U.S. v. Kelly

UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT

______________

No. 91-5645
______________

UNITED STATES OF AMERICA,
Plaintiff-Appellee,

versus

WILLIAM M. KELLY,
Defendant-Appellant.

__________________________________________________

Appeal from the United States District Court
For the Western District of Texas
__________________________________________________
(September 16, 1992)

Before WISDOM, SMITH, and EMILIO M. GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

William M. Kelly was indicted and tried for conspiring to

violate the Bank Bribery Act, 18 U.S.C. § 215, and the Bank Fraud

Act, 18 U.S.C. § 1344. A jury subsequently found Kelly guilty on

all charged counts. On appeal, Kelly argues that the district

court improperly: (1) denied his motion for continuance; (2)

denied his request to produce evidence; and (3) admitted the

hearsay statements of a coconspirator. Kelly also contends that

the Bank Bribery Act is unconstitutionally vague as applied to

his case. Finding no error, we affirm Kelly's conviction.

I

The facts of this case are straightforward and uncontested.

Kelly was a senior vice-president at the Valley-Hi National Bank
in San Antonio, Texas. Kelly's two co-defendants had previously

been his customers: John T. Haney was a customer at Valley-Hi,

and Leslie A. Leverett was a business associate of Haney's.1

The other party involved in this case, Steven A. Marburger,

was president of La Hacienda Savings Association. Haney was a

customer at La Hacienda, and had previously befriended Marburger.

Haney introduced Leverett to Marburger. Later, Marburger told

the two men he needed money, and Haney and Leverett told

Marburger that they would help him get a loan from Kelly, if he

would help Kelly get a loan from La Hacienda.

Kelly subsequently applied to La Hacienda for a $100,000

loan. At Haney's and Leverett's direction, Kelly contacted

Marburger by telephone. Kelly and Marburger agreed to make

reciprocal loans to each other to cover their respective

financial needs. Kelly then met Marburger in his office to fill

out the loan application form, even though he had no collateral

to secure the loan.

Kelly told Marburger that he would be glad to consider a

loan request from him. Marburger requested a $125,000 loan from

Valley-Hi. Valley-Hi's president, however, denied the loan

request because of Marburger's extensive debt. When Marburger

learned that Valley-Hi had denied his loan request, he refused to

approve Kelly's loan request because he thought that Kelly had

reneged on the "loan swap." Marburger later determined, however,

1
After the district court denied the motions for severance
and continuance, Kelly and Haney proceeded to a jury trial.
Leverett was a fugitive and was not tried with Kelly and Haney.

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that Kelly had not personally denied his loan, and eventually

provided Kelly with a $50,000 unsecured line of credit from La

Hacienda.

To obtain his money, Marburger then used Leverett as a

surrogate borrower. Leverett applied for and received a $125,000

loan from Valley Hi. To secure the loan, Leverett submitted

numerous financial statements, including papers showing that he

owned a mortgage company. Kelly took personal charge of the

loan, and it was quickly approved. Kelly issued a $50,000

cashier's check directly to Leverett, deposited $25,000 in an

account controlled by Haney, and used the remaining $50,000 to

purchase a certificate of deposit. Haney and Leverett gave

$50,000 of the loan proceeds to Marburger.

The defendants' troubles began when Valley-Hi's board of

directors subsequently discovered that the name of the

institution reported on Leverett's financial statement and the

name of the institution listed on the line of credit were

different, and that a financial institution with the same name as

that listed on Leverett's financial statement had filed for

bankruptcy. Kelly attempted to remedy this situation by stating

to the board of directors that he had contacted the accountant

who had audited the mortgage company's financial statement and

that the accountant had verified the financial statement.

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 In the meantime, Marburger was indicted by a federal grand

jury for "kiting" checks.2 Before the jury returned a verdict,

Marburger pled guilty, and agreed to cooperate with the

Government. As part of his plea agreement, he telephoned Haney

and Kelly, and recorded his conversations with them. Marburger

then became the Government's principal witness in Kelly's trial,

and testified that he and Kelly had arranged a "loan swap" with

the participation of Haney and Leverett.

