Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-03125/USCOURTS-ca10-90-03125-0/pdf.json

Parties Involved:
Renee Roger Drake
Appellant
United States of America
Appellee

Document Text:

PUBLISH 

FILED 

Vfiited States Court of Appeals 

T emh Circuit 

MAY 2- 1991 

ROBERT L. HOECKER 

Clerk 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

) 

UNITED STATES OF AMERICA, ) 

) 

Plaintiff-Appellee, ) 

) 

v. ) 

) 

RENEE ROGER DRAKE, ) 

) 

Defendant-Appellant. ) 

) 

No. 90-3125 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF KANSAS 

(D. C. No. 89-20073-01) 

Mark s. Bove, Denver, Colorado, for defendant-appellant. 

Christina L. Morris, Assistant U.S. Attorney (Lee Thompson, United 

States Attorney, with her on the brief), Kansas City, Kansas, for 

plaintiff-appellee. 

Before BALDOCK, BRORBY, Circuit Judges, and A. ANDERSON, District 

Judge*. 

A. Anderson, District Judge. 

*Honorable Aldon J. Anderson, Senior United States District Judge 

for the District of Utah, sitting by designation. 

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 1 
In a joint trial, defendant-appellant Renee Roger Drake and 

one co-defendant, Calvin Dennis Reese, were tried before a jury on 

six counts of wire fraud under 18 U.S.C. § 1343. Drake was accused 

of obtaining financing from a factor by fraudulent means. On 

February 5, 1990, the jury returned a verdict of guilty on all 

counts as to Drake. The trial court declared a mistrial as to codefendant Reese because the jury was unable to reach a verdict on 

the charges against him. Drake appeals his convictions on two 

points: 1) the verdict of the jury was not supported by the 

evidence presented; and 2) the trial court improperly permitted 

prejudicial cross-examination of Drake regarding his educational 

background. 

I. 

Drake served as Vice President in charge of day-to-day 

operations of Agricultural Technology International Marketing, Inc. 

( "ATIM") . R. Vol. IV at 461. In 1984, the Bank of Louisburg gave 

ATIM a working capital loan and a loan secured by a real estate 

mortgage. R. Vol. II at 56-57. Co-defendant Reese, the President 

of the Bank of Louisburg, served as ATIM's loan officer. Id. at 

26, 55. Subsequent to providing ATIM the loans, the Bank of 

Louisburg secured additional collateral in the form of a security 

interest in accounts receivable, after-acquired 

receivable, and other items. Id. at 73-75. 

accounts 

In need of additional financing, Drake obtained further credit 

for ATIM from the William R. Payne Company. R. Vol. II at 113. 

2 

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 2 
The Payne Company lent ATIM money based on individual accounts 

receivable. Id. at 119. After being assured by co-defendant Reese 

that the Bank of Louisburg did not have a security interest in 

ATIM' s accounts receivable, the Payne Company took a security 

interest in ATIM's accounts receivable then owned or thereafter 

acquired. Id at 116-17, 118-119. The Payne Company made a 

corresponding UCC-1 filing which Drake signed. Id. at 122-125. 

The Payne Company limited the ATIM line of credit when it failed to 

receive several payments due on the account. Id. at 130. 

Having been limited by the Payne Company, ATIM sought the 

financing that is the focus of the convictions now on appeal. In 

the fall of 1984, Drake spoke with John Cummings, Assistant Manager 

of United California Factors ( "UCF") , regarding the option of 

''factoring." R. Vol. III at 253-54. Factoring is the direct sale 

of accounts receivable at a discount. UCF sent one of their 

application forms for factoring to Drake at ATIM. Id. at 257. On 

the form, Drake stated that the Bank of Louisburg was the only 

party holding a security interest in ATIM accounts receivable. Id. 

at 271. On the form, Drake failed to identify the Payne Company 

even as a creditor of ATIM. Id. After reviewing and checking the 

information provided by Drake, UCF decided to factor some ATIM 

accounts. Id. at 247, 282-83. 

UCF provided ATIM a total of $56,186.53 in six payments made 

by wire transfer. R. Vol. III at 294. During the course of these 

payments, UCF discovered the Payne Company's UCC-1 filing covering 

- 3 -

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 3 
ATIM's accounts receivable. Id. at 295. When questioned about 

this filing, Drake assured UCF that the Payne Company did not hold 

a security interest in ATIM's accounts. Id. at 298-99. 

