Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-13-02603/USCOURTS-ca8-13-02603-0/pdf.json

Parties Involved:
Patrick Joseph Kiley
Appellant
United States of America
Appellee

Document Text:

United States Court of Appeals

For the Eighth Circuit

___________________________

No. 13-1162

___________________________

United States of America

lllllllllllllllllllll Plaintiff - Appellee

v.

Jason Bo-Alan Beckman, also known as Bo Beckman

lllllllllllllllllllll Defendant - Appellant

___________________________

No. 13-1163

___________________________

United States of America

lllllllllllllllllllll Plaintiff - Appellee

v.

Gerald Joseph Durand, also known as Jerry Durand

lllllllllllllllllllll Defendant - Appellant

___________________________

No. 13-2603

___________________________

United States of America

lllllllllllllllllllll Plaintiff - Appellee

Appellate Case: 13-2603 Page: 1 Date Filed: 05/12/2015 Entry ID: 4274210 
v.

Patrick Joseph Kiley, also known as Pat Kiley

lllllllllllllllllllll Defendant - Appellant

____________

Appeals from United States District Court 

for the District of Minnesota - St. Paul

____________

 Submitted: October 8, 2014

 Filed: May 12, 2015

____________

Before RILEY, Chief Judge, WOLLMAN and BYE, Circuit Judges.

____________

RILEY, Chief Judge.

Five players in a partial Ponzi scheme received over $193 million from

unsuspecting investors. Trevor Cook and Christopher Pettengill pled guilty, and

defendants Jason Bo-Alan Beckman, Gerald Durand, and Patrick Kiley proceeded to

trial. After a twenty-nine day trial, a jury found the defendants guilty on all counts,

including fraud, conspiracy, and money-laundering, and the district court sentenced 1

each to decades in prison. The defendants appeal their convictions and sentences. 

We affirm.2

The Honorable MichaelJ. Davis, Chief Judge, United States DistrictCourt for

1

the District of Minnesota, adopting the report and recommendation of the Honorable

Jeffrey J. Keyes, United States Magistrate Judge for the District of Minnesota.

We possess appellate jurisdiction under 28 U.S.C. § 1291. 2

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I. BACKGROUND

A. Facts

“We present the facts in a light most favorable to the verdicts, drawing all

reasonable inferences from the evidence that support the jury’s verdicts.” United

States v. Ramon-Rodriguez, 492 F.3d 930, 934 (8th Cir. 2007). From July 2006

through September 2009, the defendants’ partial Ponzi scheme received over $193 3

million fromhundreds ofinvestors. Only $49 million wasreturned to some investors,

all of which came from new investors’ money. Some investors lost their life savings. 

The five schemers profited in varying amounts: $12.2 million for Cook; $4.8 million

for Beckman; $4.3 million for Pettengill; $1.9 million for Durand; and $432,000 for

Kiley.

The schemers induced victims to invest in various entities they created, many

named either with the initials “UBS” (UBS entities) or the word “Oxford” (Oxford

entities). According to SEC accountant Scott Hlavacek, the schemers described a

“currency program” to potential investors leading investors to believe “they would

be investing in foreign currency trading, which was guaranteed and . . . had a . . .

fixed rate every month.” Some of the money “was actually invested in foreign

currencies,” but none of the money was “invested in a completely safe, secure, and

guaranteed currency product,” as the defendants promised.

For example, Beckman’s firm, “Oxford Global Advisors,” which was “one of

the . . . primary recipients of investor funds” in the scheme, stated in a solicitation

U.S. Securities and Exchange Commission (SEC) accountant Scott Hlavacek 3

testified, “In a true Ponzi scheme[,] the money . . . is just used for the benefit of the

people raising the money and then to make payments to older investors with new

investors’ money.” In contrast, “[i]n a partial Ponzi scheme[,] some of the money

might be . . . use[d] for something close to what [the schemers are] saying, but the rest

of the money is used to pay old investors with new investors’ money and to benefit

the individuals raising the money.”

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brochure that its “Federal Funds Income Advantage” program had a current annual

yield of 12% and promised “instant[] liquid[ity]” and “zero fluctuation of principal.” 

Each investor’s account would be “segregated”—“not co-mingled [sic] with the

general assets of the custodian, bank or dealer,” and funds would be invested in

various foreign currencies and then traded for gain depending on favorable interest

rates. Beckman told his victims they could not lose money in the currency

program—the investment was “risk-free” and “completely safe”—and that it was a

“fixed income product” “that delivers this safe 10 to 12 percent return on your

money.” Beckman also falsely inflated his own credentials. For example, Beckman

claimed to be “in the top-ranked tier of portfolio managers per a Morningstar

comparative study,” a study and ranking that did not exist. One victim testified this

false credential “factored into [her] decision to make this investment.” 

Beckman claims it was only in April 2008 that he learned the investors’ money

in the currency programwas not held in segregated accounts but was pooled together.

Yet, Beckman still obtained another $24 million of investors’ money for the currency

program. For the period August 2006 to July 2009, Beckman’s personal clients

invested more than $47 million.

At trial, a securities executive, Donald Bizub, who had a professional

relationship with Beckman, testified that in August 2008 he had seen “an ad on an

Oxford related page talking about a fixed income investment paying I believe it was

10 and a half percent guaranteed.” Bizub was concerned because “typically when you

see ads like this, there’s always an asterisk with a whole bunch of disclaimer at the

bottom; and [he did not] see an asterisk or any disclaimer.” Bizub clicked a link on

the website and sent an email with the subject line, “How’s 10.5% fixed return

sound,” and requested, “Please tell me more about this investment.” Beckman’s

colleague, Gene Walden, forwarded Bizub’s email to Beckman, stating, “Just got

this—he must have seen this in our e-newsletter on the web site.” 

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Beckman forwarded the email to Cook, writing, “Now the ship begins to sink. 

This is not good. I will needless to say take care of it, I just wanted you to know.” 

Cook wrote back to Beckman, “I am very sorry about this. . . . I think the good news

is that . . . we can blame it on a trainee sales rep who was fired . . . say nothing he did

was approved . . . also say we have opinion letters from attorneys about the product

. . . . So please see me if you would like any ammunition to respond . . . . 

Individually managed accounts is very im[p]ortant . . . remember this bullet point.” 

Even after the ship began to sink, Beckman still solicited over $12 million in

additional investor funds into non-segregated accounts. 

Some of the victims learned of the currency program through Gerald Durand’s

radio shows, “Expand YourWealth” and “Wealth Survival”—on whichBeckman was

a guest. Durand also solicited investors by advertising “educational workshop[s],”

stating he and “UBS Diversified, which manages over 2 billion dollars in assets,”

could advise how to “double your money in lessthan 5 years” and “earn 15% per year

with no risk.” Durand testified at a hearing in a related civil case that Cook chose the

name “UBS Diversified” “to confuse people.” For example, Beckman emailed to one

of his investors that the “fixed income alternative” would yield “12% for 12 months

and [was] backed by UBS (not someone we met on the street),” and the investor was

led to believe “UBS” meant the Union Bank of Switzerland. Beckman’s brochure

included the genuine UBS logo on the last page, along with several other investment

banks. Durand testified the schemers stopped using the fund name “UBS” after the

Swiss bank sued them. 

One investor victim testified that after listening to Durand’s radio show, he

attended six or seven seminars where “the emcee would kick things off . . . and say

that these are some of the most brilliant people that he knowsin the financial industry

. . . and then . . . he would have . . . Jerry Durand come up and give a little spiel for

15 minutes, then [Jason] Beckman, then Trevor Cook, and they would all give their

deal . . . . I thought these people were the best and the brightest. And I’m usually a

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very conservative type person and they really sold me.” The investor and his family

lost over $370,500. 

Durand, who was also “Managing Director” of Oxford GlobalAdvisors, placed

his name on a UBS Diversified version of the “Federal Funds Income Advantage”

brochure, which promised “[i]nterest rates. . . [c]redited at 12% annually” and stated,

“The entire contents of this brochure is solely the responsibility of UBS

Diversified. . . . For more information, please contact Gerald J. Durand.” Durand

wrote an investor that UBS Diversified’s customer funds were “insured by measures

enacted by the Federal Government” and “held in segregated accounts,” and that

Durand’s “people” at the firm were licensed brokers. Based on Durand’s

representations that the investor’s funds would be held in a segregated account and

the principal could not be lost, the investor mortgaged his home, entrusted the

proceeds and more to Durand, and lost several million dollars. 

Kiley also had a radio show, “Follow the Money.” Kiley’s radio show was

broadcast on a Christian radio station, and Kiley described himself as a Christian

man—“he always closed his broadcast with a prayer.” One of Kiley’s early investors,

Duke Thietje, stated this “ha[d] an impact on [his] investment decision” because

[Thietje] was “a person of the Bible [him]self [and] wanted someone who was of

personal integrity.” On the radio, Kiley gave a phone number that listeners could call

for more information—Kiley would then talk with the caller and send brochuresfrom

“UBS,” claiming it was a “registered financial advisory firm.” While telling potential

investors their funds would be kept in segregated accounts, Kiley personally

deposited many investors’ funds into the same account and also wrote checks to

satisfy occasional withdrawal requests. 

Kiley’s radio show also suggested listeners consult his website,

www.patkiley.com, where he lied about his own credentials, stating he was “an

independent financial analyst for a multi billion dollar corporation” and “[h]is clients

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range from top international funds and banks to the everyday investor.” Kiley’s

website advertised “The WealthManagement Group” that “currently overseesseveral

billions in assets” and “provides individual investors access to arbitrage,” known as

“a risk-less transaction” with “individually segregated” customer accounts that are

“totally liquid.” Kiley told Thietje “the funds would be traded in foreign currencies

and it was a rather successful program, having stops and so on, so there would be

little chance to really lose a large amount.” Thietje testified Kiley’s representation

of “complete safety” for his funds “was the most determining factor” in his decision

to invest with Kiley. Thietje stated Kiley’s representations led him to conclude his

funds “would be safer in the program than with [his] bank.” Thietje lost

approximately $340,000. Undeterred after Thietje’s loss, Kiley and his

representatives repeated the same promises on his radio show, his website, and in

brochures and letters to currency program investors who lost their investments just

as Thietje did. Kiley “was a money machine” who “brought in the vast

majority”—about two thirds—of the money invested in the currency program.

B. Procedural History

A jury found the defendants guilty on all counts charged against them in a

second superseding indictment (indictment). As relevant to this appeal, all three

defendants were convicted of committing or aiding and abetting the commission of

wire fraud or mail fraud in violation of 18 U.S.C. §§ 2, 1341, and 1343; conspiracy

to commit mail fraud and wire fraud in violation of 18 U.S.C. § 1349; and money

laundering in violation of 18 U.S.C. §§ 2 and 1957. Beckman, individually, was also

convicted of committing or aiding and abetting the commission of wire fraud

regarding his interactions with elderly victims Charlotte and Raymond Olson in

violation of 18 U.S.C. §§ 2 and 1343; committing or aiding and abetting the

commission of mail fraud, regarding his attempt to purchase an interest in the

Minnesota Wild hockey team of the National Hockey League (NHL) in violation of

18 U.S.C. §§ 2 and 1341; and filing false tax returns in 2007 and 2009 and tax

evasion in 2008 in violation of 26 U.S.C. §§ 7201 and 7206(1). The district court

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sentenced Beckman to 360 months imprisonment and Durand and Kiley to 240

months imprisonment. 

