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United States v. Debra A. Hartmann, Kenneth K. Kaenel, and John Scott Korabik
Citations: 958 F.2d 774; 35 Fed. R. Serv. 572; 1992 U.S. App. LEXIS 4745Docket: 90-1658, 90-1659 and 90-1660
Court: Court of Appeals for the Seventh Circuit; March 19, 1992; Federal Appellate Court
Werner Hartmann, owner of a successful stereo sales business, was murdered in his home on June 8, 1982. His body was discovered the next day, leading to an extensive investigation. Eventually, his wife Debra Hartmann, her lover John Scott Korabik, and Korabik's associate Kenneth K. Kaenel were indicted on multiple counts, including mail and wire fraud and interstate transportation of funds obtained by fraud. The charges alleged that the defendants devised a scheme to fraudulently claim life and mortgage insurance proceeds following Werner's murder. After a three-week trial, the jury convicted Debra of all counts and Korabik and Kaenel of mail and wire fraud. They received substantial prison sentences: Debra was sentenced to 22 years, while Korabik and Kaenel received 16 and 20 years, respectively, with five years of probation following their prison terms. On appeal, the defendants challenged their convictions and sentences, but the court found no merit in these challenges and affirmed the lower court's decisions. The case's background revealed that Debra and Werner's marriage, initially marked by a luxurious lifestyle, had deteriorated by 1981 due to her affair with Korabik. Despite contemplating divorce, both Debra and Werner ultimately chose not to proceed, which coincided with Debra moving in with Korabik and Kaenel. The prosecution established that the conspiracy to murder Werner was motivated by the desire to collect insurance proceeds. Debra and Korabik involved Harvey Loochtan, a Prudential Insurance Company agent, in a fraudulent scheme. Loochtan sold them a $150,000 double-indemnity life insurance policy for Werner, with Debra as the beneficiary, but the policy lapsed due to non-payment. The policy on Werner was later reinstated, although a forensic expert testified that Werner's signature on the application was forged. In March 1982, Werner sought another $250,000 policy, initially stating it was for his daughter's benefit. Debra later insisted on being the beneficiary, paying Loochtan $3,000 to secure this. The policy was approved on May 7, 1982, with a delivery deadline of June 7, 1982. After receiving the policy, Werner requested that his daughters be made beneficiaries instead, a change communicated to Debra by Loochtan. On June 8, an assailant shot Werner multiple times. The government presented evidence implicating both Korabik and Kaenel in the murder, suggesting one acted out of love for Debra and the other for financial gain. Witnesses testified to admissions of guilt from both suspects and identified a tall, athletic man fleeing the scene, potentially matching Korabik’s description. Further evidence linked Kaenel to murder solicitation, with plans to share insurance money with hired killers, leading to tensions when they refused to work on credit. Both suspects provided alibis for the time of the murder, while Debra was with Werner's first wife and daughter at a restaurant. Notably, several witnesses testified that Werner had expressed fears for his life, believing that Debra and her lover were plotting to kill him, even seeking police protection. Debra Hartmann took possession of multiple properties and assets belonging to Werner after his murder. In January 1984, she received a $450,000 settlement from Prudential Insurance Company. By September 1984, her relationship with Korabik ended. On January 19, 1989, nearly seven years post-murder, a Grand Jury indicted Debra, Korabik, and Kaenel. Debra challenges her conviction on two grounds: first, she claims the government failed to prove her specific intent to defraud, arguing that there is no reliable evidence linking her to Werner’s murder. Second, she asserts the district court improperly admitted irrelevant evidence that prejudiced the jury. The court, however, found substantial direct and circumstantial evidence supporting her involvement in the scheme to kill Werner for insurance proceeds, dismissing her claims as mere credibility challenges to government witnesses. The court emphasized that it must uphold the conviction if any rational jury could have found the essential elements of the crime proven beyond a reasonable doubt. Debra also contends that without a legal finding of her intentional killing of Werner, she cannot be convicted of fraud related to the insurance proceeds. However, the court maintains that the jury's credibility assessments and conclusions must stand, reinforcing her conviction. Debra argues that Illinois law regarding insurance proceeds indicates a failure of proof by the government in her case, citing *State Farm Insurance Co. v. Smith* and *Lincoln National Life Insurance Co. v. Johnson*. In *Smith*, the Illinois Supreme Court ruled that a beneficiary must be found to have intentionally killed the insured to bar recovery, while in *Johnson*, a beneficiary found not guilty due to insanity was still entitled to insurance proceeds as the other beneficiary failed to prove sanity at the time of the killing. However, these cases are deemed irrelevant to Debra's appeal, as they pertain to civil disputes over insurance proceeds rather than criminal fraud allegations. The government, not a co-beneficiary, is prosecuting Debra for mail and wire fraud, and she does not establish a connection between the civil cases and her alleged criminal conduct. To prove mail fraud, the government must demonstrate that Debra knowingly participated in a fraudulent scheme, used the mails in furtherance of this scheme, and acted with intent to defraud. The district court provided clear jury instructions on these elements, defining "knowingly" as awareness of her actions and their nature. Similar instructions were given for wire fraud, supported by evidence linking Debra to the crime. Debra's objections regarding the admission of evidence are also unconvincing. She contends that the inclusion of Loochtan's guilty plea improperly shifted the burden of proof to her. However, the trial judge has discretion over evidentiary rulings, and the court clearly instructed the jury that Loochtan's plea was not evidence against Debra, affirming that the burden of proof remained with the government. The district court did not abuse its discretion in this matter. Debra contends that the district court's limiting instructions did not sufficiently mitigate the prejudicial impact of Loochtan's guilty plea on the jury, referencing Bruton v. United States, which highlighted the challenges of mitigating undue prejudice from incriminating statements of a co-defendant who does not testify. However, the court distinguishes this case from Bruton, noting that Loochtan provided direct testimony and was available for cross-examination, allowing the district court to address potential prejudice adequately. Consequently, Debra's reliance on the Bruton rule is unfounded, and the court did not abuse its discretion. Debra also disputes the admission of three additional evidentiary items: forensic details of Werner's murder, Werner's out-of-court expressions of fear regarding his death, and statements made by the government during closing arguments. The court will only reverse these admissions if there is an abuse of discretion, which Debra fails to demonstrate. Furthermore, Debra claims a violation of her right to a fair trial under the Fifth Amendment due to the government's presentation of graphic evidence regarding Werner's murder, arguing that this was irrelevant to the charges of mail fraud, wire fraud, and interstate transportation of stolen property. She cites Ferrier v. Duckworth to support her argument that irrelevant evidence can lead to an unfair trial. Debra specifically objects to detailed testimony from the Cook County Medical Examiner and police officers regarding the murder scene. The court counters that the details of Werner's death were relevant to the case, as they corroborated out-of-court admissions made by co-defendants regarding the murder. The specifics of the murder, including the manner in which it occurred, aligned with testimonies and forensic evidence, thus enhancing the credibility of the co-defendants’ statements. The district court's admission of the forensic evidence was deemed relevant and within its discretion. Debra challenges the district court's ruling on the admissibility of her deceased husband Werner's out-of-court statements regarding his troubled marriage, intentions to change insurance beneficiaries, and fears of being murdered by Debra and her lover. She argues that the admission of these statements infringed on her rights under the Confrontation Clause of the Sixth Amendment, compromising her fair trial. However, all defendants, including Debra, failed to object to the statements during the trial, which diminishes their ability to contest the ruling on appeal. The district court had previously invited objections, but none were provided. As a result, the defendants waived their right to challenge the statements unless there was a clear error. The court found no plain error in admitting Werner's statements, as they fell under established hearsay exceptions. Specifically, his statements about his marriage and desire to change beneficiaries were admissible under Federal Rules of Evidence 803(3) as reflections of his then-existing state of mind, relevant to the question of why he would not designate Debra as a beneficiary. Additionally, statements expressing his fear of murder were also admissible to illustrate his attitude toward the insurance policies, supporting the notion that he would not name Debra as a beneficiary if he feared for his life. Further, some of Werner's statements were admitted under other