Appeal from judgment of conviction in United States District Court for Eastern District of New York, Thomas C. Platt, J., after a jury trial, on fourteen counts of mail fraud in violation of 18 U.S.C. §§ 1341 and 1342. Appellant argues insufficiency of the evidence and denial of his Sixth Amendment right to counsel due to trial counsel's conflict of interest.
Feinberg, Chief Judge, Kearse, Circuit Judge and Re, Chief Judge, United States Court of International Trade.*fn*
Peter Cancilla appeals from a judgment of conviction in September 1982, of the United States District Court for the Eastern District of New York, Thomas C. Platt, J., after a jury trial in which he and his wife Teresa Cancilla, who has not appealed, were convicted on fourteen counts of mail fraud in violation of 18 U.S.C. §§ 1341 and 1342. Peter Cancilla received a sentence of four years in prison and a $14,000 fine. On appeal, the government takes the position that this court should assume as true an allegation that has come to its attention that defendant's trial counsel had himself engaged in criminal activity related to the conduct for which defendant was convicted and should further assume that defendant had no knowledge of any such activity by his counsel. The issue on appeal is whether on the unusual facts of this case there was a conflict of interest that violated defendant's Sixth Amendment right to counsel. For reasons given below, we answer that question in the affirmative. We reverse and remand for a new trial.
Briefly, the Cancillas were convicted of carrying out two schemes in which they insured seriously damaged cars -- first a Mercedes and then an Oldsmobile -- without disclosing their already damaged condition and subsequently submitted false insurance claims for those damages, stating they were caused by accidents which in fact had never occurred. They were paid $3,458.29 on the first claim.
At trial, the Cancillas were represented by separate counsel. Peter did not call any witnesses, but argued that under F. R. Crim. P. 29(a) he was entitled to a judgment of acquittal. Teresa attempted to show that, unknown to the Cancillas, the body shop to which the Mercedes was taken might have installed damaged parts from a previous accident involving the Mercedes, thus inflating the insurance adjuster's estimate of necessary repairs. She argued that the Mercedes had been fully repaired after the first accident and suggested that somehow the damaged parts went from the body shop that did the earlier repairs to the body shop that allegedly switched parts, both located in Brooklyn, New York. With regard to the Oldsmobile claim, Teresa argued that the insurance company mistakenly understood her claim to cover the serious pre-existing damage when in fact she intended the claim to cover only lesser incremental damage that allegedly had been sustained after the car was insured.
When Teresa's switched parts defense emerged at trial, the judge initiated the first of a series of conferences with counsel at which he voiced his concern that Peter's counsel appeared to have a conflict of interest. The apparent conflict stemmed from counsel's prior and arguably continuing representation of the president of the body shop that repaired the Mercedes after the first accident, who had recently been convicted in a proceeding before Judge Platt of a similar insurance fraud scheme involving that body shop and a third party. The judge was concerned that Teresa's defense, as it unfolded, might implicate counsel's former client in additional criminal conduct.
Ultimately, in considering a motion for a new trial brought by Peter's new counsel, the judge concluded that Teresa's fully presented defense did not create such a conflict and that, even if it did, Peter's defense was not adversely affected. The judge denied the motion on these grounds. The conflict arising out of trial counsel's prior representation is urged in this appeal, but in light of our disposition of the case there is no need to discuss it further.
Cancilla appealed from his conviction in September 1982. While the appeal was pending, the government moved in this court to remand the case to the district court to augment the record with further information it had recently discovered which "could have a bearing" on the claim of conflict of interest. This panel granted the motion in February 1983, with a direction that any appeal following the remand be referred to the same panel.
On remand, the government advised the district court by affidavit that it had learned while the appeal was pending of an allegation that Peter Cancilla's trial counsel may have himself conspired with someone connected to the Cancilla schemes on similar fraudulent insurance claims involving cars owned by counsel.
The district court held four hearings in camera and sealed the transcripts and related documents. Cancilla and his new counsel were prohibited from revealing to anyone the new information disclosed by the government. The government refused to disclose the underlying details of the allegations against trial counsel or of its investigation. Rather, it took the position for purposes of the remand proceedings that the court should assume trial counsel had labored under a "most egregious" conflict of interest while defending Peter Cancilla because counsel may possibly have been involved in criminal activity similar to the charges against Cancilla.*fn1 The government also conceded, for purposes of the remand, that Cancilla knew nothing of his counsel's prior activities. The government argued, however, that Cancilla had the burden of showing that the conflict adversely affected his counsel's performance at trial. Initially, Judge Platt felt quite strongly that the conflict was so outrageous that there was no alternative to ordering a new trial. After briefing, however, he accepted the government's position that defendant had the burden of showing adverse impact. Because defendant failed to make such a showing, Judge Platt refused to grant a new trial. Cancilla again appealed, and the case is again before this panel.
As a preliminary matter, we must address Cancilla's argument that the government's evidence was insufficient to establish that he knowingly participated in either scheme to defraud the insurers or knowingly caused the use of the mails. The argument warrants little discussion. Cancilla would have us believe he was an innocent dupe in his wife's frauds, but the evidence of his knowing participation, if not his dominant role, is substantial. There was evidence from which the jury could conclude that: immediately after receiving payment of $3,693.50 for damages to his Mercedes and without repairing it, Cancilla transferred the car to his wife in her maiden name at an address other than the residence where they both lived and which Cancilla had used in previously insuring the car; Cancilla made a special visit to the insurance company's office to pick up the check paying his wife's fraudulent claim for pre-existing damage to the Mercedes and cashed the check at his bank after obtaining his wife's endorsement; and in connection with the fraudulent Oldsmobile claim Cancilla gave a detailed description of the car and the circumstances of the fictional accident in a consensually taped phone conversation with the ...