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In United States v. Weidner, II, 2003 WL 21183177 (D. Kan. May 16, 2003), the court faced a recusal motion leveled at all the judges of a district court based on the comments that one judge had made in the press.
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Case No. 02-40140-01/02-JAR
May 16, 2003
OMNIBUS ORDER ON PRETRIAL MOTIONS OF GOVERNMENT AND DEFENDANTS
On April 24, 2003, the Court heard evidence and argument on the following motions:
United States' Motion to Compel Return of Privileged Materials (Doc. 31);
Defendant Wittig's Motion for Recusal from the Entire District (Doc. 54)
Defendant Wittig's Motion for Bill of Particulars (Doc. 36);
Defendant Wittig's Motion to Dismiss Indictment (Doc. 34);
Defendant Weidner's Motion to Dismiss Indictment (Doc. 43);
Defendant Wittig's Motion to Submit a Pretrial Juror Questionnaire (Doc. 38);
Defendant Wittig's Notice of Submission of Additional Jury Survey Materials (Doc. 46);
Defendant Weidner's Motion for Leave to Submit a Pretrial Questionnaire (Doc. 42); and
Defendant Wittig's Motion for Intra-district Transfer to Kansas City KS (Doc. 40).
After testimony, the hearing adjourned and reconvened on May 9, 2003, for additional testimony and argument on Defendant Wittig's Motion for Intra-district Transfer to Kansas City, KS (Doc. 40), Defendant Wittig's Motion to Submit Pretrial Juror Questionnaire (Doc. 38) and Defendant Weidner's Motion for Leave to Submit Pretrial Questionnaire (Doc. 42). This order memorializes rulings made in court on both April 24 and May 9, 2003, and rules on motion taken under advisement on those dates, as well.
I. Background
In a First Superseding Indictment filed on December 4, 2002, the Grand Jury charged Defendants Clinton Odell Weidner II and David C. Wittig with: Conspiracy, in violation of Title 18, United States Code, Section 371; four counts of False Bank Entries, Reports and Transactions, in violation of Title 18, United States Code, Sections 2 and 1005; and Money Laundering, in violation of Title 18, United States Code, Section 1957. The Grand Jury also, pursuant to Title 18, United States Code, Section 982(b) and Title 21, United States Code, Section 853(p), ordered the defendants to forfeit to the United States certain real and personal property. Defendants are charged with conspiring to conceal that a $1.5 million extension of credit to Defendant Wittig, by Defendant Weidner, as an officer of Capital City Bank was going to be used by Defendant Weidner for a down payment on a real estate development in Scottsdale, Arizona in which Weidner would acquire a 50% interest. The defendants are further charged with making or causing (or aiding and abetting the making or causing) to be made false entries in bank records with the intent to deceive. They are further charged with money laundering; and the United States seeks to forfeit proceeds of unlawful activity.
II. Discussion
A. United States' Motion to Compel Return of Privileged Materials (Doc. 31)
This motion was rendered moot by both defendants returning the property to the custody of the United States Attorney. The government inadvertently gave an FBI report of an interview of Michael Earl. Both defendants have returned to the United States Attorney, their copy(s) of the inadvertently disclosed FBI report.
See Defendant Wittig's Notice of Return of Government Documents (Doc. 44) and Defendant Weidner's Notice of Return of FBI 302 (Doc. 45).
B. Defendant Wittig's Motion for Recusal from the Entire District
Defendant Wittig moves for a blanket recusal of all of the judges of this District Court for the District of Kansas. The Honorable Sam A. Crow, who was first assigned this case, entered an Order of Recusal, recusing himself on February 26, 2003, because he owns stock in Westar Energy. Judge Crow's order did not address the Defendant's motion to recuse all of the judges in the District of Kansas. The Government objects that this motion is untimely, and is a strategic "ratcheting up" of Defendant Wittig's attempt to either have this case transferred to Kansas City, or moved out of this district altogether. The Government argues that a motion for recusal should be filed at the earliest moment, and that Defendant Wittig's reliance on the November 17, 2002 Kansas City Star article evidences his ability to file a motion for recusal sooner. Because this case was originally assigned to Senior U.S. District Judge Sam A. Crow, and reassigned to this Court after Judge Crow recused himself, the Court will grant Defendant Wittig leave, to the extent that this motion is untimely. Furthermore, Defendant Wittig's motion also relies on a February 21, 2003 newspaper article, which was published on the very morning of the motions hearing that had been set before Judge Sam A. Crow.
Defendant Wittig urges recusal of all the judges, including the undersigned, because Senior District Judge Richard D. Rogers, who sits in Topeka, was quoted in articles concerning Wittig, Westar Energy, this current criminal case and an ongoing criminal investigation of Wittig. Judge Rogers, who is reportedly a Westar shareholder, was quoted in articles in the November 17, 2002 Kansas City Star, a regional newspaper, and in the February 21, 2003 Wall Street Journal, a national newspaper. Although the scope of the newspaper articles includes discussion of this case, Judge Rogers was not quoted as commenting on this case, nor on any ongoing criminal investigation of Defendant Wittig.
Rather, Judge Rogers' comments in the Kansas City Star article concerned disgruntled shareholder's reactions to the situs of the Westar shareholders meeting in the year 2000. It is unclear from the article whether Judge Rogers' comments were made in 2000, or closer in time to the article, which appeared in the Kansas City Star on November 17, 2002. The article describes the Western Resources shareholder meeting in 2000. It states in pertinent part:
The building had no air conditioning and the parking lot was full of mud, said U.S. Senior District Judge Richard Rogers of Topeka, a former board member. Instead of mingling, Wittig waited in an air-conditioned trailer until his time to speak.