hearsay exceptions. Just before his death, he expressed to two lawyers that he had overheard Debra and Korabik plotting his murder and sought advice on gathering evidence against them. He also mentioned difficulties in changing his beneficiary and fears of being killed. Both lawyers testified that Werner was in a state of panic when making these statements. Werner's statements about overhearing a plot to murder him were correctly admitted as excited utterances under Fed. R. Evid. 803(2) because they met the criteria for such statements: a startling event occurred, Werner was under the stress of excitement, and the statements directly related to the event. The testimony from Aldini and Colombik confirmed Werner's emotional state after overhearing the plot. Additionally, Werner's declarations regarding a scheme to deceive Debra and Korabik into believing he owed money to the mob were admissible under Fed. R. Evid. 803(3) to demonstrate his intent and that he executed this plan. Testimony from Jeff Joseph supported the existence of the scam, which resulted in extracting $5,000 from Debra and Korabik. This plan provided motivation for Korabik to conspire to murder Werner for financial gain. Korabik argued that these statements were introduced to counter his defense regarding the loans, but the government clarified that the statements were relevant regardless of their intended purpose, reinforcing their admission. Debra alleges that prosecutorial misconduct during closing arguments infringed on her right to a fair trial. She accuses the prosecutors of attacking her defense counsel, misrepresenting evidence and law, vouching for government witnesses' credibility, and expressing personal opinions on the evidence. The standard of review for such claims, established in United States v. Howard, requires that prosecutorial conduct be evaluated in the context of the entire trial to determine if it was inflammatory enough to compromise the defendant’s right to a fair trial. Debra's complaints, which were not objected to during trial, are subject to plain error review, focusing on the most egregious misconduct. After reviewing the record, the court finds no instances of plain error. Debra's assertion that the prosecution personally attacked her defense counsel is dismissed, as the remarks were directed at the defense's arguments rather than at the attorneys' character. Additionally, claims regarding improper vouching and personal opinions are refuted, with the court noting that the prosecutor's comments were limited to the context of witness interviews rather than personal opinions on truthfulness. Debra's claim regarding a rhetorical question about Korabik’s testimony is also deemed non-prejudicial. Ultimately, the court concludes that Debra's claims lack merit. Korabik also presents multiple claims of error, but the court finds them unpersuasive and only addresses his strongest arguments, dismissing the others. Korabik and Kaenel contend that the district court erred by denying their motions for severance, arguing that their defenses were antagonistic, leading to significant prejudice during the joint trial. They assert that facing three prosecutors—representing the government, Debra, and Kaenel—compounded this prejudice. The district court denied the severance motions, reasoning that the defenses were not sufficiently antagonistic to necessitate separate trials. The appellate standard for overturning this decision is an abuse of discretion, requiring a demonstration of compelling prejudice. The court referenced the standard from United States v. Buljubasic, which states that defenses must be mutually antagonistic to warrant severance. Specifically, defenses must be so inconsistent that accepting one would imply the guilt of another. The court concluded that the defenses presented by Korabik and Kaenel were primarily finger-pointing without substantial evidence to support their claims against each other, which does not meet the threshold for severance. The charges against them were related to a fraud scheme, not murder; thus, their mutual accusations regarding who shot Werner Hartmann did not affect their culpability for fraud. The lack of substantial evidence linking either defendant to the murder further undermined their claims for severance, leading the court to affirm that the district court did not abuse its discretion in denying the motions. Finger-pointing among defendants does not justify separate trials and can aid in presenting a complete case to the trier of fact. The current defenses lack significant evidence or relevance to the indictment charges, and their antagonism does not warrant interference with the district court's discretion. Consequently, the court's denial of separate trials for the defendants is upheld. Korabik contends that the district court wrongly allowed evidence of Kaenel selling firearms to an ATF undercover agent two years post-Werner's murder. This evidence, including testimony and