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United States v. Lewis

May 8, 2009

UNITED STATES OF AMERICA,
v.
MICHELLE A. LEWIS, DEFENDANT.



The opinion of the court was delivered by: Nora Barry Fischer United States District Judge

Judge Nora Barry Fischer

MEMORANDUM OPINION

I. INTRODUCTION

Presently before the Court are several pretrial motions filed by both the Government and Defendant Michelle A. Lewis. In this matter, the Government alleges that Defendant unlawfully transported in interstate commerce a security which was converted, stolen or taken by fraud from her former employer in violation of 18 U.S.C. §§ 2314 and 2 by negotiating and depositing a check payable to "A. Lewis Valve" into her personal checking account and that she evaded the payment of income taxes by failing to report that deposit and the deposit of another check as income on her annual income tax return in violation of 26 U.S.C. § 7201. The parties seek pretrial rulings on the admissibility of evidence related to Defendant's prior convictions of mail fraud and filing a false tax return as well as Defendant's motions for a bill of particulars and for pretrial discovery of certain information. Specifically, the Court will address the following motions: (A.) the Government's Motion in Limine for Pretrial Ruling on the Admissibility of Evidence (Docket No. 40); (B.)Defendant's Motion in Limine under Rules 608 and 609 (Docket No. 51); (C.) Defendant's Motion for Bill of Particulars (Docket No. 31); and (D.) Defendant's Motion for Discovery(Docket No. 32);.*fn1 Responses to these motions were timely filed and after numerous extensions of time, a motion hearing was held on January 29, 2009 during which the Court heard argument and accepted evidence regarding the pending motions. After the hearing, the parties submitted supplemental briefs and further documentary evidence in support of their respective positions. The motions are now fully briefed and ripe for disposition.

Upon consideration of the parties' submissions, and based on the following, the Court's disposition of the pending motions are as follows: (A) the Government's motion in limine [40] is GRANTED; (B) the Defendant's motion in limine [51] is DENIED; (C) Defendant's motion for a bill of particulars is [31] DENIED; and (D) Defendant's motion for discovery [32] is DENIED, as moot.

II. BACKGROUND

A. Instant Indictment

On July 10, 2007, a grand jury returned a two-count indictment against Defendant, charging her with interstate transportation of stolen property under 18 U.S.C. §§ 2314 and 2 (Count One) and tax evasion under 26 U.S.C. § 7201 (Count Two). (Docket No. 2). Specifically, Count One charges that on or about July 16, 2002 Defendant unlawfully transported, transmitted and transferred, and caused to be transferred, in interstate commerce from National City Bank in the states of Pennsylvania and Ohio to Bank of America in Dallas, Texas, a Reliant Energy/Orion Power Midwest Check No. 30906, dated 6/27/02, in the amount of $25,268.00, payable to "A. Lewis Valve", which Defendant knew had been stolen, converted, and taken by fraud. (Docket No. 2 at 1). Count Two alleges that on or about April 15, 2003 Defendant wilfully attempted to evade and defeat federal income taxes due and owing by her and her spouse by filing a false and fraudulent United States Individual Income Tax Return, Form 1040 for the calendar year of 2002. (Docket No. 2 at 2). It is further alleged that the joint income stated on said return was $156,970.49 and the amount of tax due and owing thereon was $37,696.39, whereas, Defendant well knew and believed that their joint income was $214,610.49 with taxes due and owing of $57,121.57. (Id.).

The indictment also contains forfeiture allegations related to the charge at Count One. (Docket No. 2 at 3). The Government seeks forfeiture under 21 U.S.C. § 853(a)(1) of "United States currency, cash equivalents, checks, securities, and bank account balances, constituting the gross proceeds of such violations." (Docket No. 2 at 3). It is further alleged that if by act or omission of Defendant that said property cannot be located by due diligence, it has been sold or deposited to a third person, it has been placed beyond the jurisdiction of the Court, has been substantially diminished in value, or has been co-mingled with other property which cannot be divided without difficulty then other property may be forfeited in lieu of the items listed, pursuant to 21 U.S.C. § 853(p). (Docket No. 2 at 3-4).