"It was embarrassing," Rogers said. "We drove all the way down there and didn't learn a thing." Rogers was unable to make this year's meeting. It was in New York.
The theme of the Wall Street Journal article on February 21, 2003 was that residents in Topeka are disgruntled by Wittig's failure to meet their expectations as the leader of Westar. The article quotes two residents of Topeka, including Judge Rogers. The article states in pertinent part:
"Seeing that bright, talented young guy up there gave us all a lot of confidence," said Richard D. Rogers, a federal judge in Topeka and a Westar shareholder. Today that confidence is gone and in its place is a Wall Street-style scandal with Mr. Wittig at its center.
The scandal is painful for the people of this tightly knit, conservative state capitol because it involves the local utility, a long-time pillar of the community that is regarded by many as a sacred public trust. About 2000 Kansans work for Westar, making it one of the biggest employers in the state. Last week, Westar announced it is slashing its dividends, which many Kansas retirees rely on for income.
Defendant Wittig argues that Judge Rogers' public comment about his personal opinion of Wittig, "is problematic because it reasonably suggests that the same views are being shared with his fellow jurists" in the District Court of Kansas. This is a baseless, speculative argument, that ignores the bedrock principle of the independence of the judiciary, and assumes that every person in a court is of the same mind, opinion and idea about any given issue. Moreover, this argument suggests that one judge's opinions about the character of a person, will be wholly adopted by the other judges in that court; a suggestion that judges are not independent thinkers. A cursory review of the opinions of various judges in this court, and in fact in courts across the nation will demonstrate that while judges faithfully follow the doctrine of stare decisis, there is not universal agreement on some issues, and in fact a rich diversity of views, perspectives and analyses of a number of issues.
Defendant Wittig also postulates or speculates that Judge Rogers may be called as a witness in this case. The basis for this assertion is not stated, and this Court will not consider an unfounded assertion or speculation in deciding whether a recusal of the entire district is warranted.
With respect to this Court, there is simply no reason for recusal. The grounds for a judge's recusal are set out in Title 28, United States Code, which mandates recusal when:
455. Disqualification of justice, judge, or magistrate judge
(a) Any justice, judge, or magistrate judge of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.
(b) He shall also disqualify himself in the following circumstances:
(1) Where he has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding. . . .
This Court has no financial interest in Westar or any related entities. Although the statute establishes no per se rule of recusal when the provider of a judge's residential facilities is a litigant; this Court's residential utilities are not provided by Westar. This Court has no personal bias or prejudice concerning a party in this case, nor personal knowledge of any disputed evidentiary facts in this case.
In addition to mandatory recusal for personal bias or prejudice or knowledge, the Court must be mindful of whether there is an appearance of partiality. The Supreme Court explained that "[t]he goal of section 455(a) is to avoid even the appearance of partiality. If it would appear to a reasonable person that a judge has knowledge of facts that would give him an interest in the litigation then an appearance of partiality is created even though no actual partiality exists because the judge does not recall the facts, because the judge actually has no interest in the case or because the judge is pure in heart and incorruptible." Thus, recusal is warranted when there is the appearance of bias, regardless of whether there is actual bias. "The test is whether a reasonable person, knowing all the relevant facts, would harbor doubts about the judge's impartiality."
Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847, 860 (1988) (quoting Hall v. Small Business Admin., 695 F.2d 175, 179 (5th Cir. 1983)).
Nichols v. Alley, 71 F.3d 347, 350 (10th Cir. 1995).
Hinman v. Rogers, 831 F.2d 937, 939 (10th Cir. 1987) (citation omitted).
Yet, the recusal statute should not be construed so liberally that it inhibits a judge's strong duty to sit when there is no legitimate factual or legal basis to recuse. A judge should not recuse on the basis of an interest that is not direct, "but is remote, contingent, or speculative, it is not the kind of interest which reasonably brings into question a judge's impartiality." Nor should a judge recuse on the basis of unsubstantiated suggestions or speculations or personal bias or prejudice. Such unsubstantiated or speculative suggestions by a litigant should not be allowed to "give litigants a veto power over sitting judges" or "a vehicle for obtaining a judge of their choice."
Nichols, 71 F.3d at 351.
In re Drexel Burnham Lambert Inc., 861 F.2d 1307, 1313-1314 (2nd Cir. 1988), cert denied, Milken v. S.E.C., 490 U.S. 1102 (1989) (citations omitted).
Switzer v. Berry, 198 F.3d 1255, 1258 (10th Cir. 2000).
United States v. Cooley, 1 F.3d 985, 993 (10th Cir. 1993).
Defendant Wittig argues that Judge Rogers' comments "create for a reasonable person a question over the impartiality of a fellow jurist considering matters that implicate another jurist in the same division. The long-standing relationship between this Court and Judge Rogers as jurists in this division further creates a definitive appearance of a partiality problem within the dynamic of the judges of this District evaluating the motion to transfer. The dynamic becomes only more problematic in the circumstances of this Court, whose service with Judge Rogers has been substantial." These arguments were addressed to the recusal of Judge Sam Crow who has presided in Topeka where Judge Rogers presides, for a period of years. This Court was appointed in December 2001, and has not had a long tenure presiding in the same location with Judge Rogers. In any event, this Court fails to see how the length of contemporaneous services diminishes the impartiality of a jurist. And, with respect to the issue of the appearance to the community, the record does not show that the public has any specific awareness of how long two jurists have worked in the same building. This Court would be surprised if the majority of people could identify which jurists preside in the federal courthouse, and which jurists preside in the trial and appellate level state courts in Topeka. Mere association of colleague jurists does not form the basis for recusal.