recorded conversations, was used to illustrate the relationship between Korabik and Kaenel regarding firearms exchange. The district court deemed this evidence admissible based on pretrial considerations, and such evidentiary rulings are only reversed upon proof of abuse of discretion. The evidence stemmed from an unrelated undercover firearms investigation. During meetings in 1984, Kaenel sold handguns and discussed gun sources, which the government suggested pointed to Korabik as the source, given Korabik's employment at a gun store and expertise. Testimony indicated a personal connection between Kaenel and Korabik, particularly following the breakup between Korabik and Debra around the time Kaenel sold the firearms. Rule 404(b) prohibits using evidence of other crimes to demonstrate propensity but allows it for other purposes, such as motive or identity. A four-part standard for admissibility under Rule 404(b) requires that the evidence addresses a matter other than propensity, is similar and timely, is clear and convincing, and its probative value is not significantly outweighed by potential prejudice. Evidence from Kaenel's transactions with Agent Mazzola met the necessary criteria to establish a relationship between Korabik and Kaenel involving gun exchanges. Although these transactions occurred two years post-Werner's murder, they fell within the timeline of the conspiracy alleged to have continued through 1984. The trial presented extensive evidence of the friendship between Korabik and Kaenel, both of whom owned several firearms, minimizing any potential unfair prejudice from admitting the Rule 404(b) evidence. Consequently, the district court's decision to admit Agent Mazzola's testimony and related recordings was deemed appropriate. Korabik contended that his Due Process rights were violated when his alibi witness, James Pappas, invoked the Fifth Amendment during cross-examination regarding Pappas's illegal sale of firearms to an undercover officer. The government's inquiries were permissible under Fed. R. Evid. 608(b), which allows for specific instances of conduct to challenge a witness's credibility. Prior to Pappas's testimony, the government provided materials to the court detailing a 1987 sale where Pappas sold three handguns to an officer posing as a gang member, without the required firearm identification documentation. Pappas chose to invoke his Fifth Amendment right against self-incrimination concerning the illegal sale. Korabik also claimed post-trial that the government relied on false information to provoke Pappas's invocation of his rights, thus compromising his fair trial. However, the court found the inquiry relevant to Pappas's credibility, particularly as Pappas's claims regarding his diligence in recording gun sales were contradicted by the evidence presented. Therefore, any harm to Korabik's alibi stemmed from Pappas's legitimate impeachment and not from any misconduct by the government. The district court and the government did not err in the case against Korabik. The invocation of the Fifth Amendment during cross-examination is permissible under Rule 608(b) and can be used for impeachment purposes. Korabik's claims of error include: 1) denial of a mistrial motion related to alleged Brady violations; 2) admission of testimony from Alden Steiffel as an admission by silence; 3) preclusion of references to the absence of a state murder indictment against the defendants; 4) denial of a mistrial due to improper comments about Kaenel's motives; and 5) admission of a certified statement from the U.S. Naval Observatory regarding civil twilight times on the night of the murder. The court found these claims unpersuasive, as they did not align with established law or the evidence presented. Specifically, Korabik’s Brady claim was deemed overstated, as he failed to demonstrate that suppressed evidence was material or would likely have changed the trial’s outcome. The district court determined that the government's late disclosure of witness testimony was not sufficient Brady material. Overall, the court upheld its discretion in admitting evidence and denying mistrial motions, affirming that Korabik's arguments lacked merit. The record contains substantial evidence supporting Korabik's conviction, and the district court did not abuse its discretion during the lengthy trial. Kaenel presents five claims of error, three of which have been previously addressed. The remaining two claims assert a violation of Due Process due to the court's refusal to hold an evidentiary hearing regarding the government's use of his statements and argue that consecutive sentences breach the Fifth Amendment's double jeopardy protections. Kaenel met with state and federal prosecutors on May 9, 1986, to discuss his involvement in the investigation of Werner Hartmann's murder. His attorney's affidavit states that prosecutors assured Kaenel that "nothing he said would be used against him" and that his cooperation would be