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Parties Involved:
Dan Gregory Duncan
Appellant
United States of America
Appellee

Document Text:

FILiD 

UnirC'd States Court of Appeals 

IN THE UNITED STATES COURT OF APPEALS Tenrh Cirmi: 

FOR THE TENTH CIRCUIT 

UNITED STATES OF AMERICA, 

Plaintiff-Appellee, 

APR 2 4 1QQO 

ROBERT L. 1-!0ECKER 

Clerk 

vs. No. 89-6097 

DAN GREGORY DUNCAN, 

Defendant-Appellant. 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF OKLAHOMA 

(D.C. No. CR-88-141-A) 

ORDER AND JUDGMENT 

Before MCKAY, Circuit Judge, SETH, Senior Circuit Judge, and 

CONWAY, District Judge.* 

*The Honorable John E. Conway, United States District Judge for 

the District of New Mexico, sitting by designation. 

Defendant-Appellant, Dan Gregory Duncan, was convicted of 

four counts of mail fraud pursuant to 18 u.s.c. § 1341. 

The defendant raises the following two issues on appeal: 

1. Whether the trial court erred when it denied the 

defendant's Motion for Judgment of Acquittal based on 

insufficient evidence to support the conviction for mail fraud; 

Appellate Case: 89-6097 Document: 01019971999 Date Filed: 04/24/1990 Page: 1 
2. Whether the trial court abused its discretion by 

allowing the government to introduce improper rebuttal evidence. 

We reject defendant's arguments on appeal, and affirm the 

judgment of the trial court. 

Facts 

On June 8, 1988, the defendant-appellant was named as the 

lone defendant in a 17-count indictment charging him with 

violations of 18 u.s.c. § 1341, to-wit: mail fraud. The 

defendant entered a plea of not guilty to each of the 

allegations, and a jury trial was conducted from December 12, 

1988 through December 16, 1988. During the course of the trial, 

the government moved for, and the trial court granted, a Motion 

to Dismiss Counts V, VI, IX and X of the indictment. The jury 

returned a verdict of guilty as to Counts XIV, XV, XVI and XVII 

of the Indictment and not guilty as to the remaining counts. The 

defendant timely filed an appeal from the verdict and the 

sentence. 

The defendant-appellant in this case is an airplane and 

airplane engine enthusiast who invented a Wankel rotary engine 

suitable for use in lightweight, home-built aircraft. The 

defendant displayed his idea and engines at the Oshkosh Air Show, 

in Oshkosh, Wisconsin, in the spring of 1983. Based on favorable 

responses to his new product, the defendant opened a full-time 

business known as Duncan Aviation Engines. The business operated 

for approximately three years. Due to recurring supply problems, 

the defendant was not always able to supply his customers with 

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the engines ordered within the contractual time period. It 

appears that in some instances he failed to provide a refund to 

those customers that did not receive engines. At the trial, a 

series of witnesses, who had ordered and did not receive, or who 

received in pieces, engines from Duncan Aviation, testified for 

the government as to their losses. In addition, three customers 

of Duncan Aviation who were quite satisfied testified on the 

defendant's behalf. 

In considering whether sufficient evidence was adduced at 

trial to sustain a conviction, an appeals court will consider all 

evidence, direct and circumstantial, and any inferences that may 

reasonably be drawn therefrom, in the light most favorable to the 

government. United states v. Troutman, 814 F.2d 1428, 1455 (10th 

Cir. 1987). The evidence will be deemed sufficient to uphold the 

jury verdict if "any rational trier of fact could have found the 

essential elements of the crime beyond a reasonable doubt." 

Jackson v. Virginia, 443 U.S. 307, 319 (1979). Finally, evidence 

supporting a conviction must be substantial, raising more than a 

mere suspicion of guilt. Troutman, 814 F.2d at 1455. 

The essential elements necessary for a conviction of mail 

fraud pursuant to 18 u.s.c. § 1341 are: 

1. An act of having devised or intending to devise a scheme 

or artifice to defraud or attempt to defraud; and 

2. An act of using the mail willfully with the intent to 

carry out some essential steps in execution of the scheme or 

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Appellate Case: 89-6097 Document: 01019971999 Date Filed: 04/24/1990 Page: 3 
artifice to defraud. United States v. Curtis, 537 F.2d 1091, 

1095 (10th Cir. 1976), cert. denied, 429 U.S. 962 (1976). 

