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United States v. Bradley

United States Court of Appeals, Sixth Circuit

March 1, 2019

United States of America, Plaintiff-Appellee,
v.
Roy C. Bradley, Sr., Defendant-Appellant.

          Argued: December 6, 2018

          Appeal from the United States District Court for the Eastern District of Michigan at Bay City. No. 1:14-cr-20216-4-Thomas L. Ludington, District Judge.

         ARGUED:

          Mark A. Satawa, SATAWA LAW, PLLC, Southfield, Michigan, for Appellant.

          Sheldon N. Light, UNITED STATES ATTORNEY'S OFFICE, Detroit, Michigan, for Appellee.

         ON BRIEF:

          Mark A. Satawa, SATAWA LAW, PLLC, Southfield, Michigan, for Appellant.

          Janet Parker, UNITED STATES ATTORNEY'S OFFICE, Detroit, Michigan, for Appellee.

          Before: MOORE, CLAY, and DONALD, Circuit Judges.

          OPINION

          KAREN NELSON MOORE, CIRCUIT JUDGE.

         Roy C. Bradley, Sr. appeals his conviction for conspiring to defraud the United States, in violation of 18 U.S.C. § 371. Bradley worked as the general contractor on Steven Ingersoll's project converting an old church in Bay City, Michigan into a new charter school called Bay City Academy (BCA). Ingersoll had previously misappropriated state funding that had been destined for a charter school he already ran, Grand Traverse Academy (GTA), and used the funding for the new charter school project to cover his tracks. At trial, Bradley was shown to have conducted a series of fraudulent transfers of the newly misappropriated money, failed to account for the resulting sizeable deposits into his accounts in his 2011 tax filing and thus underpaid his taxes, and failed to file W-2s reporting his BCA employees' wages to the IRS and to provide them with Form 1099s. Bradley argues that his conviction should be overturned for three reasons: (1) the testimony that he underpaid his taxes in 2011 constituted a prejudicial constructive amendment or variance to the indictment, (2) the government made improper arguments during its opening statement and rebuttal, and (3) the district court improperly refused to instruct the jury on a lesser-included offense. We AFFIRM Bradley's conviction.

         I. BACKGROUND

         Steven Ingersoll was an optometrist in Bay City, Michigan. (Bradley PSR at 5). He was also the sole owner of Smart Schools Management (SSM) and Smart Schools, Inc. (SSI), two entities created to operate public charter schools in Michigan. R. 393 (Tr. at 39, 50) (Page ID #8472, 8483); R. 394 (Tr. at 11) (Page ID #8579); R. 396 (Tr. at 164-65) (Page ID #8903-04). To run public charter schools, the State of Michigan first issues funding to authorizing agencies. Michigan gave funding to Lake Superior State University, an authorizing agency, which then deposited those funds into SSM's account, managed by Ingersoll. R. 396 (Tr. at 165) (Page ID #8904). With these funds, Ingersoll founded GTA, a charter school in Traverse City, Michigan, in 1999. R. 393 (Tr. at 52) (Page ID #8485). Ingersoll proceeded to misappropriate funding designated for GTA, making millions of dollars in unauthorized withdrawals and doctoring the books to hide the evidence. R. 388 (Tr. at 124) (Page ID #7718); R. 389 (Tr. at 75) (Page ID #7839).

         In April 2010, Ingersoll sought to expand his charter-school business by purchasing a building that had formerly been used as a church in Bay City, Michigan for $270, 000. R. 396 (Tr. at 154) (Page ID #8895). Ingersoll planned to renovate the building to create BCA, a new charter school. R. 396 (Tr. at 157-58) (Page ID #8896-97). Ingersoll hired Bradley as the general contractor to oversee the renovations. R. 396 (Tr. at 156-57) (Page ID #8893-96); R. 397 (Tr. at 51-52) (Page ID #8961-62). Ingersoll improperly used state funds issued to GTA for the construction of the new charter school, BCA. R. 393 (Tr. at 66-67) (Page ID #8499- 8500). Through another one of his companies, Madison Arts, LLC, Ingersoll took out a $1.8 million construction line of credit loan from Chemical Bank to further fund the BCA project. R. 396 (Tr. at 154) (Page ID #8893); R. 397 (Tr. at 156) (Page ID #8960).