II. DISCUSSION

A. Evidentiary Rulings

“We review evidentiary rulings of a district court for abuse of discretion,

giving substantial deference to the district court’s determinations. This court may

reverse only if an error ‘affects the substantial rights of the defendant’ or has ‘more

than a slight influence on the [jury’s] verdict.’” United States v. Manning, 738 F.3d

937, 942 (8th Cir. 2014) (alteration in original) (internal citations omitted) (quoting

United States v. Yarrington, 634 F.3d 440, 447 (8th Cir. 2011)).

1. Federal Rule of Evidence 404(b)

“Evidence of a crime, wrong, or other act is not admissible to prove a person’s

character in order to show that on a particular occasion the person acted in accordance

with the character.” Fed. R. Evid. 404(b)(1). But “[t]his evidence may be admissible

for another purpose, such as proving motive, opportunity, intent, preparation, plan,

knowledge, identity, absence of mistake, or lack of accident.” Id. 404(b)(2). To be

admissible at trial, prior acts must: 

(1) be relevant to a material issue raised at trial, (2) be similar in kind

and close in time to the crime charged, (3) be supported by sufficient

evidence to support a finding by a jury that the defendant committed the

other act, and (4) not have a prejudicial value that substantially

outweighs its probative value.

United States v. Turner, 583 F.3d 1062, 1066 (8th Cir. 2009). We review the district

court’s Rule 404(b) decisions for abuse of discretion. See id. at 1065.

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a. Beckman

Beckman claims the district court improperly admitted several pieces of

damaging character evidence. First, Beckman admits he was “involuntarily

disenrolled” fromthe Air Force Academy “for lying.” Second, the government stated

it intended to introduce evidence that Beckman purportedly forged his mother’s

signature on two student loan applications. The district court granted Beckman’s

motion in limine to exclude both lines of inquiry but stated in the order—and again

before Beckman took the stand—that the government could introduce the evidence

“for impeachment purposes.” On Beckman’s cross-examination, the district court

properly admitted both pieces of evidence under Federal Rule of Evidence 608(b). 

See Rule 608(b)(1) (“[T]he court may, on cross-examination, allow [specific

instances of conduct] to be inquired into if they are probative of the character for

truthfulness or untruthfulness of . . . the witness.”); cf. Rule 404(b)(2). 

Finally, at trial, Beckman’s mother stated that around 2002, she sued him as

personal representative of his grandfather’s estate after he (1) mortgaged his

grandfather’s house to pay his own debts; (2) pocketed the profit from the later sale

of the house; and (3) failed to distribute other assets—testimony Beckman also had

attempted to exclude with a motion in limine. Beckman complains the district court

erred by admitting this Rule 404(b) evidence because the events were remote in time

and the evidence could have had “an incendiary effect.” Although the evidence was

relatively remote, the government examined Beckman’s mother on these points to

refute Beckman’s statement to the NHL that he invested the principal of his

grandfather’s estate for the benefit of his mother. The evidence was directly relevant

to the charges against Beckman of defrauding the NHL, and “‘[t]his court gives great

deference to the district court’s weighing of the probative value of evidence against

its prejudicial effect.’” United States v. Gant, 721 F.3d 505, 510 (8th Cir. 2013)

(quoting United States v. Tyerman, 701 F.3d 552, 563 (8th Cir. 2012)); see Fed. R.

Evid. 403. The district court did not abuse its discretion in admitting Beckman’s

mother’s testimony. 

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b. Durand

In a pretrial order, the magistrate judge required the government to disclose any

Rule 404(b) evidence “no lessthan thirty days before trial.” The “government’s trial

memorandum, 404(b) notice, motionsin limine and memorandumin support thereof,”

filed March 6, 2012, stated, “The trial evidence will show that Trevor Cook and

Gerald J. Durand and their associates – the people running the currency program that

Mr. Beckman repeatedly promoted as a principal-protected, legitimate, prudent

investment – routinely drank alcohol and/or used drugs at the mansion to the point

of morbid intoxication.” This sentence wasincluded in a section ofthe document that

addressed Beckman, not Durand, and did not specifically refer to Rule 404(b). As

such, Durand claims he was not given notice asrequired by the magistrate judge, even

though trial began on April 19, 2012, more than thirty days after the government filed

its notice. While the government did not include the challenged drug information

under a 404(b) heading specifically addressed to Durand, the document still gave

Durand notice of the evidence the government intended to introduce, effectively

satisfying the magistrate judge’s order. 

4

At trial, the government introduced witness Stephanie Bolton, Durand’s former

assistant. Bolton testified, over Durand’s objection, she would smoke marijuana at 5

the currency program place of business three to four days a week, on a daily basis

Durand would interact with clients “when he was stoned,” and Durand knew Cook

conducted business while drunk. Durand now argues the district court erred by

allowing the testimony. See Fed. R. Evid. 401, 403, 404(b).

Before the noticed witnesstestified in front of the jury, the district court heard 4

argument on Durand’s motion.

Durand also argues he had no notice because the government’s memo referred 5

to “drugs,” and not specifically “marijuana.” Durand’s argument is specious—he,

too, uses the terms interchangeably in his brief—and we reject this disingenuous

argument.

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After Bolton’s testimony, a juror advised the district court the juror, too,

smokedmarijuana, and hemay have been “more sympathetic to” Durand. The district

court removed the juror on the government’s motion. Later, Durand moved to voir

dire the remaining jury members as to marijuana use, which the district court denied. 

Durand appeals this decision as well.

The district court did not abuse its discretion by declining to ask already

impanelled jurors questions about their views concerning illegal drug use on the

seventh day of a lengthy, complicated trial. Durand was on notice from the

government’s trial brief that it intended to introduce such evidence, so Durand could

have filed a motion to ask such questions himself on voir dire before the jury’s

impanelment. While it may strain credulity to imagine this drug and alcohol evidence

was necessary to the government’s case, we reverse “‘only when the evidence clearly

had no bearing on the case and wasintroduced solely to show defendant’s propensity

to engage in criminal misconduct.’” Gant, 721 F.3d at 509 (quoting United States v.

Farish, 535 F.3d 815, 819 (8th Cir. 2008)). The district court did not abuse its

considerable discretion in evidentiary matters by allowing the marijuana testimony.

2. Hypothetical Questions

Beckman objects to what he calls the government’s use of “guilt assuming

hypotheticals” during trial. See United States v. Barta, 888 F.2d 1220, 1224-25 (8th

Cir. 1989) (holding the district court erred by allowing “questions premised on an

assumption of guilt”). Beckman objected to two such questions early in the trial, but

admits he opted not to object to the questions he challenges on appeal because

“further objections would only highlight [the issue] for the jury.” We now review for

plain error. See United States v. Big Eagle, 702 F.3d 1125, 1130 (8th Cir. 2013). 

“Under plain error review,” Beckman “must show ‘that the district court committed

an error that is clear or obvious, that the error affected his substantial rights, and that

the error seriously affects the fairness, integrity, or public reputation of judicial

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proceedings.’” Id. (quoting United States v. Troyer, 677 F.3d 356, 358-59 (8th Cir.

2012)). 

The district court did not err, plainly or otherwise, by allowing what Beckman

describes asthe hypothetical questions. First, Beckman does not adequately develop

an argument about most of the challenged hypothetical questions, merely reciting

them in footnotes and conclusively stating the questions assume guilt, so we do not

address the undeveloped challenges here. See Fed. R. App. P. 28(a)(8)(A); Rotskoff

v. Cooley, 438 F.3d 852, 854 (8thCir. 2006) (declaring an argument waived when not

developed in appellate brief). 

Beckman does argue the district court clearly erred by allowing the following

line of questioning of Jitesh Mehta, who worked as an unlicensed broker for

Beckman:

Q. I want to call your attention to the date here. The date of this

e-mail is October 21, 2008; is that correct?

A. That’s correct. 

Q. Prior to this time had Mr. Beckman indicated to you at all that in

August of 2008 he was told that this was a Ponzi scheme or very

likely a Ponzi scheme?

A. No, I was not told.

Before Mehta’s testimony, Martin Klotz, an attorney with the Willkie Farr law

firm(Willkie Farr), testified he had represented Oxford Global Advisors and had been

retained “to analyze the [currency] program and give advice on the legality of it.”

Klotz testified he toldBeckman, “[i]n substance,” that he thought Cook was “a crook”

who was “likely running a Ponzi scheme.” So the question to Mehta was not a

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hypothetical, but repeated an assertion already in evidence. The district court did not

plainly err in admitting Mehta’s testimony.

3. Internal Revenue Service (IRS) Agent Matthew Schommer

On appeal, though not at trial, Beckman objects to questions the government

asked IRS Agent Matthew Schommer. Again, we review for plain error. Beckman

specifically objects to the use of the term “investigative significance”:

Q. Based on your investigation in the case, Agent Schommer -- well,

what if any, investigative significance did this have? Let’s put it

that way. 

A. The victim investors that are purported here to get wire transfers

never received the money.

Agent Schommer made a statement offact, that the victims did not receive the money,

and Beckman claims Agent Schommer was drawing inappropriate conclusions about

the evidence. Again in a footnote, Beckman cites over a dozen other instances of use

of the term “investigative significance,” to which he did not object at trial. 

Beckman’s contention is without merit. Beckman has not shown any error (if one

existed) affected Beckman’s substantial rights or “‘seriously affect[ed] the fairness,

integrity, or public reputation of judicial proceedings.’” Big Eagle, 702 F.3d at 1130

(quoting Troyer, 677 F.3d at 358-59). 

Both Beckman and Durand also challenge Agent Schommer’s testimony as a

lay witness. They claim on appeal, as Durand objected at trial, the government’s 6

On one occasion during Agent Schommer’s testimony spanning five days, the

6

district court errantly stated Agent Schommer was an expert. Soon thereafter, the

government agreed with Durand that Agent Schommer was not testifying as an

expert, but as a summary witness, which Beckman clarified at the beginning of his

cross-examination of Agent Schommer.

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questions elicited lay opinion testimony in violation of FederalRule of Evidence 701.

Agent Schommer’s testimony was based upon his work as case agent in this case, and

“the ‘testimony of a summary witness may be received so long as []he bases h[is]

summary on evidence received in the case and is available for cross-examination,”

United States v. Robinson, 439 F.3d 777, 781 (8th Cir. 2006) (quoting United States

v. King, 616 F.2d 1034, 1041 (8th Cir. 1980)). The district court did not abuse its

discretion by admitting Agent Schommer’s testimony.

4. Attorney-Client Privilege

In February 2008, Beckman personally hired Kari Berman of the Briggs and

Morgan law firm (Briggs) with regard to his application to purchase an interest in the

Minnesota Wild NHL team. In February or March 2008, “the Oxford Group” also

hired Briggs for representation in “general corporate and transactional matters.” 

After a due diligence investigation, in May 2008, Briggs advised the Oxford Group

that Pettengill informed Briggs that notes sold by Oxford Global Advisors’ agents

(OGA Notes) “have not been registered under federal or state law and have not been

qualified for any exemption from registration.” Briggs advised the Oxford Group to

“immediately stop all sales and the solicitation of any sales of OGA Notes.” Briggs

stated, “Because of potential conflicts of interest between various individuals and

entities and the potential for criminal law consequences, we recommend that you

promptly retain other legal counsel to advise you regarding the past sales of OGA

Notes and any future actions you should take with respect to such sales.” Briggs also

advised, “During the course of Briggs and Morgan’s legal representation of you, it

has also come to our attention that other Oxford business activities appear to be in

violation of numerousfederalstatutes and regulations. . . . [W]e recommend that you

promptly retain other legal counsel to advise you regarding such matters.” 

