United States v. Brian Hollnagel, Bci Aircraft Leasing, Inc.

955 F.Supp.2d 830

UNITED STATES of America, Plaintiff,

v.Brian HOLLNAGEL, BCI Aircraft Leasing, Inc., Defendants.

No. 10 CR 195.

United States District Court,

N.D. Illinois,

Eastern Division.

July 1, 2013.

Kenneth Edward Yeadon, Clifford Charles Histed, William R. Hogan, Jr., United States Attorney's Office, Chicago, IL, for Plaintiff.

Paula M. Junghans, Caroline Judge Mehta, Zuckerman Spaeder LLP, Washington, DC, Terence Patrick Gillespie, Genson and Gillespie, Chicago, IL, Patrick Edward Croke, Scott R. Lassar, Sidley Austin LLP, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Judge.

Defendants Brian Hollnagel and BCI Aircraft Leasing, Inc. have moved for a judgment of acquittal (R. 467) and for a new trial (R. 498, 531) on Counts One, Two, Three, Four, Five, Six, and Twelve of the Second Superseding Indictment. For the reasons explained below, the Court denies Defendants' motion for judgment of acquittal. The Court also denies Defendants' motion for a new trial.

BACKGROUND

I. General Background

The government charged Defendants Brian Hollnagel (“Hollnagel” or “Defendant”) and BCI Aircraft Leasing, Inc. (“BCI”) (collectively, “Defendants”) in the Second Superseding Indictment “with having engaged in a long-term scheme to defraud investors, lenders, and others of money and property by engaging in a fraudulent scheme to obtain financing and enrich themselves.” (R. 545, Resp. at 6.) Specifically, the Second Superseding Indictment charged Defendants with six counts of wire fraud and two counts of obstruction of justice. The charges arose from loans and investments Defendants obtained in conjunction with BCI's business of buying, selling and leasing commercial airplanes. Mr. Hollnagel was the owner, president and chief executive officer of BCI. Co–Defendant Craig Papayanis held various positions at BCI, including managing director and chief financial officer.

The government submitted a redacted renumbered indictment based on the Second Superseding Indictment (the “Renumbered Indictment”) for the jury to use during its deliberations. (R. 480.) Count One of the Renumbered Indictment charged Mr. Hollnagel with participating in a scheme to defraud AAR Corp., a corporation involved in the sale and leasing of commercial aircraft, in part based on payments Mr. Hollngal gave to an AAR Corp. employee, Brian Olds, to help facilitate aircraft deals between BCI and AAR Corp. Count Two of the Renumbered Indictment charged Mr. Hollnagel and BCI with participating in a scheme to defraud investors, financial institutions, and others. Counts Three through Six of the Renumbered Indictment charged Defendants with wire fraud based on wires used in furtherance of the scheme charged in Count Two. Count Seven of the Renumbered Indictment charged Defendants with obstruction of justice based on documents which Defendants submitted to the SEC containing false statements relating to Defendants' investments. Count Eight of the Renumbered Indictment charged Defendants with obstruction of justice based on false statements Defendants made to the SEC regarding payments made to Robert Carlsson, a licensed securities broker.

II. Procedural History

On January 18, 2012, the Court conducted jury selection and proceeded to trial in this case. The trial lasted for approximately seven weeks. During the course of the trial, the government called twenty-two witnesses and admitted over six hundred exhibits into evidence. Specifically, the government called the following witnesses: Gary Turlington, Dean Olds, Barrey Davis, Joseph Sammons, Jim Cullen, Rob Carlsson, Frank Czajka, John Taflan, John Strokirk, Frank Meyer, Thomas Berwick, Jay Johnson, John Poulton, T.D. Butzbaugh, John VanDerMeulen, Dean Matt, James Erwin, David Storch, Robert Denninger, Peter Haleas, William Conagh, and Nicole Bilicki.

On February 24, 2012, at the close of the government's case-in-chief, Defendants Brian Hollnagel and BCI moved for a judgment under Rule 29 of the Federal Rules of Criminal Procedure. (R. 467.) The Court took their motion under advisement and continued the trial. (R. 468.) Defendants called five witnesses: Lois Cavero, William Sakamoto, Quentin Brasie, Gary Turlington, and Thomas Berwick.

On March 14, 2012, following almost two weeks of deliberations, the jury returned a verdict of guilty as to Defendant Hollnagel on Count One, and verdicts of guilty as to Defendants Hollnagel and BCI on Counts Two, Three, Four, Five, Six and Seven of the Renumbered Indictment.¹ The Court entered a judgment of guilty against those Defendants in accordance with the jury verdict. The jury was unable to return a unanimous verdict as to Defendants Hollnagel and BCI on Count Eight of the Renumbered Indictment,² nor was the jury able to return a unanimous verdict as to Co–Defendant Craig Papayanis on Counts Two, Three, and Four of the Renumbered Indictment.³ The Court declared a mistrial as to those counts.

