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United States v. Cohen

United States Court of Appeals, First Circuit

April 6, 2018

UNITED STATES OF AMERICA, Appellee,
v.
R. DAVID COHEN, Defendant, Appellant.

          APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Leo T. Sorokin, U.S. District Judge]

          James B. Kransoo, with whom Krasnoo, Klehm & Falkner LLP was on brief, for appellant.

          Ryan M. DiSantis, Assistant United States Attorney, with whom William D. Weinreb, Acting United States Attorney, was on brief, for appellee.

          Before Lynch, Stahl, and Barron, Circuit Judges.

          BARRON, CIRCUIT JUDGE.

         R. David Cohen ("Cohen") appeals his convictions for one count of conspiracy to convert government property, in violation of 18 U.S.C. § 371; fourteen counts of conversion of government property, in violation of 18 U.S.C. § 641; and one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h). He also challenges his sentence. The convictions stem from his role in using bank accounts that he owned or controlled in order to negotiate fraudulently-obtained federal tax refund checks. We affirm the convictions and the sentence.

         I.

         Cohen and his co-conspirators, both indicted and unindicted, were alleged to have engaged in a scheme in Massachusetts that, beginning in October 2011 and continuing through December 2014, involved the use of stolen identities to obtain fraudulent tax refunds from the United States Internal Revenue Service ("IRS"). The alleged scheme worked as follows.

         The conspirators (though not Cohen) obtained tax refund checks by using stolen identities. Cohen, who was a real estate attorney in Massachusetts, deposited the refund checks into his existing Interest on Lawyers' Trust Accounts ("IOLTA")[1] bank account, subsequently-opened IOLTA accounts, and conventional business accounts (opened by himself or by a co-conspirator) at various banks. Cohen and his co-conspirators then wrote checks from those accounts that were cashed, made cash withdrawals from those accounts, and engaged in other transactions in order to launder the tax refunds. When questioned by various bank officials about the deposits being made to the various IOLTA and business accounts, Cohen often stated that he was depositing checks in these accounts for clients who were involved in real estate closing transactions for which he was their attorney.

         About a year and a half into the alleged scheme, on or about May 22, 2013, Cohen entered into an agreement with the Massachusetts Attorney General's Office (the "AG Settlement") to settle a lawsuit alleging that Cohen provided his advice for, and consent to, unlawful conduct by a client whom Cohen represented. In the AG Settlement, Cohen agreed to pay a $40, 000 fine and not to conduct real estate closings for a period of six months. The government alleges that, after entering into the AG Settlement, Cohen stopped using his IOLTA accounts to launder the fraudulently- obtained checks, at which time the conspiracy switched to using conventional business bank accounts for such activities.

         At trial, Cohen testified in his own defense. He asserted that he was not a "crook, " but a "fool" who "was do[ing] favors for people who he knows, who are friends, " and that he failed to look closely at documents or ask enough questions. After a ten-day trial, however, the jury convicted him of each of the sixteen counts that were given to the jury.

         At sentencing, Cohen disputed the sentencing range that the Pre-sentence Report ("PSR") set forth under the United States Sentencing Guidelines (the "Sentencing Guidelines"). Cohen contended that the PSR wrongly calculated that range by attributing too large a loss from the conspiracy to him and, therefore, by applying too large an enhancement to his base offense level, see U.S.S.G. § 2B1.1(b)(1)(I) (2015); by wrongly applying to his base offense level the enhancement that applies for an offense that involves ten or more victims, see id. § 2B1.1(b)(2)(A)(i); and by wrongly applying to his base offense level the enhancement that applies for obstruction of justice, see id. § 3C1.1. Cohen argued that, without these wrongly applied enhancements, he should have been assigned a total offense level of twenty-two, which, given his criminal history, would appear to have resulted in a sentencing range of forty-one to fifty-one months imprisonment under the Sentencing Guidelines.

         The District Court disagreed, applied the enhancements, and calculated Cohen's total offense level to be twenty-eight, which corresponded to a recommended guideline sentencing range of seventy-eight to ninety-seven months imprisonment. However, after considering the sentencing factors set forth in 18 U.S.C. § 3553, the District Court found the guideline range to be "too high" and sentenced Cohen to a below-guideline term of imprisonment of fifty-four months.[2]

         Cohen now appeals both his convictions and his sentence.

         II.

         We start with Cohen's challenge to his convictions. He argues first that they must be vacated because the District Court erred in "permit[ting the AG Settlement]" to be used at trial. He also argues that the convictions must be vacated because the District Court erred in allowing an expert witness for the government to testify regarding the Massachusetts "rules about IOLTA accounts" for attorneys. We find neither argument persuasive.

         A.

         The facts that bear on Cohen's challenge regarding the AG Settlement are as follows. Prior to trial, the government informed Cohen and the District Court that if Cohen presented any character witnesses to testify to his reputation for truthfulness and honesty, the government intended to cross-examine those witnesses about the AG Settlement. During trial, but prior to the close of the government's case, the government also made clear that if Cohen decided to testify in his own defense, the government would cross-examine Cohen about the AG Settlement pursuant to Federal Rule of Evidence 608(b).[3]

         In light of the government's stated intentions, Cohen requested the District Court "rule . . . in advance of [Cohen's] testimony, to exclude completely any cross-examination of him arising out of the [AG Settlement]." United States v. Cohen, No. 1:15-cr-10008-LTS (D. Mass. Jan. 17, 2016). Cohen's counsel told the District Court that he had been under the impression that evidence concerning the AG Settlement "wasn't going to see the light of day, if [his] reputation evidence wasn't going to come [in]." He explained, however, that if evidence of the AG Settlement would be used to cross-examine Cohen, then Cohen "might as well" introduce "a fair number of reputation witnesses" "because [he was] foiled."

         After hearing argument by both parties, the District Court, in a January 17, 2016 order, ruled as follows:

This request is DENIED without prejudice to the defendant challenging specific questions posed by the government on cross-examination. The Court notes that permissible cross-examination of the defendant and permissible cross-examination of possible defense character witnesses is not identical. For example, as to the latter the government may challenge the basis for the witness'[s] opinion or reputation testimony regarding the defendant's character. Thus, while asking the character witness whether he or she is aware of the fact of the lawsuit may well be a permissible challenge to the basis of the witness'[s] testimony that same question of the defendant, at least standing alone, does not appear to bear on truthfulness or untruthfulness.

         The parties then informed the District Court that they had "reached an agreement." If Cohen testified and the government chose to cross-examine him about the AG Settlement, the government agreed that it would only ask Cohen "of the date of the [AG Settlement], when [Cohen] agreed with the Attorney General's [O]ffice not to engage in real estate transactions for six months." In return, Cohen agreed that he would not "present[] any reputation evidence witness[es] at all." At trial, the government limited its cross-examination to the agreed-upon scope and, thereafter, Cohen did not call any character witnesses.

         On appeal, Cohen now characterizes the District Court's conditional order as "permitting the [g]overnment to use . . . prejudicial, irrelevant evidence to impeach Cohen's [potential] witnesses who would have testified to Cohen's reputation for truthfulness and honesty." He also contends that the "repeated references to the [AG Settlement] during cross-examination of Cohen's [potential] reputation-evidence witnesses, . . . would have been so prejudicial to [Cohen's] defense . . . Cohen was forced to eliminate [the reputation witness] portion of his defense." ...


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