Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-03-01127/USCOURTS-ca8-03-01127-0/pdf.json

Parties Involved:
James L. Parker
Appellant
United States of America
Appellee

Document Text:

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 03-1127

___________

United States of America, *

*

Plaintiff-Appellee, *

* Appeal from the United States 

v. * District Court for the Western

* District of Missouri.

James L. Parker, *

*

Defendant-Appellant. *

___________

Submitted: June 11, 2003

 Filed: April 20, 2004 (Corrected: May 5, 2004) 

 ___________

Before MELLOY, HANSEN, and SMITH, Circuit Judges.

___________

MELLOY, Circuit Judge.

James L. Parker was charged in a twenty-count indictment with one count of

conspiracy to commit mail fraud in violation of 18 U.S.C. § 371, eight counts of mail

fraud in violation of 18 U.S.C. § 1341, and eleven counts of money laundering in

violation of 18 U.S.C. § 1956. A jury convicted him of each of these charges, and the

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The Honorable Howard F. Sachs, United States District Judge for the Western

District of Missouri.

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district court1

 sentenced him to fifty-one months imprisonment and ordered him to

pay restitution in the amount of $704,720.00. Parker appeals his conviction, making

several challenges to the sufficiency of the evidence, evidentiary rulings, and the jury

instructions. We affirm.

I.

On April 12, 2000, a federal grand jury in the Western District of Missouri

indicted Parker, his son, Ethan Parker, and Lyle Perry on charges arising out of their

business activities with Parker’s corporation, FCI Marketing, Inc. (“FCI”). All three

co-defendants were charged with conspiracy to commit mail fraud. Only Parker and

Perry, FCI’s vice president, were charged with mail fraud, while Parker alone was

charged with money laundering. 

In 1981, Parker, together with his wife, formed FCI’s predecessor company,

Factory Connections, Inc. That company foundered, and it filed bankruptcy in 1987.

Burdened by personal, as well as corporate, debt, the Parkers themselves also filed

a petition for bankruptcy in 1988. The Parkers revamped their business approach

and, in June of 1989, founded FCI. James Parker functioned as the president and

controlling partner.

Parker’s concept in forming FCI was to sell exclusive distributorships to

investors who would sell FCI brand-name automotive parts on a consignment basis.

In exchange for an initial investment of between $30,000-$250,000 (depending on

the initial package of inventory and the size of the investor’s territory), FCI agreed

not to set up other distributorships within the boundaries of the agreed-upon

exclusive geographic territory. In addition, FCI’s sales teams traveled to the

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distributors’ territories and set up accounts with garages. After an account was

established, the sales teams installed FCI cabinets and racks at these locations and

stocked them with FCI brand products, namely brakes, spark plugs, belts, tire repair

kits, starters, alternators, and other commonly used aftermarket automobile parts. 

The investors, or “distributors,” serviced these garages and replaced the

depleted inventory with parts that the distributors purchased directly from FCI. When

servicing the garages, the distributors also collected money for the parts that the

garages’ mechanics had used since the last servicing. Therefore, distributors paid FCI

for the inventory they used to stock garages, but the distributors themselves did not

receive any payment for the products until mechanics actually used them. The

distributors maintained a line of credit with FCI so that they could adequately service

their accounts.

Investors’ execution of Parker’s consignment-based business model proved

considerably more difficult to carry out successfully than Parker advertised orally and

in printed media. At trial, the government sought to prove that Parker, in conjunction

with his co-defendants, fraudulently induced investors to purchase FCI

distributorships by making several false statements. The substance of these

statements concerned the quality of the automotive parts sold under the FCI brand

name, the quality of the distributorship accounts, FCI’s business history, and the

amount of actual and projected income. 

For example, Parker’s written promotional packages touted FCI products as

being of the highest quality. However, the evidence at trial showed that many of the

products, particularly the starters, alternators, and brakes, were of substandard

quality. This poor quality created friction between the distributors and the garages

that used these FCI products. Parker himself claimed in a 1996 lawsuit against his

brake manufacturer that the brakes were subject to premature wear, squealing, and

disintegration and that FCI lost distributorships as a result of the problems.

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Moreover, in a 1996 civil deposition, Parker claimed FCI had lost thirteen distributors

as a result of the inferior quality of the starters and alternators. Even so, when

distributors complained to Parker about the products, Parker assured the complaining

distributors that they were the only ones experiencing recurrent problems. In

addition, testimony at trial established that Parker often responded to these

complaints by accusing the mechanics of improperly installing the FCI products,

which exacerbated the tension between the distributors and the garages.

Parker also represented that FCI would provide distributors with a professional

sales staff to set up high quality accounts. He described the accounts as garages that

employed several mechanics and had two or more bays. Instead, the government

alleged that the “professional” sales team members had little to no training and that

the accounts were oftentimes no more than dump sites for the sales person’s

inventory. There was evidence that FCI sales teams had set up accounts at a bait shop

and at a junk yard and that, in order to entice garage owners to accept an FCI account,

sales members would tell the owners that they need not use the product but could

keep it on hand for emergencies. The government alleged that Parker knew of these

deficiencies but continued to promote his sales staff as a professional one that would

establish income-producing accounts at high volume garages.

What is more, FCI promotional materials included documentation concerning

the profitability of owning an FCI distributorship. The figures contained in these

materials were compiled by Parker and co-defendant Perry, who was a certified public

accountant. In 1993, at FCI’s annual seminar, Parker circulated an informal income

and sales survey. The idea to conduct such a survey was an impromptu one, and

distributors were told to estimate their sales revenues. Based on these responses,

Perry compiled a chart of gross and net incomes for the current year and, based on a

10% yearly growth rate, projected gross and net income for the following two years.

