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United States v. Merz

United States District Court, D. Vermont

May 21, 2015



CHRISTINA REISS, Chief District Judge.

Pending before the court are Defendant Patricia Merz's motions for a judgment of acquittal and for a new trial (Doc. 81). In her motions, Defendant challenges both the sufficiency of the evidence and the legal theories upon which the government prevailed at trial. On April 8, 2015, the court held oral argument and took the pending motions under advisement.

The government charged Defendant in a four count Superseding Indictment with: knowingly and willfully conspiring to commit the crime of interstate transportation of stolen money, in violation of 18 U.S.C. § 371 (Count I); transmitting and transferring in interstate commerce stolen money, in violation of 18 U.S.C. § 2314 (Count II); causing sums of money to be transmitted by wire in interstate commerce, by means of materially false and fraudulent pretenses, representations and promises, and for the purpose of executing such scheme, in violation of 18 U.S.C. § 1343 (Count III); and uttering a forged security with the intent to deceive another person or organization, in violation of 18 U.S.C. § 513 (Count IV).

The case arises out of the administration of the probate estate of Defendant's mother Annelise McGuigan (the "Estate") by Defendant and her brother, Christopher McGuigan. Mr. McGuigan was indicted as a co-conspirator, entered a guilty plea, and testified against Defendant at trial pursuant to a cooperation agreement with the government. After a four-day trial, the jury found Defendant guilty of all four counts of the Superseding Indictment.

The government is represented by Assistant United States Attorney Gregory L. Waples and Assistant United States Attorney Nikolas P. Kerest. Defendant is represented by Federal Public Defender Michael L. Desautels.

I. Factual and Procedural Background.

The government's evidence at trial consisted of the testimony of eleven witnesses and fourteen exhibits. Defendant introduced ten exhibits into evidence, testified on her own behalf, and called two additional witnesses. Many of the relevant facts were uncontested.

In August 2009, Annelise McGuigan died at a residential care facility in Bennington, Vermont without leaving a will. Her principal asset at the time was her former residence in Rupert, Vermont (the "Rupert House") where Christopher McGuigan was living. Defendant and her brother were their mother's sole heirs.

In December 2009, the Bennington County Probate Court (the "Probate Court") granted Defendant's and Mr. McGuigan's request to serve as co-administrators of the Estate. The evidence revealed that Defendant was informed of and understood her duties and responsibilities as a co-administrator and signed a bond that stated as follows:
We Patricia C Merz of Granville N.Y. as principal and co signer Chris McGuigan as sureties, are held and stand bound to the Probate Court for the District of Bennington in the penal sum of $210, 000.00 to secure performance of duties as fiduciary as specified in the conditions below.
The conditions of this obligation are that Patricia C. Merz who is administrator of the estate of the deceased shall:
1. Make and return to the Probate Court within thirty days of issuance of Letters Testamentary/Letters of Administration a true and perfect inventory of goods, chattels, rights, credits and estate of the deceased, which shall come to his/her possession or knowledge or to the possession of any other person for him/her;
2. Administer according to law, if an executor, according to the will of the testator, all goods, chattels, rights, credits and estate which shall at any time come to his/her possession, or to the possession of any other person for him/her, and of the same, pay and discharge all debts, legacies and charges on same, or such dividends thereon as shall be decreed by the Probate Court;
3. Render a true and just account of his administration to the Probate Court within one year and annually thereafter, and at any time when required by this court;
4. Pay all taxes which the executor or administrator is required to pay; and
5. Perform all orders and decrees of the Probate Court. When the conditions of this obligation are fulfilled, the bond shall no longer be in force.

(Gov. ex. 3 at 1744.)

Defendant testified that when she signed the bond, she intended to follow the rules and regulations of being an administrator. She also testified that she received a copy of the Probate Court's informational booklet for pro se parties (Gov. ex. 13) which explained an administrator's duties and responsibilities in some detail. She acknowledged that she was aware that her obligations as an administrator included paying the creditors of the Estate.

Edgar Campbell, Esq. testified on behalf of the government to explain the obligations of an administrator and the nature of a probate estate. Attorney Campbell has practiced law in Manchester, Vermont since 1978 and specializes in estate planning. He assumed responsibility for administering the Estate when Defendant and her brother were removed as co-administrators by the Probate Court.

Attorney Campbell testified that a probate estate is a legal entity created under Vermont law in order to administer and distribute the assets and pay the debts of a deceased person. He explained that, as a legal entity, a probate estate is subject to federal and state taxation, could sue and be sued, and could engage in financial transactions such as buying, selling, and investing subject to the constraints of probate law. He explained the duties, rights and responsibilities of an administrator of a probate estate which included paying the undisputed claims of an estate's creditors before distributing all of the estate's assets to the heirs. He described Defendant's and her brother's failure to fulfill their obligations to the Estate and how and why they were removed as administrators.