         Ingersoll then misappropriated funding from the construction loan. Ingersoll, his wife Deborah Ingersoll, his son Gayle Ingersoll, Bradley, and Bradley's wife Tammy Bradley together completed a series of financial transactions transferring Chemical Bank loan money through their own accounts and eventually into Ingersoll's personal account. From there, Ingersoll reimbursed some of the money he had earlier improperly withdrawn from GTA for personal use.

         For example, on February 7, 2011, Ingersoll and Bradley obtained a $508, 000 draw on the Chemical Bank loan. R. 397 (Tr. at 50-51, 57) (Page ID #896-61, 8967). Ingersoll then transferred $400, 000 of that to Bradley's account. R. 393 (Tr. at 89-90) (Page ID #8522-23). Three days later, Bradley wrote a check for $200, 000 which was deposited into Gayle Ingersoll's account on February 10, 2011. R. 393 (Tr. at 72-75) (Page ID #8505-08). That same day, Gayle Ingersoll wrote a check for the same amount which was deposited into Steven and Deborah Ingersoll's personal account. R. 393 (Tr. at 76) (Page ID #8509); R. 392 (Tr. at 166) (Page ID #8426). In May 2011, the same actors completed a similar series of transactions routing $30, 000 to Steven Ingersoll, who used the funds to purchase real estate. R. 392 (Tr. at 170-71) (Page ID #8430-31); R. 393 (Tr. at 104-06) (Page ID #8537-39).

         In June 2011, over the course of two days, another similar series of transfers took place. Ingersoll and Bradley initiated a $704, 000 draw on the Chemical Bank line of credit. R. 397 (Tr. 68-72) (Page ID #8978-82). Ingersoll then transferred that money to Bradley's construction company account. R. 393 (Tr. at 106) (Page ID #8539); R. 397 (Tr. at 73-74) (Page ID #8983). Next, Tammy Bradley transferred that amount into an account associated with Gayle Ingersoll. R. 393 (Tr. at 77, 79, 106) (Page ID #8510, 8512, 8539). Gayle Ingersoll then transferred the same amount into Steven and Deborah Ingersoll's personal account. R. 393 (Tr. at 86) (Page ID #8519); R. 389 (Tr. at 85-86) (Page ID #7849-50). Steven Ingersoll then moved $700, 000 to his SSI account, then to his SSM account, and lastly to GTA's account on the final day of the school's fiscal year. R. 393 (Tr. 31-33) (Page ID #8464-66); R. 389 (Tr. at 88) (Page ID #7852).

         Meanwhile, Bradley hired indigent employees to work at the BCA construction site and paid them around $250 to $350 in cash per week for five or six full days of work. R. 394 (Tr. at 78, 85) (Page ID #8646, 8653); R. 396 (Tr. at 119, 121) (Page ID #8858, 8860). He did not pay FICA or FUTA taxes on the wages and did not file W-2s or issue Form 1099s to the employees. R. 394 (Tr. at 79) (Page ID #8647); R. 396 (Tr. at 95) (Page ID #8834).

         Bradley and his wife Tammy worked with an employee of H&R Block to file their 2011 taxes, but failed to provide documentation to support their income claims. R. 396 (Tr. at 22, 29) (Page ID #8761, 8768). They repeatedly changed the amounts of income they claimed by large margins, making one significant increase soon after Gayle Ingersoll was interviewed by federal agents as part of the investigation of the present case. R. 396 (Tr. at 31-32) (Page ID #8770- 71); R. 396 (Tr. at 41-43) (Page ID #8780-82); R. 389 (Tr. at 86) (Page ID #7680). At trial, an IRS agent named Michael Wisniewski testified that even after Bradley and Tammy adjusted their reported income, they still underreported their actual income earned in 2011 and accordingly underpaid their tax obligation. R. 388 (Tr. at 32-34) (Page ID #7626-28).