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In 1994, Parker again surveyed distributors at FCI’s annual convention. The

figures obtained from this survey were significantly lower than the 1993 figures, and

Parker and Perry compiled a new chart with the updated 1994 figures. When the

survey showed yet another decline in income in 1995, Parker did not update his

promotional materials with the 1995 figures. Instead, he continued to provide

prospective investors with the 1994 chart. Moreover, the 1994 chart continued to

show a 10% annual increase in sales and profits even though the results of Parker’s

survey showed a decline in income for two consecutive years. After 1995, Parker did

not conduct any further surveys, nor did he tell new distributors that the most current

data showed significantly less profitability and growth than the information he

provided them. 

Representations concerning the profitability of an FCI distributorship, the

projected incomes, the professionalism of FCI’s sales staff, and the quality of its

goods and accounts were not the only bases of the crimes charged in the indictment.

At trial, the government produced evidence of other alleged misrepresentations

Parker made that tended to prove his intent to deceive and to induce potential

investors into buying FCI distributorships. Like the above-mentioned statements,

these other misrepresentations were mailed to interested investors as part of FCI’s

promotional literature packet. For instance, the government alleged that Parker

falsely represented to potential investors that FCI distributorships were 100%

successful when, in fact, Parker knew of failed distributorships and of distributorships

that were not profitable. Similarly, in print media, FCI advertised that it was

“Number 1,” and the advertisement further indicated that this ranking was based on

an “Independent survey conducted by FCI Marketing Inc.” No such survey had ever

been conducted.

FCI was headquartered in St. Joseph, Missouri, and prospective investors

commonly traveled to FCI headquarters to meet with Parker before purchasing

distributorships. As part of Parker’s sales pitch to several investors, he informed

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them that the profitability of his son, Ethan Parker’s, distributorships was typical.

Parker failed to inform prospective investors, however, that his son received

substantial inventory free of charge and had a much higher line of credit than ordinary

distributors. The government alleged that Parker’s representations regarding the

normalcy and the profitability of his son’s distributorships were made (or omitted)

with the fraudulent intent of inducing and deceiving prospective investors. 

II.

Parker’s first point of contention on appeal concerns the trial court’s admission

of the expert testimony of Steven Toporoff. Toporoff is a government lawyer with

the Federal Trade Commission. His job title, specifically, is Franchise Program

Coordinator. The thrust of his testimony summarized the scope and substance of the

so-called Federal Trade Commission’s “Franchise Rule.” Without offering any

opinion as to whether or not FCI distributorships were “franchises” within the

meaning of the Franchise Rule, Toporoff testified as to the Federal Trade

Commission’s definition of a franchise and the disclosure obligations under federal

franchise law that accompany classification as a franchise. 

Toporoff testified that the Franchise Rule requires that a franchisor make

several disclosures to potential investors. First, a franchisor must disclose the total

number of franchises that have opened, as well as the total number of those that have

closed. In addition, a franchisor must disclose its litigation history to the extent it

implicated the franchisor’s wrongdoing . Franchisors are also required to disclose all

bankruptcy proceedings in which the franchise or its principals have been involved.

And while the Franchise Rule does not require that a franchisor make any financial

disclosures, it governs those that are made. For example, a statement as to historical

performance must meet generally accepted accounting principles, and a projection

must proceed from a reasonable basis.

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At trial, Parker’s counsel objected to Toporoff’s testimony on relevancy

grounds, while counsel for his co-defendant, Perry, objected to the testimony on the

ground it constituted an impermissible legal conclusion. The trial judge overruled the

objections, agreeing with the government’s contention that the testimony was

properly admissible to show intent and motive. At Parker’s request, the court did,

however, give the jury the following cautionary instruction at the conclusion of

Toporoff’s testimony:

I advise you that whether FCI, that is the corporation that we’re

[sic] been talking about, whether FCI created franchises is not

something that the witness established by his testimony. He wasn’t

asked that; he didn’t answer any such question. The question of whether

a franchise or franchises were created by FCI with regard to its

distributorships is something that would have to be determined to the

extent it is pertinent by other evidence in the case.

And I further remind you that even if FCI did create franchises,

this prosecution is not a lawsuit claiming violation of the Federal Trade

Commission, FTC requirements. The question in this case, at least one

of the ultimate questions, would be whether one or more of the

defendants knew of the obligations under the FTC written rules, whether

one or more of them knew of the obligations and failed to comply in

order to hide things from the investors and to deceive them into

becoming distributors.

Parker did not object to the substance of this cautionary instruction.

On appeal, Parker argues the trial court erred in admitting Toporoff’s testimony

for three reasons. First, Parker contends the testimony invaded the province of the

judge and the jury because it constituted opinion testimony concerning legal

standards. Second, he reasserts his relevancy objection. And third, for the first time,

he argues that, even if the testimony were relevant, the district court should have 

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excluded it under Federal Rule of Evidence 403 because, according to Parker, its

probative value was substantially outweighed by its prejudicial effect. 

We review the district court’s decision to admit evidence over a party’s

objection for abuse of discretion. United States v. Rock, 282 F.3d 548, 551 (8th Cir.

2002). The government argued, and the trial court found, that the testimony was

properly admissible to show Parker’s intent to deceive. We agree. 