Thereafter, at least as of May 20, 2008, two of the Oxford entities hired Robert

Mendelson of the Morgan, Lewis & Bockius law firm (Morgan Lewis) for securities

law advice. In response to the question, “[W]ho was the primary face of the client?”

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Mendelson testified, “I primarily interacted with Mr. Beckman.” Morgan Lewis

withdrew its services from the Oxford entities on June 27, 2008, sending a “noisy

withdrawal letter,” because the attorneys “reached the conclusion [their] advice was 7

not going to be followed.” The subject line of the withdrawal letter read “Retention

of Morgan, Lewis & Bockius LLP by Oxford Global Advisors, LLC and Oxford

PCG” and reported, “We concluded that, at a minimum, the investment was not

marketed in compliance with regulatory requirements.” The letter listed the remedial

measures Morgan Lewis had recommended and stated, “Despite your agreement that

these actions should be taken, they simply have not. . . . Given the circumstances, we

believe we have no option other than to withdraw. . . . We highly recommend that

these entities obtain legal counsel to evaluate the issues we have outlined herein.”

On July 17, 2008, Oxford Global Advisors, LLC next engaged Martin Klotz

at Willkie Farr. The subject line of Willkie Farr’s engagement letter read,

8

“Representation of Oxford Global Advisors, LLC,” and the letter declared, “We are

delighted to have the opportunity to represent Oxford Global Advisors, LLC (the

‘Client’).” Klotz testified Beckman “was the face of [his] client.” 

Finally, Beckman signed another personal representation letter with Briggs

dated July 21, 2008. 

Mendelson testified a “noisy withdrawal letter” “is a letter you send to a client 7

when you are withdrawing as their counsel and you want the reasons to be readily

apparent.”

Within a few weeks, Klotz “made a comment [to Beckman] to the effect of 8

. . . [t]he notion that you can borrow unlimited amounts of money interest-free and

create a risk-free investment is ridiculous. Among other things, some clever person

would have figured it out a long time ago if it was that easy. This just makes no

sense.”

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Before trial, the district court denied motions to quash subpoenas by law firms

Briggs, Morgan Lewis, and Willkie Farr, along with Beckman’s motions to exclude

attorney-client communications. The district court noted the Oxford entities were in

receivership, see, e.g., SEC v. Cook, No. 0:09-cv-3333 (D. Minn. Dec. 11, 2009)

(second amended order appointing receiver), and the receiver had waived the

attorney-client privilege. The district court found Morgan Lewis and Willkie Farr

were hired to represent Oxford entities, not Beckman, and no attorney-client privilege

attached between Beckman and either Morgan Lewis or Willkie Farr. Attorneys

Berman, Mendelson, and Klotz testified at trial, and the government introduced the

letters quoted above, as well as other attorney-client communications. “We review

[the district court’s privilege] finding for clear error.” United States v. Spencer, 700

F.3d 317, 320 (8th Cir. 2012).

Beckman now proposes the district court erred by admitting attorney-client

privileged evidence because Beckman sought legal advice from Morgan Lewis and

Willkie Farr for himself personally, as well as on behalf of Oxford entities, and the

personal relationship cannot be separated from the corporate relationship. “The

attorney-client privilege protects confidential communications between a client and

his attorney made for the purpose of facilitating the rendering of legal services to the

client.” Id. While Beckman may have been the “face of” the client, he was not the

client itself. The May 2008 Briggs letter clearly advised that the separation of

representation of Beckman personally and the Oxford entities was of paramount

importance, and the purpose of retaining Morgan Lewis, and then Willkie Farr,

ostensibly wasto accomplish thatseparation. The district court properly found, based

on the correspondence introduced, that Morgan Lewis and Willkie Farr represented

Oxford entities, not Beckman.

Similarly, the district court properly denied Beckman’s motion in limine to

exclude a July 31, 2008, email from Klotz to Beckman—quoted in the

indictment—that reads, “Under the most optimistic analysis of what happened here,

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. . . the . . . investment program is riddled with illegalities: illegal sale of unregistered

securities, inadequate or misleading disclosures to clients, both about the investment

product and about the fees, and transactions by unlicensed persons and entities, to

take the most obvious examples.” Beckman argued to the district court that the

introduction of the email violated his attorney-client privilege with Klotz, but the

district court found (1) Beckman waived the privilege by disclosing the

communication to a third party, and (2) the receiver waived the Oxford Group’s

privilege with Klotz, and Klotz did not represent Beckman personally, so the

privilege did not apply. 

As to Briggs, who did represent Beckman personally, the district court

determined the crime-fraud exception to the attorney-client privilege applied and

admitted Berman’s testimony. See United States v. Zolin, 491 U.S. 554, 562-63

(1989) (explaining the attorney-client privilege does not extend to communications

regarding future wrongdoing). We review the district court’s determination “for

abuse of discretion, according its determination considerable deference.” In re Grand

Jury Proceedings, G.S., F.S., 609 F.3d 909, 913 (8th Cir. 2010).

Beckman suggests there is no evidence he intended to engage in future

wrongdoing when he hired Briggs in February 2008. The government introduced

ample evidence to the contrary. First, the government introduced an affidavit from

Joel Barth, a financial analyst. The NHL hired Barth’s firm “to perform financial due

diligence on persons who apply to acquire ownership interestsin NHL teams.” After

Beckman applied to become a part owner of the Minnesota Wild, Barth “performed

the financial due diligence on Mr. Beckman to ascertain if Mr. Beckman had the

financial resources he reported.” Barth received most of Beckman’s financial

information directly from Briggs. For example, Beckman provided a “Statement of

Financial Condition” that stated his net worth, together with his wife, was over $21

million, including over $20 million froman investment in Oxford Group, LLC. Barth

doubted the legitimacy of most of the Oxford Group assets. Barth found an “error . . .

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of such magnitude – amounting to millions of dollars – that it appeared to [him] that

[he] had been misled.” Beckman had also “reported through counsel that the Oxford

Group had at least $4.2 billion under management,” but this “was strongly

contradicted by other readily available data.”

Second, IRS Special AgentJohn Tschida also reviewed the materials Beckman

had made available to Barth. Special Agent Tschida concluded in his affidavit, “With

the assistance of Briggs and Morgan, Mr. Beckman prepared and then submitted a

large volume of false and misleading information to the NHL in order to fraudulently

induce it to accept his ownership application and even used the same Briggs and

Morgan attorneys as references on his application.” 

Relying on the two affidavits and additional evidence reviewed in camera, the

district court determined the evidence showed an ongoing effort to defraud the NHL

and applied the crime-fraud exception. The district court did not abuse its discretion

by finding the crime-fraud exception applied and receiving into evidence the attorney

communications.

5. Durand-Pettengill Video Recording

During the government’s investigation of Beckman, Durand, and Kiley,

Pettengill agreed to assist the government by surreptitiously using a video-recording

device during a meeting with Durand. The government moved in limine to exclude

the admission of the recording at trial. In response, Durand asked to introduce the

recording to impeach Pettengill. On May 10, 2012, without the jury present, the

district court heard argument and granted the government’s motion, stating “[the

recording] will be excluded from being used as impeachment.” 

The next day, May 11, 2012, the district court entered a written order granting

the government’s motion in limine asto statements by Durand only, stating they were

exculpatory and therefore inadmissible hearsay because they would be advanced by

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Durand as proof of “the truth of the matter asserted.” Fed. R. Evid. 801(c)(2); see

also Fed. R. Evid. 802; United States v. Edwards, 159 F.3d 1117, 1127 (8th Cir.

1998) (“[E]xculpatory out-of-court declarations are not admissible hearsay.”). In the

written order, the district court did allow Durand to introduce Pettengill’s statements

for impeachment purposes. That day at trial, Durand confirmed he had received the

written order, but Durand did not use the recording to impeach Pettengill. 

Days later, during Durand’s cross-examination of Agent Schommer, Agent

Schommer acknowledged he considered the Durand-Pettengill recording in preparing

for trial. At that point, Durand again attempted to enter the entire recording into

evidence, including Durand’s statements. After argument atsidebar, the district court

confirmed its written order. 

On appeal, Durand argues he should have been able to play the recording

during his cross-examination of Agent Schommer, when the recording would not be

offered for the truth of the matter asserted, but rather “to reveal the effect on SA

Schommer who considered it in forming lay opinions.” Durand does not offer any

specifics as to how the recording would have assisted the trier of fact in evaluating

Agent Schommer’s testimony,merely concluding the jury would have seen that Agent

Schommer’s “conclusions could not have been based upon a real investigation.” 

“‘A statement offered to show its effect on the listener is not hearsay.’” United

States v. Wright, 739 F.3d 1160, 1170 (8th Cir. 2014) (quoting United States v.

Dupree, 706 F.3d 131, 136 (2d Cir. 2013)). But here, Durand does not establish the

relevance of the Durand-Pettengill recording in relation to any effect on Agent

Schommer. Unlike other cases where we have admitted similar evidence, see, e.g.,

id. at 1171; United States v. Cline, 570 F.2d 731, 734-35 (8th Cir. 1978), Durand

does not offer any hint as to how the recording would be relevant to Agent

Schommer’s investigation. The district court did not abuse its discretion by

excluding Durand’s statements on the recording asinadmissible, exculpatoryhearsay.

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6. Kiley’s Objections

For the first time on appeal, Kiley argues the district court erred by admitting

improper opinion testimony fromthree witnesses. We review for plain error. See Big

Eagle, 702 F.3d at 1130. 

First, Kiley objectsto Pettengill’s testimony(1) agreeing Pettengill himself was

“right in the middle of this fraudulent mess,” (2) stating there was “no doubt in

[Pettengill’s] mind [the information Kiley ‘put on his website about himself’] was

false,” and (3) agreeing “that at some point in time Mr. Kiley knew that this currency

program was not what [the schemers] were telling people it was.” Kiley also objects

to attorney Klotz’s testimony (1) that Klotz suspected Beckman and Cook were

operating a Ponzi scheme, and (2) implying Cook and “Kiley brought in billions” and

to Agent Schommer’s testimony that (1) “the fraud was exposed” right after June 29,

2009, (2) Kiley provided a response in a civil case “post the time that the fraud had

been discovered,” and (3) Kiley’s denials in an answer in the civil case were “false. 

They are lies.”

In each case, Kiley argues the district court plainly erred by admitting improper

opinion testimony, particularly by stating “a defendant’s conduct [w]as ‘fraud’ or

‘fraudulent.’” Spencer, 700 F.3d at 321-22 (rejecting the defendant’s “contention that

[the witness’s] testimony usurped the jury’s role as factfinder, and thereby created

unfair prejudice” when the witness “did not express an opinion about whether [the

defendant] had the requisite mens rea to commit fraud . . . or whether [the

defendant’s] actions were fraudulent”). Even if we assume Spencer suggests that a

witness who concludes a defendant’s actions were fraudulent usurps the jury’s role,

here, the witnesses used the word “fraud” only as a shorthand for the Ponzi scheme

itself, which no one denies. The testimony did not “‘affect [Kiley’s] substantial

rights, and . . . seriously affect[] the fairness, integrity, or public reputation of judicial

proceedings.’” Big Eagle, 702 F.3d at 1130 (quoting Troyer, 677 F.3d at 358-59). 

