U.S.A. v. Benton, III
- Summarized by Jason Stitt , Keating Muething & Klekamp PLL
- 5 years 11 months ago
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- 16-1774/1775 (6th Circuit, Jun 26,2017) Not Published
- Tag(s):
-
- Ruling:
- Affirmed district court ruling on charges of bankruptcy fraud and mail fraud.
- Procedural context:
- Appeal from the United States District Court for the Eastern District of Michigan
- Facts:
- The debtors landlord filed a prepetition lawsuit for past due rent and obtained a judgment in the amount of $12,635. Debtors were ordered by state court to pay judgment in full or vacate the home they rented. Debtors filed a Chapter 13 case in the Eastern District of Michigan to stay the impending eviction.
Bankruptcy Court approved a plan requiring the debtors to pay the bankruptcy trustee $1,835 over 60 months. Trustee would pay $1,100 to landlord for current rent, plus $110 per month to make up the arrears. In their filing, the debtors claimed to own household goods with $1,750. Post-confirmation the debtors purchased a homeowner's insurance policy for the property they were renting. Approximately two years later, the home was severely damaged by fire. The debtors were paid $184,762 for damage to the dwelling and the policy limit of $200,250 for loss of personal property. The debtors did not inform the landlord of the fire and failed to make plan payments to the trustee.
The Chapter 13 trustee moved to dismiss the case for failure to make payments. The debtors admitted default under the plan, but claimed they'd been evicted from the residence because the landlord defaulted on his mortgage. The debtors moved to convert their case to one under Chapter 7 based on pleadings, which included false statements.
As a result of these actions, the debtors were indicted in the Eastern District of Michigan on four counts of bankruptcy fraud, in violation of 18 U.S.C. § 157(3), and one count of mail fraud, in violation of 18 U.S.C. § 1341. Specifically, counts one and two charged the debtors with bankruptcy fraud for knowingly understating the value of their personal property in their Chapter 13 filings in order to defraud creditors. Count three charged them with falsely representing to the insurance company that they owned the home. Counts four and five related to bankruptcy fraud in the pleadings relating to conversion of the case.
The debtors were found guilty of counts two through five and were sentenced to prison and ordered to pay restitution to the insurance company.
Each debtor appealed on the grounds that they were denied a fair trial by virtue of prosecutorial misconduct on the grounds that the US Attorney implied the debtors schemed to commit fraud included plans to commit insurance fraud by arson (for which they were not charged). The Sixth Circuit held that to prevail on a claim of prosecutorial misconduct the debtors needed to show that the prosecutor's improper comments so infected the trail with unfairness as to make the resulting conviction a denial of due process. Because the debtors had not objected to the comments at the underlying trial, the Sixth Circuit revealed for plain error. The Sixth Circuit held that to grant relief under plain error review four requirements must be met: 1) there must be a legal error; (2) the error must be clear; (3) the error must have affected the appellant’s substantial rights; and (4) the error must have seriously affected the fairness, integrity, or public reputation of the proceedings. The Sixth Circuit found no plain error and affirmed the conviction.
The wife-debtor also sought reversal on the grounds that there was not sufficient evidence the she was involved in a misrepresentation regarding the reason for conversion of the case because she had not signed the pleading and the pleading was based on information provided by the debtor-husband. She had moved for acquittal on those grounds in the underlying case. The Sixth Circuit review the denial of a motion for judgment of acquittal de novo, but held that it must consider the evidence in the light most favorable to the prosecution. The Sixth Circuit affirmed the denial of the motion to acquit finding that the debtor-wife failed to overcome her burden to show that her argument is so compelling as to warrant the finding that no reasonable juror could have found her guilty. The District Court had found that even if she did not provide information for that particular pleading, it was clear that she was participating with her husband in a scheme that included such pleading.
- Judge(s):
- SILER, CLAY and McKEAGUE, Circuit Judges
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