II

A

Kelly contends that the district court erred in denying his

second motion for continuance, and that he was "materially

prejudiced by such denial." The grant or denial of a continuance

is within the sound discretion of the trial court, and will be

disturbed on appeal only for abuse of discretion. See United

States v. Shaw, 920 F.2d 1225, 1230 (5th Cir.) (quotation

omitted), cert. denied, U.S. , 111 S. Ct. 2038 (1991); United

States v. Uptain, 531 F.2d 1281, 1285 (5th Cir. 1976) (citations

omitted). Kelly must demonstrate an abuse of discretion

resulting in serious prejudice. See United States v. Webster,

734 F.2d 1048, 1056 (5th Cir.) (citation omitted), cert. denied,

469 U.S. 1073, 105 S. Ct. 565 (1984). Furthermore, "[w]hether a

continuance was properly denied depends on the circumstances of

the case." See United States v. Hopkins, 916 F.2d 207, 217 (5th

2
At Kelly's federal trial, Marburger stated that he would
have La Hacienda cashier's checks issued, and then put the money
to his own use.

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Cir. 1990) (citation omitted). Relevant circumstances may

"include the amount of time available, the defendant's role in

shortening the time needed, the likelihood of prejudice from a

denial, and the availability of discovery from the prosecution."

Id.3

Kelly argues that his counsel was prevented from preparing

adequately, because his counsel had a conflicting trial set for

the same day as Kelly's trial, and that the Government's alleged

failure to timely comply with its discovery obligations resulted

in material prejudice to his case. The Government responds that

Kelly was not prejudiced by the denial of another continuance, as

he did not show how the granting of another continuance would

have significantly aided his case. Furthermore, regarding the

alleged tardy production of discovery materials, the Government

asserts that Kelly had access to the tapes throughout the

pretrial proceedings and, that, even if there was some delay in

providing Kelly with a final copy of the transcript, it did not

result in prejudice to Kelly's substantial rights.

3
See also Uptain, 531 F.2d at 1286-87 (noting that cases
regarding motions for continuance are numerous and involve
varying factual contexts, and that in assessing claims of
inadequate preparation time the court considers such factors as
the quantum of time available for preparation, the likelihood of
prejudice from denial, the defendant's role in shortening the
effective preparation time, the degree of complexity of the case,
and the availability of discovery from the prosecution)
(citations omitted); United States v. Hamilton, 492 F.2d 1110,
1112-13 (5th Cir. 1974) (no abuse of discretion in denying motion
for continuance where defendant alleged that Government failed to
provide a transcript of preliminary hearing, because appellant
had shown no prejudice).

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 The trial was originally set for July 16, 1990. Kelly's co-

defendant, Haney, moved for a continuance on July 5, 1990, and

the district court granted the motion and rescheduled the trial

for September 10, 1990. On August 28, 1990, Kelly submitted his

own motion for continuance, and the district court granted this

motion and rescheduled the trial for October 29, 1990. Thus,

Kelly received the benefit of two continuances, by which he

received approximately three additional months to prepare for

trial. On October 19, Kelly moved for a continuance of the

October 29 trial date. This motion was denied. On October 29,

1990, Kelly filed a renewed motion for continuance, and the

district court denied the motion.4

As the Government notes, the record does not indicate that

Kelly's case was so complicated as to warrant additional delay.

In addition, the record does not indicate that Kelly's counsel

failed to provide an adequate defense. His counsel participated

in pretrial preparation, and actively participated in trial by

cross-examining the Government's witness and calling witnesses on

Kelly's behalf. An examination of the totality of circumstances

indicates that Kelly's counsel had sufficient time to prepare for

the case. See Webster, 734 F.2d at 1056-57 (when claims of

4
As grounds for the motion for the continuance, Kelly
pointed out that his counsel had a conflict with the October 29,
1990 trial date, as his counsel had another trial set in federal
court on this same date. In addition, Kelly stated that: (1) the
other case was a multi-defendant case which would take several
weeks to try; (2) his counsel was a solo practitioner and his
time would be consumed by the other trial; (3) his case was
complex and his counsel had not had adequate time to prepare; and
(4) discovery was incomplete.

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insufficient time for preparation are advanced, the court of

appeals examines the totality of circumstances to determine if

the continuance should have been granted). Furthermore,

regarding any delays in discovery, Kelly has failed to show how

any alleged delay prejudiced him. See United States v. Hamilton,

492 F.2d 1110, 1112-13 (5th Cir. 1974) (abuse of discretion is

defined as a trial error that harms or prejudices the defendant).

Accordingly, the district court did not abuse its discretion in

denying Kelly's motion for continuance.