The district court did not plainly err by failing to strike this testimony sua sponte.

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Kiley also asserts the district court plainly erred by allowing testimony from

an ex-wife and an ex-girlfriend as to his alleged drug use and inability to manage his

finances. Kiley claims the evidence violated Federal Rules of Evidence 403 and 404.

The government claims the questions about Kiley’s ability to manage his finances

were relevant to Kiley’s assertions of his financial acumen, and the comment about

drug use was blurted out unexpectedly from the ex-girlfriend. The district court did

not plainly err by failing to strike the testimony sua sponte.

9

B. Sufficiency of the Evidence

Beckman and Kiley appeal the district court’s denial of their motions for

acquittal on the grounds of insufficient evidence. “We review the district court’s 10

decision to deny the motion for judgment of acquittal de novo. ‘When reviewing the

sufficiency of the evidence, we consider the evidence in the light most favorable to

the verdict rendered and accept all reasonable inferences which tend to support the

jury verdict.’” United States v. Bordeaux, 570 F.3d 1041, 1047 (8th Cir. 2009)

(internal citation omitted) (quoting United States v. Ramirez, 362 F.3d 521, 524 (8th

Cir. 2004)). “Evidence supporting conviction ‘need not preclude every outcome other

than guilty.’” United States v. Pierson, 544 F.3d 933, 938 (8th Cir. 2008) (quoting

Ramirez, 362 F.3d at 524). “If any interpretation of the evidence would allow a

reasonable-minded jury to find the defendant guilty beyond a reasonable doubt, we

must uphold the verdict. This standard of review is very strict, ‘and the jury’s verdict

is not to be lightly overturned.’” United States v. Teague, 646 F.3d 1119, 1122 (8th

The defendants contend the district court’s errors in admitting improper 9

evidence, even if harmlessindividually, warrant reversal when viewed cumulatively. 

“Because we have not found multiple errors, harmless or otherwise, we must also

reject this contention.” United States v. Wilkens, 742 F.3d 354, 364 (8th Cir. 2014).

Durand states he does not challenge the sufficiency of the evidence, yet he 10

does appeal the district court’s denial of a motion of acquittal, stating the district

court committed “cumulative reversible error.”

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Cir. 2011) (internal citation omitted) (quoting United States v. Hayes, 391 F.3d 958,

961 (8th Cir. 2004)). 

1. Beckman

a. No Knowledge

Beckman primarily claims he had no knowledge “that Cook and Pettengill ran

a Ponzi scheme” until “the Phillips lawsuit” hit the papers. A reasonable jury could

11

have believed evidence to the contrary, including the following: the Briggs law firm

May 2008 letter; the Morgan Lewis law firm June 2008 letter; testimony from

Mendelson that in June 2008 he advised Beckman “there was the very strong

potential [the currency program] was an unregistered public offering” and must be

rescinded; Klotz’s July 2008 email to Beckman advising the “investment program is

riddled with illegalities”; Klotz’s testimony he told Beckman in July 2008 the

currency program“made no sense whatsoever,” “a risk-free investment isridiculous,”

and “the initial offering to the Oxford Global Advisors investors was likely illegal”;

and Cook’s August 2008 email to Beckman outlining a plan to cover their tracks

when an outsider questioned their website’s promise of a 10.5% fixed rate. Applying

all inferences supporting the verdict, we accept the jury’s conclusion that Beckman

was aware of the scheme as it unfolded prior to July 2009.

b. The Olsons

Beckman was found guilty as charged in Counts 14 and 15, committing or

aiding and abetting the commission of wire fraud, regarding his interactions with

elderly victims Charlotte and Raymond Olson, whose trust lost almost $5 million.

Beckman claims he had no intent to defraud the Olsons. Among other evidence

In July 2009, numerous investors sued Cook, Durand, and many of the UBS 11

and Oxford entities. See Phillips v. Cook, No. 0:09-cv-1732 (D. Minn. July 7, 2009)

(complaint).

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supporting the charges, the government produced a letter ostensibly written by 12

Raymond Olson transferring $1.975 million that ViaSource Funding Group, LLC

(ViaSource) wasto receive fromOlson’s Bear Stearns SecuritiesCorp. (Bear Stearns)

account to a new account not named in the letter, along with a letter dated the same

day from Beckman to ViaSource directing the wire transfer of the Bear Stearns funds

to Oxford Global Advisors, LLC. A substantial part of the $1.975 million was then

transferred to other Oxford entities. Mr. Olson testified at trial he did not recall

writing the letter and did not recall having heard of ViaSource. A reasonable jury

could conclude Beckman intended to defraud the Olsons and prepared the letter to

access and misappropriate the $1.975 million.

c. The NHL 

Beckman was found guilty as charged in Counts 16 and 17, committing or

aiding and abetting the commission of mail fraud, regarding two applications

Beckman submitted in his effort to purchase an interest in the Minnesota Wild. The

first application asked, “Have you ever been a party to any litigation, including

litigation alleging harassment or discrimination? . . . If yes, attach Schedule G setting

forth [additional information].” Beckman answered “yes” and attached Schedule G,

but he did not include the fact that his mother sued him with regard to his handling

of his grandfather’s estate, his employer sued him for refusing to pay back a

promissory note, and two convictions for drunk driving. Beckman claims he acted

under the advice of counsel and the errors were immaterial. Beckman’s counsel,

Berman, did not corroborate Beckman’s claim that she advised him to omit the

incidents. As to the deficiencies in Beckman’s financial disclosures, Beckman’s

evidence fails to “refute” the strong evidence of his intent to defraud. Barth testified

at trial to substantially the same facts averred in his affidavit, outlining the serious

SEC accountant Hlavacek testified in detail how Beckman misappropriated

12

the proceeds from the viatical sales of two separate insurance policies, each for

$1.975 million, as alleged in Counts 14 and 15.

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fabricationsBeckman provided as purported evidence of hisself-worth. A reasonable

jury could believe Berman and Barth, rather than Beckman, and find Beckman’s

omissions both intentional and material. See United States v. Gaona-Lopez, 408 F.3d

500, 505 (8th Cir. 2005) (finding credibility questions are the province of the jury).

d. Tax Counts

Finally, Beckman disputes the sufficiency of the evidence supporting his tax

fraud convictions. Beckman maintains the government did not prove he acted 13

willfully. IRS Special Agent Anna Johnson testified as to Beckman’s omissions of

income for his 2007 and 2009 returns (Beckman did not file a return in 2008). A

reasonable jury could credit Special Agent Johnson’s testimony and conclude

Beckman acted willfully when in 2007 he submitted a tax return reporting a

substantial negative income based on a loss from his interest in Oxford Global

Advisors, LLC—even though he testified in a deposition that he did not contribute

any capital of his own into the entity—resulting in a $328,126 tax refund rather than

a $165,204 tax payment. A reasonable jury could also conclude Beckman acted

willfully when in 2009, in a self-prepared return, Beckman claimed a deductible theft

loss of $1,498,853 due to a Ponzi scheme, which required Beckman to represent he

had “no actual knowledge” of the fraud before it was made public.

2. Kiley 

Kiley admits he made “self-aggrandizing statements” as to “his professional

credentials both on his website and in his radio show” that were “not true.” Like

Beckman, Kiley claims “the government failed to prove that Mr. Kiley knew or

understood the fraudulent nature of Cook’s scheme,” making his lies as to his

financial success and abilities merely “puffery,” not fraud. A reasonable jury could

have believed evidence to the contrary, such as Kiley’s carefully integrated, false

Beckman also summarily disputes his conviction on the money-laundering

13

counts. We do not reach this undeveloped argument. See Rotskoff, 438 F.3d at 854.

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statements on his website, on the radio, in brochures, and in conversations about the

safety of the currency program. Kiley assured potential investors their money would

be safe with him, intending to secure investors for the currency program without

regard to whether the program would deliver what Kiley promised. 

To take but one example, investorJoseph Kalina testified he listened to Kiley’s

radio show, “Follow the Money,” in 2008. Kalina heard Kiley advertise a minimum

return on investment of ten to twelve percent and “pretty much guarantee” safety,

with the ability to withdraw anytime. Kalina called the phone number given on the

radio show and talked with Kiley, who sent Kalina “a big folder on all the good

things that’s [sic] going to happen.” Kiley wrote to Kalina on “Universal Brokerage

FX” letterhead, “The safety and integrity of customer funds on deposit are ensured

[sic] by measures enacted by the Federal Government, various exchanges, and the

firm itself. Customer funds are held in segregated accounts providing safety,

security and liquidity. . . . Each and every broker has gone through extensive testing,

examination and personal screening by Universal Brokerage FX before he or she has

received their license.” Kiley sent Kalina a brochure advertising the “Yield

Enhancement Analysis Program” (YEAP) that “offers a fully protected principal. . . .

The system objective is simple; the strategy aims to take advantage of the ‘free

money’ policy in Japan. . . . All currency risk is insured through other financial

markets. . . . The YEAP simply collects daily interest and utilizes other financial

markets to eliminate currency fluctuation risk.” Relying on Kiley’s representations

made in the letter and the brochure, on the phone, and in person that his investment

would be safe and insured, Kalina withdrew his money from an individual retirement

account—and paid almost a ten percent penalty, which Kiley assured Kalina he would

earn back in the currency program. At the time Kalina invested with Kiley, Kiley was

aware Kalina was retired and was investing all of his retirement savings, just over

$100,000. At the time of trial, $3,000 had been returned to Kalina. Based on the

evidence adduced at trial, a reasonable jury could have found Kiley knew of the

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falsehoods he advanced—“the ‘free money’ policy in Japan”—about the scheme he

promoted. 

C. Kiley’s Trial Attorney

At the district court, Kiley retained attorney H. Nasif Mahmoud to represent

him. Kiley now asserts he was denied his Sixth Amendment right to competent

assistance of counsel at trial because “Mahmoud labored under multiple conflicts of

interest while representing” Kiley. Kiley also argues the district court’s failure to

address the conflicts violated his Fifth Amendment right to Due Process.

Count 23 in the indictment (Count 17 in the original indictment) charged that

on July 7, 2009, Kiley engaged in money laundering via a “[w]ire transfer of

$100,000.00 from the Basel Group, LLC, bank account at Associated Bank to the

account of an attorney.” Well before trial, in a “motion for inquiry,” the government

apprised the district court that the attorney cited in Count 23 was Kiley’s attorney,

Mahmoud. The government advised the district court (1) Mahmoud might be a

necessary witness because he attended meetings and purportedly stayed at the

mansion where the schemers conducted the business of the currency program for as

much as three weeks in July 2009; (2) during that time, Cook told Mahmoud that

Cook initiated the Count 23 wire transfer, not Kiley; (3) Mahmoud currently

represented “Individual A,” who would “certainly” be called as a trial witness; and

(4) Mahmoud formerly represented “Individual B,” a “likely” government witness. 

The government advised the district court to explore the potential conflict issues in

order to ensure Kiley’s Sixth Amendment right to counsel was protected. 