Among other charges, Parker was convicted of mail fraud in violation of 18

U.S.C. § 1341. This statute prohibits the use of the mails to execute “any scheme or

artifice to defraud, or for obtaining money or property by means of false or fraudulent

pretenses, representations, or promises.” 18 U.S.C. § 1341. Intent to defraud is an

essential element of proving a violation of 18 U.S.C. § 1341. See United States v.

Manzer, 69 F.3d 222, 226 (8th Cir. 1995) (to prove a violation of 18 U.S.C. § 1341,

government must establish “(1) the existence of a scheme to defraud, and (2) the use

of the mails . . . for purposes of executing the scheme”). Toporoff’s testimony was

relevant to establishing this essential element. 

Toporoff did not testify that FCI distributorships were franchises subject to the

Federal Trade Commission’s Franchise Rule. Thus, contrary to Parker’s assertion,

Toporoff did not offer an impermissible legal opinion. He testified as to the scope

and obligations of the rule. Other evidence supported a finding that FCI

distributorships were, in essence, franchises. For instance, in the late 1980's, the State

of Nebraska sent Parker a letter, in which it informed him that FCI may be subject to

compliance with Nebraska’s seller-assisted marketing regulations. In addition,

Parker’s promotional materials indicated that the information contained therein was

given in compliance with state and federal regulations, and the referenced information

included disclosures that Toporoff testified were required by the Franchise Rule. 

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The most telling evidence that Parker believed he was marketing franchises and

was subject to compliance with the Franchise Rule was a document drafted by his

attorney. In 1995, Parker contemplated expanding FCI and incorporating a new

business entity, FCI Franchising, Inc. While Parker ultimately did not pursue this

venture, the document describes the FCI Franchising, Inc.’s franchises as similar to

the distributorships offered by FCI Marketing, Inc. Indeed, the description of FCI

Franchising, Inc.’s franchises is identical in substance to that of an FCI Marketing,

Inc. distributorship: “FCI [Franchising, Inc.] sells franchises to operate

distributorships which sell aftermarket autoparts on consignment to automobile repair

shops, service centers, and repair garages,” while FCI Marketing, Inc. similarly

consists of “a marketing program of placing assortments of major product lines on

consignment at Automotive Repair Shops and Garages.”

In short, the government presented sufficient evidence from which a reasonable

jury could have found that FCI was subject to the Franchise Rule, that Parker knew

he was selling franchises, and that he was aware of the obligations of the Franchise

Rule. Therefore, Toporoff’s testimony concerning the scope and substance of the rule

was relevant, as indicated by the trial judge in his cautionary instruction, to show

Parker’s intent to deceive if he knowingly failed to comply with the rule. The jury

was not compelled to make such an inference, and the trial judge specifically

instructed the jury that Toporoff’s testimony was relevant only if other evidence

established that FCI distributorships were subject to the Franchise Rule. Under these

circumstances, the trial court did not abuse its discretion in admitting Toporoff’s

testimony over Parker’s relevancy objection, especially in light of the cautionary

instruction that limited the jury’s use of the testimony to the issue of Parker’s intent

to deceive. 

Confronted with an almost identical argument to Parker’s, the Fifth Circuit

Court of Appeals affirmed the admission of evidence of violations of civil banking

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regulations in a bank fraud trial. In United States v. Harvard, 103 F.3d 412 (5th Cir.

1997), the court held that evidence of banking regulations violations was relevant to

show the defendant’s motive or intent. Id. at 422-23. The court reasoned that the

regulations,

tended to prove that Harvard had a motive to make false entries in order

to hide the nature of the sham loan . . . . Evidence that Harvard’s nondisclosure of the “consulting fee” was in violation of civil banking

regulations went toward showing Harvard’s knowledge of his duty to

disclose the fee and his motivation to hide his receipt of the fee.

Id. at 422.

In yet another similar case to come before the Fifth Circuit, the court in United

States v. Parks, 68 F.3d 860 (5th Cir. 1995), affirmed the district court’s admission

of evidence of civil banking regulations on the ground that the evidence was relevant

to show intent and motive. Id. at 866-67. In that bank fraud case, the court held,

“Evidence of violations of civil banking regulations cannot be used to establish

criminal conduct. Evidence of such violations may, however, be admitted for the

limited purpose of showing the defendants’ motive or intent to commit the crime

charged.” Id. at 866 (internal citations omitted). As in Harvard and Parks, the

government in the present case was charged with proving intent to defraud, and the

district court took painstaking care to guard against the possibility that the defendant

would be convicted of a federal crime because he violated civil regulations. 

The paramount concern for the trial judge in these types of cases is not one of

relevancy, because, as discussed above, evidence of civil violations is clearly relevant

insofar as a defendant’s knowledge and violation of the regulations are relevant to

show intent and motive. Instead, the question is one of undue prejudice. The district

courts in Harvard, Parks, and in the present case recognized the potential for unfair

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Parker did not object to the admission of Toporoff’s testimony on the ground

it was unduly prejudicial. Instead, he objected to the testimony as irrelevant. To the

extent that Parker’s appeal is based on evidence to which he did not object at trial, our

standard of review is plain error. See United States v. Whitetail, 956 F.2d 857, 861

(8th Cir. 1992).

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prejudice and confusion and guided the juries’ use of such evidence by instructing the

juries as to its proper, limited use. 

