1 Circuit Judge of the Seventh Circuit, sitting by

designation. UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 94-40560

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

VERSUS

MICHAEL BRYANT BRUMLEY,

Defendant-Appellant.

Appeal from the United States District Court

for the Eastern District of Texas

(July 18, 1995)

Before WOOD 1 , JOLLY, and DeMOSS, Circuit Judges.

DeMOSS, Circuit Judge,

M ichael Brumley appeals his conviction at a bench trial on

three counts of wire fraud, three counts of money laundering and

one count of conspiracy to commit mail fraud and wire fraud.

Brumley does not appeal his conviction on two counts of making

false s tatements to a financial institution, but he appeals his

sentence. Finding that there was insufficient evidence to convict

Brumley of wire fraud, money launde ring and conspiracy to commit

mail fraud and wire fraud, we REVERSE. Brumley's sentence of2

twenty-four months for two counts of making false statements to a

financial institution is AFFIRMED.

BACKGROUND

Brumley began working for the Texas Industrial Accident

Board (IAB) in July, 1976, as a pre-hearing examiner. In July 1988

he was promoted to the position of regional director for the

Houston area. As part of the state's new workers' compensation

law, the IAB was re-organized in 1990 as the Texas Workers'

Compensation Commission (TWCC) and Brumley was appointed the TWCC's

regional associate director (essentially the same position he had

held with the IAB). Beginning in 1982, Brumley solicited and

accepted approximately $40,000 in loans from local attorneys, which

he admitted was a violation of IAB ethical guidelines.

Between 1987 and 1992, Brumley also accepted over $86,000 in

"loans" via wire transfers from another local attorney, John Cely.

Although Cely understood that the money would never be repaid, he

continued to make loans to Brumley. Cely wired the money from the

Western Union office in Lufkin, Texas, to Brumley in Beaumont,

Texas.

The procedure for making the Western Union wire transfers

involved Cely, or one of his employees, filling out a form listing

the recipient and the amount of the transfer. Cely paid for the

wire transfer with checks payable to H.C. Walker, the Lufkin

Western Union franchisee. The Western Union agent then, through a

personal computer, dialle d into Western Union's main computer in

Bridgeton, Missouri. The Western Union agent would write a unique3

ten-digit number, which he obtained through the computer in

Missouri, on the back of the form he gave to Cely. This would

serve as the receipt. Brumley was then immediately able to pick up

the money.

After being notified that a money transfer was waiting for

him, Brumley would go to a Western Union office in Beaumont to pick

up the transfer. He would fill out a form identifying himself as

the recipient and the Beaumont Western Union agent would call the

Western Union computer in Bridgeton, Missouri, to ver ify the

information. Brumley was then given a check for the amount of the

transfer, which he would cash at either a bank or a grocery store.

In 1988, pursuant to a complaint from one of Cely's clients,

the IAB began an investigation into Cely's law practice. Brumley

on several occasions urged the IAB to reconsider its decision to

formally investigate Cely, and Brumley assisted C ely in altering

subpoenaed documents. Finally, Brumley aided Cely's efforts to

lease TWCC property in Lufkin. The lease, if it had been

consummated, would have violated ethical guidelines, as Cely

practiced before the TWCC. Nevertheless, Brumley directed that the

building specifications be faxed to Cely's office in the name of

one of Cely's clients, James Fredregill. A TWCC employee later

mailed the lease specifications to Fredregill . The property was

ultimately leased to a disinterested party.

Michael Brumley was indicted in November 1993 for conspiracy

to defraud the citizens of the state of Texas of the honest use of

his services via mail and wire communications (18 U.S.C. § 371),2 Brumley was sentenced to twenty-four months in prison for

each of the two counts of making false statements to a financial

institution, to be served concurren tly. Brumley does not appeal

those convictions (they are the only ones we do not reverse).

Brumley does, however, challenge his sentence.

3 18 U.S.C. § 1343 provides:

Whoever, having devised or intending to devise any sc heme or

artifice to defraud, or for obtaining money or property by means of

false or fraudulent pretenses, representations, or promises,

transmits or causes to be transmitted by means of wire, radio, or

television co mmunication in interstate or foreign commerce, any

writings, signs, signal s, pictures, or sounds for the purpose of

executing such scheme or artifice, shall be fined not more than

$1,000 or imprisoned not more than five years, or both. (emphasis

added).

