Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-07-01312/USCOURTS-ca8-07-01312-0/pdf.json

Parties Involved:
United States
Appellee
Monty E. Wanless
Appellant

Document Text:

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 07-1309

___________

United States of America, *

*

Plaintiff - Appellee, *

*

v. *

*

Zachery T. Whitehill, *

*

Defendant - Appellant. *

___________

No. 07-1311

___________

United States of America, * Appeals from the United States

* District Court for the Western

Plaintiff - Appellee, * District of Missouri.

*

v. *

*

Bradley L. Lovstad, *

*

Defendant - Appellant. *

___________

No. 07-1312

___________

United States of America, *

*

Plaintiff - Appellee, *

*

Appellate Case: 07-1312 Page: 1 Date Filed: 07/10/2008 Entry ID: 3450442
-2-

v. *

*

Monty E. Wanless, *

*

Defendant - Appellant. *

___________

No. 07-1318

___________

United States of America, *

*

Plaintiff - Appellee, *

*

v. *

*

Jaime E. Cook, *

*

Defendant - Appellant. *

___________

Submitted: October 18, 2007

Filed: July 10, 2008

___________

Before BYE, BOWMAN, and SMITH, Circuit Judges.

___________

BYE, Circuit Judge.

These appeals arise out of a telemarketing scheme to defraud would-be credit

card purchasers. Zachary Whitehill, Bradley Lovstad, Monty Wanless, and Jaime

Cook were charged with conspiracy to commit Wire and Telemarketing Fraud, 18

U.S.C. § 371, and Aiding and Abetting Wire and Telemarketing Fraud, 18 U.S.C.

§§ 1343, 2325, and 2. In addition, Whitehill was charged with Aiding and Abetting

Money Laundering, 18 U.S.C. §§ 1957 and 2, and Criminal Forfeiture, 18 U.S.C.

Appellate Case: 07-1312 Page: 2 Date Filed: 07/10/2008 Entry ID: 3450442
1

The Honorable Nanette K. Laughrey, United States District Judge for the

Western District of Missouri.

-3-

§ 982. Following a jury trial, Whitehill, Lovstad and Wanless were convicted of

conspiracy and aiding and abetting, while Cook was convicted of conspiracy but

acquitted of aiding and abetting. Whitehill was also convicted of money laundering

and forfeiture.

Each defendant appeals his convictions and sentences arguing the district court1

erred by 1) instructing the jury on willful blindness, 2) refusing defendants' theory of

defense instruction, 3) imposing sentencing enhancements based on a preponderance

of the evidence standard, and 4) refusing to grant a new trial based on the

government's failure to disclose exculpatory materials in violation of Brady v.

Maryland, 373 U.S. 83 (1963). We affirm.

I

The scheme began in 1997 when Christopher Ekeland and Whitehill, among

others, started Gecko, a telemarketing company. Lovstad, Wanless, and Cook were

hired shortly after the company was formed. Initially, Gecko conducted telemarketing

on behalf of charitable organizations. From the beginning, it engaged in questionable

business practices. Its employees would solicit contributions from customers who

were told the charities were local organizations and eighty percent of the contributions

would go to the charity. In reality, the charities were not local and eighty to ninety

percent of the contributions went to Gecko.

In August 1999, Gecko moved from charitable telemarketing to working with

vendors who sold credit card packages. The vendors assembled offers which included

coupons for free merchandise, travel, and applications for major credit cards. Most,

if not all, of the materials were available to customers free of charge. Nonetheless, the

Appellate Case: 07-1312 Page: 3 Date Filed: 07/10/2008 Entry ID: 3450442
-4-

vendors hired telemarketing firms like Gecko to solicit customers at costs ranging

between $159.95-$229.95. The vendors supplied Gecko with scripts its telemarketers

followed to entice customers into purchasing the packages. The scripts directed

telemarketers to tell customers the packages contained actual credit cards, not simply

applications for credit cards. The vendors also sold call lists of potential customers

to Gecko. The call lists contained the names of people who, because of poor

creditworthiness, were unable to obtain unsecured credit cards.

Persons solicited were told 1) Gecko's telemarketer was an employee of the

vendor, 2) the customer was pre-approved for a major credit card, 3) the customer's

credit had been upgraded, and 4) the caller's company helped people reestablish

creditworthiness. Frequently, telemarketers misrepresented their locations to

customers to ease concerns about the legitimacy of the solicitations. The evidence

showed the defendants were aware the statements were false.

If a customer agreed to purchase a credit card package, the telemarketer

connected the customer to a "verification officer." The verification officer's job was

to obtain billing information and confirm the purchase. Because verification calls

were recorded, the verification officers did not follow the script provided to

telemarketers. They told customers the packages did not contain actual credit cards

and if the customer questioned the discrepancy an answer was selected from a list of

prescribed responses termed a "rebuttal." For example, customers would be told all

they had to do was provide the credit card company with their social security number

and the card would be issued. The rebuttal response sheets were created by Gecko as

a means of deflecting customer questions and complaints. The evidence showed the

defendants knew the rebuttals were intended to facilitate sales and conceal

misrepresentations.