Moreover, Parker did not object to Toporoff’s testimony at trial as being

unduly prejudicial, and we are not swayed by his Rule 403 argument on appeal,

particularly in light of the district court’s cautionary instruction. The Federal Rules

of Evidence instruct that relevant evidence is admissible unless “its probative value

is substantially outweighed by the danger of unfair prejudice, confusion of the issues,

or misleading the jury, or by considerations of undue delay, waste of time, or needless

presentation of cumulative evidence.” Fed. R. Evid. 403. To the extent Toporoff’s

testimony implicated Rule 403 concerns, the district court adequately minimized the

testimony’s prejudicial impact. The court instructed the jury regarding the Federal

Trade Commission regulatory evidence and guided the jury’s consideration of such

evidence by way of a cautionary instruction, which immediately followed Toporoff’s

testimony. The district court was mindful of the potential prejudice that this

testimony could have on Parker’s trial and, accordingly, explicitly admonished the

jury that the trial was “not a lawsuit claiming violation of the Federal Trade

Commission, FTC, requirements.” 

We conclude that, in light of the court’s cautionary instruction and able

guidance to the jury, the court did not abuse its discretion, much less commit plain

error,2

 in admitting Toporoff’s testimony. The trial judge employed appropriate

measures to prevent undue prejudice and jury confusion that otherwise could have

resulted from evidence that Parker may have violated Federal Trade Commission civil

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regulations. Therefore, we conclude that the trial court properly admitted Toporoff’s

testimony for the limited purpose of showing intent and motive.

III.

We turn next to Parker’s second argument for reversal—that is, whether the

government presented sufficient evidence to support his mail fraud conviction.

Specifically, Parker claims that the government failed to sustain its burden of

negating all reasonable interpretations of the allegedly false statements that would

render the statements literally true. In the alternative, Parker argues that the trial

judge committed plain error in failing to sua sponte instruct the jury that, if under one

reasonable construction of the allegedly false statements the statements were factually

correct, the jury must return a verdict of not guilty.

A.

“We review the sufficiency of the evidence de novo, viewing evidence in the

light most favorable to the government, resolving conflicts in the government’s favor,

and accepting all reasonable inferences that support the verdict.” United States v.

Washington, 318 F.3d 845, 852 (8th Cir. 2003). “The verdict must be upheld if ‘there

is an interpretation of the evidence that would allow a reasonable- minded jury to find

the defendant[ ] guilty beyond a reasonable doubt.’” United States v. Nambo-Barajas,

338 F.3d 956, 960 (8th Cir. 2003) (quoting United States v. Vig, 167 F.3d 443, 445

(8th Cir. 1999)). The standard of review is, thus, a strict one, and a jury’s verdict will

not be lightly overturned. “Reversal is appropriate only where a reasonable jury

could not have found all the elements of the offense beyond a reasonable doubt.”

United States v. Armstrong, 253 F.3d 335, 336 (8th Cir. 2001).

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B.

To prove mail fraud, the government bore the burden of proving: (1) a scheme

to defraud by means of material false representations or promises, (2) intent to

defraud; (3) reasonable foreseeability that the mail would be used, and (4) the mail

was used in furtherance of some essential step in the scheme. 18 U.S.C. § 1341; see

also United States v. Frank, 354 F.3d 910, 916 (8th Cir. 2004) (conviction under 18

U.S.C. § 1341 requires proof that the defendant “voluntarily and intentionally devised

or participated in a scheme to defraud the United States by concealing his assets, that

he entered into the scheme with the intent to defraud, that he knew that it was

reasonably foreseeable that the mails would be used, and that he used the mails in

furtherance of the scheme”). Parker’s challenge to the sufficiency of the evidence

implicates only the first element—that is, whether the government proved the falsity

of his statements. The government alleged that the scheme to defraud in this case

consisted of Parker making a number of false representations, nine of which the

district court enumerated in its instructions to the jury. To support his conviction, the

government must have proved that Parker knowingly made at least one of the nine

false representations as part of the scheme to defraud. 

Parker relies on United States v. Anderson, 579 F.2d 455 (8th Cir. 1978) for

the proposition that the government was required to disprove all interpretations of his

allegedly false statements that would render them factually true. First, it is not

altogether clear whether there is a legal basis for Parker’s argument because the cases

he cites refer to an external source of ambiguity. E.g., United States v. Whiteside,

285 F.3d 1345, 1351-52 (11th Cir. 2002) (“In a case where the truth or falsity of a

statement centers on an interpretive question of law, the government bears the burden

of proving beyond a reasonable doubt that the defendant’s statement is not true under

a reasonable interpretation of the law.”) (emphasis added); United States v. Prigmore,

243 F.3d 1, 18 (1st Cir. 2001) (looking to defendant’s asserted reasonable

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interpretation of federal regulation and stating, “if the evidence at trial gives rise to

a genuine and material dispute as to the reasonableness of a defendant’s asserted

understanding of applicable law, the judge, and not the jury, must resolve the

dispute”) (emphasis added); United States v. Rowe, 144 F.3d 15, 21-23 (1st Cir.

1998) (finding that government bore burden of negating reasonable interpretations

because a reasonable interpretation of the underlying disclosure requirement would

render the defendant’s statement true); United States v. Migliaccio, 34 F.3d 1517,

1523-25 (10th Cir. 1994) (reversing and remanding for new trial where district court

refused to instruct on ramifications of ambiguity of healthcare reporting procedures

in a mail fraud case); Anderson, 579 F.2d at 459 (finding government had duty to

disprove defendant’s interpretations of statements where ambiguity arose from

certification clauses in defendant’s reimbursement invoices). Nevertheless, for the

reasons stated below, we need not reach that issue today.

