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United States v. Pitts

United States District Court, M.D. Alabama, Northern Division

October 30, 2017

United States of America, Plaintiff
v.
Christopher Bernard Pitts, Defendant.

          MEMORANDUM OF OPINION AND ORDER

          L. SCOTT COOGLER UNITED STATES DISTRICT JUDGE

         This opinion and order addresses several pending motions. On January 4, 2017, the United States filed a Motion to Exclude Testimony. (Doc. 64.) On April 26, 2017, Defendant, Christopher Bernard Pitts (“Pitts”), filed a pro se motion to withdraw his guilty plea in this action. (Doc. 83.) Several days later, he filed an amended motion to withdraw his guilty plea, through counsel. (Doc. 85.) After the United States moved to strike that motion due to it not being signed by Pitts' counsel, Pitts' counsel filed another amended motion to withdraw his guilty plea to correct the error. (Doc. 87.)[1] Pitts filed yet another amended motion to withdraw his guilty plea, again through counsel, on June 8, 2017. (Doc. 90.) There are assorted response briefs and replies to these motions.[2] After careful consideration of the issues, the motion to exclude testimony is due to be granted and the motions to withdraw the guilty plea are due to be denied.

         I. Background

         Christopher Bernard Pitts (“Pitts” or “Defendant”) is, or at least was, an attorney, licensed to practice law in the State of Alabama. On September 30, 2005, he entered into a contractual relationship with the United States Department of Housing and Urban Development (“HUD”) whereby he agreed to provide legal/closing services with regard to the sales of homes owned by HUD in North and Central Alabama. This relationship continued into 2008.

         As a part of his contractual obligations, Pitts was to open and maintain separate escrow accounts at a financial institution to be used for closings of the sales of the HUD homes in the different geographical areas specified in his contracts with HUD. “Through these escrow accounts, Pitts was to: (1) receive the funds being used to purchase the homes; (2) pay all closing costs, including his fee; and (3) distribute the remaining balance to HUD by way of a wire to the United States Treasury.” (Plea Agreement, Doc. 52 at 6.) In addition, the sale proceeds were to be paid via wire transfer to HUD “no later than 2:00 PM on the business date following a real estate closing . . . .” (Id.)

         “[A]t some point prior to March 2008, a shortage had developed in both of Pitt's HUD escrow accounts.” (Id. at 7.) Pitts then transferred various amounts in and out of the accounts. Pitts failed to inform HUD of the “material facts that: (1) there were substantial shortfalls in Pitt's HUD escrow accounts; and (2) Pitts lacked the funds necessary to close transactions involving HUD-owned homes.” (Id.)

         “Beginning in or about March of 2008 and continuing until in or about December of 2008, Pitts perpetuated a scheme to defraud HUD of the proceeds of the sales of HUD-owned homes. He did so by: (1) commingling funds among the various escrow accounts that he controlled without informing HUD of his doing so; and (2) causing to be disbursed from the escrow accounts funds that he transferred and not providing them to HUD.” (Id.)

         Then, “[o]n or about November 21, 2008, for the purpose of executing the above described scheme to defraud, Pitts, located in Montgomery, Alabama, sent an email to a HUD employee located in Atlanta, Georgia.” (Id. at 8.) Attached to the email were nine separate requests to wire transfer funds to HUD in connection with the sale of HUD-owned homes that Pitts knew were fraudulent when he sent the email. (Id.)

         On July 14, 2016, pursuant to the filed Plea Agreement, Pitts entered a plea of guilty to Count One of the Indictment charging him with Wire Fraud in violation of 18 U.S.C. § 1343. The plea proceeding was not, however, without issues. In fact, when originally asked if he wished to plead guilty, Pitts stated the following, “Judge, looking at the plea agreement as it's written, there are simply some things that are factually untrue.” (Plea Transcript, Doc. 92 at 3.) The Court then offered the parties an opportunity to discuss the matter while the Court attended to other cases that were then set. At some point later that day, the parties informed the Court that an agreement had been reached.

         The new plea agreement was then filed with significant changes to the section entitled “Factual Basis.” (Compare Original Plea Agreement, Doc. 103-1 with Executed and Filed Plea Agreement, Doc. 52.) Some of the specific changes and deletions included by Pitts are as follows. Pitts caused to be deleted the reference in paragraph “f” of the original plea agreement that one method of his perpetrating a scheme to defraud HUD included establishing an additional escrow account to use for closings without informing HUD. (See Original Plea Agreement, Doc. 103-1 at 7.) Pitts also caused to be deleted paragraphs “j” and “k” which described the payoff of the mortgages allegedly owed by his wife. (See id at 8.) And lastly, Pitts caused to be added a new paragraph “k” that asserted that he contended that “some portion of the loss amount is attributable to negligence and other acts of non-criminal conduct.” (See Executed and Filed Plea Agreement, Doc. 52 at 8.) After an appropriate hearing and colloquy with Pitts, the Court accepted his plea of guilty to Count One of the Indictment and adjudged him guilty of the same.

         Nothing of significance happened in the case until October 2016 when the probation office submitted its presentence investigation report setting the HUD loss amount at $1, 090, 888.53. This contributed to a United States Sentencing Guidelines offense level of 20, which, combined with Pitts' criminal history category of I, resulted in an advisory guideline imprisonment range of 33 to 41 months. The Court set Pitts' sentencing but then continued it to allow him to present a witness that he, through counsel, described as an expert on the loss amount. The United States objected to the qualifications of the witness and on May 31, 2017, the Court conducted a hearing to evaluate the qualifications of the witness and to preserve her testimony if it was determined that her testimony and opinions were to be received as an expert or otherwise.

         The witness, Mary Anne Harris (“Harris”), is the owner and president of a company called “Positively Balanced” located in Georgia that by her representation reconciles escrow accounts. (Sentencing Transcript, Doc. 93 at 4.) Harris attended some college and then in 1992 obtained her certificate as a paralegal. (Id. at 8.) None of her paralegal or college ducation dealt with reconciliation of escrow accounts. (Id. at 49.) Harris worked as a paralegal until 2003 (reconciling trust accounts as part of her duties) before starting her current business. (Id. at 8.) While Harris has not published anything on reconciliation, she has spoken at approximately four seminars about the subject. (Id. at 52.)

         Pitts first contacted Harris in 2011, resulting in her beginning an overview of his escrow accounts. (Id. at 9.) Pitts provided her then with his physical escrow account bank records even though the records were not complete. (Id.) At some point, Harris sent Pitts' records off to a third-party service that was to manually enter the data so that the information could be analyzed through the use of a software tool entitled “RynohLive.” (Id. at 10.) Pitts put the work on hold in 2012 and then recommenced it in late 2014. (Id. at 12-13.)

         Harris “supervised” various employees (none of which have been identified to the Court) in performing the work, particularly in 2014 and 2015. (Id.) As a result of the application of the software to the data, as well as a review of what were described ...


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