See, e.g. In re Olcese, 86 B.R. 916 (Bankr. N.D. Ohio 1988) (recusal was not warranted simply because a colleague judge had been a former partner in a law firm that represented a group of claimants in a Chapter 11 case assigned to the bankruptcy judge).
Further, Defendant Wittig's reliance on United States v. Singer is misplaced. There, recusal of all judges in the district was found warranted after one judge dismissed an indictment for prosecutorial misconduct and had made public statements suggesting that the prosecutor had suborned perjury. Singer is distinguishable for two reasons. First, the judge made disparaging remarks about the integrity of the prosecutor; and judges necessarily rely on the integrity and candor of all lawyers who appear in front of them, as officers of the court. More importantly, the public statements of the trial judge were seriously disparaging, suggesting that the prosecutor had allowed a witness to testify falsely. The statements attributed to Judge Rogers in the Kansas City Star and the Wall Street Journal can hardly be called disparaging. Judge Rogers' statements about David Wittig in the February 21, 2003 Wall Street Journal article could be interpreted as complimentary, at least at that point in time; shareholders, including Judge Rogers thought and trusted that Wittig held great promise for the company's future. The other statement attributed to Judge Rogers did not impugn Wittig's character or integrity either. Judge Rogers merely related that the shareholder meeting was held in an uncomfortable building with no air conditioning, and that Wittig waited in an air conditioned trailer before the meeting started.
575 F. Supp. 63 (D.C.Minn. 1983).
Moreover, Defendant Wittig argues that one judge's statements concerning his reputation in the community will be perceived by the public as rendering unlikely a fair and impartial trial for him. But, there is no showing that the public would likely connect the statements of Judge Rogers to this Court.
Defendant Wittig's reliance on United States v. Ferguson is also misplaced. There recusal was warranted when it became evident that the judge's former law clerk might be a witness at a suppression hearing. The public might reasonably conclude that the fairness and impartiality of the suppression hearing would be compromised, because the judge, who is the trier of fact at such a hearing, would have to evaluate the credibility of a former law clerk. But here, even if Defendant could show that Judge Rogers was a likely witness at trial, the Court is not sitting as the trier of fact at trial, and does not weigh the credibility of the witnesses. That is the province of the jury. In any event, there is no showing that Judge Rogers is a likely witness; that is rank speculation. Defendant Wittig is not charged in this case with anything that arose out of the operations of the Westar company and cannot show, much less explain, how Judge Rogers' testimony would have any relevance at trial.
550 F. Supp. 1256 (S.D.N.Y. 1982).
Defendant Wittig further argues that this Court will necessarily have to consider Judge Rogers' statements along with other evidence he offers in support of his motion for intra-district transfer. But the Court need not consider Judge Rogers' statements. In support of Defendant Wittig's Motion for Intra-district Transfer, the Court received extensive evidence of surveys of almost 1000 people in the Topeka and Kansas City divisions who would be eligible for jury service. In fact, in arguing for transfer, Defendant Wittig relied on this evidence, not the quoted comments of Judge Rogers.
In short, Defendant Wittig fails to present a reasonable factual basis for calling the impartiality of this Court into question. He neither alleges nor shows a "personal bias" of this Court. Defendant Wittig's Motion is denied.
C. Defendant Wittig's Motion for Bill of Particulars (Doc. 36)
Rule 7(f) of the Federal Rules of Criminal Procedure states that a court may issue a bill of particulars. The decision to issue a bill of particulars falls within the discretion of the court. This discretion is exercised while adhering to the recognized scope of a bill of particulars. A bill of particulars is not a discovery device. It cannot be used to take measure of the government's case. The purpose of a bill of particulars is to inform the defendant of the substantive facts of the charges against him, but not to discover the evidentiary basis for the charges. The defendant is not entitled to know all the evidence the government will use against him at trial. However, the defendant must be adequately apprized of the charges against him so that he may prepare a defense for trial. Additionally, a bill of particulars is unnecessary where the information the defendant seeks is available through "some other satisfactory form." Courts have found an open file discovery policy is a satisfactory means of obtaining such information. Thus, in order for the defendant to persuade the Court to grant this motion, the defendant must show, specifically, how he would be prejudiced absent the bill of particulars.
United States v. Kunzman, 54 F.3d 1522 (10th Cir. 1995).
United States v. Dunn, 841 F.2d 1026, 1029 (10th Cir. 1988).
Id.
United States v. Rogers, 617 F. Supp. 1024 (D. Colo. 1985).
United States v. Daniels, 95 F. Supp.2d 1160, 1166 (D. Kan. 2000) (citing Dunn, 841 F.2d at 1029)).
United States v. Levine, 983 F.2d 165, 166-67 (10th Cir. 1992).
United States v. Higgins, 2 F.3d 1094, 1096 (10th Cir. 1993).
Daniels, 95 F. Supp.2d at 1166 (citing United States v. Canino, 949 F.2d 928, 949 (7th Cir. 1991)).
Id. at 1166 (citing United States v. Sturmoski, 971 F.2d 452, 460 (10th Cir. 1992)).
Defendant Wittig seeks a bill of particulars on Counts II, III and IV of the First Superceding Indictment, which charge him with aiding and abetting Defendant Weidner in making false bank entries, reports and transactions in violation of 18 U.S.C. § 1005. Defendant Wittig wants identified, what action he took that aided and abetted Defendant Weidner. But, the indictment provides sufficient information to deny a bill of particulars.