B

Kelly also argues that the district court erred in refusing

to require the Government to produce documentary materials

related to other crimes by Marburger. The evidence that Kelly

contends should have been produced is evidence related to the

$50,000 he allegedly gave to Marburger. He alleges that the

Government should have produced evidence related to the check-

kiting charges against Marburger. By having such evidence, Kelly

argues that he would have discovered who the cashier's checks

were payable to, and how Marburger received the funds. Kelly

contends that he would have been able to show that Marburger

received the $50,000 not from him, but from another source.

The Government argues that, because the cashier's checks

were noted in Marburger's indictment5, Kelly had sufficient

5
Kelly had access to Marburger's indictment, which noted
the kited checks. See Defendant's Exhibit 3, included in Record
on Appeal, United States of America v. William M. Kelly, No. 91-
5645 (5th Cir.) (copy of twenty-six count indictment against
Stephen A. Marburger).

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evidence to argue that Marburger obtained the $50,000 without

Kelly's participation. The Government also contends that Kelly

had the opportunity to cross-examine Marburger about the issuance

of the $50,000 check from La Hacienda, allegedly issued with the

funds from Kelly.

"It is well[-]settled that the government has the obligation

to turn over evidence in its possession that is both favorable to

the accused and material to guilt or punishment." Pennsylvania

v. Ritchie, 480 U.S. 39, 57, 107 S. Ct. 989, 1001 (1987), citing

Brady v. Maryland, 373 U.S. at 87, 83 S. Ct. at 1196 (other

citation omitted). "Suppressed evidence is material `if there is

a reasonable probability that, had the evidence been disclosed to

the defense, the result of the proceeding would have been

different.'" Cordova v. Collins, 953 F.2d 167, 171 (5th Cir.

1992) (citation omitted), petition for cert. filed (Jan. 21,

1992). This court applies a strict standard of materiality: the

alleged exculpatory evidence must be "materially favorable to

[Kelly] as to guilt, punishment, or both." United States v.

Masat, 948 F.2d 923, 932 (5th Cir. 1991) (citation omitted),

petition for cert. filed (Apr. 3, 1992).

Kelly has failed to show how the production of the kited

checks6 "were material to his defense, how the documents'

production would have changed the outcome of the case, or that

the documents' failure to be produced has undermined the

confidence in the integrity of the outcome of his trial." Id.

6
See supra note 2.

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Kelly's counsel examined Marburger about the issuance of the

$50,000 cashier's check, and Marburger stated that Kelly's

$50,000 was the source of the check. His counsel cross-examined

Marburger about the kited checks, thereby fleshing out the

possibility that Kelly's $50,000 was not the source of the check

to Marburger's company, a possibility which the jury apparently

rejected. Kelly has failed to show that the outcome of this case

would be different had the Government provided discovery of the

kited checks.

C

Kelly contends that the district court also erred in denying

his motion for relief from prejudicial joinder, on the ground

that his defense was prejudiced by the admission of incriminating

hearsay statements by his co-defendant Haney. "As a general

rule, defendants who are indicted together are tried together."

United States v. Featherson, 949 F.2d 770, 773 (5th Cir. 1991)

(citation omitted), cert. denied, U.S. , 112 S. Ct. 1698 (1992),

cert. denied, U.S. , 112 S. Ct. 1771 (1992). This court reviews

a district court's denial of a motion for severance for abuse of

discretion. Id. To show abuse of discretion, "the defendant

must show that he `received an unfair trial and suffered

compelling prejudice against which the trial court was unable to

afford protection.'" United States v. Webster, 734 F.2d 1048,

1052 (5th Cir.) (citation omitted), cert. denied, 469 U.S. 1073,

105 S. Ct. 565 (1984).

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 Kelly alleges prejudice because a 1987 tape recording of

Marburger and Haney was not redacted according to the terms of

the district court order. In addition, Kelly claims that an

unredacted transcript of this tape was given to the jury to read

while the tape was played. Kelly also claims error in admitting

statements made in 1986 by Haney which Marburger and his former

business secretary recounted at trial.

The Government argues that the 1987 tape between Haney and

Marburger was properly admitted because the district court gave

proper limiting instructions to the jury and because the district

court ordered that the transcript be redacted only "out of an

abundance of [caution]." Furthermore, the Government asserts

that the tape did not provide incriminating statements that

implicated Kelly. In addition, the Government alleges that the

1986 statements by Haney were properly admitted because Kelly and

Haney were members of the same conspiracy.

(1)

A tape of a 1987 conversation between Haney and Marburger

was played to the jury during Marburger's testimony. Kelly

objected to the playing of the tape,7 as well as the transcript

that accompanied the tape.8 Kelly argues that, although the tape

7
See Government Exhibit 6, included in Record on Appeal
(tape of July 16, 1987 conversation between Marburger and Haney).
8
See Government Exhibit 7, included in Record on Appeal
(transcript of July 16, 1987 conversation between Marburger and
Haney).