In a strong response to the government’s motion, Kiley stated Mahmoud was 

“not a necessary witness” because other attorneys were present at the meetings, and

they could testify rather than Mahmoud. Kiley stated the government’s motion was

“a transparent attempt to prevent Kiley from securing the attorney of his choice” and

on five occasions suggested the district court “consider sanctions against the

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government.” Although Kiley was also represented by a local attorney, David Zins,

Kiley suggested disqualifying Mahmoud would result in hardship because Zins was

less experienced and knew less about the case than Mahmoud. Kiley also stated

Individual A was not a necessary witness because he was “the wrong witness” and

Mahmoud had represented “Individual B on a one time basis” “years before.” Kiley

went so far as to suggest the money-laundering count was included in the indictment

in “an effort to keep Kiley’s present defense counsel [Mahmoud] from representing

Kiley.” 

A magistrate judge granted the government’s motion for inquiry and heard

argument on the matter. At the hearing, after explanation by the magistrate judge,

Kiley waived his rights as to any conflict with Individual A, Steve Nortier, and

Individual B, Thietje. Also at the hearing, Kiley personally volunteered, “I have the

utmost confidence in Mr. Mahmoud in many areas. His veracity, his commitment.”

Kiley expressly “waive[d] any potential conflict of interest” and declared, “I want to

keep Mr. Mahmoud.”

After the hearing, Kiley filed written “waivers of potential conflicts ofinterest”

as to Nortier and Thietje. The magistrate judge recommended Mahmoud not be

disqualified because of Kiley’s waivers and because Mahmoud was not a necessary

witness, and the district court agreed.

Kiley now argues the district court erred by not considering the conflict

inherent in Count 23 itself—that Kiley was convicted of a crime that implicated his

attorney, Mahmoud. This potential conflict was not raised by the government in its

motion for inquiry, nor raised by Kiley at the magistrate judge’s hearing, nor

addressed by the magistrate judge or the district court before trial. At trial, several

witnesses testified as to Mahmoud’s receipt of the charged wire transfer. Mahmoud

asked a witness about it himself, referring to himself in the first person—Mahmoud

asked Kiley’s administrative assistant, “In July of 2009, about the time you sent that

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wire to me, what was [Kiley’s] condition from what you observed when he learned

of the fraud?” Kiley now suggests the potential conflict regarding Count 23 was

(1) so obvious the district court should have investigated the matter whether or not

Mahmoud raised it on Kiley’s behalf, and (2) so grave it violated Kiley’s Fifth

Amendment right to due process.

“Where a constitutional right to counsel exists, our Sixth Amendment cases

hold that there is a correlative right to representation that is free from conflicts of

interest.” Wood v. Georgia, 450 U.S. 261, 271, 272-73 (1981) (vacating and

remanding on due process grounds where defendants “were represented by their

employer’s lawyer,” and “[a]ny doubt asto whether the court should have been aware

of the problem [wa]s dispelled by the fact that the State raised the conflict problem

explicitly and requested that the court look into it”). In the context of an assertion of

ineffective counsel due to multiple representation of co-defendants in state court, 

trial courts [must] investigate timely objections to multiple

representation. But nothing in our precedents suggests that the Sixth

Amendment requiresstate courtsthemselvesto initiate inquiriesinto the

propriety ofmultiple representation in every case. Defense counsel have

an ethical obligation to avoid conflicting representations and to advise

the court promptly when a conflict of interest arises during the course of

trial. Absent special circumstances, therefore, trial courts may assume

either that multiple representation entails no conflict or that the lawyer

and his clients knowingly accept such risk of conflict as may exist. . . .

[T]rial courts necessarily rely in large measure upon the good faith and

good judgment of defense counsel. . . . Unless the trial court knows or

reasonably should know that a particular conflict exists, the court need

not initiate an inquiry.

Cuyler v. Sullivan, 446 U.S. 335, 346-47 (1980) (footnotes omitted). Nevertheless,

as we have stated, 

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The Supreme Court [has rejected the] argument that, where the trial

judge has failed to make a Sullivan-type inquiry notwithstanding an

apparent attorney conflict of interest, reversal is automatic regardless of

whether the conflict affected the attorney’s performance. . . . The

Supreme Court [has] concluded that, where the trial court knew or

reasonably should have known about a potential attorney conflict of

interest and yet failed to make an inquiry, the petitioner, in order to void

the conviction, must show that the conflict of interest had an adverse

effect on his or her counsel’s performance.

Koste v. Dormire, 345 F.3d 974, 975, 981-82 (8th Cir. 2003) (citing Mickens v.

Taylor, 535 U.S. 162, 172-74 (2002)) (reviewing a petition for relief under 28 U.S.C.

§ 2254 asserting a conflict that did not involve multiple representation); see also

Ausler v. United States, 545 F.3d 1101, 1102, 1104 (8th Cir. 2008) (reviewing a

motion for relief under 28 U.S.C. § 2255 that did not involve multiple representation

and stating, “[I]n cases involving a [district court’s] failure to inquire into . . .

potential conflicts [other than one attorney representing co-defendants, a] defendant

[must] show that ‘a conflict of interest actually affected the adequacy of’” his

attorney’s representation, as opposed to “Strickland prejudice” (quoting Mickens, 535

U.S. at 170-71 & nn.3, 4)).14

In this case, the district court relied on (1) Mahmoud’s assurance that no

conflict existed and his adamant response to the government’s motion for inquiry and

(2) Kiley’s clear statement to the magistrate judge he wanted Mahmoud to represent

him—“I want to keep Mr. Mahmoud.” See Powell v. Alabama, 287 U.S. 45, 53

(1932) (“It is hardly necessary to say that the right to counsel being conceded, a

To the extent later cases conflict with Ausler, see, e.g., Noe v. United States,

14

601 F.3d 784, 790 (8th Cir. 2010) (“[W]e have not yet determined whether

[Sullivan’s] presumed prejudice analysis extends beyond conflicts arising from

multiple representation.”), we must follow the earliest opinion, Ausler. See Mader

v. United States, 654 F.3d 794, 800 (8th Cir. 2011) (en banc) (explaining we are

bound by prior panel opinions).

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defendant should be afforded a fair opportunity to secure counsel of his own

choice.”). Unlike Wood, the government’s motion for inquiry did not apprise the

district court of the Count 23 issue Kiley now raises. We therefore reject Kiley’s due

process challenge raised under the Fifth Amendment, and we find the district court

was not required to address sua sponte the potential Count 23 conflict in the midst of

this complex and lengthy trial. 

As to Kiley’s ineffective-assistance challenge, the district court has not heard

argument on the alleged inherent conflict in Count 23. Because Kiley “must show

that the” alleged “conflict of interest had an adverse effect on” Mahmoud’s

performance, Koste, 345 F.3d at 981, and the district court has not passed on this

issue, we decline to address it on direct appeal in the first instance. Cf. United States

v. Hubbard, 638 F.3d 866, 869 (8th Cir. 2011) (“‘We will consider ineffectiveassistance claims on direct appeal only where the record has been fully developed,

where not to act would amount to a plain miscarriage of justice, or where counsel’s

error is readily apparent.’” (quoting United States v. Ramirez-Hernandez, 449 F.3d

824, 827 (8th Cir. 2006))); United States v. McAdory, 501 F.3d 868, 872-73 (8th Cir.

2007) (stating ineffective-assistance claims are ordinarily deferred to 28 U.S.C.

§ 2255 proceedings). Whether the alleged Count 23 conflict resulted in ineffective

assistance by Mahmoud is more appropriately addressed in a § 2255 proceeding with

the benefit of the fact-finding and appraisal by the trial judge, who is in a better

position to assess Mahmoud’s performance.

D. Newly Discovered Evidence—Murder Plot

Several months before the start of trial, Pettengill met with Federal Bureau of

Investigation (FBI) agents and told them Durand suggested to Pettengill they should

arrange for Beckman to be murdered in order to collect on a key man life insurance

policy on Beckman. Pettengill’s comments were noted on an FBI “Form 302,” dated

November 3, 2011 (Form 302). 

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Over a year later, on December 21, 2012, the government alluded to the murder

plot in its sentencing memorandum for Durand. On December 26, 2012, the

government moved for an evidentiary hearing “at which the United States will prove

by the preponderance of the evidence that, in December of 2009, Mr. Durand

proposed to Mr. Pettengill that they arrange for the murder of Jason Bo-Alan

Beckman in order to collect and split the proceeds of a life insurance policy on

Beckman’s life.”

The government did not disclose the Form 302 to Beckman and Durand until

December 28, 2012, more than six months after trial. In an email to the defendants’

attorneys, the government stated it looked in its files for this Form 302 in preparation

for sentencing. Not finding the Form 302, the government asked the FBI to review

its files. The FBI delivered the Form 302 on December 27, 2012. The government

explains the lack of disclosure “was a mistake” and “it intended to turn over all of its

interview memoranda in this enormous case.” On December 28, 2012, and December

30, 2012, Durand and Beckman, respectively, moved for a new trial based on the

newly discovered Form 302 evidence.

A few days later, on January 3, 2013, the district court held an evidentiary

hearing on the morning of the sentencing hearings. The district court denied

Beckman’s and Durand’s motions for a new trial and later issued a memorandum

opinion to that effect.

1. Federal Rule of Criminal Procedure 33(b)

This court “review[s] the district court’s denial of [a defendant’s] motion for

a new trial based on newly discovered evidence for abuse of discretion.” United

States v. Haskell, 468 F.3d 1064, 1076 (8th Cir. 2006); see also Fed. R. Crim. P.

33(b)(1).

A successful Rule 33(b) movant must show that:

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(1) the evidence [was] unknown or unavailable to the defendant at

the time of trial;

(2) the defendant [was] duly diligent in attempting to uncover it;

(3) the newly discovered evidence [is] material; and

(4) the newly discovered evidence . . . probably will result in an

acquittal upon retrial.

United States v. Rubashkin, 655 F.3d 849, 857 (8th Cir. 2011) (alterations and

emphasisin original). “[T]he standard in our circuit for a Rule 33 motion is clear and

binding. The rule requires that the newly discovered evidence ‘probably will result

in an acquittal.’” Id. at 858 (internal citation omitted) (quoting United States v.

Baker, 479 F.3d 574, 577 (8th Cir. 2007)).

The district court found Beckman failed to satisfy the last two elements for a

Rule 33(b) motion because (1) the alleged murder plot occurred after the fraud ended,

and so was immaterial, and (2) the Form 302 contained inculpatory, rather than

exculpatory, statements as to Beckman, i.e., Pettengill and Beckman “knew the

money was gone, and the plan was to blame Cook.” The district court did not clearly

err in its findings and did not abuse its discretion.

Beckman also states the district court erred because if Beckman had access to

the Form 302 before trial, he may have reconsidered “his decision not to seek a

severance from Durand” and might not have engaged in “‘hands off’ treatment of

Durand” at trial. The district court did not explicitly address this argument in its

order.

“Federal Rule of Criminal Procedure 14(a) vests the district court with

authority to order severance if consolidation for trial appears to prejudice the

government or a defendant. Nevertheless, there is a strong presumption against

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severing trials.” United States v. Kramer, 768 F.3d 766, 770 (8th Cir. 2014). 

Beckman does not allude to any prejudice he suffered by being joined as a codefendant with Durand, nor does he delineate just what evidence he would have

produced about Durand relevant to the time frame of the fraud had Beckman known

about the alleged murder plot before trial. Thus, his argument is unsupported and

without merit.