The substantive allegations of fact underlying Counts II, III and IV are clearly spelled out in the indictment. Each count sets out the actions that the bank took, with Defendant Wittig's assistance, to violate the statute. This sufficiently apprizes Defendant Wittig of the charges against him, and give him sufficient notice in order to prepare a defense. The specific evidentiary basis for each count is not something that Defendant Wittig can discover through a bill of particulars.
Daniels, 95 F. Supp.2d at 1166.
Defendant Wittig also requests a bill of particulars on Count VI, to explain how the proceeds derived from the conspiracy alleged in Count I and the false entry alleged in Count II were "criminally derived" proceeds, alleged to be laundered in Count VI. Defendant Wittig is not entitled to discover the exact evidence or theory of the government's case. This request fails for the same reasons as the above requests. Count VI sets out the substantive facts that the government relies on to show what profits were criminally derived, even giving an account number. The specific allegations in Count VI apprize Defendant Wittig of the actions that the government believes constitute money laundering. Thus, he is able to prepare a defense for those actions and be protected against double jeopardy. This is all the law requires. Defendant Wittig's Motion for a Bill of Particulars is denied.
D. Defendant Wittig's Motion to Dismiss Indictment (Doc. 34) and Defendant Weidner's Motion to Dismiss Indictment (Doc. 43)
Defendant Weidner moves to dismiss the indictment, arguing that because there was no actual or potential harm to Capital City Bank, and no evidence that he had the specific intent to defraud the bank, there is no violation of Title 18, United States Code, Section 1005. And, without a violation of that statute, there can be no violation of the conspiracy, money laundering or forfeiture statutes, all of which rely on the violation of Section 1005, as a predicate. Defendant Wittig's motion to dismiss raises other grounds; but one basis of his motion is that to the extent the indictment is legally insufficient with respect to Defendant Weidner, it must also be legally insufficient as to him, as either an alleged co-conspirator or alleged aider and abetter of Weidner's charged offenses.
Defendant Weidner's motion is wholly without merit. Actual or potential harm is not an element of Title 18, United States Code, Section 1005. Intent to injure or deceive is an element, but this is not synonymous with actual or potential harm. In United States v. Krepps the court examined the intent to injure or deceive element of 18 U.S.C. § 1005. In Krepps, the defendant, a bank officer, caused the bank to loan money to two borrowers, who then funneled the money back to the defendant for his use, essentially using the borrowers as straw men. The defendant argued that there was no false entry or intent to injure or defraud the bank under those circumstances because the debtors knew and agreed to be the primary obligors and they were capable of repaying the loan. The Third Circuit disagreed, stating:
605 F.2d 101, 108-109 (3rd Cir. 1979).
In the present case, the bank's books showed loans to the Housers and to McKinnon, but did not reflect Krepps' interest as the ultimate beneficiary of the loans. As discussed above, the fact that there is no evidence demonstrating that the named debtors are incapable of repaying the loans, or that they deny their legal obligation to do so, does not shield the true nature of the transactions; they were designed to facilitate Krepps' borrowing of funds by funnelling [sic] them through the named debtors. Because those who are charged by law with the examination of these records have a significant interest in obtaining a full picture of the bank's actual condition, including its relationship to its officers, the true nature of the transaction should have been entered in the bank's records. As we have already seen, a jury may plausibly have determined that Krepps intended to deceive the bank's officers or those appointed to examine its books when he omitted from the bank records any reference to his being the beneficiary of the loan. Thus, because the bank records indicated only the interest of the Housers and McKinnon in the loans, a jury could reasonably conclude that Krepps caused false entries to be made in violation of § 1005. . . .
Id. at 109.
The court explained that § 1005 exists "to give assurance that upon an inspection of a bank, public officers and others would discover in its books of account a picture of its true condition." As such, when the entry shows a loan to a borrower when the money is actually to be given back to the bank officer for his own use, the examiners are deceived as to the true picture of the bank's condition. And, even if the straw men borrowers are capable of repaying the loans, that does not constitute a defense to § 1005. For, even if the transaction does not expose the bank to a risk of default, there still remains the concealment that the borrowers were funneling money back to the bank officer.
Id.
The Tenth Circuit agreed with this analysis in United States v. Evans, reasoning that whether the loans were fully collateralized was irrelevant when the entries on the books did not give an accurate picture of the bank's conditions or the true purpose of the loan.
42 F.3d 586, 593 (10th Cir. 1994).
Id.
Just as the likelihood of repayment, negating potential harm, is irrelevant, the lack of actual harm is irrelevant. In United States v. Kramer, the defendant argued for a judgment of acquittal because no intent to injure was present and full restitution was made, thus no actual harm to the bank occurred. The court found that restitution was not a defense to § 1005 because an intent to injure or defraud is not rebutted by subsequently making restitution. This Court agrees. Any lack of actual or potential harm is irrelevant to whether Defendants Weidner and Wittig violated § 1005. Defendant Weidner also argues that the government simply cannot prove an intent to injure or deceive, unless it proves actual or potential harm. But that is an argument that must be left for the trier of fact. For these reasons, Defendant Weidner's Motion to Dismiss is denied; and Defendant Wittig's Motion to Dismiss, to the extent predicated on Defendant Weidner's motion, is denied.
190 F.2d 712, 718 (4th Cir. 1951).
Id.
Id.
Defendant Wittig moves to dismiss Counts II, III and IV, arguing that they fail to state a violation of 18 U.S.C. § 1005 by him. Defendant Wittig argues that this statute is not directly applicable to bank customers such as Wittig and that the indictment fails to state or show how he is liable for aiding and abetting a violation of 18 U.S.C. § 1005.
The gist of Defendant Wittig's argument is that in order for him to be liable for aiding and abetting a false entry in a bank record, there must be a showing that (1) someone other than he made a false entry in a bank record; (2) Wittig took an action that contributed to and furthered the specific offense, and (3) Wittig intended to aid the commission of the offense.