4 The mail fraud, 18 U.S.C. § 1341, and wire fraud, 18 U.S.C.

§ 1343, statutes are nearly identical, with the main difference

being whether the fraud involves th e mails or interstate wires.

Because the wire fraud statute was patterned after the mail fraud

statute, the two are in pari materia

, that is, they are to be read

together. Therefore, cases construing the mail fraud statute are

applicable to wire fraud. U nited States v. Donahue

, 539 F.2d 1131,

1135 (8th Cir. 1976); United States v. Louderman

, 576 F.2d 1383,

4 wire fraud (18 U.S.C. §§ 1343, 1346), money laundering (18 U.S.C.

§ 1956) and making false statements to a financial institution (18

U.S.C. § 1014). At the conclusion of the bench trial, the district

court convicted Brumley on all nine counts in the indictment and

he was sentenced to forty -eight months in prison 2

. Brumley now

appeals.

WIRE FRAUD

The essential elements of wire fraud, 18 U.S.C. § 1343 3

, are:

(1) a scheme to defraud and (2) the use of, or causing the use of,

interstate wire communications to execute the scheme. U nited

States v. Faulkner

, 17 F.3d 745, 771 (5th Cir. 1994), cert. denied

,

115 S. Ct. 786 (1995); United States v. Herron

, 825 F.2d 50, 54

(5th Cir. 1987). 4 In order to prove that a defendant has used, or1387 n.3 (9th Cir. 1978); United States v. Computer Sciences Corp.

,

689 F.2d 1181, 1188 n. 14 (4th Cir. 1982); United States v. Lemire

, 720 F.2d 1327, 1334 n. 6 (D.C. Cir. 1983), cert. denied , 467 U.S.

1226 (1984); United States v. Fermin Castillo

, 829 F.2d 1194, 1198

(1st Cir. 1987).

5 Two other circuits have held that the foreseeability of the

interstate nature of the wire communication is irrelevant (at least

where the defendant actually makes the commun ication). U nited

States v. Bryant

, 766 F.2d 370, 375 (8th Cir. 1985), cert. denied

, 474 U.S. 1054 (1986); United States v. Blassingame , 427 F.2d 329,

5 caused the use of, interstate wire communications, the government

must show that the defendant knew, or that it was foreseeable to

h im that, an interstate wire communication would result. "Where

one does an act with the knowledge that the use of the [interstate

wires] will follow in the ordinary course of business, or where

such use can reasonably be foreseen , even though not actually

intended, the n he `causes' the mails to be used." P ereira v.

United States , 347 U.S. 1, 8-9 (1954).

In order for a wire fraud conviction to stand, then, it must

be foreseeable to the defendant that his actions will result in an

interstate wire communication. When a defendant in one state calls

someone whom he knows is in another state, an interstate wire

communication is clearly foreseeable. However, when the individual

does not pe rsonally communicate, but instead causes a nother to

communicate via interstate wires, foreseeability is not always so

readily apparent. In such a case, therefore, the government must

show that it was foreseeable to the defendant that his actions

wo uld cause an interstate wire communication. U nited States v.

Maze

, 414 U.S. 395, 399 (1974); Pereira v. United States

, 347 U.S.

1, 8-9 (1954). 5331 (2d Cir. 1970), cert denied

, 402 U.S. 945 (1971) . However,

these cases are contrary to our existing precedent, which requires

foreseeability. U nited States v. Duncan

, 919 F.2d 981, 991 (5th

Cir. 1990), cert. denied

, 500 U.S. 9263 (1991); United States v.

Toney

, 598 F.2d 1349, 1355 (5th Cir. 1979), cert. denied

, 444 U.S.

1033 (1980); R.A.G.S. Couture, Inc. v. Hyatt , 774 F.2d 1350, 1354

(5th Cir. 1985); S nyder

, 50 5 F.2d at 601; U nited States v.

Shryock

, 537 F.2d 207, 209 (5th Cir. 1976), cert. denied

, 429 U.S.

1100 (1977).

6 Brumley preserved error on his insufficiency of the evidence

claims; he moved for a directed verdict at the close of the

government's case, which was also the close of evidence. U nited

States v. Pierre , 958 F.2d 1304, 1310 (5th Cir. 1992) (en banc).

7 The ind ictment charged that the conspiracy was between

Brumley and Cely although Cely was an unindicte d co-conspirator.