In Anderson, the defendant was convicted of making false statements in

matters within the jurisdiction of a federal agency, to wit, the Federal Highway

Administration. Anderson, 579 F.2d at 457. The events that gave rise to the charges

against Anderson arose out of a federally-funded road construction project. Id. The

defendant obtained certain materials and labor free of charge through an unrelated

federal reimbursement program. Id. Nevertheless, he submitted a claim to the

Federal Highway Administration for full reimbursement without disclosing that he

had been reimbursed for some costs under the unrelated federal program. Id. The

defendant, therefore, was reimbursed twice for the same work. Id. at 457-58.

In submitting his claim for reimbursement to the Federal Highway

Administration, the defendant certified that “funds have not been received from the

State or expended for such services under any other contract agreement or grant.” Id.

at 459. The government alleged that this certification was false. Id. On appeal after

his jury conviction, the defendant argued that the government failed to prove the

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falsity of his statement because a host of reasonable interpretations would have

rendered the ambiguous certification statement true. Id. The Anderson court agreed

and held that, when the statement alleged to be false is facially ambiguous, “it [is]

incumbent upon the government to introduce proof sufficient to establish the falsity

of the statements as well as the defendant’s knowing and willful submission of the

statements. In carrying out that burden the government must negative any reasonable

interpretation that would make the defendant’s statement factually correct.” Id. at

460.

Parker’s reliance on Anderson is misplaced. We held in Anderson that the

government bears the burden of negating literally truthful interpretations of

statements in a fraud case when the statements (1) are ambiguous and (2) are subject

to reasonable interpretations. See id.; accord United States v. Colin Anderson, 879

F.2d 369, 376-77 (8th Cir. 1989) (rejecting contention that government bears burden

to disprove all of defendant’s interpretations of allegedly false statement and holding

that government bears burden to “negative only any reasonable interpretation of an

ambiguous statement. The statements at issue here—‘never been in force’ and ‘null

and void’—have accepted meanings. It was the jury’s role then to determine whether

Lundin made these unambiguous statements with the required knowledge that they

were false.”). Parker’s statements were neither facially ambiguous, nor were they

subject to multiple reasonable interpretations. Consequently, under the facts of this

case, the government did not have the burden to negate the stretched interpretations

Parker now offers on appeal.

To accept Parker’s argument that the government failed to sustain its burden

of proof at trial, we would have to find that statements, such as FCI had been in

business since 1977, FCI was ranked “Number 1” based on an independent study,

FCI’s “planned program” was 100% successful, FCI supplied the best quality auto

parts, and FCI established high quality accounts for distributors, were ambiguous and

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subject to multiple rational interpretations. See Anderson, 579 F.2d at 460. Even

under the most generous construction of ambiguity, Parker’s statements are clear and

are not subject to reasonable interpretations that would render them true. Unlike

Anderson, there is nothing facially ambiguous about Parker’s statements. To the

extent Parker offered differing explanations of the meaning of his statements, the jury

evidently rejected them, and we cannot say that its conclusion was not based on

sufficient evidence. 

For the same reasons discussed above, the district court did not commit plain

error in failing to sua sponte give an instruction on the additional proof required if

ambiguity were found to reside in Parker’s statements. Defendants are entitled to

instructions on their theories of defense only insofar as those theories are supported

by an adequate factual basis. See, e.g., Mathews v. United States, 485 U.S. 58, 63

(1988) (stating that defendant is “entitled to an instruction as to any recognized

defense for which there exists evidence sufficient for a reasonable jury to find in his

favor”). Parker’s strained interpretations of facially unambiguous statements do not

entitle him to an instruction on this theory, and certainly the district court’s failure to

sua sponte give such an instruction does not rise to the level of clear error. Moreover,

even if he had been entitled to it, there was more than sufficient evidence at trial to

negate all interpretations of Parker’s statements that would have made them literally

truthful. Therefore, to the extent any error was committed, it was harmless.

In short, we have examined the evidence in the light most favorable to the

government and have considered each of Parker’s arguments urging reversal of his

mail fraud conviction. We conclude that the evidence was sufficient to sustain the

conviction. Moreover, the errors that Parker claims require reversal in this case, even

if committed, were harmless. This is so because the evidence, viewed as a whole,

strongly demonstrates the falsity of Parker’s statements. And because Parker’s

statements were not facially ambiguous and because they were not subject to any

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reasonable interpretations, the district court did not commit clear error by failing to

sua sponte instruct the jury on the legal effect of an interpretation that would make

the statements literally correct. Accordingly, we affirm the district court’s denial of

Parker’s motion for new trial.

IV.

Parker’s third argument on appeal posits that the trial court abused its

discretion in submitting a “deliberate ignorance” instruction to the jury because the

evidence showed actual, not constructive, knowledge. “[I]n reviewing a district

court’s decision to give a willful blindness instruction, we must review the evidence

and any reasonable inference from that evidence in the light most favorable to the

government.” United States v. Hiland, 909 F.2d 1114, 1131 (8th Cir. 1990). In this

case, the district court instructed the jury that it could find that Parker acted

“knowingly” if it found that he,

was aware of a high probability that the gross sales and gross projections

overstated the average gross sales and gross profits of FCI Marketing

Distributors in 1993 and 1994, and that he deliberately avoided learning

the truth. The element of knowledge may be inferred if Defendant

James L. Parker deliberately closed his eyes to what would otherwise

had been obvious to him.

