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United States v. Britton

May 08, 2002


Appeal from the United States District Court for the Northern District of Illinois, Western Division. No. 00 CR 50003-2--Philip G. Reinhard, Judge.

Before Flaum, Chief Judge, and Posner and Kanne, Circuit Judges.

The opinion of the court was delivered by: Kanne, Circuit Judge

Argued November 7, 2001

Defendant Sheila Britton was convicted of multiple counts of mail fraud arising from her use of client funds for her personal benefit. She appeals, arguing that (1) there was insufficient evidence to support her conviction, (2) the district court erred in denying her attorney's motion to withdraw, and (3) the district court improperly refused to let her sister testify as an expert. We affirm.

I. History

Sheila Britton and her husband Dan owned and operated a collection agency in Rockford, Illinois known as Commercial Collection Company, Inc. ("CCC"). Businesses hired CCC to collect debts owed to them, and CCC retained a percentage commission on the amounts that it collected. In addition to commissions on payments made directly to CCC, CCC was also entitled to receive commissions on payments that debtors sent directly to CCC clients ("direct payments"). When clients received direct payments, theynotified CCC of these payments so that CCC could account for them and then deduct the appropriate commission.

CCC initially had two separate bank accounts: an operating account and a trust account. Eventually, CCC stopped using the operating account, and all deposits and disbursements were made into and from the trust account. Payments received from debtors were deposited into the trust account and recorded into CCC's computer system. At the end of each month, CCC's computer system generated a "Statement of Collection" for each of its clients for whom money had been collected that month. The Statements showed the net amounts due to the clients after CCC's commissions were deducted. The Statements were then supposed to be sent to the client along with a check for the amount due in order for clients to know their financial standing with CCC.

Britton's responsibilities at CCC initially consisted of bookkeeping while Dan operated CCC. Specifically, she was the person primarily responsible for entering payments from debtors into CCC's computer system. Eventually, Britton assumed more responsibilities at CCC and began managing CCC's daily business. During this time, Britton supervised employees, met with clients, and personally reviewed and delivered Statements and checks to several major clients. By early 1996, Britton informed CCC's employees that she, and not Dan, was running CCC.

At the same time, Britton and her husband began using funds belonging to CCC's clients to pay for various personal and business expenses. For example, Britton took cash to "run an errand," to purchase a gift for her son or daughter, and to take her children to a local festival. Further, Britton and her husband regularly wrote checks on CCC's trust account to pay for their personal expenses, including a trip to Walt Disney World and a trip to Mexico. Britton also used CCC trust account funds to pay her mortgage on her personal residence, to pay for her lawn maintenance bills and landscaping, and to pay for her salon expenses.

Due to the Britton's extensive use of clients' funds, by 1996, there were insufficient funds in CCC's trust account to pay the clients the amounts they were owed. Britton and her husband thus ceased paying many of CCC's clients. Although they had stopped paying these clients, CCC continued to collect on these clients' accounts because debtors continued to mail their checks to CCC for debts owed to these clients. From August 1995 through November 1996, CCC's internal records established that CCC owed several clients a total of over $21,000, but had paid clients only $739.02. In 1997, CCC failed to pay clients over $32,000 that was due to them.

Britton and her husband were charged with twenty-three counts of mail fraud in violation of 19 U.S.C. sec. 1341 and with one count of defrauding a local government agency that received federal funds in violation of 18 U.S.C. sec. 666 (a)(1)(A).*fn1 On November 17, 2000, approximately two and one-half weeks before the scheduled start of the trial, Britton filed a motion to continue the trial date in order to allow second-chair defense counsel Christopher A. DeRango to withdraw. The motion stated that DeRango had a conflict of interest in that he had previously represented a government witness named Bruce Swanson.

On November 22, 2000, Britton's motion was initially presented to the district court. The district court heard the parties' arguments and indicated that it was inclined to deny the motion and to rule that DeRango could continue on the case, except that he would not be allowed to participate in the cross-examination of Swanson. DeRango then requested an opportunity to make an in camera proffer to the court, and later that same afternoon, the court heard DeRango's proffer. This proceeding was off the record. On November 27, 2000, the parties reappeared before the district court on the same issue. The judge cleared the courtroom and then gave DeRango an opportunity to repeat on the record the proffer he had given to the court on November 22.

After the courtroom was cleared, DeRango stated the following: Swanson had admitted stealing $500 in cash from CCC during a pre-trial interview with the FBI and when he testified before the grand jury. During their preparation for trial, Britton and DeRango had discussed Swanson's potential testimony, including those admissions. Britton had stated that Swanson had admitted to her that the reason he had stolen cash from CCC was to pay his legal bills. DeRango then realized that he had previously represented Swanson while DeRango worked at another law firm. This statement prompted DeRango to obtain permission from his prior firm to view Swanson's billing records. After he reviewed those records, DeRango determined that he had received in excess of $1,200 in cash from Swanson. Thus, DeRango concluded that he possessed information that could be used to impeach Swanson about the amount of money he had taken and that he should be permitted to withdraw in order to testify about these payments.

The district court allowed the other attorneys to return to the courtroom and denied Britton's motions for continuance and for withdrawal. The court initially ruled that because the potential impeachment material related to a billing record, it was not covered by the attorney-client privilege. The court noted that defendant's lead counsel, Daniel Cain, could obtain this record with a trial subpoena. Additionally, in order to avoid the "appearance of impropriety" presented by an attorney cross-examining his former client, the court held that ...

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