B. Prior Convictions

Defendant was previously convicted of similar crimes in which she stole funds from a different employer by preparing false checks, forging endorsements on them and negotiating and depositing them into her personal bank account and then failing to report the proceeds derived from the deposit of these checks on her income tax return. Specifically, on December 14, 2001, Defendant was charged by way of an information with one count of mail fraud under 18 U.S.C. § 1341, and one count of making and subscribing to a false tax return under 26 U.S.C. § 7206(1). (Docket No. 57-2). The charges resulted from Defendant's alleged theft of certain funds from her employer during the period of 1995 through 1999 and then failure to report the income derived from said funds on her income tax return for the tax year of 1999. (Id.). Also on December 14, 2001, Defendant waived indictment and pled guilty to both charges pursuant to a plea agreement before the Honorable Gary L. Lancaster. (Docket No. 57-2 at 5). At the waiver and plea hearing, Judge Lancaster advised Defendant of her rights to be indicted by a grand jury and to be tried by a jury of her peers. (Crim. No. 01-288, Docket No. 23, Transcript of Waiver and Plea Hearing 12/14/2001 ("Trans. Hr'g 12/14/01") at 7-8. She was also advised of the charges in the information and that she faced a total maximum sentence of up to eight years imprisonment. Trans. Hr'g 12/14/01 at 10-11. That she faced up to eight years imprisonment was also reflected in Defendant's plea agreement with the Government, which was dated September 5, 2001. Plea Letter 9/5/01 at ¶ (C)(1)(a). Defendant admitted to engaging in the following conduct regarding those charges, as stated by Assistant United States Attorney Robert Cessar, Esquire.

As to Count 1, the Defendant was employed as the supervisor of the accounts payable and payroll department for GMS Corporation. They provided payroll services and accounts payable services for companies owned by Graziano Corporation and Grain Corporation.

Beginning in January, 1995, and continuing through November of 1999, the Defendant used the US mails to defraud those companies. There were basically two methods. One, she will prepare Doe checks made payable to company officers and vendors. Then there was a signatory stamp that was placed on those checks. She would take those checks, forge the endorsement of the payee company official, usually take them to the bank and negotiate them, and use the proceeds from those checks for her own personal expenses.

The other method that was used was that checks would be made payable to her creditors. It was mainly credit card companies. She would again affix her signature stamp on the check. Those checks would then be mailed to her creditors, mostly credit card companies.

That would be the sum and substance of what would establish the Government's case. The mailing element is the mailing of one of those checks from her residence at 114 West End Avenue in Munhall, PA, to Atlanta, Georgia, to a company called First USA Bank. That mailing occurred on or about November 30th, 1999, and it was a Graziano Corporation check payable to First USA Bank in the amount of $1,409. That would be the summary of the evidence in the mail fraud count of the case.

As to the tax case, it's a corollary of the mail fraud. It deals with filing a false tax return on or about March 3rd of the year 2000. The Defendant prepared a 1999 tax return to be filed in 2000. It was a joint return of her and her husband, signed by her under the penalty of perjury.

It was false because it did not disclose the amount of money she had obtained from Graziano Corporation, the illegal income, on that return. And there was approximately -- she reported about $105,839 in income on that return, but failed to report approximately $87,830 in illegally obtained income from Graziano Corporation pursuant to the mail fraud. By not reporting that income, she subscribed and filed a false tax return.

Trans. Hr'g 12/14/01 at 15-16. Defendant asserted that she agreed with the prosecution's summary of her conduct, her counsel asserted that her pleas of guilty were consistent with his advice, and Judge Lancaster accepted her guilty pleas and entered a judgment of guilty as to both counts. Trans. Hr'd 12/14/01 at 16-17. Defendant's sentencing was initially scheduled to take place on March 8, 2002. (Criminal No. 01-288, Docket No. 7).

The pre-sentence report prepared by the Probation Office indicated that Defendant was subject to a mandatory guideline imprisonment range of 24-30 months. It was provided to both the Government and defense counsel.*fn2 The Government filed its position with respect to sentencing factors on February 5, 2002. (Criminal No. 01-288, Docket No. 11). Defendant did not file her position regarding sentencing factors at that time, but instead filed a motion to continue the sentencing date on February 13, 2002. (Criminal No. 01-299, Docket No. 12). Said motion was granted by Judge Lancaster and the sentencing date was continued until May 31, 2002. (Criminal No. 01-299, Text Order, February 19, 2002). Defendant then filed a second motion to continue the date of sentencing on May 24, 2002. (Criminal No. 01-299, Docket No. 13). Judge Lancaster granted this motion as well, continuing the sentencing date to take place on July 17, 2002. (Criminal No. 01-288, Text Order, May 28, 2002). Subsequently, Defendant filed a third motion for a continuation of the sentencing date on July 15, 2002. (Criminal No. 01-288, Docket No. 14). This motion was also granted by Judge Lancaster and the sentencing was rescheduled for September 27, 2002. (Criminal No. 01-288, Text Order, July 16, 2002). Defendant then filed a motion for a downward departure on September 20, 2002 to which the Government responded on September 23, 2002.