Drake was charged with six counts of wire fraud, representing 

the six payments by UCF. A jury convicted Drake on all six counts. 

Drake now appeals. 

II. 

Sufficiency of the Evidence. 

At the close of the government's case and at the close of all 

the evidence, Drake moved for judgment of acquittal on the grounds 

that the evidence presented was not sufficient to support a 

conviction. The trial court denied both motions. We consider 

evidence sufficient to support a criminal conviction if, viewing 

all the evidence, both direct and circumstantial, in the light most 

favorable to the government, a reasonable trier of fact could find 

the essential elements of the crime beyond a reasonable doubt. 

United States v. Culpepper, 834 F.2d 879, 881 (lOth Cir. 1987), 

citing Jackson v. Virginia, 443 u.s. 307, 318-19 (1979). 

The crime of wire fraud consists of two essential elements. 

The prosecution must prove: 1) a scheme or artifice to defraud or 

obtain money by false pretenses, representations, or promises; and 

2) use of interstate wire communications to facilitate that scheme. 

United States v. Brien, 617 F.2d 299, 307 (1st Cir. 1980), cert. 

denied 446 U.S. 919 (1980). Drake asserts that the evidence failed 

to demonstrate the first element, a scheme to defraud. 

- 4 -

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 4 
Drake bases his argument on the definition of "scheme to 

defraud by false representations" under 18 u.s.c. § 1343. The 

cases define a scheme to defraud as "one reasonably calculated to 

deceive persons of ordinary prudence and comprehension. " 1 See, 

~' United States v. White, 673 F.2d 299, 302 (lOth Cir. 1982); 

United States v. Washita Constr. Co., 789 F.2d 809, 817 (lOth Cir. 

1986) . Drake argues that his misrepresentations could not have 

deceived a financier of ordinary prudence because of the Payne 

Company's ucc-1 filing. Drake asserts that a reasonable financier 

would not have agreed to provide any money before checking for, and 

then on, the UCC-1 financing statement. For this reason, contends 

Drake, a reasonable financier would not be deceived into thinking 

no security interest existed by Drake's misrepresentation. Drake 

urges that, therefore, no scheme to defraud existed because his 

actions were not calculated to deceive "persons of ordinary 

prudence." Drake, however, misreads this portion of the definition 

of a scheme to defraud. Interestingly, ample evidence exists to 

support a finding that a reasonable factor could have been deceived 

by Drake's misrepresentations. Because we find Drake's basic legal 

position untenable, however, we need not examine that evidence. 

The focus of the language defining a scheme to defraud is on 

1 The trial court charged the jury with an instruction, the 

propriety of which is not disputed, which stated in pertinent part: 

"You are instructed that a 'scheme to defraud by false representations' is one reasonably calculated to deceive persons of ordinary 

prudence and comprehension. Implicit in this definition is the 

requirement that the misrepresentations be material. Further, 

deceitful concealment of material facts may also constitute fraud." 

- 5 -

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 5 
the violator, not the victim. The definition provides the factfinder with a standard for determining from the accused's actions 

whether the accused possessed the requisite mens rea from his 

actions. See Gusow v. United States, 347 F.2d 755, 756 (lOth Cir. 

1965). In our review of the cases employing this definition, we 

find that courts use the definition to determine whether an 

accused 1 s actions were "calculated to deceive." See, ~' id. 

(using definition and noting "[d]irect proof of willful intent is 

not necessary"); White, 673 F.2d 302 (focusing on mental state of 

accused). We do not find any cases using the definition to 

determine whether the accused targeted the proper victim. We find 

no precedent supporting Drake's position that a scheme to defraud 

is a violation only if it would deceive a reasonably prudent 

person. But cf. Lindsey v. United States, 332 F.2d 688, 690 (9th 

Cir. 1964) (sufficient that defendant sought to induce action by 

misrepresentation and actual reliance by intended victim is 

immaterial). To accept Drake's argument would require us to hold 

that a party who fully intends to deceive a victim may avoid 

criminal liability by designing a scheme sufficiently unusual that 

the law would deem it unbelievable by a reasonably prudent person. 

we do not find this position persuasive. 