         Bradley was indicted in the United States District Court for the Eastern District of Michigan on April 9, 2014. R. 3 (Indictment at 14) (Page ID #33). He was charged with two counts: Count 1, Conspiracy to Commit Bank Fraud, in violation of 18 U.S.C. §§ 1344 and 1349, and Count 2, Conspiracy to Defraud the United States, in violation of 18 U.S.C. § 371. R. 3 (Indictment at 1, 6) (Page ID #20, 25). Steven Ingersoll and Gayle Ingersoll were charged co-conspirators in Count 2. Id. The indictment included additional charges against Tammy Bradley, Deborah Ingersoll, and Steven Ingersoll. Id. On April 23, 2014 the government filed a Superseding Indictment, which added forfeiture allegations. R. 24 (Superseding Indictment) (Page ID #75).

         Prior to trial, Bradley submitted a motion in limine requesting that the jury be instructed on the proposed lesser-included offenses of conspiracy to fail to file W-2s or issue 1099s, in violation of 26 U.S.C. §§ 7203 and 7204, respectively. R. 114 (Bradley's Request for Lessor [sic] Included Offense as to Count Two 18 USC [sic] § 371 at 1) (Page ID #776). The district court declined to rule on this motion prior to trial. R. 147 (Order Denying Mot. for Peremptory Challenges and Addressing Mots. in Limine at 6) (Page ID #1078).

         Bradley went to trial on February 10, 2015. R. 391 (Voir Dire Tr.). Bradley was tried jointly with his wife Tammy as well as Steven, Deborah, and Gayle Ingersoll. At trial, the government offered the testimony of Agent Michael Wisniewski of the IRS, who began to testify about the Bradleys' underreporting and underpaying of their 2011 taxes on Friday, February 27, 2015. Bradley objected to this testimony, arguing that it was outside the scope of the indictment, which did not list Bradley's underpayment of his taxes as an overt act in furtherance of the conspiracy to defraud the United States. R. 399 (Tr. at 98-104) (Page ID #9338-44). The district court stated that it needed more time to review the underlying law, and prevented Wisniewski from further testifying on the subject that day. Id. at 104 (Page ID #9344). The government provided Bradley with additional information about Wisniewski's intended testimony in the days that followed. R. 186 (Tr. at 16) (Page ID #1574). When Wisniewski resumed this testimony on Tuesday, March 3, 2015, the court ruled that it reasonably fell within the scope of the conspiracy as charged in Count 2. Id. at 13-24 (Page ID #1571-82).

         On February 23, 2015, Bradley filed "Proposed Jury Instructions for Lessor [sic] Included Offense as to Count Two." R. 142 (Bradley's Proposed Jury Instructions) (Page ID #1033). This filing failed to propose actual jury instructions, but rather merely reiterated arguments for the inclusion of instructions on the proposed lesser-included offenses discussed in his earlier motion in limine. On March 6, 2015, Bradley was acquitted of Count 1 in a Judgment of Acquittal. R. 152 (Order Granting in Part and Denying in Part Mots. for Acquittal) (Page ID #1247). The district court did not instruct on a lesser-included offense in its final jury instructions, but did not explain why in the written record. R. 176 (Jury Instructions at 7) (Page ID #1376). On March 10, 2015 the jury returned a verdict finding Bradley guilty of Count 2. R. 156 (Verdict Form) (Page ID #1253). On March 24, 2015, Bradley joined Steven Ingersoll's Motion for Judgment of Acquittal and Motion for New Trial. R. 171 (Def. Bradley's Joinder in Dr. Ingersoll's Mot. for New Trial and for J. of Acquittal) (Page ID #1307). The district court denied the motions for judgment of acquittal and for a new trial. R. 205 (Order Denying Mots. for New Trial) (Page ID #2515). Judgment was entered against Bradley, and he received a sentence of 18 months in custody followed by two years of supervised release. R. 374 (J. in a Criminal Case at 1-3) (Page ID #7125-27). Bradley timely filed his Notice of Appeal. R. 375 (Notice of Appeal) (Page ID #7132).

         II. DISCUSSION

         A. Constructive Amendment or ...


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