After the multiple extensions discussed above were granted, the sentencing hearing was rescheduled once more by the Judge Lancaster, and the sentencing hearing was finally held on October 11, 2002. (Crim. No. 01-288, Docket No. 22, Transcript of Sentencing Hearing 12/14/2001 ("Trans. Hr'g 10/11/2002")). At the hearing, Judge Lancaster heard argument from counsel as to Defendant's motion for a downward departure. Trans. Hr'g 10/11/2002 at 6-10. Judge Lancaster denied Defendant's motion and sentenced her to 24 months incarceration at each of counts one and two, with said terms to run concurrently. Id at 10-12. At the conclusion of this term of imprisonment, Defendant was sentenced to a term of three years of supervised release at count one and one year at count two, with said terms to run concurrently. Id. In addition, Defendant was ordered to pay restitution in the amount of $274,918.78 to GMS Corporation. Id. A fine was not imposed, although Defendant was ordered to pay a $200 special assessment. Id.; see also Docket No. 57-3.*fn3

C. Government's Factual Allegations as to the Instant Indictment

As stated, the pending charges against Defendant are one count of interstate transportation of stolen property under 18 U.S.C. §§ 2314 and 2 (Count One) and one count of tax evasion under 26 U.S.C. § 7201 (Count Two). This alleged criminal conduct occurred after Defendant had pled guilty to the prior charges on December 11, 2001 and before she was ultimately sentenced for same on October 11, 2002. (Docket No. 2). In its motion, the Government asserts that the following allegations will be proven at trial regarding the pending charges in the indictment at Criminal Number 07-258.

On May 20, 2002, the defendant, Michelle Lewis, made, and caused to be made, a deposit of Reliant Check number 29435 dated 5/16/02 payable to "A. Lewis Valve" in the amount of $29,732.00 to her account at National City Bank. On July 16, 2002, the defendant, Michelle Lewis, made, and caused to be made, a deposit of Reliant Check number 30906 dated 6/27/02 payable to "A. Lewis Valve" in the amount of $25,268.00 to her account at National City Bank. This check is the subject of Count One of the indictment. The government contends that these checks were issued and negotiated without the consent, authorization, and approval of Reliant Resources. The government contends further that the circumstance of their issuance and negotiation constituted theft, taking by fraud, and conversion. Lewis has given statements disputing this issue saying that they were part of some arrangement to pay her a transition bonus for continuing to work during the transition period during the merger of Orion Power into Reliant Resources. She further asserts that she negotiated the checks under that belief and presumably is disputing whether she knew that the charged check was stolen. Lewis' statements also appear to challenge whether she willfully attempted to evade her tax obligation asserting that she thought a 1099 would be sent to her for this income. (Docket No. 40 at 5-6).

D. Defendant's Financial Activity During 2002

At the motion hearing, the Government introduced documentary and testimonial evidence*fn4 regarding Defendant's financial activity during the time period in which the alleged criminal conduct occurred, i.e., May through July of 2002. After the hearing, Defendant produced additional documentary evidence in rebuttal. (Docket Nos. 74-2, 74-3 and 74-4). Likewise, the Government responded with supplemental evidence of Defendant's finances. (Docket No. 76-2, Govt. Exs. 13-21). For the purpose of resolving this motion, the Court now makes the following factual findings with respect to same.

Three large deposits of funds from Reliant Corporation totaling $67,510.00 were made into a National City Bank account owned by Defendant and her husband during the applicable time period and the Government maintains that two of these deposits were illegally obtained by Defendant. (Docket No. 61 at 37). In the Government's view, the lone legitimate transaction occurred on May 20, 2002, when Defendant received an electronic funds transfer from Reliant in the amount of $12,510. (Docket No. 61 at 38; Govt. Ex. 2). As discussed above, the two allegedly illegitimate transactions totaled $55,000 and are detailed as follows. On the same day she received the electronic funds transfer, May 20, 2002, Defendant deposited a check from Reliant dated May 16, 2002 and payable to "A Lewis Valve" in an amount of $29,732.00. (Id.). Then, on July 16, 2002, Defendant deposited another Reliant check payable to "A. Lewis Valve"and dated June 26, 2002 in the amount of $25,268.00. (Id.).

Defendant and her husband maintained three types of credit accounts during May, June and July of 2002: (1) a home equity line of credit; (2) a Discover credit card; and (3) a Visa credit card. Over that time period, several large payments totaling $50,742.82 were made from the joint National City checking account to these credit accounts including: (1) $30,000 on the home equity line of credit; (2) $16,842.82 on the Discover credit card; and (3) $3,900 on the Visa credit card. The details of those transactions are the following.