The evidence showed each defendant was aware 1) the sales scripts falsely

promised credit cards, 2) the verification process only promised applications, and 3)

Appellate Case: 07-1312 Page: 4 Date Filed: 07/10/2008 Entry ID: 3450442
-5-

the rebuttals were used to further the deception if a customer asked about the

discrepancy. The government presented evidence of an email from Ekeland to

Whitehill, Wanless, and Cook, sent weeks before the FBI raided Gecko's offices,

directing them to conceal and later destroy the deceptive sales scripts. The

government also presented evidence indicating the defendants were familiar with the

materials contained in the packages, knew the packages did not contain credit cards

as promised, and were aware credit-challenged customers, who could not obtain major

credit cards, were being targeted. The government's evidence further demonstrated

the defendants knew no customers ever received credit cards and Gecko periodically

changed vendor names to solicit customers who previously had been duped. When

the customers questioned the caller, they were told the telemarketer represented a

different company and this time a card would be provided. Finally, several Gecko

telemarketers testified they approached defendants questioning the legality of Gecko's

activities but their concerns were dismissed. At trial, the defendants denied

knowledge of the fraudulent scheme. The government argued the evidence proved

defendants had actual knowledge of the scheme or were suspicious but chose to focus

on generating revenue instead of pursuing their concerns.

Gecko established offices in Iowa, Missouri, and Kansas, and solicited

customers throughout the United States. Whitehill was Gecko's co-owner, vicepresident, secretary, and an office manager. He established a second business for the

purpose of purchasing call lists of credit-challenged customers, supervised Gecko's

Iowa offices, hired and trained telemarketers and managers, maintained and "tweaked"

sales scripts, and prepared sales reports and payroll.

 

Cook was hired in 1997 and became the manager at Gecko's office in Des

Moines, Iowa. As manager he was responsible for hiring, training telemarketers,

maintaining and modifying the sales scripts, processing customer leads, and other

administrative duties. The evidence showed the Des Moines office generated

approximately $455,223 in revenue while Cook was manager.

Appellate Case: 07-1312 Page: 5 Date Filed: 07/10/2008 Entry ID: 3450442
-6-

Lovstad was also hired in 1997 and became the manager of Gecko's Brooklyn,

Iowa office. He was responsible for hiring, training telemarketers, maintaining and

modifying the sales scripts, processing customer leads, and other administrative

duties. The evidence showed the Brooklyn office generated approximately

$1,120,718 in revenue while Lovstad was manager.

Wanless was hired in 1997 and in 1999 became the manager of Gecko's Kansas

City, Kansas office. He was responsible for hiring, training telemarketers,

maintaining and modifying the sales scripts, processing customer leads, and other

administrative duties. The evidence showed the Kansas City office generated

approximately $3,336,833 in revenue while Wanless was manager.

II

A. Jury Instructions - Willful Blindness

Defendants first argue there was no evidentiary basis for a willful blindness jury

instruction and the instruction improperly reduced the government's burden of proof.

We review the district court's jury instructions for abuse of discretion and will affirm

"[i]f the instructions, taken as a whole, fairly and adequately submitted the issues to

the jury." United States v. Lalley, 257 F.3d 751, 755 (8th Cir. 2001). "A willful

blindness instruction is appropriate when the defendant asserts a lack of guilty

knowledge, but the evidence supports an inference of deliberate ignorance." United

States v. Gruenberg, 989 F.2d 971, 974 (8th Cir. 1993) (citations omitted). Ignorance

is deliberate if the defendants were presented with facts putting them on notice

criminal activity was particularly likely and yet intentionally failed to investigate.

United States v. Barnhart, 979 F.2d 647, 652 (8th Cir. 1992). We look to whether

there was sufficient evidence to justify the instruction, reviewing "the evidence and

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

government." United States v. Hiland, 909 F.2d 1114, 1130-31 (8th Cir. 1990).

Appellate Case: 07-1312 Page: 6 Date Filed: 07/10/2008 Entry ID: 3450442
-7-

A willful blindness instruction is not appropriate if the evidence implies

defendants could only have had "either actual knowledge or no knowledge of the facts

in question." United States v. Parker, 364 F.3d 934, 946 (8th Cir. 2004) (citation

omitted). The evidence is sufficient to support the instruction if a jury could find

beyond a reasonable doubt the defendants had either actual knowledge of the illegal

activity or deliberately failed to inquire about it before taking action to support the

activity. Id. (citing United States v. Kellermann, 992 F.2d 177, 179 (8th Cir. 1993)).

If reasonable inferences support a finding the failure to investigate is equivalent to

"burying one's head in the sand," the jury may consider willful blindness as a basis for

knowledge. Gruenberg, 989 F.2d at 974.

The defendants argued they were unaware Gecko was engaged in fraud. Based

on the foregoing, however, we find a jury could reasonably conclude defendants knew

something was wrong but chose not to inquire. 