As for Drake's general assertion that the evidence does not 

support a finding of a scheme to defraud, we disagree. Viewed in 

the light most favorable to the government, the evidence shows that 

Drake stated on the application form, "[a]ll debt through bank of 

- 6 -

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 6 
Louisburg" when Drake knew ATIM had obtained financing from the 

Payne Company on ATIM accounts receivable. When UCF discovered 

that the Payne Company had made a UCC-1 filing covering ATIM' s 

accounts receivable, Drake assured UCF that Payne Company had no 

actual security interest in ATIM assets. Drake told UCF that there 

would be no difficulty in getting the Payne Company to withdraw its 

UCC-1 filing. The evidence presented at trial was sufficient to 

sustain a jury finding that a scheme to defraud by false 

representations existed within the meaning of 18 U.S.C. § 1343. 

III. 

Cross-Examination of Appellant Drake. 

At trial, a portion of Drake's defense centered on his claim 

that he was unaware of the Payne Company's security interest in 

after-acquired accounts receivable. Drake asserted that he 

believed ATIM had granted a security interest only in then existing 

accounts receivable. In support of this position, Drake testified 

that he had no formal training in business management. Drake noted 

that his background was as a business consultant with an emphasis 

on psychological applications and considerations in business 

management. Possibly in support of this argument, Mr. Drake was 

asked during direct examination, "Mr. Drake, basically, what is 

your background and education?" Drake answered, "Majored in 

psychology and the usual things that go along with a major." R. 

Vol. IV at 458. On cross-examination, Drake testified that he had 

a degree in psychology. 

- 7 -

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 7 
The assistant U.S. Attorney impeached Drake on this point 

through the use of prior inconsistent statements. Id. at 537-39. 

Drake explained the inconsistencies by testifying, "No, I do not 

have a diploma that says I have 120 graduate hours. I have a 

completed major, and I did practice clinical psychology. It was at 

the University of Illinois and Roosevelt University .... I would 

have completed it probably around [19]53 to '54." Id. at 540. 

The Assistant u.s. Attorney proceeded to cross-examine Drake 

on several other matters. Several hours later, after the noon 

break, the Assistant u.s. Attorney reopened her cross-examination 

of Drake with the following exchange: 

Q. (By Ms. Robinson) I'm sorry. Mr. Drake, if we 

would clarify the record, is your testimony that you do 

or you do not have a degree in psychology? 

A. I do not 

MR. SHARBUTT: I am going to object. I think we 

spent probably twenty minute [sic] on that this morning. 

I think he's answered that he does not have an official 

degree but he had the hours that were necessary in his 

major. 

THE COURT: overruled. Go ahead. 

A. I do not have the official diploma document, 

no. I am not shown as a graduate per se of the 

institution of Roosevelt University in Chicago. I did 

complete my major which qualified me to practice. 

Q. (By Ms. Robinson) All right. So when you 

testified under oath at the deposition and the trial that 

you had a B.A. degree, that was not a true statement? 

A. I was in a hurry and that was wrong. I felt 

that way because I completed my major, and I was 

qualified for psychiatry--psychology. In reflection, 

yes, it was wrong. 

- 8 -

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 8 
Q. All right. Now, you also testified that you 

had done some work at the University of Illinois and then 

later you went to Roosevelt University, that is where you 

finished? 

A. Yes. 

Q. When you transferred from the University of 

Illinois to Roosevelt, did you transfer your credits from 

the University of Illinois? 

A. Of course. 

Q. All right. If the University of Illinois' 

records reflect that no credits were ever transferred, do 

you have any explanation for that? 

A. I would have no explanation for that. 

Q. Isn't it a fact that you didn't really have 

very many grades to transfer because most of your grades 

were flunking grades? 

A. Not that I recall. 

Q. And you left there in 1951 so it wouldn't be 

possible for you to stack up enough hours by 1954 or '55 

to be close to a degree at Roosevelt University? 

A. Not true. 

Q. If the records reflect that you had Fs and Ds 

and a few Cs and only one B during your three semesters 

there, those records would be inaccurate? 

A. At the University of Illinois? 

Q. Yes. 

A. I don't recall my records there. I just know 

they were transferred. 

Q. Also, isn't it a fact that you were actually 

kicked out of the University of Illinois in 1951? 