United States v. Unruh, 855 F.2d 1363, 1371 (9th Cir. 1987), cert. denied sub nom. Forde v. United States, 488 U.S. 974 (1988).
Wittig relies on United States v. Docherty, where a bank customer borrowed funds, at the request of a bank vice-president, and then re-loaned them to the vice president in a series of loan transactions. In applying for the loans, the customer left blank the purpose of loan, or wrote "personal" as the purpose. The court held that the customer did not aid and abet a false entry violation under 18 U.S.C. § 656 or § 1005, nor conspire to violate those laws, because the customer did not participate in any false entry. The loans were recorded as his liabilities, they remained his liability, and the customer understood at all times that he had the ultimate obligation to repay the loan, for the bank vice-president never suggested to the customer that he would not be liable for the loan.
468 F.2d 989 (2d Cir. 1972).
Id. at 990.
Id.
This Court disagrees with the reasoning in Docherty, as have other courts. However, whether Defendant Wittig can be directly charged under § 1005 need not be addressed by this Court. Defendant Wittig is charged with aiding and abetting under 18 U.S.C. § 2, the crime of false entry under § 1005. While courts are divided over whether a non-employee can be directly charged under § 1005, a customer can certainly be charged with aiding and abetting a bank employee in making a false entry. The government alleges Defendant Wittig submitted his balance sheet, loan application, promissory note and any other documents knowing that the loan was not for restoration expenses, but rather that it was to be loaned back to Defendant Weidner. Subsequently, according to the government's theory, any bank entries made by Defendant Weidner would appear to meet the requirements that Defendant Wittig argues must be shown; that (1) someone other than he made a false entry in a bank record; (2) Wittig took an action that contributed to and furthered the specific offense, and (3) Wittig intended to aid the commission of the offense. Counts II, III and IV are legally sufficient as charged against Defendant Wittig.
See infra, n. 38, 39.
United States v. Edwards, 566 F. Supp. 1219, 1221 (D.Conn. 1983) (holding that all sections of § 1005, even those containing no class restrictions, apply only to bank employees); United States v. Barel, 939 F.2d 26, 38-41 (3d Cir. 1991) (limiting liability under § 1005 to bank insiders and holding that amendments did not change original intent). But see United States v. Edick, 432 F.2d 350, 352-53 (4th Cir. 1970) (affirming conviction of non-insider because plain language of paragraph three contains no class restriction).
United States v. Hoffman, 94 F.3d 642, *4 n. 5 (4th Cir. Aug. 20, 1996) (unpublished opinion) (holding that one who was not an officer or employee under § 1005 can be charged with aiding and abetting a bank employee in making a false entry).
Unruh, 855 F.2d at 1371.
Defendant Wittig argues that Count V is defective because the complained of conduct does not violate 18 U.S.C. § 1005. He first argues that the document submitted or caused to be submitted was his balance sheet that he submitted to the bank; it was not a bank form or internally generated bank document. This balance sheet, he argues, is not within the plain language of Section 1005, which requires a false entry in "any book, report or statement of such [national] bank with intent to injure or defraud such bank." But, the statute does not require that the entry be a formal accounting record, or a document internally created or generated by the bank. The Court is mindful that the purpose of the statute is to ensure that insiders or bank examiners reviewing bank records, get an accurate picture of bank transactions and the bank's condition. The government's theory is that the balance sheet submitted by Defendant Wittig became a permanent part of the loan file. This document, while not generated within the bank, became a bank record as part of the loan file. As such, the balance sheet was a statement that provided information to officers or bank examiners about the nature of the loan and the status of the borrower. Such a statement or record is within the parameters of § 1005.
United States v. Foster, 566 F.2d 1045, 1052 (6th Cir. 1977) (holding that an interoffice memo sufficed because Section 1005 is intended to be broad enough to cover any document or record of the bank that would reveal pertinent information for the officers or directors of the bank).
Defendant Wittig also argues that as a bank customer, he cannot violate § 1005. As previously discussed with respect to Counts II, III and IV, Defendant Wittig's argument is without merit, because he is charged with aiding and abetting a violation of § 1005. Defendant Wittig further argues, however, that in Count V, he is charged with the principal act of making a false entry, not as an aider and abetter or accomplice. This Court disagrees.
Count V charges a violation of § 1005 through the submission of Defendant Wittig's balance sheet. The false entry would be the entry of Defendant Wittig's balance sheet into the loan file, which would then be available for review by the bank as well as the bank examiners. Defendant Wittig argues that because he, as a bank customer, cannot alone violate § 1005, if Count V charges him with making the false entry, it is legally insufficient. But, assuming the government's theory is that the false entry was actually made by Defendant Weidner when the balance sheet became part of the loan file, then Defendant Wittig's actions of submitting the false balance sheet are sufficient to establish aiding and abetting.
The government contends that Defendant Wittig has liability under Count V, as an aider or abetter, or alternatively under a Pinkerton conspiracy theory of liability. Defendant Wittig argues that a Pinkerton conspiracy theory of liability for Count V is legally insufficient, because there must be a substantive offense committed by another, upon which Wittig's conspiracy liability is based. That is not the case. Conspiracy liability and liability for a substantive offense are two separate and distinct offenses and conviction of both does not implicate double jeopardy.
Defendant's Reply, p. 4 (Doc. 51) (citing United States v. Self, 2 F.3d 1071, 1089 (10th Cir. 1993).
Harvey v. Shillinger, 76 F.3d 1528, 1533 (10th Cir. 1996) (citing Pinkerton v. United States, 328 U.S. 640, 643 (1946)).