On August 1, 2012, Defendants filed a supplemental memorandum in support of their motion for judgment of acquittal pursuant to Rule 29 of the Federal Rules of Criminal Procedure. (R. 530.) That same day, Defendants filed a motion for a new trial pursuant to Rule 33 of the Federal Rules of Criminal Procedure. (R. 531.) Defendants' motion for a new trial incorporates and exclusively relies upon the arguments that Defendants make in their motion for a judgment of acquittal. The Court, therefore, considers both motions simultaneously.

LEGAL STANDARD

I. Motion for Judgment of Acquittal—Rule 29

Rule 29(a) provides that, “[a]fter the government closes its evidence or after the close of all the evidence, the court on the defendant's motion must enter a judgment of acquittal of any offense for which the evidence is insufficient to sustain a conviction.” Fed.R.Crim.P. 29(a). When, as here, a defendant makes a Rule 29(a) motion at the close of the government's case, and the court reserves decision, the court “must decide the motion on the basis of the evidence at the time the ruling was reserved.” Fed.R.Crim.P. 29(b).

“In challenging the sufficiency of the evidence, [a defendant] bears a heavy, indeed, nearly insurmountable, burden.” U.S. v. Warren, 593 F.3d 540, 546 (7th Cir.2010); see also U.S. v. Jones, 713 F.3d 336, 339–40 (7th Cir.2013); U.S. v. Berg, 640 F.3d 239, 246 (7th Cir.2011); U.S. v. Dinga, 609 F.3d 904, 907 (7th Cir.2010); U.S. v. Morris, 576 F.3d 661, 665–66 (7th Cir.2009). The reviewing court will view the “evidence in the light most favorable to the prosecution,” and the defendant “ ‘must convince’ the court that, even in that light, ‘no rational trier of fact could have found him guilty beyond a reasonable doubt.’ ” Warren, 593 F.3d at 546 (quoting U.S. v. Moore, 572 F.3d 334, 337 (7th Cir.2009)); see also U.S. v. Eller, 670 F.3d 762, 765 (7th Cir.2012); U.S. v. Doody, 600 F.3d 752, 754 (7th Cir.2010) (stating that the inquiry is “whether evidence exists from which any rational trier of fact could have found the essential elements of a crime beyond a reasonable doubt”). In other words, a court will “set aside a jury's guilty verdict only if ‘the record contains no evidence, regardless of how it is weighed,’ from which a jury could have returned a conviction.” U.S. v. Presbitero, 569 F.3d 691, 704 (7th Cir.2009) (quoting U.S. v. Moses, 513 F.3d 727, 733 (7th Cir.2008)); see also Warren, 593 F.3d at 546.

It follows that under Rule 29, courts “do not reassess the weight of the evidence or second-guess the trier of fact's credibility determinations.” U.S. v. Arthur, 582 F.3d 713, 717 (7th Cir.2009); see also U.S. v. Severson, 569 F.3d 683, 688 (7th Cir.2009). This strict standard is a recognition that “[s]orting the facts and inferences is a task for the jury.” Warren, 593 F.3d at 547. The Seventh Circuit teaches that:

[t]he critical inquiry on review of the sufficiency of the evidence to support a criminal conviction must be not simply to determine whether the jury was properly instructed, but to determine whether the record evidence could reasonably support a finding of guilt beyond a reasonable doubt. But this inquiry does not require a court to ask itself whether it believes that the evidence at the trial established guilt beyond a reasonable doubt. Instead, the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.

Moore, 572 F.3d at 337 (quoting Jackson v. Virginia, 443 U.S. 307, 318–19, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979)).

II. Motion for a New Trial—Rule 33

Rule 33 of the Federal Rules of Criminal Procedure provides that, “[u]pon the defendant's motion, the court may vacate any judgment and grant a new trial if the interest of justice so requires.” Fed.R.Crim.P. 33(a); see also U.S. v. Smith, 674 F.3d 722 (7th Cir.2012) (reviewing a district court's order on a Rule 33 motion for abuse of discretion); U.S. v. McGee, 408 F.3d 966, 979 (7th Cir.2005). “ ‘[C]ourts have interpreted [Rule 33] to require a new trial in the interests of justice in a variety of situations in which the substantial rights of the defendant have been jeopardized by errors or omissions during trial.’ ” U.S. v. Eberhart, 388 F.3d 1043, 1048 (7th Cir.2004) (quoting U.S. v. Kuzniar, 881 F.2d 466, 470 (7th Cir.1989)), overruled on other grounds,546 U.S. 12, 126 S.Ct. 403, 163 L.Ed.2d 14 (2005).

“ ‘A jury verdict in a criminal case is not to be overturned lightly, and therefore a Rule 33 motion is not to be granted lightly.’ ” Eberhart, 388 F.3d at 1048 (quoting U.S. v. Santos, 20 F.3d 280, 285 (7th Cir.1994)). The court may grant a new trial if the jury's “verdict is ‘so contrary to the weight of the evidence that a new trial is required in the interest of justice.’ ” U.S. v. Washington, 184 F.3d 653, 657 (7th Cir.1999) (“The focus in a motion for a new trial is not on whether the testimony is so...