The evidence further revealed that in June 2010, Defendant and her brother published a notice to creditors of the Estate which stated in relevant part: "All creditors having claims against the estate must present their claim in writing within four months of the first publication of this notice. The claim must be presented to me at the address listed below with a copy filed with the register of the Probate Court." (Gov. ex. 3 at 1720.) Five creditors filed claims including a funeral home which provided burial services for Annelise McGuigan, a landscaping business which had provided services to maintain the grounds surrounding the Rupert House, a credit card company, the State of Vermont, and the residential care facility which cared for Ms. McGuigan before her death. The State of Vermont filed the largest claim, for $71, 016.47, for Medicaid expenses that it paid for the care Ms. McGuigan received at the residential care facility. A representative of the State of Vermont testified that she mailed a copy of this claim to Defendant and Mr. McGuigan in January 2010 and again in May 2010.

In July 2010, Defendant and her brother applied to the Probate Court for a License to Sell Real Estate (the "License") to sell the Rupert House.[1] In their inventory of the Estate, Defendant and her brother stated under oath that the Rupert House was "the property of the estate." Id. at 1722. In their motion seeking a license to sell, they stated that the sale would benefit the Estate because "it would liquidate the sole asset of the estate and allow the asset to be liquidated, distributed and the Estate be closed." Id. at 1715. The Probate Court issued the license on August 4, 2010 and in doing so identified the Rupert House as "the sole asset of the estate." ld. at 1650. The License directed Defendant and her brother to file a written report of the sale with the Probate Court.

Upon receipt of a $10, 000.00 deposit for the sale of the Rupert House, Defendant and Mr. McGuigan opened a checking account at TD Bank in Vermont in the name of "Estate of Annelise McGuigan Patricia C Merz Coadministrator and Christopher McGuigan Coadministrator" (the "Estate account"). (Gov. ex. 1 at 223.) Defendant and her brother were identified on the account not as owners or account holders, but as co-administrators.

Christopher McGuigan testified that he and Defendant agreed that he should maintain possession of the Estate's checkbook. Defendant, in contrast, suggested that her brother insisted on keeping the checkbook and she testified that because he was an alcoholic and she was afraid of him when he was drinking she acquiesced to this request.

Defendant and her brother hired an attorney to oversee the sale of the Rupert House. Both the disbursement statement and the HUD-1 Settlement Statement for the closing identified the seller as the "Estate of Annelise McGuigan." (Gov. ex. 3 at 1671.) The evidence revealed that a mechanic's lien, a mortgage, a broker's commission, and attorney's fees were all paid as part of the closing on the Rupert House. The remaining proceeds were disbursed to Defendant and her brother in a check for $149, 930.96 and later two equal checks for $9, 975.00. Defendant's check for $9, 975.00 was made out to "Patricia Merz, executor." (Gov. ex. 7 at 1296.) Attorney Campbell described the proceeds of the sale of the Rupert House as "an asset of the estate." (Doc. 70 at 75:7.) He testified that had he handled the sale of the Rupert House, he would have made the check payable to the Estate.

After the closing, on August 18, 2010, Defendant and Mr. McGuigan deposited approximately $149, 930.96 of the proceeds of the sale of the Rupert House into the Estate account. Thereafter, both Defendant and her brother made withdrawals from the Estate account. Mr. McGuigan testified that their agreement was that each would receive approximately the same amount of the Estate's assets:

Assistant United States Attorney: Was there any kind of understanding between you and your sister as to what would happen if someone took money out of the estate account or received money from the estate account?
Mr. McGuigan: We were going to keep it fair.
Assistant United States Attorney: Meaning?
Mr. McGuigan: If-if I took a hundred dollars, she would take a hundred dollars. If I took a thousand dollars, she would take a thousand dollars. We were trying to keep it even.

(Doc. 71 at 79:8-79:17.)

If Defendant wanted money from the Estate, she would ask her brother for a check. In exchange, Defendant would sign blank checks that her brother could use at a later time. At some point, Defendant deviated from this practice and began to access the Estate account directly, without advising her brother or obtaining his signature. Representatives from the TD Bank branch in Granville, New York testified that they allowed Defendant to withdraw funds from the Estate account if she presented a withdrawal slip signed by both herself and her brother which was referred to at trial as an "accommodation withdrawal slip." A TD Bank representative described this as "like a generic form a customer would ask for if they wanted to take money out of their account." (Doc. 70 at 184:8-184:10.) TD Bank also permitted the use of"checking withdrawal slips" which served the same purpose. Id. at 264:6-264:7.

Government witnesses testified that they analyzed Defendant's records at TD Bank in New York and the Estate account in Vermont and concluded that Defendant had used the withdrawal slips to transfer monies interstate. The government introduced evidence of electronic transfers of funds from Defendant's personal account in New York to vendors in Vermont involving funds she accessed from the Estate account.

The evidence further revealed that when Defendant used TD Bank's drive-up teller service in Granville, she would obtain a withdrawal slip from the teller, and she would then return the slip to the teller with her brother's forged signature. She concedes that by forging his signature, she intended to deceive her brother. See Doc. 72 at 75:14-75:17. Defendant further admitted that, while accessing funds from the Estate, she "knew there was a Shea Funeral Home bill, a Palmer ...

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