Count V charges both defendants with violating § 1005. What must be proved is that a violation of § 1005 occurred, a conspiracy existed, Defendant Wittig was a member of the conspiracy, and thus, Defendant Wittig is liable for the violation under a conspiracy theory. It does not matter who committed the substantive offense. If it is shown that Defendant Weidner entered the balance sheet into bank records, and Defendant Wittig's actions show his partnership in the crime, then Pinkerton liability exists. The government's evidence at trial will determine whether the jury should be instructed on both aiding and abetting, as well as conspiracy liability under Count V. While Defendant Wittig cannot be convicted of Count V on both theories, if the evidence bears out both theories, the jury may choose. Thus, Count V is sufficient to proceed to trial under Pinkerton liability.
Defendant Wittig also moves to dismiss Count VI as insufficient because the government cannot show that the proceeds of the loan were criminally derived. Count VI alleges that the defendants engaged in a "monetary transaction, affecting interstate commerce, in criminally derived property . . . having been derived from specified unlawful activity . . . the submission of false statements to a federally insured bank. . . ." Count VI concerns a $1.5 million transfer from Defendant Wittig's account, which was allegedly the proceeds of a Capital City Bank loan to Defendant Wittig, made by Defendant Weidner. The government's theory is that the false entries, in violation of § 1005, made the loan proceeds criminally derived.
Indictment, Count 6; A conviction under § 1957 requires a showing that: (1) defendant knowingly engaged in a monetary transaction; (2) the defendant knew that the property involved derived from specified unlawful activity; and (3) the property is of a value greater than $10,000. United States v. Hare, 49 F.3d 447, 451 (8th Cir. 1995).
While Defendant Wittig argues that the generation of statements and submissions for the loan were not relied upon and were unrelated to the loan, and that the increase in his line of credit was unrelated and merely coincidental to the loan being made, these are arguments for trial. Whether the government can show the nexus will be determined at trial. Count VI sufficiently states a violation of 18 U.S.C. § 1957.
Defendant Wittig's final argument is that Count I, the conspiracy count, must be dismissed if the Court finds the false entry and money laundering charges insufficient. But, as discussed above, these underlying charges are sufficiently plead and supported to proceed to trial. As such, the conspiracy charge is sufficiently stated.
E. Defendant Wittig's Motion for Intra-district transfer to Kansas City KS (Doc. 40)
Defendant Wittig moves, pursuant to Fed.R.Crim.P. 18 and Fed.R.Crim.P. 21, for a transfer of this case within the judicial district to the division in Kansas City, Kansas. Fed.R.Crim.P. 21(a) provides that:
Upon the defendant's motion, the court must transfer the proceeding against that defendant to another district if the court is satisfied that so great a prejudice against the defendant exists in the transferring district that the defendant cannot obtain a fair and impartial trial there.
Rule 21(a) appears to be inapplicable because Kansas is comprised of one judicial district and Defendant Wittig seeks a transfer within the judicial district. Fed.R.Crim.P. 18 applies and provides that:
Unless a statute or these rules permit otherwise, the government must prosecute an offense in a district where the offense was committed. The Court must set the place of trial within the district with due regard for the convenience of the defendant and the witnesses, and the prompt administration of justice.
Nevertheless, courts rely on the general principles found in Rule 21 and the case law interpreting that Rule to evaluate motions for intra-district transfers.
See United States v. Walker, 890 F. Supp. 954, 958 n. 5 (D. Kan. 1995); see also Fed.R.Crim.P. 18, Notes of Advisory Committee on Rules, 1966 Amendment: "If the court is satisfied that there exists in the place fixed for trial prejudice against the defendant so great as to render the trial unfair, the court may, of course, fix another place of trial within the district (if there be such) where such prejudice does not exist. Cf. Rule 21 dealing with transfers between districts."
The Constitution guarantees a defendant "a fair trial by a panel of impartial, `indifferent' jurors." Pretrial publicity in topical criminal cases is inevitable and only impacts a defendant's rights when it dictates the community's opinion as to guilt or innocence. Pretrial publicity can give rise to a due process violation in two ways: "(1) where prejudice is presumed because the publicity was `sufficiently prejudicial and inflammatory and [it] . . . saturated the community where the trial was held, . . . or [(2)] where the defendant establishes actual prejudice resulting from the publicity." The defendant has the burden of establishing the presumption of prejudice and it is only invoked in extreme situations. In determining whether presumptive prejudice exists, the court must consider the totality of the circumstances, "including the type of pretrial publicity, the time lapse between peak publicity and the trial, and the credibility of prospective jurors who indicate during voir dire that they could be impartial despite having been exposed to pretrial publicity about the case."
United States v. Abello-Silva, 948 F.2d 1168, 1176 (10th Cir. 1991) (quoting Irvin v. Dowd, 366 U.S. 717, 723 (1961)).
Id. (citation omitted).
Walker, 890 F. Supp. at 959 (citing United States v. Awan, 966 F.2d 1415, 1427 (11th Cir. 1992).
Id. (citations omitted).
Id. (quoting United States v. Lehder-Rivas, 955 F.2d 1510, 1524 (11th Cir.), cert. denied sub nom., 506 U.S. 924 (1992)).
Transfer may be justified and appropriate when "the information disseminated to the public was of such a nature and so pervasively distributed that [defendant could not] obtain a fair and impartial jury trial in Topeka" or that it was "likely to ensconce the community's attitudes into one of uniform hostility toward the defendant." D. Kan. Rule 40.2 provides that "[t]he court shall not be bound by the requests for place of trial but may, upon motion by a party, or in its discretion determine the place of trial."