2. Brady and Giglio Violations

Beckman and Durand argue the government’s failure to produce the Form 302

violated the requirements of Brady v. Maryland, 373 U.S. 83, 87 (1963). “‘To show

a Brady violation, the defendant must establish that (1) the evidence was favorable

to the defendant, (2) the evidence was material to guilt, and (3) the government

suppressed evidence. . . . Evidence is material only if there is a reasonable probability

that, had the evidence been disclosed to the defense, the result of the proceeding

would have been different.’” United States v. Jeanpierre, 636 F.3d 416, 422 (8th Cir.

2011) (quoting United States v. Ladoucer, 573 F.3d 628, 636 (8th Cir. 2009)). “‘We

review de novo allegations of Brady violations.’” Mandacina v. United States, 328

F.3d 995, 1001 (8th Cir. 2003) (quoting United States v. McElhiney, 275 F.3d 928,

932 (10th Cir. 2001)).

Beckman also argues the government violated the requirements of Giglio v.

United States, 405 U.S. 150, 153-55 (1972). “‘Under [Giglio], the government must

disclose matters that affect the credibility of prosecution witnesses. [F]or example,

a defendant is entitled to know of a promise to drop charges against a key witness if

that witness testifies for the government.’ However, the nondisclosure of Giglio

evidence only justifies a retrial if the withheld information is deemed material.” 

United States v. Garcia, 562 F.3d 947, 952 n.7 (8th Cir. 2009) (second alteration in

original) (internal citations omitted) (quoting United States v. Morton, 412 F.3d 901,

906 (8th Cir. 2005)). 

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a. Beckman

Beckman claims the Form 302 was exculpatory because the evidence of a

murder plot would “buttress[] his arguments about his lack of knowledge of any

overall conspiracy.” But the Form 302 actually is inculpatory on that issue, so this

evidence was not favorable to Beckman, as Brady requires.

Second, Beckman states the “fact that Pettengill never disclosed the murder

plot to Mr. Beckman . . . seriously undermines credibility and character.” But

Pettengill’s admitted role in the scheme seriously affected his credibility from the

beginning, and it is unclear how the revelation of another purported act of deception

would have materially affected the jury’s interpretation of Pettengill’s testimony. 

Beckman has not established the withheld information is material, as both Brady and

Giglio require. 

b. Durand

Durand first contends Pettengill’s statement in the Form302 that the “fund was

doing great and had $40 million” supports his argument that the enterprise did not

begin as a scam and that Durand reasonably believed the program was legitimate.

Pettengill substantially testified to the $40 million balance at trial, and the Form 302

would have only amounted to cumulative evidence. Second, in the Form 302,

Pettengill stated, “Swiss FX [a firm run by Pettengill and Durand] was pitched more

correctly than the Oxford currency program. It was not pitched with a guaranteed

rate.” This information, too, came out at trial when Pettengill testified asto Swiss FX

that he “wanted to have an organization that was actually compliant with the law.” 

Neither assertion reasonably would have produced a different outcome, as Brady

requires.

Third, and “[m]ost importantly,” Durand conclusively states, “[s]howing the

jury what the government knew and when they would have known it, was crucial. 

That missing piece of paper would more likely than not have caused a different

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outcome with respect to the [c]onspiracy [c]ount [] against Mr. Durand.” Finally, in

his reply brief, Durand cites for the first time several more of Pettengill’s statements

in the Form 302 that Durand surmises might have led to exculpatory statements by

Pettengill on cross-examination. Such conjecture does not meet the Bradymateriality

requirement.

3. Jencks Act

Beckman and Durand argue the government’s failure to produce the Form 302

also violated the Jencks Act. See 18 U.S.C. § 3500. “After a witness called by the

United States has testified on direct examination, the court shall, on motion of the

defendant, order the United States to produce any statement (as hereinafter defined)

of the witness in the possession of the United States which relates to the subject

matter as to which the witness has testified.” Id. § 3500(b). This court “review[s] a

district court’s ruling under the Jencks Act for clear error.” United States v. New,

491 F.3d 369, 376 (8th Cir. 2007). Assuming the Form 302 is a “statement” within

the meaning of 18 U.S.C. § 3500(e), “[w]e will not overturn a conviction for

noncompliance with the Jencks Act where there is no indication of bad faith on the

part of the government, nor an indication of prejudice to the defendant.” United

States v. Douglas, 964 F.2d 738, 741 (8th Cir. 1992). 

Even if Beckman or Durand could establish prejudice, neither has established

bad faith on the part of the government. Beckman provides no argument whatsoever

as to bad faith. Durand assumes bad faith simply from the non-disclosure itself,

arguing the government did not produce the Form 302 because it was exculpatory as

to him. On the contrary, it is hard to imagine Durand would not have objected and

filed a motion in limine to exclude the Form 302 if it had been timely produced,

considering the revelation of a possible murder-for-hire. Because the Form 302 is

inculpatory as to both Beckman and Durand, the government had no obvious motive

to exclude it. The district court did not clearly err by denying Beckman’s and

Durand’s motion for a new trial based on a Jencks Act violation.

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4. Impeachment

Finally, both Beckman and Durand argue the Form 302 would have provided

impeachment material during cross-examination of Pettengill. Yet, generally, “new

evidence which is merely cumulative or impeaching is not, according to the oftenrepeated statement of the courts, an adequate basis for the grant of a new trial.” 

Mesarosh v. United States, 352 U.S. 1, 9 (1956) (internal quotation marks omitted);

accord United States v. Burns, 495 F.3d 873, 875 (8th Cir. 2007) (explaining

“impeachment evidence israrely sufficient to entitle a defendant to a new trial”). The

district court properly denied the motions for a new trial on this basis. 

E. Sentencing

“When we review the imposition of sentences, whether inside or outside the

[United States Sentencing] Guidelines [U.S.S.G. or Guidelines] range, we apply ‘a

deferential abuse-of-discretion standard.’” United States v. Hayes, 518 F.3d 989, 995

(8th Cir. 2008) (quoting Gall v. United States, 552 U.S. 38, 41 (2007)). In reviewing

a district court’s sentencing decision, an appellate court “must first ensure that the

district court committed no significant procedural error, such as failing to calculate

(or improperly calculating) the Guidelines range, treating the Guidelines as

mandatory, failing to consider the [18 U.S.C.] § 3553(a) factors, selecting a sentence

based on clearly erroneous facts, or failing to adequately explain the chosen

sentence.” Gall, 552 U.S. at 51. “When reviewing the district court’s calculation of

the sentencing guidelines advisory sentencing range, ‘[w]e review the district court’s

factual findings for clear error and its construction and application of the Guidelines

de novo.’” United States v. Pappas, 715 F.3d 225, 228 (8th Cir. 2013) (alteration in

original) (quoting United States v. Raplinger, 555 F.3d 687, 693 (8th Cir. 2009)). 

“Under an advisory Guidelines regime, sentencing judges are only required to find

sentence-enhancing facts by a preponderance of the evidence.” United States v.

Garcia-Gonon, 433 F.3d 587, 593 (8th Cir. 2006). But see Alleyne v. United States,

570 U.S. ___, ___, 133 S. Ct. 2151, 2155 (2013) (holding “any fact that increases the

mandatory minimum is an ‘element’ that must be submitted to the jury”).

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The Guidelines advise the district court to consider “all reasonably foreseeable

acts and omissions of othersin furtherance of[a] jointly undertaken criminal activity”

such as “a criminal plan, scheme, endeavor, or enterprise undertaken by the defendant

in concert with others, whether or not charged as a conspiracy.” U.S.S.G.

§ 1B1.3(a)(1)(B) (Nov. 2012). “[T]he emphasis under § 1B1.3,” however, “is the

scope of the individual defendant’s undertaking and foreseeability in light of that

undertaking, rather than the scope of the conspiracy as a whole.” United States v.

Spotted Elk, 548 F.3d 641, 674 (8th Cir. 2008); see U.S.S.G. § 1B1.3, cmt. n.2. “[A]

defendant’s conviction for conspiracy does not automatically mean that every

conspirator has foreseen the” amount of loss, number of victims, or number of

insolvent victims “involved in the entire conspiracy; in addition to membership in the

conspiracy, the district court must find the scope of the individual defendant’s

commitment to the conspiracy and the foreseeability of particular” fraudulent

transactions “from the individual defendant’s vantage point.” Spotted Elk, 548 F.3d

at 674. “‘We review the district court’s findings as to scope of the defendant’s

undertaking, foreseeability to the defendant, and furtherance of the conspiracy for

clear error.’” United States v. Adejumo, 772 F.3d 513, 533 (8th Cir. 2014) (quoting

Spotted Elk, 548 F.3d at 677). 

1. Beckman 

a. Advisory Guidelines Calculation

Beckman maintains the district court procedurally erred in calculating his

advisory Guidelines range. First, Beckman claims the district court erred in

calculating the amount of loss. At trial, the government introduced a detailed report

listing the amount invested by each victim, totaling over $193 million. Beckman

states he should not be accountable for the total amount because he was not

responsible for the investments brought in via the radio shows or by any of the other

schemers. See U.S.S.G. § 2B1.1(b)(1)(N) (increasing the offense level by 26 if the

loss exceeded $100 million). For the same reason, Beckman contends he should not

be responsible for over 250 victims generally, nor for over 100 victims whose

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solvency was threatened. See id. § 2B1.1(b)(2)(C), (b)(15)(B)(iii). Beckman also

alleges his personal clients were more sophisticated than the general pool of victims

because many were wealthy and had invested with him before the currency program

began.

Beckman’s arguments are unavailing. Together with his fellow schemers,

Beckman appeared on a radio show, gave public seminars, and produced brochures

advertising the currency program with the objective of casting the victim-ensnaring

net as wide as possible to all reaches of the general public. The evidence introduced

at trial renders inconceivable Beckman’s present contention that he could not

reasonably foresee, nor did he commit to, the scope of the currency program. The

district court did not clearly err in attributing the aggregate losses caused by the

conspiracy to Beckman. 

Second, Beckman argues the Olsons, who were in their nineties at the time of

the trial, were not vulnerable victims. See id. § 3A1.1(b)(1) & cmt. n.2 (increasing

the offense level by two “[i]f the defendant knew or should have known that a victim

of the offense was a vulnerable victim,” including a victim “who is unusually

vulnerable due to age”). Whether the Olsons were vulnerable victims is a factual

determination we review for clear error. See, e.g., United States v. Fiorito, 640 F.3d

338, 351 (8th Cir. 2011). “As a group, older persons are more experienced investors,

so it would be clear error to impose a § 3A1.1(b)(1) increase simply because some of

the victims of a widespread investment scam were elderly.” United States v.

Anderson, 349 F.3d 568, 572 (8th Cir. 2003). Rather, “the enhancement . . . requires

a fact-based explanation of why advanced age or some other characteristic made one

or more victims ‘unusually vulnerable’ to the offense conduct, and why the defendant

knew or should have known of this unusual vulnerability.” Id. In Anderson, we

decided the government’s “breezy assertion” “that the instant scheme featuring the

too good to be true, tax free, risk free, 12% rate of return investment, would have

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little chance of success without such a vulnerable audience” fell “far short of the

necessary showing.” Id. at 573 n.3 (internal quotation marks omitted). 