6 On appeal, Brumley argues that the evidence was insufficient

to convict him of wire fraud, as there was insufficient evidence

that he caused the interstate wire communication. 6 We agree. In

a bench trial, the standard of review is a substantial evidence

test. U nited States v. Cardenas

, 9 F.3d 1139, 1156 (5th Cir.

1993), cert. denied , 114 S. Ct. 2150 (1994)

.

[I]n reviewing the findings of guilt by a trial court in a

non-jury trial, the standard of review of the appellate court

"is to determine whether such findings are suppor ted by any

substantial evidence. It is not our function to make

credibility choices or to pass upo n the weight of the

evidence. The test is whether the evidence is sufficient to

justify the trial judge, as trier of the facts, in concluding

beyond a reasonable doubt that the defendant was guilty."

Cardenas

, 9 F.3d at 1156 (quoting United States v. Jennings

, 726

F.2d 189, 190 (5th Cir. 1984)).

Neither Br umley nor Cely 7 actually communicated with eachIf one conspirator makes a wire communication to execute a scheme,

then all conspirators are liable for wire fraud. U nited States v.

Toney

, 598 F.2d 1349, 1355 (5th Cir. 1979). Therefore, in

determining knowledge and foreseeability relative to Brumley, we

must also consider whe ther the interstate wire communication by

Western Union was foreseeable to Cely.

8 We note that the government cites only Second and Eighth

Circuit cases and ignores all of our foreseeability precedent.

7 other via interstate wires. The only interstate wire

communications in the record were those made by the Western Union

agents in Lufkin, Texas and Beaumont, Texas to the Western Union

computer in Missouri. In order to determine whether Brumley or

Cely caused an interstate wire communication, the issue is whether

it was foreseeable to them that their actions would cause the

Western Union agents' interstate wire communications.

At trial, and on appeal, the govern ment mistakenly believed

that foreseeability and knowledge of the interstate nature of the

wire communication were not elements of wire fraud 8

. Therefore,

the governmen t did not seek to put on evidence showing

foreseeability. In fact, when Brumley's attorney attempted to

question Western Union's representative about foreseeability, the

government objected, arguing that the foreseeability of interstate

communications was not an element of the offense and therefore not

relevant.

Even though the government did not consider knowledge or

foreseeability to be matters it needed to prove at trial, we have

examined the record to determine whether, nevertheless, there was

sufficient evidence to allow the trial judge to determine that it

was foreseeable to Brumley or Cely that their actions would cause8

the Western Union agents' interstate wire communications. The only

evidence in the record that could even inferentially show knowledge

or foreseeability is: (1) Western Union is an international

company with many agents throughout the United States and (2) the

form Cely used in Lufkin, Texas, to initiate the sending of the

money to Brumley listed, on the back, a Western Union corporate

address in New Jersey.

Cely testifie d as a government witness. Nowhere in his

testimony does Cely say, or imply, that he knew, or that it was

foreseeable to him, that his actions could result in an interstate

wire communication.

The only evidence that even attempted to address the

forese eability of interstate communications points to a lack of

foreseeability. When asked on cross-examination by Brumley's

attorney whether a wire transfer customer would be aware of Western

Union's interstate computer system, the Western Union

representative responded, "I can't answer that."

These facts, taken together, do not constitute notice that a

wire transfer of money from Lufkin, Texas, to Beaumont, Texas, will

involve an interstate wire communication. There is not sufficient

evidence i n this record upon which a trier of fact could find

beyond a reasonable doubt that it was foreseeable to Brumley or

Cely that their actions would cause the Western Union agents to

make interstate wire communications . Because use of interstate

wire communications is an essential element of the offense, Herron

,

825 F.2d at 54; Faulkner

, 17 F.3d at 741, the evidence at trial was9

insufficient for the court to find Brumley guilty of wire fraud.

CONSPIRACY TO COMMIT MAIL FRAUD AND WIRE FRAUD

Brumley was convicted of one count of conspiracy to commit

mail fraud and wir e fraud. Brumley argues on appeal that the

evidence was insufficient to convict him. We agree.