communicated to the judge presiding over his case. Kaenel interpreted this as an unconditional promise of immunity, while the government contended it was a mutual agreement requiring his cooperation in exchange for non-use of the information provided against him. When Kaenel ceased to cooperate, the district court ruled that an evidentiary hearing on the alleged immunity promise was unnecessary, supporting the government's interpretation of the agreement. The court concluded that Kaenel’s cessation of cooperation constituted a breach, releasing the government from its obligations. Furthermore, the district court noted that the government could have discovered almost all evidence independently of Kaenel's information, with only two items being potentially problematic. However, those items were deemed cumulative, with substantial supporting evidence available from other sources. Ultimately, the district court rejected Kaenel's assertion that he could provide evidence, cease cooperation, exclude that evidence, and require the government to demonstrate independent sourcing for the evidence it sought to admit. Kaenel’s decision to stop cooperating with the government voided any obligations the government had under their agreement. The district court found no error in refusing to hold an evidentiary hearing, as Kaenel failed to present facts that would justify such relief. Although he claimed that continuing cooperation could endanger his life, he did not raise this self-defense argument in the district court. Instead, he argued that the government’s offer of immunity was unconditional and that he was not obligated to continue cooperating to receive it. This lack of record supporting his new claim led to its waiver on appeal. The court reaffirmed that a defendant’s failure to adhere to a pretrial agreement negates the government’s corresponding duties, and Kaenel's cessation of cooperation removed any protections he might have had, subjecting him to prosecution. Even if the self-defense argument had been made, it would not have excused his failure to cooperate. Cooperating with government investigations poses significant risks for defendants-turned-informants, who assume the dangers faced by law enforcement. Allowing a defendant to withdraw cooperation at will while still reaping benefits from prior agreements would enable selective manipulation of information. The district court's ruling mandates that defendants must adhere to their cooperation agreements to receive government-provided benefits. Even if the government violated an agreement with Kaenel, the evidence he sought to suppress would still be admissible due to the independent source doctrine, which permits the admission of evidence discovered via lawful means independent of any constitutional violation. The court found that the shell casings and car keys provided by Kaenel were not critical enough to warrant a reversal of the case. Kaenel's claims regarding the information he provided are therefore rejected. Furthermore, Kaenel's consecutive sentences for multiple counts of mail and wire fraud do not violate double jeopardy or cruel and unusual punishment prohibitions. Despite Kaenel's references to opposing viewpoints on consecutive sentencing, established authority recognizes each mailing or wire communication as a separate offense. Consequently, the district court's sentencing determination is upheld. The convictions and sentences of Debra Hartmann, John Scott Korabik, and Kenneth Kaenel are affirmed. Although Debra challenged the relevance of certain photographs, they were not shown to the jury, and the focus remains on the jury's analysis of the injuries presented. A statement made under the excitement caused by a startling event is classified as an excited utterance, which can be admissible in court. The government contended that Werner's statements about his fear of being murdered were also admissible under the residual clause of the hearsay rule, but the court determined that admitting the statements as excited utterances was not plain error, making it unnecessary to address the residual clause argument. The Supreme Court has established that the standard for admitting evidence of similar acts has been lowered from "clear and convincing" to requiring only "sufficient evidence" for jury consideration, as outlined in Huddleston v. United States. Korabik claimed the government engaged in wrongful conduct by denying defense access to information regarding an illegal sale; however, defendants are not entitled to access materials under Rule 608(b) that are not discoverable under Fed. R.Crim. P. 16. The Brady ruling states that the prosecution's suppression of favorable evidence violates due process if the evidence could impact guilt or punishment, regardless of the prosecution's intent. Kaenel's challenges regarding evidence admission related to gun sales, Werner's statements, and the denial of separate trials have already been addressed by the court.