Parker argues that the willful blindness instruction created an impermissible

risk that the jury would convict him by applying a negligence standard. We have

recognized that the willful blindness instruction “should not be given . . . when the

evidence ‘points solely to either actual knowledge or no knowledge of the facts in

question.’” United States v. Regan, 940 F.2d 1134, 1136 (8th Cir. 1991) (emphasis

added) (quoting Hiland, 909 F.2d at 1130). However, “‘even where there is evidence

of actual knowledge, a willful blindness instruction is proper if there is sufficient

evidence to support an inference of deliberate ignorance.’” United States v.

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3

To the extent Parker complains that the willful blindness instruction created

a risk that he would be convicted on a mere negligence standard, any such danger was

adequately addressed by the court’s admonition to the jury,

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Gruenberg, 989 F.2d 971, 974 (8th Cir. 1993) (quoting Hiland, 909 F.2d at 1130-31);

accord United States v. Ruhe, 191 F.3d 376, 384 (4th Cir. 1999) (“If the evidence

supports both actual knowledge on the part of the defendant and deliberate ignorance,

a willful blindness instruction is proper.”); United States v. Kellermann, 992 F.2d

177, 179 (8th Cir. 1993) (holding district court did not err in giving willful blindness

instruction where “a reasonable jury easily could find beyond a reasonable doubt that

Kellermann either had actual knowledge of his wrongdoing in making false

statements . . . or deliberately failed to make detailed inquiry into KT & R's activities

before making such statements”) (emphasis added).

The district court in Parker’s case did not commit reversible error in giving the

willful blindness instruction because there was evidence of both actual and

constructive knowledge. The evidence of actual knowledge included Parker’s

response to questioning during an interview with a Federal Bureau of Investigation

special agent. When asked about the inflated income projections that Parker provided

to distributors, Parker acknowledged that the most recent data from 1995 showed a

decline in income. According to the special agent’s testimony, Parker stated, “I guess

they are [lower]. I guess I should have updated these things with the new

information.” At the same time, however, there was also evidence that Parker

remained willfully blind to the inaccuracy of the data by not conducting any surveys

after the 1995 survey showed a decline in income for the second consecutive year.

Therefore, because the evidence viewed in the light most favorable to the government

showed that Parker intentionally remained ignorant of the true facts and had actual

knowledge, we will not disturb the district court’s decision to submit the deliberate

ignorance instruction to the jury.3

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You may not find that the defendant acted knowingly, however,

if you find that the defendant did not personally sponsor the figures or

that he actually believed that the gross sales and gross profits projections

for 1993 or 1994 were as represented, or if you find that the defendant

James L. Parker was simply careless or inattentive. A showing of

negligence, mistake, or carelessness is not sufficient to support a finding

of knowledge.

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V.

Parker also challenges the sufficiency of the evidence regarding his money

laundering and aiding and abetting money laundering convictions under 18 U.S.C.

§ 1956 and 18 U.S.C. § 2, respectively. To support these convictions, the government

was required to prove that Parker “‘engaged in financial transactions with the

knowing use of the proceeds of illegal activities’ and with the ‘intent to promote the

carrying on’ of unlawful activity.” United States v. Jolivet, 224 F.3d 902, 909 (8th

Cir. 2000) (quoting United States v. Hildebrand, 152 F.3d 756, 762 (8th Cir. 1998)).

Parker contends that the government failed to establish the “intent to promote”

element of the charge because the allegedly laundered money was used to pay for

auto parts and supplies that had already been delivered by the vendors to the

distributors. Hence, contrary to the government’s assertion that the money was

reinvested and used to purchase auto parts to resupply distributors, Parker contends

that the money was used to pay vendors for an antecedent unlawful activity. 

As noted above, we review Parker’s challenge to the sufficiency of the

evidence de novo, viewing the evidence in the light most favorable to the

government. E.g., United States v. Washington, 318 F.3d 845, 852 (8th Cir. 2003).

We accept as established all reasonable inferences that support the verdict. See

United States v. Hawkey, 148 F.3d 920, 923 (8th Cir. 1998). The transactions the

indictment charged as money laundering consisted of expenditures, paid by checks

written by FCI, that allegedly promoted the fraudulent distributorship scheme. These

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checks were signed by Ralph Stover, who was FCI’s secretary and treasurer. His

duties required him, among other responsibilities, to negotiate checks on behalf of

FCI to pay automotive parts manufacturers and vendors. 

For reversal, Parker relies primarily on our decision in Jolivet. In that case, a

jury convicted the defendant of mail fraud, money laundering, and conspiracy.

Jolivet, 224 F.3d at 905. The defendant and her husband perpetrated four insurance

schemes wherein they obtained insurance and then claimed to have caused an

accident, submitting false accident claims and false expenses and medical records to

their insurance company. Id. On appeal, the defendant challenged the sufficiency of

the evidence to support her money laundering convictions on the ground that

depositing the proceeds of her insurance scams and making the funds available for

use was not enough to prove the “intent to promote the carrying on” element of

money laundering under 18 U.S.C. § 1956(a)(1)(A)(i). Id. at 909.

The Jolivet court agreed, explaining:

In order to be found guilty of money laundering under §

1956(a)(1)(A)(i), the government must prove that the defendant

“engaged in financial transactions with the knowing use of the proceeds

of illegal activities” and with the “intent to promote the carrying on” of

unlawful activity. Hildebrand, 152 F.3d at 762 (quoting §

1956(a)(1)(A)(i)). Thus, although the prohibited conduct is

characterized as money laundering, it is different from traditional money

laundering because the criminalized act is the reinvestment of illegal

proceeds rather than the concealment of those proceeds. See id.

