The Tenth Circuit Court of Appeals issued its opinion in United States v. Banks on Monday, August 4, 2014.
Defendants Banks, Barnes, Harper, Stewart, Walker, and Zirpolo operated or were associated with the entities Leading Team, Inc. (LT) and DKH, Inc. (DKH). In 2003, Defendants stopped operating LT and began operating a third entity, IRP Solutions Corporation (IRP). IRP was formed to develop computer software, and one of its software offerings was purportedly designed for sale to law enforcement to develop a nationwide database for law enforcement.
Beginning in about October 2002, Defendants began contacting various staffing agencies and soliciting payrolling services, in which the staffing agency would hire and pay Defendant’s choice of employee and then Defendant would repay the staffing agencies, plus a small increase for profit for the staffing agency. In order to convince the staffing agencies to agree to the payrolling services, Defendants claimed that their law enforcement database software was on the verge of being sold to the Department of Justice and several law enforcement agencies. Over the course of several years, Defendants received over $5 million in staffing payments from 42 different staffing companies that they did not repay.
Defendants were indicted in June 2009, and in 2011 they were convicted after a jury trial of several counts of wire fraud and mail fraud, and conspiracy to commit wire fraud and mail fraud, and sentenced to various terms of imprisonment ranging from 87 months to 135 months. They appealed, asserting four issues: (1) their speedy trial right was violated when the district court granted four continuances at Defendants’ request; (2) the district court compelled co-defendant Barnes to testify in violation of his Fifth Amendment privilege against self-incrimination; (3) the district court abused its discretion by excluding the testimony of two of Defendants’ potential witnesses; and (4) the cumulative effect of the court’s otherwise harmless errors necessitated reversal.
The Tenth Circuit first examined the speedy trial claim. Four different times, Defendants requested continuances from the district court. Defendants asserted that, due to the prolonged investigation beginning in 2004, discovery in the case was voluminous (totaling over 20,000 pages of documents), and they would not be able to adequately prepare for trial without the continuances. Each time, the district court examined the circumstances and issued findings that the ends of justice served by granting the continuance outweighed the public’s and Defendants’ interest in the speedy trial. Although the total continuance time was quite long, the Tenth Circuit determined no error in the district court’s decisions, finding instead that the unique circumstances of this case, including the high volume of discovery materials and potential witnesses, supported the district court’s decisions to grant continuances. Further, the Tenth Circuit noted that each continuance was requested by Defendants, and they could not assert prejudice from delays they requested.
Next, the Tenth Circuit turned to Defendants’ claim that Barnes was compelled to testify in violation of his Fifth Amendment privilege against self-incrimination and the district court declined to give a curative instruction to satisfy the Sixth Amendment. The Tenth Circuit found that although the district court requested the defense to call a witness, Barnes was not the only witness available to testify at that time, and he testified voluntarily at the behest of his co-defendants. Further, when offered a curative instruction, Barnes declined. The Tenth Circuit found no error in the actions of the district court.
As to the third claim regarding the district court’s denial of testimony by the two defense witnesses, the Tenth Circuit again found no error. The district court denied the testimony because Defendants failed to disclose the witnesses in violation of Federal Rule of Criminal Procedure 16 and Federal Rule of Evidence 702. Although Defendants concede that they violated Rule 16 and FRE 702, they argue that the record reflects their efforts were made in good faith and the court’s chosen remedy of exclusion violated precedent. The Tenth Circuit rejected these claims. The district court had allowed testimony similar to that proffered from the two rejected witnesses, and concluded that the testimony of those two witnesses would be cumulative. The Tenth Circuit found no abuse of discretion in this action.
Finally, the Tenth Circuit addressed Defendants’ argument that the effect of the harmless errors in their case caused cumulative error requiring reversal. The Tenth Circuit rejected this claim, noting that Defendants failed to show any error, much less error requiring reversal.
The district court’s judgment was affirmed.