Id. (citations omitted).
Defendant Wittig presented testimony and exhibits, including surveys of residents in the Topeka and Kansas City divisions who would qualify for jury service in this Court. This evidence reveals significant differences, when comparing residents of the Topeka division area with residents of the Kansas City division area, in the number and percentages of people who recognize this case or unrelated matters concerning Defendant Wittig and Westar Energy. These surveys further reveal significant differences in the number and percentages of people who have negative attitudes about David Wittig and/or the management of Westar Energy Company. The survey was conducted by jury consultant Lisa Dahl, after having been peer reviewed by jury consultants Edward Bronson, Thomas Beisecker and two other social scientists, and was designed and executed in accordance with the standards adopted by the American Society of Trial Consultants.
Defendant Wittig offered the testimony of Lisa Dahl, Edward Bronson and Thomas Beisecker, three experts in the area of jury and trial consultation, which includes the surveying and analysis of relevant community attitudes and prejudice, particularly in connection with motions for change of venue. One expert, Edward Bronson, has researched and studied venue issues for over 30 years, collaborated on the development of standards adopted by the American Society of Trial Consultants for venue surveys, and has been qualified as an expert over 100 times in federal and state courts, in the areas of venue, pretrial publicity, survey design, analysis and efficacy of voir dire. Bronson opined that based on his quantitative and qualitative analysis of the media coverage of Wittig, both related to this case and unrelated to this case, there had been pervasive, inflammatory and prejudicial media coverage of Defendant Wittig and Westar Energy, particularly in the Topeka area.
Although there has been media coverage of this case, most of the media coverage has been about unrelated matters, including Westar Energy's financial troubles, as well as allegations of mismanagement, malfeasance, and excessive compensation paid to Defendant Wittig and other Westar executives. In fact, the quantity and content of media coverage of these matters is demonstrated in the relatively high degree of recognition of Defendant Wittig and/or Westar Energy among people who would qualify for jury service in the Topeka division, of the 485 persons surveyed in the Topeka division, 388 had read, seen or heard at least one of these facts: criticism of Defendant Wittig's management of Westar; investigations into Defendant Wittig's salary at Westar; Westar Energy's customers paying higher rates as a result of Defendant Wittig's past actions; and/or investigation into Westar executives' personal use of corporate aircraft. Only 97 of the 485 people in the Topeka division reported no recognition of any of these matters.
And, although there has been much less media coverage of this case in particular, Bronson noted that there has been a "seamless web" of media coverage of this case and such unrelated matters as Westar Energy's financial troubles, allegations of malfeasance and mismanagement of Westar Energy, allegations of excessive compensation of Defendant Wittig and other Westar Executives and allegations of Defendant Wittig's malfeasance, conspicuous consumption and flawed character. As a result, people frequently and readily confuse this case with these unrelated matters that have received heavy media coverage. Beisecker testified that there is in effect a merger of facts in this case with these unrelated facts or allegations. This confusion or merger is demonstrated in some of the narrative responses to survey questions. The financial troubles of Westar, the perceptions of excessive compensation of Westar executives and Defendant Wittig's conspicuous consumption are mentioned by many respondents.
There are remarkable differences in the degree of recognition of these unrelated matters among those surveyed in the Topeka division and the Kansas City division. In contrast to the Topeka division, where only 97 of 485 persons surveyed reported no recognition of these unrelated matters in the "seamless web" of media coverage, of 501 persons surveyed in the Kansas City division, only 214 recognized these matters, 287 reported no recognition of any of these matters.
There has been media coverage in the Kansas City area, and some national coverage, in the Wall Street Journal. But, the difference in recognition of the unrelated matters reported in the media is due in part to the difference in the "salient factor," that is, the community interest in the coverage, as between Topeka and Kansas City. Bronson testified that in the Topeka division, there is a higher incidence of residents who are ratepayers of Westar Energy, who consider Westar Energy their utility company, and who perceive that they have a direct and personal interest in Westar Energy. The survey revealed that in the Topeka division, 350 of the 485 respondents reported that their utility company is Westar Energy. In contrast, in the Kansas City division, only 171 of the 501 respondents reported that their utility is Westar Energy.
The perceived personal stake of Westar ratepayers is borne out in the survey results. The survey revealed that Westar ratepayers in Topeka and Kansas City had a higher degree of recognition of the matters reported in the media about Westar Energy and Defendant Wittig. In the Topeka division, only 15% of Westar customers had no recognition of the matters; while 37% of non customers of Westar had no recognition. In the Kansas City division, 43% of the Westar customers had no recognition of the matters; while 67% of non Westar customers had no recognition. The higher salient factor has a causal relationship to another significant statistical difference, of those with some recognition of unrelated matters reported in the media, 65.6% in the Topeka division have overheard or participated in discussions about these matters; while only 34.6% in the Kansas City division have overheard or participated in such discussions. High salience effects not only recognition of these matters, but the likelihood that a person will have discussed or overheard others discussing these matters.
Moreover, the higher salience, higher personal interest, and greater perception of a direct stake in Westar Energy among those surveyed in the Topeka division, is related to a higher degree of prejudice among the respondents in that division. The experts testified that prejudice was identified in this survey, with questions about the respondent's perception of having been harmed by Westar Energy's management, or the respondent's perception that Defendant Wittig is guilty of a crime. of those who have some recognition of unrelated matters reported in the media, 56.8% of Topeka division respondents and 46.9% of Kansas City division respondents perceive that Defendant Wittig is definitely or probably guilty, of course, the majority of Kansas City division respondents have no recognition of these matters, and are thus not included in the 46.9% figure.