(contrasting § 1956(a)(1)(A)(i)’s prohibition of reinvestment money

laundering to § 1956(a)(1)(B)(i)’s prohibition of concealment money

laundering).

. . . . 

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-21-

The government must prove that the defendant, using illegallygained proceeds, undertook a financial transaction “with the intent to

promote the carrying on of specified unlawful activity.” §

1956(a)(1)(A)(i). It is true that the deposit of funds in a bank account

may promote an antecedent unlawful activity by making the funds

available to the wrongdoer. However, the government bears the burden

of proving that the money was used to further the carrying on of such

illegal activity. We find no logic in the government’s suggestion that

Jolivet could promote the carrying on of an already completed crime.

Cf. United States v. Edgmon, 952 F.2d 1206, 1214 (10th Cir. 1991)

(“Congress aimed the crime of money laundering at conduct that follows

in time the underlying crime rather than to afford an alternative means

of punishing the prior ‘specified unlawful activity.’”).

Id.

In Jolivet, the appellant-defendant’s money laundering convictions could not

stand because the government did not prove that Jolivet “used the proceeds from any

one incident to further [her] future schemes. Rather, the undisputed evidence showed

that most of the money went to pay daily living expenses and to pay credit card debt

. . . .” Id. at 911. Thus, a money laundering conviction cannot stand where there is

“no evidence that the proceeds were used for anything other than personal expenses.”

Id. However, contrary to Parker’s contention, such evidence exists here. The checks

on which the money laundering counts against Parker were based were drawn from

FCI accounts and written to pay auto parts manufacturers and suppliers. Without the

constant resupply of auto parts, Parker could not have continued to operate his

fraudulent distributorship scheme. The evidence that Parker reinvested in FCI with

funds derived from the fraudulent scheme is sufficient to show that he intended to

promote the carrying on of that scheme.

Parker also relies on United States v. Brown, 186 F.3d 661 (5th Cir. 1999) for

reversal. In Brown, the defendant operated an automobile dealership and conducted

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a significant amount of legitimate business. Id. at 662-63. However, he was also

engaged in a fraudulent scheme to charge some customers more than the amount

authorized by state law for document and title fees. Id. at 663. The indictment

alleged eighteen instances of overcharging and alleged that the defendant laundered

the proceeds of the excessive fees. Id. The jury convicted the defendant of money

laundering, but the Fifth Circuit reversed this conviction, finding insufficient

evidence to establish that the charged expenditures were used with the intent to

promote the defendant’s fraudulent scheme, as opposed to his legitimate business

activities. Id. at 670. The evidence showed that the allegedly laundered funds paid

for the dealership’s basic operations, such as parts, paints, materials, trade-in car

purchases, a computer system lease, glass repair, a health plan, coffee mugs, etc. Id.

at 668 n.13. No evidence linked the charged expenditures to the defendant’s scheme

to defraud purchasers by overcharging for document and title fees. 

In reversing Brown’s conviction, the Fifth Circuit recognized that, under some

circumstances, “the intent to promote criminal activity may be inferred from the

particular type of transaction.” Id. at 670. For instance, an intent to promote drug

trafficking can be inferred where a defendant, who was both a drug dealer and a

preacher, purchased beepers because “beepers were not necessary to the defendant’s

legitimate business operations and played an important role in [the defendant’s] drug

trafficking scheme.” Id. (referencing United States v. Jackson, 935 F.2d 832 (7th Cir.

1991)). However, the court found that those circumstances did not exist in Brown.

Parker’s reliance on Brown and Jolivet is misplaced, because those cases are

factually inapposite to his case. In Jolivet, the government conceded that it could not

trace the use of the insurance scheme proceeds after the defendant withdrew them

from her bank account. Jolivet, 224 F.3d at 911. In addition, the evidence showed

that Jolivet’s four insurance scams were not an ongoing criminal enterprise but rather

were four discrete unlawful scams. Id. at 910-11. In Brown, there was no evidence

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that the defendant’s charged expenditures were for items other than “above the board”

business expenses. Brown, 186 F.3d at 668-69. In short, what was missing in both

Jolivet and in Brown was a nexus between the charged expenditures and a specified

criminal activity. Parker, however, was charged to have fraudulently induced

investors into buying FCI distributorships by, inter alia, misrepresenting the quality

of FCI brand automotive supplies. The evidence at trial showed that the charged

expenditures paid for belts, filters, tire repair kits, ignition parts, starters, alternators,

and brake pads. The supplies were part and parcel of the underlying fraudulent

scheme and, therefore, were integral to the transactions from which the jury could

reasonably have inferred Parker’s intent to promote the fraudulent scheme. 

Parker’s case is, furthermore, analogous to United States v. Hildebrand, 152

F.3d 756 (8th Cir. 1998). There, we sustained the defendants’ money laundering

convictions for defendants’ participation in a scheme to defraud would-be members

of a class action. Id. at 761. In Hildebrand, the defendants formed a group, “We The

People.” Id. at 760. This group had no legitimate purpose, as it was formed solely

to recruit people to join a class action and pay a $300 “administrative fee.” Id. No

claims were ever submitted to the court, class certification had been denied in the

underlying litigation, and the case had ultimately been dismissed. Id. at 761. In

analyzing the defendants’ sufficiency-of-the-evidence challenges as to their intent to

promote an unlawful scheme, we cited the evidence that proceeds from the scheme

were used to pay for office supplies, secretarial services, office staff wages, and

reimbursement to claims writers for promotional expenses and commissions on fees

collected from fraud victims. Id. at 762. The Hildebrand case is instructive because,

like the Hildebrand defendants, Parker’s distributorship business was ongoing, and

he did not conduct any business that was not intimately connected to his fraudulent

scheme. The nexus between the unlawful activity and the ill-gotten proceeds in cases

like Hildebrand and Parker’s case is obvious.

