Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-13-03747/USCOURTS-ca7-13-03747-0/pdf.json

Parties Involved:
Larry Pust
Appellant
United States of America
Appellee

Document Text:

In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

No. 13-3747 

UNITED STATES OF AMERICA,

Plaintiff-Appellee, 

v.

LARRY PUST, 

Defendant-Appellant.

___________________ 

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division. 

No. 1:10-cr-00859-2 — Sharon Johnson Coleman, Judge. 

____________________ 

ARGUED OCTOBER 27, 2014 — DECIDED AUGUST 18, 2015 

____________________ 

Before WOOD, Chief Judge, and EASTERBROOK and

WILLIAMS, Circuit Judges. 

WILLIAMS, Circuit Judge. Larry Pust was convicted after a 

jury trial of four counts of wire fraud. He and his coconspirator Robert Anderson ran a $10 million Ponzi scheme 

for over two years getting clients to invest in a phony lowincome housing investment program in the Chicagoland arCase: 13-3747 Document: 40 Filed: 08/18/2015 Pages: 10
2 No. 13-3747

ea. He was sentenced to 34 months’ imprisonment to run 

concurrently on each count. He now appeals his conviction, 

arguing that the evidence was insufficient to establish that 

he acted with intent to defraud the alleged victims. He also 

challenges the district court’s decision to admit statements of 

a co-conspirator under Federal Rule of Evidence 

801(d)(2)(E). For the reasons stated herein, we affirm Pust’s 

conviction. 

I. BACKGROUND 

Larry Pust met a man named Robert Anderson sometime 

before 2005. Robert Anderson was the owner and officer of 

several corporations and ran different investment programs. 

Pust lived in Spokane, Washington, and had no professional 

experience as an investment broker. Nevertheless, Pust invested $10,000 in one of Anderson’s programs and began 

helping Anderson find investors for various other programs. 

One such program was called Rosand Enterprises, Inc. 

(“REI”), a supposed low-income housing program based in 

Chicago. Pust and Anderson solicited funds from investors 

for REI and guaranteed that the funds went into an attorney’s escrow account, which was “absolutely secure.” They 

told investors that the funds were only used as leverage to 

secure lines of credit in order to construct and sell lowincome housing. The “guaranteed returns” were promised to 

be as high as 20% each month. In actuality, no such program 

existed. REI never purchased lots in Chicago and did not 

participate in any government-sponsored low-income housing programs. Instead, Anderson and Pust ran a Ponzi 

scheme where new investor funds were used to make interest payments to old investors and to make purchases in seCase: 13-3747 Document: 40 Filed: 08/18/2015 Pages: 10
No. 13-3747 3

curities trading programs which the defendants referred to 

as Dr. Fred, Methwold, Lady Jane, and Howard Norris. 

In December 2011, Anderson and Pust were indicted for 

wire fraud in violation of 18 U.S.C. §1343. Anderson pled 

guilty, but Pust proceeded to trial. Before trial, the government made a Santiago proffer to admit as evidence against 

Pust statements of Anderson under FRE 801(d)(2)(E). See 

United States v. Santiago, 582 F.2d 1128, 1130–31 (7th Cir. 

1978). Defense counsel did not object pre-trial or during trial 

as the statements were admitted. When the district court 

asked defense counsel if he had any objections as the statements were admitted, defense counsel responded “no” and 

“no objection.” 

At trial, several of REI’s victim-investors testified regarding conversations they had with Pust and Anderson. Other 

evidence admitted at trial included numerous emails between Pust and Anderson, Pust and the victim-investors, 

and Anderson and the victim-investors. At the conclusion of 

trial in March 2013, a jury found Pust guilty of four counts of 

wire fraud. This appeal followed. 

II. ANALYSIS 

On appeal, Pust challenges the sufficiency of the evidence underlying his conviction for wire fraud. He also challenges the district court’s decision to admit statements of 

Anderson under FRE 801(d)(2)(E). We address each argument in turn. 

A. Sufficient Evidence to Support Wire Fraud Conviction 

When evaluating the sufficiency of the evidence, we consider the evidence in the light most favorable to the prosecuCase: 13-3747 Document: 40 Filed: 08/18/2015 Pages: 10
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tion, making all reasonable inferences in its favor. United 

States v. Paneras, 222 F.3d 406, 410 (7th Cir. 2000). We will affirm the conviction so long as any rational trier of fact could 

have found the defendant to have committed the essential 

elements of the crime. Id. 

In order to convict Pust for wire fraud under 18 U.S.C. 