The Court disagrees with Biedecker's analysis that those respondents who indicated that they were unsure, had no opinion, or refused to answer the question, are prejudiced. Thus, the Court's analysis reflects a modification of the survey results, to exclude those refusing to answer or those answering that they are unsure or have no opinion from those who are prejudiced. This modification did not significantly change the results nor the comparison of the Topeka and Kansas City division populations.
Thus, more telling, is a comparison of "prejudice" among all respondents, whether or not they have recognition of matters reported in the media. When comparing all respondents, there is a significant difference in "prejudice" between respondents in the Topeka and Kansas City divisions. In the Topeka division, among all respondents, 44.8% perceive that Defendant Wittig is guilty and 36.1% perceive they have been harmed by Westar Energy. But in the Kansas City division, only 18.2% perceive that Defendant Wittig is guilty; and only 15.6% perceive that they have been harmed by Westar Energy. And, not surprisingly, the survey reveals a higher degree of prejudice among Westar ratepayers, who heavily populate the Topeka division, but are a minority in the Kansas City division. Among Westar ratepayers, 46.8% in the Topeka division and 30.5% in the Kansas City division perceive that Defendant Wittig is guilty. Among those who are not Westar customers, 39.3% in the Topeka division and 14.2% in the Kansas City division perceive that Defendant Wittig is guilty.
Based on these significant differences in the degree of recognition, the perception of personal interest or stake in this case and other matters related to Wittig or Westar Energy, the Court agrees with the experts, who all opined that a trial in the Kansas City division would be preferable to a trial in the Topeka division. Bronson specifically opined that the prejudice level in the Kansas City division is low enough, that a fair trial was possible, employing other curative measures such as juror questionnaires and individualized, sequestered voir dire. Although delay of trial is sometimes a curative measure, in this case, the media coverage of Defendant Wittig and Westar has not diminished over time. In fact, it is anticipated that there will be substantial media coverage this very week, upon the release of a report of Westar's internal investigation of the use of corporate aircraft and the management of corporate assets and affairs.
The Court specifically finds that the majority of people eligible for jury service in the Kansas City division are not Westar customers and are not laboring with the recognition, or perception, of personal interest or stake in this case. Because of that, there is not a statistically significant degree of "prejudice" as defined by the experts in this case. An intra-district transfer, coupled with a juror questionnaire, and perhaps some individualized voir dire should ensure that this defendant's case is heard by a jury of 12 persons who are fair and impartial, and committed to honor their oath to decide the case on the admitted evidence and the Court's instructions.
Thus the Court grants Defendant Wittig's Motion for Intra-District Transfer. This case will be transferred to the Kansas City, Kansas Division of the United States District Court for the District of Kansas. The Defendants have suggested that because Defendant Weidner did not move for intra-district transfer, Defendant Wittig's motion functionally serves as a motion for severance. The Court rejects this argument and finds that the entire case should be transferred. There is no constitutional right to be tried in a particular division of the District of Kansas. While venue is generally a constitutional concern, the place assigned for trial within a judicial district is not a matter of constitutional dimension.
F. Defendant Wittig's Motion to Submit a Pretrial Juror Questionnaire (Doc. 38); Defendant Wittig's Notice of Submission of Additional Jury Survey Materials (Doc. 46) and Defendant Weidner's Motion for Leave to Submit a Pretrial Questionnaire (Doc. 42)
United States v. Faulkner, 17 F.3d 745, 757 (5th Cir. 1994) (citing cases for the proposition that the constitutional unit of venue is the district, not the division).
Defendant Weidner incorporates and adopts Defendant Wittig's motions on this issue. The Tenth Circuit has expressly sanctioned pre-voir dire excusal of jurors in non-capital cases based on jury questionnaires. Other circuits have permitted the same. Although potential jurors may be removed before voir dire for hardship or bias, this practice is expressly permitted by the Jury Select and Service Act, 28 U.S.C. § 1866 (c).
See United States v. Contreras, 108 F.3d 1255, 1269-70 (10th Cir. 1997).
See United States v. Paradies, 98 F.3d 1266, 1277-81 (11th Cir. 1996); United States v. North, 910 F.2d 843, 909-10 (D.C. Cir. 1990), withdrawn and superseded in part on other grounds, 920 F.2d 940 (D.C. Cir. 1990).
See Webster, 162 F.3d at 347-48 (removal for lying on questionnaire); Paradies, 98 F.3d at 1280 (removal for hardship).
On May 14, 2003, the Court held a hearing on the issue of pretrial questionnaires. Following argument from counsel, the Court granted defendants' motions to utilize pretrial jury questionnaires. The Court's findings were set out on the record and are incorporated in this order. The Court will provide a proposed questionnaire to counsel and take objections from the parties.
IT IS THEREFORE ORDERED that Defendant Wittig's Motion for Recusal from the Entire District (Doc. 54) IS DENIED;
IT IS FURTHER ORDERED that Defendant Wittig's Motion to Dismiss Indictment (Doc. 34) IS DENIED;
IT IS FURTHER ORDERED that United States' Motion to Compel Return of Privileged Materials (Doc. 31) IS DENIED AS MOOT; IT IS FURTHER ORDERED that Defendant Weidner's Motion to Dismiss Indictment (Doc. 43) IS DENIED; IT IS FURTHER ORDERED that Defendant Wittig's Motion to Submit a Pretrial Juror Questionnaire (Doc. 38) and Additional Jury Survey Materials (Doc. 46) IS GRANTED; IT IS FURTHER ORDERED that Defendant Wittig's Motion for Intra-district transfer to Kansas City KS (Doc. 40) IS GRANTED.