Charlotte Olson testified she held two college degrees and at one time had the

“knowledge and ability and acumen” to manage her money herself. But Mrs. Olson

suffered a stroke in 1998, and after that she was not “able to manage [her] money as

[she was] before.” The “stroke removed [her] memory[,] and [she] had a very

difficult time getting it back.” She also testified “the stroke ma[de her] more foggy”

and made it “harder for [her] to make well-informed decisions about [her] money.” 

The district court did not clearly err by finding Mrs. Olson was a vulnerable victim

and that Beckman, who described her as “a long-standing client,” knew or should

have known of her vulnerable status.

Third, Beckman objects to an enhancement for a violation of a securities law

by an investment advisor. See U.S.S.G. § 2B1.1(b)(18)(A)(iii) (requiring a four-level

enhancement “[i]f the offense involved . . . a violation of securities law and, at the

time of the offense, the defendant was . . . an investment adviser”). Beckman does 15

not dispute the charged offenses involved a violation of securities law or that he was

an SEC-registered investment advisor. Rather, Beckman claims he was not acting in

the role of an SEC-registered investment advisor with regard to the currency program

because he did not charge a fee, and thus was “an independent agent, a function that

did not require . . . licensing.” Beckman cites no case law in support of his claim, nor

do we find any. We are persuaded by the reasoning of the Eleventh Circuit, which

was not convinced by a defendant’s arguments that the § 2B1.1(b)(18) enhancement

did not apply because the defendant was not licensed. See United States v. Elia, 579

F. App’x 752, 755 (11th Cir. 2014) (unpublished per curiam) (reasoning that “the

“A conviction under a securities law . . . is not required in order for

15

subsection (b)(18) to apply. This subsection would apply in the case of a defendant

convicted under a generalfraud statute if the defendant’s conduct violated a securities

law.” U.S.S.G. § 2B1.1(b)(18), cmt. n.14(B).

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term ‘investment adviser’ does not require formal licensing” in the first instance);see

U.S.S.G. § 2B1.1(b)(18)(A)(i)-(iii). The district court did not clearly err by finding

Beckman was an investment advisor and applying the enhancement. 

Fourth, Beckman denies the conspiracy and questions whether it involved

sophisticated means. See id. § 2B1.1(b)(10)(C) (increasing the offense level by two

if “the offense . . . involved sophisticated means”). “For purposes of subsection

(b)(10)(C), ‘sophisticated means’ means especially complex or especially intricate

offense conduct pertaining to the execution or concealment of an offense.” Id.

§ 2B1.1(b)(10)(C), cmt. n.8(B). “Conduct such as hiding assets or transactions, or

both, through the use of fictitious entities[or] corporate shells. . . ordinarily indicates

sophisticated means.” Id. “‘Even if any single step is not complicated, repetitive and

coordinated conduct can amount to a sophisticated scheme.’” United States v.

Huston, 744 F.3d 589, 592 (8th Cir. 2014) (quoting Fiorito, 640 F.3d at 351). “The

enhancement applies when the offense conduct, viewed as a whole, was notablymore

intricate than that of the garden-variety offense.” Adejumo, 772 F.3d at 531 (quoting

United States v. Jenkins, 578 F.3d 745, 751 (8th Cir. 2009) (internal marks omitted)). 

“‘We review the factual finding of whether a . . . scheme qualifies assophisticated for

clear error.’” Huston, 744 F.3d at 592 (alteration in original) (quoting United States

v. Brooks, 174 F.3d 950, 958 (8th Cir. 1999)). Given the obviously complex nature

ofthisfinancial crime, which involved “‘repetitive and coordinated conduct,’” see id.

(quoting Fiorito, 640 F.3d at 351), and defrauded hundreds of investors, the district

court did not clearly err by finding the defendants’ scheme involved sophisticated

means.

Finally, Beckman asserts he did not obstruct justice. See U.S.S.G. § 3C1.1

(increasing the offense level by two for obstruction “related to . . . the defendant’s

offense of conviction”); id. cmt. n.4(B) (stating perjury is an example of obstruction). 

“A defendant commits perjury if, under oath, he or she gives false testimony

concerning a material matter with the willful intent to provide false testimony, rather

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than as a result of confusion, mistake, or faulty memory.” Adejumo, 772 F.3d at 535

(internal marks omitted)(quoting United States v. O’Dell, 204 F.3d 829, 836 (8thCir.

2000)). “‘We review a district court’s factual findings in support of an obstruction

of justice enhancement for clear error and its application of the sentencing guidelines

to the facts de novo.’” Id. (quoting O’Dell, 204 F.3d at 836). 

During the Phillips litigation, Beckman swore in an affidavit and testified to

the court he and his wife invested over $6 million in the currency program, of which

almost $4 million was his “earnings.” At trial, Beckman also testified he invested

millions of dollars with the currency program. In contrast, SEC accountant Hlavacek

testified that at the most, Beckman invested only $44,000 into the currency program. 

The district court did not err by crediting Hlavacek’s testimony and the evidence

introduced at trial rather than Beckman’s affidavit and testimony, and properly

applied the obstruction of justice enhancement.

b. Comparison with Cook

Beckman argues the district court procedurally erred by failing to explain why

Beckman’s sentence was sixty months longer than Cook’s, even though, according

to Beckman, Cook was “[t]he acknowledged kingpin of the Ponzi scheme.” See

18 U.S.C. § 3553(a)(6) (requiring a sentencing court to consider “the need to avoid

unwarranted sentence disparities among defendants with similar records who have

been found guilty of similar conduct”). Beckman’s argument fails because

“avoidance of unwarranted disparities was clearly considered by the Sentencing

Commission when setting the Guidelines ranges,” and a district judge “necessarily

g[ives] significant weight and consideration to the need to avoid unwarranted

disparities” when he “correctly calculate[s] and carefully review[s] the Guidelines

range.” Gall, 552 U.S. at 54.

Beckman also ignores Cook’s different status with regard to sentencing. First,

Cook pled guilty, while Beckman proceeded with a lengthy, complex jury trial. 

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Second, Cook pled guilty to two crimes, aiding and abetting mail fraud and tax

evasion, while a jury convicted Beckman of many more, including crimes unique to

him concerning the Olsons and the NHL. As a result, Cook was not similarly situated

with Beckman. See United States v. Williams, 624 F.3d 889, 897 (8th Cir. 2010)

(finding “no procedural error in the district court’s consideration of 18 U.S.C.

§ 3553(a)(6) [when] the two defendants were not similarly situated”). 

At Beckman’s sentencing hearing, the district court said, “I have reviewed all

the case law that is pertinent to this case fromthe Eighth Circuit Court of Appeals and

of course the United States Supreme Court and most assuredly I have reviewed Title

18, 3553(a), and those provisions in fashioning the sentence that I will hand down in

a few moments.” The district court continued, “All four of you that I am going to be

sentencing today, from Pettengill, to Durand, to Kiley to you [Beckman], were

essential to the whole scheme, as was Trevor Cook, and for that you will be sentenced

to a term of imprisonment that I believe is appropriate.” The district court did not

procedurally err when it considered § 3553(a)(6), and the district court adequately

explained the sentences of the defendants in relation to each other, particularly

considering the obvious disparities between Beckman and Cook.16

Beckman urges us to remand for clarification of his sentence in relation to 16

Cook, citing United States v. Cole, 721 F.3d 1016 (8th Cir. 2013), where the

sentencing court sentenced Cole to three years probation when her advisory

Guidelines range was 135 to 168 months imprisonment and her co-conspirators

received “much harsher” sentences of 180 months and 90 months imprisonment. Id.

at 1019, 1025. Noting “the magnitude of the downward variance” and that Cole’s

sentence was “a ‘major departure’ from the advisory Guidelines range,” we

“remand[ed] for the district court to more fully explain the defendant-specific facts

and policy decisions upon which it relied in determining that the probationary

sentence [was] ‘sufficient, but not greater than necessary’ . . . to achieve the

sentencing objectives set forth in section 3553(a).” Id. at 1025 (quoting Gall, 552

U.S. at 50 and 18 U.S.C. § 3553(a)). Our remand in Cole was predicated upon the

unique facts of that case and does not require the same result here, where Beckman

received a well-considered and well-explained sentence of imprisonment.

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2. Durand 

Durand argues the district court procedurally erred in calculating his sentence,

which “violate[s] the letter and spirit of 18 U.S.C. § 3553(a),” because his

“culpability was exponentially less than that of the other defendants.” In reviewing

the district court’s sentencing decision, again, we emphasize “the scope of the

individual defendant’s”— Durand’s—“undertaking and foreseeability in light ofthat

undertaking, rather than the scope of the conspiracy as a whole.” Spotted Elk, 548

F.3d at 674; see U.S.S.G. § 1B1.3, cmt. n.2. We “focus . . . on acts, reasonably

foreseeable to” Durand “even though committed by others, that furthered a criminal

activity that he had agreed to undertake jointly with those others.” Davison, 761 F.3d

at 685. Again, “‘[w]e review . . . for clear error.’” Adejumo, 772 F.3d at 533 (quoting

Spotted Elk, 548 F.3d at 677).

Durand proposes he should not be responsible for all the losses attributed to the

conspiracy because he claims he played a smaller role than his co-conspirators. See

U.S.S.G. § 2B1.1(b)(1)(N). Durand claims he “was responsible for recruiting [only]

17 individuals who invested and lost less than seven million dollars.” Alternatively,

Durand suggests the district court should have calculated the loss as Durand’s gain

of $1.9 million. See id. § 2B1.1, cmt. n.3(B). Durand contends, “if he was part of a

conspiracy, he joined it well into 2008,” and he “solicited zero investors for the

Cook-Kiley currency program after [he] was fired in early June of 2008.”

The evidence presented at trial contradicts Durand’s proposition. Durand

admits he started soliciting investors for Cook through his radio show and by hosting

seminars as early as 2005. Durand produced brochures, practically identical to

Beckman’s, advertising the currency program and making utterly false statements

about the safety and liquidity of investors’ funds. Durand forwarded names of

investors to Cook, knowing Cook was a liar who purposely misled people by using

the name “UBS.” Although Durand now claims he was “fired” in June 2008, at the

time, he stated he had moved out of the currency program’s principal place of

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business but “nothing else has changed.” (Emphasis added). Durand stated he would

“still do the radio, the newsletter, seminars and oh yes . . . still continue to be an

owner of Oxford!!!” An Oxford Global Advisor newsletter dated August 2008

containing articles by Beckman and Durand lists Durand as “Managing Director,

Oxford Global Advisors” and directs investors to “[t]une in” to Durand’s radio show

“to tune up [their] portfolio[s].” The district court did not clearly err by finding the

17

evidence adduced at trial, including Durand’s radio shows, brochures, seminars,

newsletters, advice to investors and personal gain, showed Durand personally

understood and foresaw the scope of the scheme that wrought economic disaster on

the investors. The district court did not clearly err in finding Durand responsible for

over $100 million in actual losses. See U.S.S.G. § 2B1.1(b)(1)(N). 

3. Kiley 

“Assuming that the district court’s sentencing decision is procedurally sound,

the appellate court should then consider the substantive reasonableness of the

sentence imposed under an abuse-of-discretion standard.” Gall, 552 U.S. at 51. 