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Moreover, we cannot accept Parker’s argument that the charged transactions

do not support his convictions as a matter of law merely because the expenditures

were for the payment of products that had already been delivered to distributors. To

do so would be nonsensical and would insulate wrongdoers from criminal prosecution

if they simply used a charge account or maintained a line of credit in order to reinvest

in their criminal activities. Indeed, in Hildebrand, one of the transactions we cited as

supporting the defendants’ convictions was payment for services previously rendered

by claim writers. Id.

When illegal proceeds are used to reinvest in a fraudulent scheme and when

reinvestment is done with the purpose of promoting that scheme, § 1956(a)(1)(A)(i)

makes reinvestment criminal. United States v. Oberhauser, 284 F.3d 827, 829 (8th

Cir.), cert. denied, 537 U.S. 1071 (2002). Here, the evidence viewed in the light most

favorable to the government establishes that Parker engaged in illegal reinvestment

money laundering. The principal evidence at trial of Parker’s guilt was checks signed

by Stover to automotive parts manufacturers. Stover testified that these parts were

used to resupply FCI distributors. Without the resupply of inventory, Parker would

have been unable to continue his scheme to defraud new and existing distributors.

The nexus between his unlawful activity and the ill-gotten proceeds is evident from

the nature of the transactions themselves. From this nexus, a reasonable jury could

have inferred intent to promote the charged mail fraud conspiracy. Accordingly, we

affirm the district court’s denial of Parker’s motion for new trial on his money

laundering conviction.

VI.

Parker’s final argument on appeal concerns the district court’s instruction

regarding the government’s burden of proof to show the interstate commerce

component of Parker’s money laundering charges. Only days after Parker’s trial, in

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United States v. Evans, 272 F.3d 1069 (8th Cir. 2001), cert. denied, 535 U.S. 1029

(2002), we held that the Eighth Circuit Model Criminal Jury Instruction 6.18.1956J

misstated the government’s burden as to the charged transaction’s effect on interstate

commerce. Id. at 1081. The instruction at issue in Evans provided: 

It is not necessary for the government to show that a defendant actually

intended or anticipated an effect on interstate commerce, or that

commerce was actually affected. All that is necessary is that the natural

and probable consequences of a defendant’s actions would be to affect

interstate commerce no matter how minimal.

Id. (quoting jury instruction in defendant’s trial). At Parker’s trial, the jury was

similarly instructed:

It is not necessary for the Government to show that the defendant

actually intended or anticipated an effect on interstate or foreign

commerce, or that commerce was actually affected. All that is necessary

is that the natural and probable consequences of the defendant’s action

would be to affect interstate or foreign commerce no matter how

minimal.

The nearly identical language of the instruction at issue in Evans and in

Parker’s case compels us to conclude that the instruction given at Parker’s trial

understated the government’s burden of proving the interstate commerce element of

the money laundering charges against him. However, because Parker failed to object

at trial, we must consider whether or not Parker was harmed. See Evans, 272 F.3d at

1081-82 (applying harmless error review). In Evans, we held that the defendant was

not entitled to a new trial even though the interstate commerce instruction was

incorrect, because the error was harmless. Id. at 1082.

In Evans, the transaction at issue was the purchase of a vehicle from a used car

dealership. Id. at 1080. That alone was sufficient to establish an effect on interstate

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-26-

commerce. Id. at 1082. Here, the government proved that two of the banks on which

funds were drawn and into which proceeds were deposited were involved in interstate

commerce. Counsel for the government explicitly asked the witnesses who were

called to testify regarding FCI bank statements whether their banks were involved in

transactions that “go from one state to another” and that cross state lines. Both

witnesses responded in the affirmative. They each identified loans and money

transfers to and from out-of-state banks and specifically identified some of the checks

deposited into FCI’s account as having originated from out-of-state banks.

In addition, exhibits admitted into evidence indicate that the bank, to wit,

Provident Bank, is insured by the Federal Deposit Insurance Corporation. That is

enough to show an effect on interstate commerce. See United States v. Wadena, 152

F.3d 831, 853 (8th Cir. 1998) (“The government presented evidence that the checks

referenced in Counts 10 through 18 were all deposited in either the First National

Bank of Detroit Lakes, Minnesota or the State Bank of Winger, Minnesota. As these

institutions are FDIC-insured, the government’s evidence that these checks were

deposited into these institutions is sufficient proof of an interstate commerce nexus.”).

Therefore, as in Evans, the erroneous instruction to which Parker did not object

at trial does not require reversal because the government proved the interstate

commerce component of the money laundering charges; consequently, Parker was not

harmed. In addition, it should also be noted that we “will affirm if the entire charge

to the jury, when read as a whole, fairly and adequately contains the law applicable

to the case.” United States v. Casas, 999 F.2d 1225, 1230 (8th Cir. 1993). In

Parker’s case, the district court did instruct the jury that it had to find beyond a

reasonable doubt that the transactions at issue affected interstate commerce. In listing

the elements of the money laundering counts, the first element the jury was instructed

to consider was whether Parker “conducted or caused to be conducted a financial

transaction which in any way or degree affected interstate commerce.” As a whole,

then, the instructions adequately contained the applicable law.

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VII.

We have considered each of Parker’s arguments, and for the reasons stated

above, we affirm the district court.

______________________________

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