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was redacted, the transcript was not, violating Bruton v. United

States.9

In Bruton, the Supreme Court "held that the admission of

incriminating nontestimonial statements made by one defendant,

unavailable for cross-examination at trial, created a substantial

risk of prejudice to the nondeclarant codefendant, because the

jury might))despite limiting instructions to the

contrary))consider them against the nondeclarant."10 The Court

spoke of "powerfully incriminating extrajudicial statements of a

codefendant . . . [that] are deliberately spread before the jury

in a joint trial."11 This holding was clarified in Richardson

v. Marsh,12 in which the Court stated that the Confrontation

Clause of the Sixth Amendment "is not violated by the admission

of a nontestifying codefendant's confession with a proper

limiting instruction when . . . the confession is redacted to

eliminate not only the defendant's name, but any reference to his

or her existence."13

In considering such claims under Bruton, this court has

stated that "[a] critical consideration in Bruton claims is

9
391 U.S. 123, 88 S. Ct. 1620 (1968), appeal after remand,
416 F.2d 310 (8th Cir. 1969), cert. denied, 397 U.S. 1014, 90 S.
Ct. 1248 (1970).
10
Bruton v. United States, 391 U.S. 123, 88 S. Ct. 1620
(1968), cited in United States v. Basey, 816 F.2d 980, 1004 (5th
Cir. 1987).
11
Bruton, 391 U.S. at 135-36, 88 S. Ct. at 1627-28.
12
481 U.S. 200, 107 S. Ct. 1702 (1987).
13
Id. at 211, 107 S. Ct. at 1709.

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whether the out-of-court statement at issue clearly implicates

the codefendant; if the statement does not do so, no serious

Bruton issue is presented." United States v. Basey, 816 F.2d

980, 1005 (5th Cir. 1987). Furthermore, even if a statement is

admitted in violation of the Bruton principle, "the error may be

harmless if the statement's impact is insignificant in light of

the weight of other evidence against the defendant." Id.; see

also United States v. Greer, 939 F.2d 1076, 1096 (5th Cir.) (even

if statement admitted in violation of Bruton, error is harmless

if statement's impact is insignificant in light of other evidence

against defendant) (citation omitted), vacated by 948 F.2d 934

(5th Cir. 1991), relevant part reinstated, No. 90-1348, 1992 U.S.

App. LEXIS 17408 (5th Cir. July 30, 1992) (en banc) (per curiam).

In this case, the Haney-Marburger conversation, relayed in

the tape and transcript did not specifically name Kelly as the

perpetrator of the alleged events. Rather, the conversation

simply catalogues interactions with Kelly. Any concrete

connection between Kelly and Marburger "only came through other

evidence presented by the government." Greer, 939 F.2d at 1096.

The Government still had to, and did, present other evidence to

link Marburger and Kelly. Id. For example, the Government

offered Marburger's testimony, as evidence in the form of checks,

and the testimony of Valley-Hi's president. Thus, the district

court did not deprive Kelly of his Sixth Amendment rights.

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 (2)

Kelly similarly argues that statements made by Haney in

1986, and quoted by Marburger and Judy Hilton,14 also violate

Bruton because they plainly incriminated Kelly and because no

limiting instruction could protect Kelly from the risk of

prejudice. The Government argues that the statements made in

1986 by Haney were properly admitted because they were made

during the course of a conspiracy.

The district court admitted the statements as a

coconspirator statement under Fed. R. Evid. 801(d)(2)(e).15 "For

a co-conspirator's statement to be admitted pursuant to Rule

801(d)(2)(E), there must be a conspiracy, the statement must be

made in the course of the conspiracy, and the declarant and the

defendant must be members of the conspiracy." United States v.

Vasquez, 953 F.2d 176, 182 (5th Cir.) (citation omitted), cert.

14
Hilton, an executive secretary to Marburger at La
Hacienda in the summer of 1986, testified that in the summer of
1986, she heard a conversation between Marburger, Haney and
Leverett in which Haney told Marburger not to worry because he
would help Marburger get the money he needed, and that they could
probably get it from Kelly. See Record on Appeal, vol. V at 180-
81. Marburger also testified that in the summer of 1986 Haney
told him that he had some friends who would help Marburger get a
loan, and that Kelly was one of these friends. See Record on
Appeal, vol. IV at 70-71.
15
Rule 801(d)(2)(E) of the Federal Rules of Evidence
states that:
(d) Statements which are not hearsay. A
statement is not hearsay if--
* * *
(2) Admission by party-opponent. The
statement is offered against a party and is .
. . (E) a statement by a coconspirator of a
party during the course and in furtherance of
the conspiracy.