A. No. 

Q. So if the records reflect that you were kicked 

out for falsifying facts in a disciplinary investigation, 

is your testimony that that would not be right? 

- 9 -

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 9 
MR. SHARBUTT: Your Honor, I'm going to object to 

this line of questions. This constant reference to 

records reflect, I think if there are some records, we 

should have them in evidence. They should be subject to 

proper ID, subject to foundation requirements rather than 

this line of questioning. I think if there are records 

that are going to be in evidence, let's get them in. 

MS. ROBINSON: Your Honor, I have the custodian of 

the records upstairs in my office. I do have the record 

here. I imagine Mr. Drake has never seen this record or 

doesn't have it, but if Mr. Sharbutt wants to have it 

offered into evidence, I would have no objection. 

MR. SHARBUTT: Your Honor, at this time Defendant 

Drake moves for mistrial on the grounds of this line of 

questioning. This line of questioning is only done, has 

no probative value with any of the facts that are to be 

presented to the jury, and it's merely to inflame the 

jury and on those grounds we move for mistrial. 

THE COURT: Overruled. He may answer it. If you 

have your custodian here, why, we can get right into it. 

Q. (By Ms. Robinson) All right. Mr. Drake, then, 

if the transcript and record from the University of 

Illinois indicates that you were dismissed from the 

university at the close of the second semester 1950 to 

1951 for violation of terms of your probation and for 

falsification of facts in a disciplinary investigation, 

is it your testimony this document is not correct? 

A. I would dispute that, yes. 

R. Vol. IV at 547-50. The Assistant U.S. Attorney then moved to 

other subject areas. 

Drake argues this line of questioning was improper on two 

grounds. First, the questions dealt with unfairly prejudicial and 

irrelevant material. Second, the questions themselves constituted 

the introduction of extrinsic evidence of specific instances of 

- 10-

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 10 
conduct offered in violation of Fed. R. Evid. 608(b) . 2 In general, 

the trial court has broad discretion in ruling on evidentiary 

matters. United states v. Alexander, 849 F.2d 1293, 1301 (lOth 

Cir. 1988). We may not reverse the trial court's evidentiary 

rulings "in the absence of an abuse of discretion." Id. (citations 

omitted.) 

We begin by examining whether the subject matter of the crossexamination was appropriate. As a preliminary matter during direct 

testimony, Drake testified that his educational background 

consisted of "a major in psychology." This testimony opened the 

area of Drake's educational background to cross-examination and 

provided a potential target for impeachment. Fed. R. Evid. 

6ll(b) . 3 See Alford v. United States, 282 u.s. 687, 691-93 (1931) 

2 Rule 608(b) provides: 

EVIDENCE OF CHARACTER AND CONDUCT OF WITNESS 

(b) Specific instances of conduct. Specific 

instances of the conduct of a witness, for the purpose of 

attacking or supporting the witness' credibility, other 

than conviction of crime as provided in rule 609, may not 

be proved by extrinsic evidence. They may, however, in 

the discretion of the court, if probative of truthfulness 

or untruthfulness, be inquired into on cross-examination 

of the witness (1) concerning the witness' character for 

truthfulness or untruthfulness, or (2) concerning the 

character for truthfulness or untruthfulness of another 

witness as to which character the witness being crossexamined has testified. 

Fed. R. Evid. 608(b). 

3 Rule 611 provides: 

MODE AND ORDER OF INTERROGATION AND PRESENTATION 

-11-

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 11 
(cross-examination on preliminary testimony as to witness' place of 

residence is proper). 

In response to the prosecutor's exploration of Drake's 

educational background, Drake made certain factual assertions that 

created potential targets for impeachment. Drake initially stated 

that he had a degree in psychology. After being impeached through 

the use of prior inconsistent statements, Drake asserted that he 

had finished the requirements for a degree though he had not 

actually received one. The prosecutor later sought to impeach 

Drake on this and related points. The prosecutor did so by 

attempting to elicit admissions from Drake that his testimony was 

incorrect. such a tactic is permissible to probe a witness' 

credibility through contradiction. See United States v. Greschner, 

802 F.2d 373, 383 (lOth Cir. 1986) (prosecution may try to impeach 

by eliciting an admission that a witness testified falsely); see 

generally United States v. Park, 525 F.2d 1279, 1283 (5th Cir. 