Kiley first argues his “sentence wassubstantively unreasonable because it placed too

much weight on the Sentencing Guidelines’ ‘loss amount’ enhancement under

§ 2B1.1(b)(1)(N), which adds 26 points to a defendant’s offense level where ‘actual

losses’ exceed $100,000,000.” Kiley states, “The government did not provide any

evidence that the ‘actual loss’ suffered by the investors was ‘reasonably foreseeable’

by Mr. Kiley. As such, it is not proper to attribute that loss to Mr. Kiley under the

guidelines.” Kiley contends he was unaware the purpose of the scheme was to

defraud the investors and “he did not know that the statements he made about the

In his article, Durand wrote, “My desire to address the investor is dwarfed by 17

my concern for the masses—those hard working Americans who exist frompaycheck

to paycheck, blissfully unaware of how close to the edge of economic disaster they

reside.” 

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currency program were . . . false.” Based on sufficient evidence produced at trial, the

jury found otherwise. 

Second, Kiley theorizes his sentence violates the Eighth Amendment because

“use ofthe loss amount enhancement to punish individuals involved in large financial

crimes results in sentences that are excessive and disproportionate to the crime

charged, and therefore serve no valid legislative purpose.” Yet, “even ‘assuming that

a sentencing court may disregard [a guideline] on pure policy grounds,’” the United

States Supreme Court has not held “‘that a district court must disagree with any

sentencing guideline, whether it reflects a policy judgment of Congress or the

[Sentencing] Commission’s characteristic empirical approach.’” United States v.

O’Connor, 567 F.3d 395, 398 (8th Cir. 2009) (first alteration in original) (quoting

United States v. Barron, 557 F.3d 866, 871 (8th Cir. 2009)). Kiley’s policy argument

did not compel the district court to accept his theory.

“‘[W]here a district court has sentenced a defendant below the advisory

guidelines range, it is nearly inconceivable that the court abused its discretion in not

varying downward still further.’” United States v. McKanry, 628 F.3d 1010, 1022

(8th Cir. 2011) (alteration in original) (quoting United States v. Moore, 581 F.3d 681,

684 (8th Cir. 2009) (per curiam)). The district court did not abuse its discretion by

applying the loss amount enhancement and then sentencing Kiley to 240 months

imprisonment, well below his advisory Guidelines range of 3,360 months for all

fifteen counts. 

F. Beckman’s Motion to Strike

Twice in its brief, the government statesCharlotte and Raymond Olson are now

deceased. Beckman filed a motion to strike these references. Because the statements

played no part in our analysis, we deny Beckman’s motion as moot.

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III. CONCLUSION

We affirm the conviction and sentence of each defendant.

BYE, Circuit Judge, concurring in part and dissenting in part.

I agree in all respects with affirming the convictions and sentences of Jason

Beckman and Gerald Durand. I believe Patrick Kiley's Sixth Amendment rights were

violated at trial, however, because his counsel was laboring under a conflict of

interest that adversely affected his representation of Kiley. As a result, I would

reverse Kiley's conviction and remand for a new trial. I therefore respectfully dissent

from Section II.C. of the majority's opinion.

18

The district court never considered whether Kiley's trial counsel, H. Nasif

Mahmoud, was operating under a conflict of interest while representing Kiley on the

grounds that Mahmoud was directly implicated in one of Kiley's crimes. Count 23

of the Second Superseding Indictment charged Kiley with money laundering in

connection with a 2009 wire transfer of $100,000 from one of Trevor Cook's

fraudulent enterprises. The purported purpose of the wire transfer was to pay

Mahmoud to represent the fraudulent enterprise and Kiley in a related civil case. 

Mahmoud attendedmeetings at the currency program's place of businessin July 2009,

purportedly to discuss the civil litigation. The government cross-examined Julie

Gilsrud, Kiley's secretary, with the intent to show the wire transfer was done for

Kiley's benefit, or at least with Kiley's approval. Mahmoud admitted during trial he

received the $100,000 wire transfer. In closing argument, the government argued the

wire transfer "was directed by Trevor Cook for the benefit of Pat Kiley. Pat Kiley

had utilized Mr. Mahmoud in connection with a civil litigation. That $100,000 was

for Kiley's benefit." The jury determined the funds Mahmoud received were

Because I would reverse Kiley's conviction, I would not reach the other trial 18

and sentencing issues relevant to him.

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laundered funds within the meaning of 18 U.S.C. § 1957, and found Kiley guilty of

Count 23.

Kiley's current counsel – appointed to represent Kiley following the

postponement of his initial sentencing hearing – argues Mahmoud's receipt of the

laundered funds (as well as his presence at the currency program's place of business)

could lead reasonable jurors to regard Mahmoud as a co-conspirator in the currency

program. He further contends that where an attorney is implicated in his own client's

crimes, a conflict necessarily exists because the client and attorney have divergent

interests with respect to the factual and legal underpinnings of the charge, as well as

the course of action to be taken in defending against the charge. See, e.g., United

States v. Fulton, 5 F.3d 605, 611-13 (2d Cir. 1993) (indicating when an attorney is

implicated in criminal activity sufficiently related to crimes charged against a client,

an unwaivable conflict of interest exists and a per se violation of the Sixth

Amendment occurs because the attorney's "fear of, and desire to avoid, criminal

charges, or even the reputational damage from an unfounded but ostensibly plausible

accusation, will affect virtually every aspect of his or her representation of the

defendant").

Applying our decision in Ausler v. United States, 545 F.3d 1101 (8th Cir.

2008), the majority does not presume prejudice from Mahmoud's implication in the

money laundering charge and automatically reverse Kiley's conviction. Instead, in

this case where the district court failed to inquire into the potential conflict, the

majority concludes Kiley must show the conflict actually affected the adequacy of

Mahmoud's representation. See id. at 1104 (quoting Mickens v. Taylor, 535 U.S.

162, 170-71 & nn. 3, 4 (2002)). Based solely upon Mahmoud's assurance that no

conflict existed, coupled with Kiley's statement to the magistrate judge that he wanted

Mahmoud to represent him, the majority concludes "the district court was not

required to address the potential Count 23 conflict in the midst of this complex and

lengthy trial." Ante at 30.

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I do not agree the majority's analysis is sufficient to address the issues raised

by Kiley. First, I fail to see how a conflicted attorney's own assurance that no conflict

exists should be relevant. But even assuming it is relevant, Mahmoud's assurance

only pertained to the two potential conflicts the government raised in its motion for

inquiry: 1) whether Mahmoud was a necessary witness because he was present at the

July 2009 meetings; and 2) whether he had a potential conflict because he currently

represented one government witness (Stephen Nortier) and formerly represented

another government witness (Duke Thietje). Mahmoud's assurance did not address

the conflict that matters – whether Mahmoud's implication in Kiley's crime, as the

recipient of Count 23's laundered funds, adversely affected his representation of

Kiley.

Similarly, Kiley's statement to the magistrate judge indicating he "want[ed] to

keep Mahmoud" as his attorney did not address the Count 23 implication conflict. 

Kiley's statement responded solely to questions regarding Mahmoud'srepresentation

of Nortier and Thietje. See Mot. Tr. at 14-25, District Ct. Docket #127. Kiley was

never questioned about the conflict stemming from Mahmoud's receipt of $100,000

in laundered funds, nor was he ever given the opportunity to knowingly and

voluntarily waive that conflict, assuming it could be waived. See United States v.

Lopesierra-Gutierrez, 708 F.3d 193, 201-02 (D.C. Cir. 2013) (concluding the conflict

stemming from defense counsel's receipt of laundered funds could be knowingly and

voluntarily waived, but only "where a stipulation bars presentation of incriminating

testimony" and thus the jury never learns that defense counsel received laundered

funds).

Kiley contendsthe possibility that Mahmoud'simplication in Count 23 created

a conflict "was sufficiently apparent . . . to impose upon the court a duty to inquire

further," such that the failure to conduct the inquiry violated Kiley's Fifth Amendment

due process rights. Wood v. Georgia, 450 U.S. 261, 272, 273 (1981). I do not find

the majority's analysis – which appears to consist solely of an examination of the

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district court's inquiry into other potential conflicts – particularly helpful in

addressing that due process issue.

With respect to Kiley's claim that his Sixth Amendment rights were violated, 

the majority defers ruling on Kiley's ineffective-assistance-of-counsel claim until it

has been presented in a subsequent proceeding under 28 U.S.C. § 2255. I would

address the Sixth Amendment claim now. In my view, Mahmoud's ability to provide

constitutionally effective representation to his client came to an end when the jury

learned Mahmoud wasthe recipient of Count 23's laundered funds, was present at the

currency program's place of business, and participated in discussions with Kiley's coconspirators about the currency program. The jury's knowledge of Mahmoud's

implication in Count 23 is a bell that has been rung, and cannot be undone for

purposes of this trial by requiring the district court to hold an evidentiary hearing in

a § 2255 proceeding.

In the situation we have here, where the jury knew Mahmoud received the

laundered funds and was directly implicated in Kiley's charged conduct, it is at least

debatable whether the conflict should be viewed as a per se violation of the Sixth

Amendment and require automatic reversal of Kiley's conviction. See Fulton, 5 F.3d

at 611-13 (applying a per se rule). But even assuming Kiley must demonstrate the

conflict adversely affected Mahmoud's performance under Cuyler v. Sullivan, 446

U.S. 335, 350 (1980), I believe Kiley satisfies that standard.

In Dawan v. Lockhart, 31 F.3d 718 (8th Cir. 1994), our court addressed a

conflict created by the same attorney representing both the defendant and his

co-defendant in a burglaryand theft-of-property prosecution. Stout, the co-defendant,

pleaded guilty and gave a sworn statement implicating Dawan, the defendant. At

Dawan's trial, after the attorney called Stout as a witness and he testified Dawan was

not involved in the charged crimes, the prosecutor cross-examined Dawan about his

prior sworn testimony implicating Dawan, specifically "highlight[ing] the fact that

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Dawan's counsel wasthe attorney who had represented Stout when the statement was

made." Dawan, 31 F.3d at 720. Stout then admitted he had previously implicated

Dawan, but claimed he had lied under oath. Id.

Applying Cuyler's adverse effect standard, our court held Dawan's Sixth

Amendment rights were violated because the jury learned – via the prosecutor's crossexamination – that Dawan's counsel had also represented a witness who changed his

story. We said the "prosecutor's comments made Dawan's attorney look less credible

and, by extension, made Dawan look less credible as well." Id. at 722.

Similarly, here the jury learned that Mahmoud received laundered funds

derived from the fraudulent currency program. The jury also learned Mahmoud was

present at the currency program's place of business and participated in discussions

regarding civil litigation the co-conspirators faced. Based on these facts, it strains

credulity not to expect a reasonable jury to consider whether Mahmoud himself was

part of the criminal conspiracy. If it was even ostensibly plausible for the jury to

believe Mahmoud was involved in the criminal conspiracy, I believe we should

presume it would have "affect[ed] virtually every aspect of [Mahmoud's]

representation of the defendant." Fulton, 5 F.3d at 613. At a minimum, however,

Mahmoud'simplication in Count 23, asthe admitted recipient of funds the jury found

to be laundered, would undoubtedly hurt Mahmoud's credibility with the jury, and by

extension make Kiley look less credible as well. "This is a sufficient adverse effect

for purposes of Cuyler." Dawan, 31 F.3d at 722.

I respectfully dissent from Section II.C. of the majority's opinion. 

______________________________

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