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denied, U.S. , 112 S. Ct. 2288 (1992). All these elements must

be established by a preponderance of the evidence. Id. at 183.

The evidence in this case shows the existence of a conspiracy for

a loan-swap, statements made during the course of this loan-swap

arrangement, and the participation of Haney, Marburger and Kelly

in this loan-swap arrangement. Thus, the district court properly

admitted the statements as coconspirators' statements. Id.

D

Lastly, Kelly contends that the statute under which he was

convicted, 18 U.S.C. § 215, is "unconstitutionally vague as

applied to him."16 He argues that he could not have reasonably

16
Kelly was convicted under the 1984 version of 18 U.S.C.
§ 215, which provides:
(a) Whoever, being an officer, director, employee,
agent, or attorney of any financial institution, bank
holding company, or savings and loan holding company,
except as provided by law, directly or indirectly,
asks, demands, exacts, solicits, seeks, accepts,
receives or agrees to receive anything of value, for
himself or for any other person or entity, other than
such financial institution, from any person or entity
for or in connection with any transaction or business
of such financial institution; or

(b) Whoever, except as provided by law, directly or
indirectly, gives, offers, or promises anything of
value to any officer, director, employee, agent, or
attorney of any financial institution, bank holding
company, or savings and loan holding company, or offers
or promises any such officer, director, employee,
agent, or attorney to give anything of value to any
person or entity, other than such financial
institution, for or in connection with any transaction
or business of such financial institution, shall be
fined not more than $5,000 or three times the value of
anything offered, asked, given, received, or agreed to
be given or received, whichever is greater, or
imprisoned not more than five years, or both; but if
the value of anything offered, asked, given, received,
or agreed to be given or received does not exceed $100,

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understood that the statute prohibited his conduct because it is

not clear that a loan constitutes "anything of value" under the

statute, thereby making the statute too vague to give him notice

that accepting the loan from La Hacienda or granting the loan to

Leverett was prohibited. The Government asserts that 18 U.S.C. §

215 is not unconstitutionally vague as applied to the facts of

this case because Kelly cannot demonstrate that he could not have

reasonably understood that his conduct in creating a reciprocal

loan agreement was prohibited by the statute.

In United States v. Wicker,17 we considered a vagueness

argument much like Kelly's regarding the 1984 version of 18

U.S.C. § 215. We stated that a "statute violates due process if

it is so vague that a person of ordinary intelligence does not

have a reasonable opportunity to know what is prohibited, and if

the law provides no explicit standards for enforcement."18 To

show that section 215 is unconstitutionally vague, Kelly "must

show that he could not have reasonably understood that his

conduct was prohibited by the statute."19 As was the case in

Wicker, Kelly has failed to make such a showing in this case.

shall be fined not more than $1,000 or imprisoned not
more than one year, or both.

18 U.S.C. § 215 (1984).
17
933 F.2d 284 (5th Cir.), cert. denied, U.S. , 112 S. Ct.
419 (1991).
18
Id. at 288, citing Grayned v. City of Rockford, 408 U.S.
104, 108, 92 S. Ct. 2294, 2298 (1972).
19
Id., citing Parker v. Levy, 417 U.S. 733, 756, 94 S. Ct.
2547, 2561 (1974) (emphasis in Wicker).

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 Promising to give a loan from his bank, in order to secure a

loan from another, cannot reasonably be understood to be anything

other than giving, offering, or promising a thing of value, or

seeking, accepting, receiving or agreeing to receive anything of

value contrary to the proscriptions of section 215.20 The

evidence shows that Kelly knew the proceeds from his loan to

Leverett would go to Marburger, who in turn would make a loan

from La Hacienda to Kelly. Kelly's actions were covered by

section 215, and he has not shown that he could not have

reasonably understood that his conduct was prohibited by the

statute))this is especially so given Congress's intent in

enacting section 215 to "remove from the path of bank officials

the temptation of self enrichment" at the borrower's or bank's

expense. United States v. Jumper, 838 F.2d 755, 758 (5th Cir.

1988) (citation omitted).

III

For the foregoing reasons, we AFFIRM.

20
See supra note 16.

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