§1343, the government needed to prove that (1) there was a 

scheme to defraud; (2) wires were used in furtherance of the 

scheme; and (3) Pust participated in the scheme with the intent to defraud. United States v. Sheneman, 682 F.3d 623, 628 

(7th Cir. 2012); United States v. Stephens, 421 F.3d 503, 507 (7th 

Cir. 2005). Here, Pust only challenges the sufficiency of the 

evidence with respect to the intent to defraud element. “An 

‘intent to defraud’ means that the defendant acted willfully 

and with specific intent to deceive or cheat, usually for the 

purpose of getting financial gain for himself or causing financial loss to another.” Paneras, 222 F.3d at 410 (internal 

quotations and citations omitted). “However, because direct 

evidence of a defendant’s fraudulent intent is typically not 

available, specific intent to defraud may be established by 

circumstantial evidence and by inferences drawn from examining the scheme itself which demonstrate that the 

scheme was reasonably calculated to deceive persons of ordinary prudence and comprehension.” Id. (citing United 

States v. LeDonne, 21 F.3d 1418, 1426 (7th Cir. 1994)). 

Pust argues that to reasonably infer an intent to defraud 

requires more than involvement in a scheme or repeating the 

scheme’s misrepresentations or even persisting in selling the 

scheme despite some awareness of areas of concern. He does 

not challenge the fact that Anderson was running a Ponzi 

scheme, but he claims that he did not know the fraudulent 

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No. 13-3747 5

nature of the scheme and merely repeated misrepresentations that Anderson made to him. Pust acknowledges that he 

told victim-investors that their money would be invested into a low-income housing program, that no low-income housing investment program actually existed, that new investor 

funds were used to pay old investors, and that other investor 

funds were used to pay for unrelated securities trading. But 

Pust says that there is no evidence that he did not believe the 

misrepresentations were true. 

We disagree. The government presented ample evidence 

from which a rational jury could find that Pust knew what 

he was telling investors was false and that he acted with an 

intent to defraud. Particularly, the emails exchanged between Pust and Anderson and between Pust and victiminvestors were evidence from which a reasonable jury could 

infer that Pust knew no low-income housing project existed 

and that REI investor funds were being taken out of the supposedly secure escrow account and used for other trading 

projects. 

FBI Special Agent Joseph Karmik testified that he reviewed approximately 7,500 email messages involving Pust’s 

email addresses in the course of his investigation. None of 

the messages the government examined between Pust and 

Anderson discussed topics related to building low-income 

housing like closing dates, purchase agreements, or construction. Pust was in Spokane during the relevant events, 

but he and Anderson communicated frequently through 

email. If the two were truly involved in a program that built 

low-income housing, over the course of 7,500 emails, one 

would expect to see at least one email discussing the logistics 

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of housing construction. So the jury was entitled to infer that 

Pust knew the low-income housing project was a lie. 

Moreover, the government introduced many of these 

7,500 emails at trial. For example, emails back and forth between Pust and Anderson show that Pust knew the funds 

did not remain in the escrow account, even though Pust admits that he told investors that is where the funds would 

stay. In emails dated February 21, 2007 and March 30, 2007, 

Anderson discussed needing to repay the escrow account. In 

the March 30 email, Anderson told Pust that he would use 

the Methwold monies to “cover our March debts to the investors” and “[s]hould Fred get us caught up as he stated, 

then I could catch up on the escrow.” Then, on January 9, 

2008, Pust emailed victim-investor Brian Ford and told him 

that the price of inner city lots had increased, which is why 

the monthly interest had decreased to 10%. This email is one 

of many in which Pust lied to investors about the existence 

of the housing project. Additionally, on April 30, 2008, Anderson and Pust exchanged emails regarding $175,000 they 

received from a new investor. They discussed which investors should now receive payments as a result of the influx in 

funds. The investors identified by Pust as needing payment 

were both investors in the supposed low-income housing 

project. 

We find Pust’s argument that he was an unwitting participant in Anderson’s scheme unpersuasive. There was sufficient evidence from which a reasonable jury could infer that 

Pust knew the material facts that he represented to investors 

were false and that he acted with intent to deceive. 