On appeal, the defendant argues that there is insufficient 

evidence to establish that he intended to establish a scheme or 

artifice to defraud. The defendant contends that the trial court 

denied the Motion for Judgment of Acquittal on grounds that 

1) the technical aspects represented in the defendant's 

literature were unsupported by data and therefore misleading; 

and/or 2) that the defendant continued to receive and solicit 

money when he had no reasonable basis to believe that he could 

perform. On his behalf, the defendant argues that the jury 

returned a verdict of "not guilty'' on Counts I, II, III, IV, VII, 

VIII, XI, XII and XIII of the Indictment. The defendant would 

construe those verdicts as support for a finding that the jury 

did not conclude Mr. Duncan's technical information or 

representations with respect to his product were false or 

misleading. 

In answer to the defendant/appellant's argument, the 

government offers the fact that those allegations on which the 

jury returned a verdict of ''not guilty," were based on conduct 

stemming from transactions that took place relatively early in 

the defendant's course of business. The government persuasively 

argues that the jury might have found that early on in the 

business, the defendant had the potential for fulfilling orders 

for engines, and had not actually deceived people into believing 

that they would receive an item which did not and would not ever 

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exist. The government then argues that the jury actually found 

sufficient evidence to convict Mr. Duncan on Counts XIV, XV, XVI 

and XVII which alleged violations during the months of May and 

June of 1985 and April of 1986. The government characterizes 

these violations as conduct which occurred late in the life cycle 

of the company, at a point in time in which the defendant could 

no longer hope to fulfill the promises made to his customers. 

Thus, the government makes the argument that the defendant 

continued to solicit and receive money for aircraft engines which 

he could no longer produce. Such conduct is purportedly 

sufficient to constitute fraud pursuant to 18 u.s.c. § 1341. 

Thus, the first issue presented for our consideration is 

whether the jury might have found that the defendant intended to 

defraud by continuing to receive orders after May of 1985. It is 

our belief that the jury could have reasonably found in favor of 

the government on Counts XIV, XV, XVI and XVII given the evidence 

presented to it, and might easily have separated the later 

violations from the earlier alleged violations in reaching its 

conclusion. A catalog of the relevant evidence immediately 

suggests that there was ample testimony to substantiate the 

conviction. 

As to Counts XIV, XV and XVI, the testimony of William 

Johnson provides ample support for the finding of "guilty." 

Mr. Johnson testified that he transmitted $2,000.00 through the 

U.S. mail as a down payment on a particular engine from the 

defendant, and then visited the defendant's plant in February of 

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1986. He never received an engine or a refund for the monies he 

paid the defendant. He was unsuccessful in his attempt to 

contact the defendant by telephone and/or to get an aircraft 

engine for himself as he could not get anyone at the place of 

business, Duncan Aviation, over the phone. As to Count XVII, the 

testimony of Dr. Jack Soules provides support for the jury 

verdict. Dr. Soules testified that he sent the defendant 

$2,000.00 for an aircraft engine in April of 1986 and did not 

receive the engine or a refund from the defendant. Despite 

numerous attempts by telephone to contact the defendant, there 

was no response. Dr. Soules testified that the defendant was 

difficult to reach and would not return his phone calls. When he 

was able to get the defendant on the phone, Dr. Soules became 

suspicious that the defendant was avoiding him and trying to 

escape from his obligations. This conduct occurred despite 

Dr. Soules apparently mitigatory offers to have the necessary 

engine castings made in Cleveland if the defendant would simply 

send him the blueprints for the same. Dr. Soules further 

testified that he paid $257.00 for a motor mount for an engine 

and described it as junk. (Dr. Soules was an engineer with a 

masters and doctorate degree in physics from Ohio State 

University). Despite repeated promises by the defendant that he 

would deliver the required merchandise within a few weeks, a 

couple of weeks, or a matter of a few days, Dr. Soules never 

received the merchandise. 