(a) Control by court. The court shall exercise 

reasonable control over the mode and order of interrogating witnesses and presenting evidence so as to (1) make 

the interrogation and presentation effective for the 

ascertainment of truth, ( 2) avoid needless consumption of 

time, and (3) protect witnesses from harassment or undue 

embarrassment. 

(b) Scope of cross-examination. Cross-examination 

should be limited to the subject matter of the direct 

examination and matters affecting the credibility of the 

witness. The court may, in the exercise of discretion, 

permit inquiry into additional matters as if on direct 

examination. 

Fed. R. Evid. 611. 

- 12-

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 12 
1976) (restrictive rule does not foreclose questions intended to 

impeach a witness) . The subject of the prosecutor's crossexamination was not, therefore, inappropriate. 

Having determined that permitting the prosecutor to 

inquire into this subject matter on cross-examination, the court 

must now determine whether the form of cross-examination permitted 

by the trial court was an abuse of discretion. Fed. R. Evid. 

611 (b) . Drake urges that the questions constituted the 

introduction of extrinsic evidence of specific instances of conduct 

in violation of Rule 608(b). 

The questions posed by the prosecutor referred to the contents 

of school records not in evidence and specific instances of conduct 

approximately thirty years old. Cross-examination questions alone, 

however, cannot constitute extrinsic evidence. See generally 

United States v. Crosby, 713 F.2d 1066, 1074-75 (5th Cir. 1983) 

(prosecutor's factual assertion on cross-examination was not 

improper); United States v. Cole, 617 F.2d 151, 154 (5th Cir. 1980) 

(cross examination question explicitly referring to contents of a 

document not in evidence did not qualify as extrinsic evidence). 

The court, therefore, rejects Drake's argument. 4 

4 Because we find that the prosecutor's questions were not 

extrinsic evidence, we expressly do not rule on whether Rule 608 

encompasses the prosecutor's questions. Rule 608 deals primarily 

with methods of proving character. See Fed. R. Evid. 608. We need 

not determine whether questions asked to elicit contradictory 

answers are limited by Rule 608 as a method of proving character. 

- 13-

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 13 
Though the questions asked did not constitute extrinsic 

evidence, they were arguably improper because they assumed facts 

not in evidence. 5 See Scogen v. Dow Chemical Co., 375 F.2d 692, 

704 (8th Cir. 1967). The questions implied that the records 

actually did support the facts asserted by the prosecutor. The 

contents of the records were not in evidence. The court, however, 

cannot find that any substantial right of Drake has been affected. 

See generally Fed. R. Evid. 103 (no error unless substantial right 

of a party affected) . Drake had already been effectively impeached 

on a closely related issue by the use of inconsistent statements. 

Furthermore, by the time Drake's counsel made the objection now 

being appealed, he had already permitted a number of almost 

identical questions to be posed. 6 See Reagan v. Brock, 628 F.2d 

721, 723-24 (1st Cir. 1980) (objection made after line of similar 

questions and after specific question had already been answered is 

not a timely objection). The damage had already been done by the 

time counsel raised the objection now on appeal. The court finds, 

therefore, that the trial court did not abuse its discretion nor 

thereby commit a harmful error. 

5 The argument that the questions improperly assumed facts not 

in evidence better reflects the objection raised by Drake at trial 

than the extrinsic evidence argument now asserted on appeal. At 

trial, Drake did not contend that extrinsic evidence was 

inadmissible on these issues. In fact, Drake invited the 

introduction of extrinsic evidence. Drake merely objected to the 

reference to records not before the jury. See supra at p. 10. 

6 Drake's counsel initially objected to this line of 

questioning as being cumulative. Drake does not now argue such 

grounds on this appeal. 

- 14-

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 14 
CONCLUSION 

The arguments asserted by defendant-appellant Drake are 

without merit. The government presented sufficient evidence to the 

jury to support a finding that a scheme reasonably calculated to 

deceive existed within the meaning of 18 u.s.c. § 1343. Furthermore, the trial court did not abuse its discretion in permitting 

the prosecutor to cross-examine and impeach Drake regarding his 

educational background. 

AFFIRMED. 

- 15-

Appellate Case: 90-3125 Document: 01019292094 Date Filed: 05/02/1991 Page: 15