The home equity line of credit with the Auto Workers Federal Credit Union had a credit limit of $50,000. (Docket No. 61 at 36; Govt. Ex. 1). In 2002, the required monthly payment on this account was $977.82 and Defendant normally paid $1,000 per month on this account. (Docket No. 76 at 4; Govt. Ex. 1). The May 2002 statement shows that the account had an outstanding balance of $47,960.67 at the beginning of the period and that, on May 14, 2002, a $1,000 payment was made. (Docket No. 61 at 36; Govt. Ex. 1). Two additional payments in the amount of $10,000 each were made to this account in May of 2002; the first on May 20 and a second on May 29. (Id.). Both payments were made from the joint National City account through checks signed by Defendant. (Govt. Exs. 5, 7). A third $10,000 payment was made to this account on July 26, 2002 and was also paid by a check from the joint National City account signed by Defendant. (Docket No. 61 at 41-2; Govt. Exs. 1, 11). After these payments were made, the line of credit statements reflect that the next payment due on the line of credit was $977.82 on November 20, 2004. (Govt. Exs. 1-3).

Defendant had a $10,000 limit on the Discover credit card and an outstanding balance of over $9,000 in March, April, and May of 2002. (Govt. Exs. 16, 17, 18). The July 2002 credit card statement reflects that there was a previous balance of $9,773.80 on this account but that on June 1, 2002, Defendant made a payment of $9,844.93. (Govt. Ex. 19). This amount was paid from the joint National City checking account by a check dated May 15, 2002. (Docket No. 61 at 40; Govt. Ex. 4). The July 2002 statement shows that Defendant made numerous purchases in June 2002 and had an outstanding balance of $6,997.89. (Govt. Ex. 20). Then on July 22, 2002, a payment of $6,997.89 was made to this account by a check from the joint National City account and signed by Defendant. (Govt. Exs. 10, 21).

Defendant and her husband also maintained a joint Visa credit card account with the Auto Workers Federal Credit Union. (Govt. Exs. 13-15). This account had an outstanding balance of $3,898.18 on the April 2002 statement. (Govt. Ex. 13). The account was not kept current and the May 2002 statement provides that there was an outstanding balance of $3,939.21 and a minimum payment of $836.00 was due immediately. (Govt. Ex. 14). The June 2002 statement reflects that a payment of $3,900 was made on May 29, 2002 and corresponds with a check written in that amount from the joint National City checking account. (Docket No. 61 at 40; Govt. Exs. 6, 15).

While Defendant was incarcerated, from November of 2002 until August of 2004, her husband was able to make minimum payments on the three credit accounts from their joint National City checking account, despite the loss of Defendant's income. (See Def. Ex. A-1:T-4). Defendant's husband made payments to these accounts, including the Auto Workers Federal Credit Union home equity line of credit, in various amounts ranging from $100-$300. (Id.). As noted above, in May of 2002 (prior to $30,000 in payments against the home equity line of credit), the minimum monthly payment on the line was $977.82. (Docket No. 76 at 4; Govt. Ex. 1).

III. DISCUSSION

A. The Government's Motion in Limine for Pretrial Ruling on the Admissibility of Evidence [40];

Pursuant to Rule 404(b) of the Federal Rules of Evidence, the Government "seeks a pretrial ruling on the admissibility of certain evidence at trial." (Docket No. 40 at 1). Specifically, the Government seeks to introduce the following "evidence during its case-in-chief to show knowledge through motive and the existence of a common scheme or plan, to show absence of mistake or accident, and to show tax due and owing": (1) evidence of a prior bad act related to the issuance of Reliant Check number 29435 including Defendant's negotiation of such check on May 20, 2002, facts that are similar to the instant offense but are not charged in the indictment; and (2) evidence of Defendant's prior conviction for mail fraud and tax evasion in the Western District of Pennsylvania at Criminal Number 01-288. (Docket No. 40 at 8-10). In response, Defendant maintains that she "cannot presently object on legal grounds to the

[G]overnment's use of evidence related to an uncharged check (Reliant Check No. 29435)" however, she "vehemently object[s] ... to the [G]overnment's use of her prior conviction for mail fraud and subscribing to a false tax return in 2002 (Criminal No. 01-288, W.D. Pa.)." (Docket No. 49 at ΒΆΒΆ 1-2). Accordingly, as Defendant does not contest the admission of the uncharged check for the purposes set forth by the Government in its motion, ...


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