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In addition to these witnesses, an employee of the defendant 

testified that he overheard Mr. Duncan in conversations at the 

plant telling persons making inquiries about their aircraft 

engines "stuff that he was supposed to be doing that we weren't 

doing." Bill Gray, a former employee of the defendant, stated 

that the defendant specifically told people that they were 

testing the engines, as in flight testing, but that he never did 

any testing on any of the engines. In addition, Gray testified 

that three or four times a day the defendant would tell the 

secretary to make up something, or tell the persons that he was 

not there, or that the parts were on their way to them. Gray 

also testified that the defendant ordered him to assemble an 

unworkable unit. Gray further stated that the kind of material 

advertised by the defendant in his brochures was not actually 

being used in the aircraft engines. According to Gray, the 

defendant never provided the customer with what he stated he was 

going to provide them. He also testified that he did not have 

any knowledge of the defendant sub-contracting any of the work on 

the engines, and that there was no testing equipment within the 

defendant's facility. 

Finally, Ms. Cheryl Reynolds, a secretary for the defendant, 

testified that she handled the checks that arrived in the mail 

and received an average of ten telephone calls per day at Duncan 

Aviation. Some of the phone calls would be from customers who 

had ordered engines and wanted to know if they were ready or if 

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they had been shipped. These customers also inquired as to how 

long the wait would be before the engines were ready for 

shipment. Ms. Reynolds' additionally stated that some customers 

would receive partial engines and that other customers would not 

be sent a shipment at all. Her testimony was that most of the 

information that the defendant told her to pass along regarding 

the merchandise was false. To her knowledge, while working for 

the defendant, there were never any flight tested rotary engines 

shipped, and some rotary engines were simply not operable. 

Ms. Reynolds also stated that she composed, typed, signed 

letters, and sent receipts for money received for orders on 

aircraft engines at the direction of the defendant. 

All of this evidence would tend to suggest that the 

defendant knew he could not produce any of the aircraft engines 

ordered as of May 1985, and yet he continued to take monies from 

people, did not refund monies already received, or otherwise 

misstated and misrepresented his ability to fulfill orders. In 

addition, a reasonable jury could find that the defendant 

received checks and money orders through the U.S. mail, and 

returned receipts and other materials to persons through the 

U.S. mail. It would therefore be reasonable for a jury to infer 

that the defendant received monies knowing, at the time of his 

solicitation of those funds, that he would be unable to perform. 

Based on the foregoing discussion, and the ample evidence in 

the record to support a jury verdict against the defendant, this 

Court finds that the trial judge acted within his discretion in 

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not granting a judgment of acquittal. The trial court will 

therefore be affirmed on this issue. 

The second issue on appeal is whether the trial court abused 

its discretion by allowing the government to introduce improper 

rebuttal testimony. The admission of rebuttal evidence and the 

characterization of evidence as such rests within the sound 

discretion of the trial court. Therefore, the appellate court 

must determine whether the trial court abused that discretion. 

United states v. Posey, 647 F.2d 1048, 1052 (10th Cir. 1981); 

United States v. Smurthwaite, 590 F.2d 889 (10th Cir. 1979). 

At trial, counsel for the defendant objected to the 

admission of the testimony of Terry Herrell as substantive 

evidence being offered under the guise of rebuttal. The trial 

court disagreed and allowed the testimony of Mr. Herrell as 

rebuttal evidence. Mr. Herrell, an aerospace engineer, testified 

concerning the help he offered in preparing a brochure for the 

defendant which described his aircraft engines. The information 

that Mr. Herrell used for the brochures was supplied by the 

defendant. Herrell's testimony came after the defendant had made 

allegations in his direct testimony concerning the fuel 

consumption of the aircraft engines, the amount of hours and the 

time between overhaul of the engines, the horsepower of the 

engines, and the rotations per minute of the engines. 

Mr. Herrell's testimony refuted those matters. 

The bulk of the defendant's objections regarded refutations 

of technical data that Mr. Herrell presented in front of the jury 

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during rebuttal. The defendant was apparently unhappy with this 

"expert testimony" in that Herrell disputed some of the figures 

which Duncan published in his brochure. Much of Herrell's 

testimony might have been presented by the government in its 

case-in-chief upon direct examination. However, since the 

admission of rebuttal evidence is within the sound discretion of 

the trial court, and the mere fact that testimony that may have 

been given on direct examination does not preclude its 

admissibility on rebuttal, United States v. Pennett, 496 F.2d 

293, 299 (10th Cir. 1974), we do not find that the trial court 

abused its discretion in allowing such testimony to go to the 

jury. Furthermore, we do not find that Mr. Herrell's testimony 

in any way prejudiced the case against the defendant since the 

trial court might easily have found it properly characterized as 

rebuttal evidence. 

Therefore, in regard to this final issue, the trial court is 

AFFIRMED. 

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