The defendants' also claim the instruction lowered the government's burden of

proof and allowed the jury to convict them based on a negligence standard. We have

held a jury cannot be led to convict a defendant improperly on a negligence standard

where, as here, the instruction states the jury must not conclude the defendant had

knowledge of criminal activity if he was simply careless or negligent. See Parker, 364

F.3d at 947 n.3. Accordingly, we conclude the district court did not abuse its

discretion in giving the willful blindness instruction.

B. Jury Instructions - Theory of Defense

Defendants asserted a good faith defense, arguing they lacked intent to commit

wire fraud and requested the jury be told: "In order to establish fraudulent intent on

the part of a person, it must be established that such person knowingly and

intentionally attempted to deceive another." The district court refused the instruction

in favor of the Eighth Circuit Model Instruction on good faith which provides: 

Appellate Case: 07-1312 Page: 7 Date Filed: 07/10/2008 Entry ID: 3450442
-8-

Good faith is a complete defense to the charge of conspiracy to commit

telemarketing wire fraud [and aiding and abetting wire and telemarketing

fraud] if it is inconsistent with knowledge of the purpose of the

agreement to engage in telemarketing wire fraud [or intent to defraud

which are essential elements of the charge of aiding and abetting

telemarketing wire fraud.] 

According to the defendants, the district court's refusal to use their instruction

hampered the defense because the court's instructions did not "focus" the jury's

attention on their asserted defense.

 

Defendants are entitled to a theory of defense instruction if it is timely

requested, is supported by the evidence, and is a correct statement of the law, but they

are not entitled to a particularly worded instruction. United States v. Lucht, 18 F.3d

541, 553 (8th Cir. 1994) (citing United States v. Long, 977 F.2d 1264, 1272 (8th Cir.

1992)). The district court has considerable discretion in framing the instructions and

"[i]t is sufficient if the instruction actually given by the trial court adequately and

correctly covers the substance of the requested instruction." United States v. Rederth,

872 F.2d 255, 258 (8th Cir. 1989) (quoting United States v. Richmond, 700 F.2d

1183, 1195-96 (8th Cir. 1983)). We determine the adequacy of instructions by

looking at them as a whole and in the context of the trial. Id.

We see no basis for concluding the district court's good faith instruction was

inadequate. It clearly defined good faith and stated it was a complete defense to the

charges. The language requested by defendants shed no further light on the good faith

defense, except to repeat the definition of fraudulent intent which was included

elsewhere in the instructions. Therefore, the district court did not abuse its discretion.

Appellate Case: 07-1312 Page: 8 Date Filed: 07/10/2008 Entry ID: 3450442
-9-

C. Brady Violation

Several weeks after trial, the government provided the defendants with a letter

written by Ekeland's lawyer to the government which had not been disclosed before

trial. The letter indicated the lawyer believed his client was of the view there was no

evidentiary basis for charging Lovstad, Wanless, and Cook with fraud. The

defendants viewed the letter as exculpatory and argued the government violated Brady

by failing to disclose the information. The government argued there was no Brady

violation because the lawyer's impressions were erroneous and Ekeland specifically

disavowed his lawyer's statements.

Under Brady, the government must disclose any evidence both "favorable to an

accused" and "material either to guilt or to punishment." 373 U.S. at 87. Brady

applies to exculpatory and impeachment evidence, United States v. Bagley, 473 U.S.

667, 676 (1985), whether or not the accused has specifically requested the

information, Kyles v. Whitley, 514 U.S. 419, 433-34 (1995). Evidence favorable to

the accused is material "if there is a reasonable probability that, had the evidence been

disclosed to the defense, the result of the proceeding would have been different." Id.

at 433-34 (quoting Bagley, 473 U.S. at 682). "The question is not whether the

defendant would more likely than not have received a different verdict with the

evidence, but whether in its absence he received a fair trial, understood as a trial

resulting in a verdict worthy of confidence. Id. at 434.

The letter was written by Ekeland's lawyer and did contain opinions Ekeland

refuted. Thus, it could not have been used to impeach Ekeland and there was no duty

under Brady to disclose the letter. Even assuming it was Brady material, Ekeland's

contrary testimony and the evidence marshaled by the government vitiates any harm

occasioned by the nondisclosure. In this instance, the failure to produce a letter

Appellate Case: 07-1312 Page: 9 Date Filed: 07/10/2008 Entry ID: 3450442
-10-

containing a third-party's interpretation of a government witness's testimony does not

undermine confidence in the verdict.

D. Sentencing Enhancements

Defendants' final argument is the district court erred when it imposed various

sentencing enhancements based on a preponderance of the evidence standard instead

of requiring the jury to find the enhancements were supported by proof beyond a

reasonable doubt. This argument has previously been rejected by our court. See, e.g.,

United States v. Okai, 454 F.3d 848, 851-52 (8th Cir. 2006).

III

The judgment of the district court is affirmed.

______________________________

Appellate Case: 07-1312 Page: 10 Date Filed: 07/10/2008 Entry ID: 3450442