court's refusal  to grant a            downward adjustment  for his  minor  role in  the offense,  a            position   which   was   not  opposed   by   the  government.            Apparently, at  sentencing this  brass ring was  within reach            when  the Probation  Officer interrupted  the proceeding  and            engaged in an ex parte communication with the court some time                          __ _____            after which the downward adjustment was denied.  According to            Scott, "the Probation Officer discarded his  role as . . . an            impartial  'arm of  the Court'  and donned  the mantle  of an            advocate  for rejection  of the  requested  2-point deduction            . . . ."                      Defendant's moral outrage regarding this  issue was            evident  at oral  argument, but  we are  perplexed as  to his            expectations of the Probation  Officer's proper behavior.  We            would expect the officer to exercise his independent judgment            as to the  application of the guidelines and  we see no error            in his interruption of  the proceedings to make  his judgment            known.  See  United States  v. Belgard, 894  F.2d 1092,  1097                    ___  _____________     _______            (9th Cir. 1990) (observing that a probation officer's duty is            to  "provide  the trial  judge  with as  much  information as            possible in order  to enable  the judge to  make an  informed            decision").   Anything less would  be a dereliction  of duty.            Scott's attempt to condemn  the officer for doing his  job is                                         -14-            misplaced and can not act as a basis for overturning a ruling            that is not clearly erroneous.                      4.   Reimbursement                           _____________                      Included in defendants' sentences was an obligation            to repay the cost of their court-appointed attorneys, who had            been   obtained  on   defendants'  allegation   of  financial            inability.  See  18 U.S.C.   3006A(a).   To the  government's                        ___            repeated  allegation  of  misrepresentations  in   their  CJA            application  defendants failed  to  respond.   They did  not,            until  threatened   with  contempt,  even   respond  to   the            government's  extensive financial report, with exhibits.  The            court's ultimate sentence apparently rejected their replies.                      Our  difficulty  is  that the  court  conducted  no            hearing,  and  made  no  findings as  to  either  defendant's            financial  viability.   See United  States v.  Santarpio, 560                                    ___ ______________     _________            F.2d  448, 455 (1st Cir. 1977); cf. United States v. Chorney,                                            ___ _____________    _______            63  F.3d 78, 83 (1st Cir. 1995).  We must remand that that be            done.                      5.   Restitution                           ___________                      Finally, defendants protest the court's  order that            they jointly and  severally pay restitution to  Dupont in the            amount of  $54,000, citing the second mortgage  still held by            Dupont.    Restitution  orders  are subject  to  clear  error            review.  United States v. Hensley, 91 F.3d 274, 277 (1st Cir.                     _____________    _______            1996).  As  we noted ante,  Dupont's mortgage is  essentially                                 ____                                         -15-            worthless.  If circumstances  were to change, i.e,  the first            mortgage to disappear or land values increase to the point of            validating  Dupont's mortgage,  defendants  would be  free to            apply for relief from the restitution order.                                         III.                      The convictions  and sentences are affirmed  in all                                                         ________            respects, except  that the reimbursement orders  are vacated.            The cases are remanded for further proceedings  on the matter            of reimbursement in accordance herewith.                                         -16-