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No. 13-3747 7

B. Co-Conspirator’s Statements Properly Admitted 

Pust also argues that the district court erred in admitting 

statements of Anderson under FRE 801(d)(2)(E). For a coconspirator’s statements to be admissible under FRE 

801(d)(2)(E), the government must establish by a preponderance of the evidence (1) that a conspiracy existed, (2) that the 

defendant and the declarant were members of the conspiracy, and (3) that the statements were made in furtherance of 

the conspiracy. United States v. Villasenor, 664 F.3d 673, 681–82 

(7th Cir. 2011). Normally, we review the district court’s decision to admit a co-conspirator’s statements under FRE 

801(d)(2)(E) for an abuse of discretion. Id. at 681. Under this 

standard, findings of fact are reviewed for clear error. United 

States v. Rea, 621 F.3d 595, 604 (7th Cir. 2010). However, 

Pust’s attorney did not object to the admission of Anderson’s 

statements at trial. Furthermore, when asked if he had any 

objections to the statements, at times, the attorney said “no 

objection” or “no.” Therefore, the government argues that 

Pust has waived his right to challenge the admission of these 

statements. 

“When a defendant intentionally relinquishes or abandons a known right, the issue has been waived and cannot 

be reviewed on appeal, not even for plain error.” United 

States v. Locke, 759 F.3d 760, 763 (7th Cir. 2014). A defendant 

who affirmatively states “I do not object” has intentionally 

waived the right and cannot ask for review. Id. Forfeiture, on 

the other hand, comes about through neglect. United States v. 

Spells, 537 F.3d 743, 747 (7th Cir. 2008). Forfeited issues are 

reviewed for plain error. Id. To reverse for plain error, this 

court must find (1) error, (2) that is plain, (3) that affects the 

defendant’s substantial rights; and (4) that seriously affected 

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fairness, integrity, or public reputation of judicial proceedings. United States v. Ambrose, 668 F.3d 943, 963 (7th Cir. 

2012). 

In his reply brief, Pust argues that he may have forfeited 

his challenge to the admissibility of Anderson’s statements, 

but he has not waived the issue because there was no intentional relinquishment. We agree with the government that 

Pust has come very close to waiving his right to challenge 

this issue because he was asked if he had any objections and 

his attorney replied “no objection” or “no.” See United States 

v. Natale, 719 F.3d 719, 730 (7th Cir. 2013). But in Natale, we 

recognized the harshness of the waiver rule where defense 

counsel’s statements likely resulted from negligently bypassing a valid argument rather than a knowing and intentional 

decision. See id. at 730–31. In circumstances where defense 

counsel’s approval of some action is “nothing more than a 

simple ‘no’ or ‘no objection’ during a rote call-and-response 

colloquy with the district judge,” we suggested we could 

more closely examine whether the defendant truly waived 

his challenge or merely forfeited it. Id.

However even if we were to find Pust’s challenge only 

forfeited and subject to plain error review, Pust has not 

demonstrated plain error. “To establish the existence of a 

conspiracy, the offering party must show that there was an 

agreement to commit some illegal act and the alleged conspirator knew ‘something of its general scope and objective.’” United States v. Mahkimetas, 991 F.2d 379, 382 (7th Cir. 

1993) (citations omitted). To prove a defendant’s involvement 

in a conspiracy, the government must show that (1) the defendant knew of the conspiracy, and (2) the defendant intended to associate himself with the criminal scheme. United 

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No. 13-3747 9

States v. Schumpert, 958 F.2d 770, 773 (7th Cir. 1992). Circumstantial evidence may be used to establish the existence of a 

conspiracy and a defendant’s involvement in the conspiracy. 

Id. In fact, circumstantial evidence is often the only proof 

available when no members of the conspiracy testify against 

their co-conspirators. See id. 

Pust argues that the government failed to show that a 

conspiracy existed between Anderson and himself because 

there was no evidence that Pust knew the general scope and 

objective of the conspiracy or that he had an intent to associate with the purported conspiracy. But we disagree. The 

same evidence used to establish that Pust acted with an intent to defraud—namely, the email correspondences—is circumstantial evidence from which the district court properly 

inferred the existence of a conspiracy and Pust’s involvement 

in that conspiracy. For example, emails show Pust and Anderson discussing where to move investor funds and what 

lies to tell investors about the mortgage industry when they 

inquired about the decline in monthly interest payments 

from the REI project. The emails provide compelling evidence of Pust’s knowledge of and involvement in the 

scheme. We agree with the government that Pust’s challenge 

to the admission of Anderson’s statements is simply a rehash 

of his challenge to the sufficiency of the evidence, and for the 

same reasons we found the evidence sufficient to support 

the verdict, we reject his evidentiary challenge. See United 

States v. Yoon, 128 F.3d 515, 526 (7th Cir. 1997) (rejecting challenge to admission of co-conspirator statements under FRE 

801(d)(2)(E) where essentially identical to sufficiency challenge). There was no error in admitting Anderson’s statements. 

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III. CONCLUSION 

For the foregoing reasons, we AFFIRM the judgment of the 

district court. 

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