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United States v. Reichel

United States Court of Appeals, Eighth Circuit

December 28, 2018

United States of America Plaintiff- Appellee
v.
Bryan S. Reichel Defendant-Appellant

          Submitted: October 19, 2018

          Appeal from United States District Court for the District of Minnesota - Minneapolis

          Before SHEPHERD, KELLY, and STRAS, Circuit Judges.

          KELLY, CIRCUIT JUDGE

         Bryan Reichel appeals from his convictions for wire fraud, filing for bankruptcy for the purpose of executing a scheme to defraud, and making false statements in relation to bankruptcy proceedings. Upon careful consideration of the issues presented, we affirm the judgment of the district court.[1]

         I

         This case stems from Reichel's operation of PureChoice, Inc., a business that developed indoor air quality monitoring systems. Reichel founded PureChoice in 1992. During his tenure as president and CEO, Reichel obtained millions of dollars in bank loans for the company. PureChoice, having not yet turned a profit, was unable to pay back these loans. Reichel approached private investors, seeking and obtaining bridge loans, many of which he personally guaranteed. Reichel told the investors that PureChoice would use the money to restructure its debt and to fund its operations until it could reach profitability. What Reichel didn't tell the investors was that PureChoice was already in default on many of its bank loans, with collection actions threatened or pending against the company and himself-which is the type of information that PureChoice's lawyer urged him to disclose and that several investors indicated would have caused them to rethink their decisions to invest.

         After obtaining bridge loans under false pretenses, Reichel did not attempt to pay them back until threatened with collection actions. Nor did he primarily use the loans to fund PureChoice operations, as he had promised. Instead, he paid off earlier loans, paid himself a large salary and bonuses, and occasionally instructed PureChoice employees to simply write him checks for tens of thousands of dollars in company funds. He did the same with the millions of dollars in stock sales that he collected from some of the same investors.

         In 2010, Reichel was forced out of the company after an employee discovered that he had been stealing money. Soon after, one of PureChoice's investors, George Anderson, filed suit against Reichel to recover $1.5 million in unpaid loans. Reichel's stated defense was that payment on the loans was not due until May 2011. Anderson's counsel agreed to delay filing his summary judgment motion until May, giving Reichel an opportunity to pay off the debt. But on April 29, 2011, Reichel filed for bankruptcy under Chapter 7, thus automatically staying Anderson's collection action.

         During the course of the bankruptcy proceedings, the trustee discovered that Reichel had failed to disclose household goods worth at least $97, 000, the sale of utility equipment, the transfer of $212, 000 to an account in the name of "Reichel Investments, LP," and the fact that he was using the Reichel Investments account to pay his personal expenses. The trustee asked the bankruptcy court to deny discharge due to fraudulent activity. In 2012, Reichel waived his right to discharge.

         In 2014, Reichel was indicted on seven counts of wire fraud in connection with the PureChoice investments, in violation of 18 U.S.C. § 1343. In 2015, the government filed a superseding indictment, which added five new counts related to Reichel's failed bankruptcy proceedings: one count of filing for bankruptcy for the purpose of executing a scheme to defraud, in violation of 18 U.S.C. § 157; three counts of making a false statement in relation to bankruptcy proceedings, in violation of 18 U.S.C. § 152(3); and one count of concealing a tax refund that was bankruptcy estate property, in violation of 18 U.S.C. § 152(1).

         A jury found Reichel guilty on all counts except the concealment of a tax refund. At sentencing, the district court applied multiple enhancements to Reichel's offense level, resulting in a Guidelines range of 262 to 327 months. It sentenced Reichel to 264 months of imprisonment. Reichel appeals, challenging several of the district court's decisions before and after trial and at sentencing.

         II

         Reichel first contends that the district court erred in denying his pretrial motion to sever the wire fraud counts from the bankruptcy-related counts. He argues that the counts were misjoined under Federal Rule of Criminal Procedure 8(a), which allows for joinder of separate counts only where the offenses "are of the same or similar character, or are based on the same act or transaction, or are connected with or constitute parts of a common scheme or plan." "The propriety of joinder is . . . determined from the face of the indictment." United States v. Massa, 740 F.2d 629, 644 (8th Cir. 1984), overruled on other grounds by United States v. Inadi, 475 U.S. 387 (1986). Rule 8(a) is "broadly construed in favor of joinder." United States v. Colhoff, 833 F.3d 980, 983 (8th Cir. 2016) (quoting United ...


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