The essential elements of conspiracy to commit mail fraud and

wire fraud, 18 U.S.C. § 371, are: (1) an agreement between two or

more persons; (2) to commit interstate mail fraud or wire fraud;

a nd (3) an overt act committed by one of the conspira tors in

furtherance of the conspiracy. U nited States v. Hatch

, 926 F.2d

387, 393 (5th Cir.), cert. denied

, 500 U.S. 943 (1991); United

State s v. Massey , 827 F.2d 995, 1001 (5th Cir. 1987); and U nited

States v. Gordon , 780 F.2d 1165, 1170 (5th Cir. 1986).

"'Conspirac y to commit a particular substantive offense cannot

exist without at least the degree of criminal intent necessary for

the substantive offense.'" M assey

, 827 F.2d at 1001 (quoti n g

Ingram v. United States , 360 U.S. 672, 678 (1959)).

Specific intent to use interstat e wires is not required for

wire fraud; interstate wire communication need only be foreseeable.

L ikewise, for mail fraud, the use of the mails need onl y be

foreseeable. The government's burden, therefore, is to demonstrate

beyond a reasonable doubt that Brumley agreed to engage in a scheme

t o defraud in which the use of the mail and interstate wire

communications was at least foreseeable. M assey

, 827 F.2d at 1002.

For the reasons previously stated, the evidence at trial was

insufficient to prove that the use of interstate wire9 Little did not know that Fredregill was Cely's client.

10 communications was foreseeable. Therefore, the evidence was

insufficient to prove Brumley intended t o commit wire fraud, an

essential element of conspiracy to commit wire fraud.

The evidence in the record is insufficient to show that

Brumley and Cely conspired to commit mail fraud. The only

testimony at trial concerning mailings was that of Alvin Little, an

employee of the TWCC. Little testified that Brumley mentioned to

him that Fredregill, a client of Cely 9

, was interested in bidding

for the TWCC leas e in Lufkin, Texas. Later, when the lease

specifications came o ut, Little mailed Fredregill a copy. This

evidence is insufficient to allow a rational finder of fact to

determine beyond a reasonable doubt that it was foreseeable to

Brumley that the mails would be use d to execute a scheme. S ee

United States v. Walters , 997 F.2d 1219, 1223 (7th Cir. 1993).

Because the evidence was in sufficient to prove that Brumley

intended to commit mail fraud or wire fraud, we reverse his

conviction for conspiracy to commit mail fraud and wire fraud.

MONEY LAUNDERING

Brumley appeals his money laundering convictions on

sufficiency of the evidence grounds, arguing that the evidence was

insufficient to establish the underlying specified unlawful

activity of wire fraud. We agree.

The money laundering statute, 18 U.S.C. § 1956, r equires a

financial transaction involving the procee ds of a specified

unlawful activity. "Specified unlawful activity" is defined in 1811

U.S.C. § 1956(c)(7)(A) to include any racketeering offense listed

in 18 U.S.C. § 1961(1). One of the racketeering offenses

identified in 18 U.S.C. § 1961(1) is wire fraud, 18 U.S.C. § 1343.

Brumley's three money laundering convictions were based on the

specified unlawful activity of wire fraud. The wire frauds alleged

in the money laundering counts are the same a s those in the wire

fraud counts. Therefore, for the reasons previously stated, the

money laundering convictions are reversed because of insufficient

evidence.

SENTENCING

Brumley r aises two issues related to sentencing. However,

these issues do not concern the false statements to a financial

inst itution counts; they only concern the wire fraud, money

laundering and conspiracy to commit mail f raud and wire fraud

counts. As those counts have been reversed, we need not consider

Brumley's sentencing issu es. Therefore, Brumley's sentence of

twenty-four months for two counts of making false statements to a

financial institution is affirmed.

CONCLUSION

The evidence at trial was insufficient to prove that it was

foreseeab le to Brumley that his actions in receiving the Western

Union wire transfer would cause an interstate wire communication.

Because the defendant's use of interstate wire communications is an

essential element of the offense of wire fraud, the evidence was

insufficient to prove Brumley committed wire fraud. The evidence

was likewise insufficient to prove Brumley conspired to commit wireg:\opin\94-40560.opn

wdg 12 fraud. Brumley's money laundering convictions were based on the

underlying specified unlawful activity of wire fraud. Because the

evidence was insufficient to convict Brumley of the underlying wire

fraud, it was also insufficient to convict him of money laundering.

For the foregoing reasons, Brumley's convictions for wire

fraud, money laundering and conspiracy to commit wire fraud are

REVERSED. Brumley's sentence of twenty-four months for the two

counts of making false statements to a financial institution is

AFFIRMED.