FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

May 5, 2008

THOMAS K. KAHN

CLERK

 The Honorable David M. Ebel, United States Circuit Judge for the Tenth Circuit, sitting *

by designation.

 [PUBLISH]

IN THE UNITED STATES COURT OF APPEALS 

FOR THE ELEVENTH CIRCUIT

_____________

No. 06-11643

_____________

D.C. Docket No. 04-00329 CR-01-JTC-1

UNITED STATES OF AMERICA,

 Plaintiff-Appellee,

versus

CHARLES E. EDWARDS, 

 Defendant-Appellant. 

__________________________

Appeal from the United States District Court 

for the Northern District of Georgia

__________________________

(May 5, 2008)

Before TJOFLAT, BLACK and EBEL , Circuit Judges. 

*
 “Generically, a Ponzi scheme is a phony investment plan in which monies paid by later 1

investors are used to pay artificially high returns to the initial investors, with the goal of

attracting more investors.” United States v. Silvestri, 409 F.3d 1311, 1317 n.6 (11th Cir. 2005)

(quotation omitted).

2

TJOFLAT, Circuit Judge:

This case involves a business that the defendant, Charles E. Edwards,

claimed was legitimate. A Northern District of Georgia jury, however, found that

Edwards was operating a Ponzi scheme and convicted him of wire fraud and

related crimes. Edwards now appeals his convictions and the prison sentence he 1

received. We affirm his convictions but vacate his prison term and remand the

case for a new sentencing hearing. 

I.

A.

From its founding on June 7, 1994, through September 11, 2000, Charles E.

Edwards was the Chairman of the Board and sole owner of ETS Payphones, Inc.

(“ETS”), a privately owned Georgia corporation that provided management

services to payphone owners. Edwards also controlled Payphone Systems

Acquisitions, Inc. (“PSA”), a Delaware corporation that was a wholly owned

subsidiary of ETS. Edwards and others often referred to these two companies – 

and others Edwards formed to support ETS’s payphone program – collectively as
3

ETS, and we do likewise.

Edwards organized ETS to implement his idea of selling coin-operated

payphones to investors who would then lease the phones back to Edwards for a

guaranteed rate of return. Edwards discussed his idea with an acquaintance,

Beverly Slater, who suggested that he use insurance agents, those selling life

insurance, including annuities, to market the payphones. Edwards liked her

suggestion and persuaded her to establish a network of independent insurance

agents to sell the phones. She would serve as the distributor of the phones,

purchasing them from ETS and selling them to the investors solicited by the

insurance agents. Slater formed BEE Communications, Inc. (“BEE”) to perform

the distributorship functions. Tom Murray was one of BEE’s insurance agents. 

He was so successful selling payphones that Edwards made him a distributor. 

Like Slater, Murray formed a corporation to operate his distributorship, National

Communications Marketing, Inc. (“NCMI”).

Shortly after Edwards’s sale and lease-back plan was up and running,

Edwards formed PSA to deal with the distributors. The sale and lease-back of the

payphones were handled as follows. The insurance agent, having found an

investor, contacted the distributor, and the distributor sent the agent a five-year

lease already executed by ETS, as lessee, for the investor to sign, as lessor. The
 The lease agreement gave the investor the option of participating with ETS in the 2

servicing of the payphones, in which case the investor would receive some of the profits the

phones yielded. This option played no role in the inducement of investors to participate in

Edwards’s sale and lease-back program. 

3

 The commissions varied from time to time, ranging from a total of 20% in 1998 to 25%

in 2000. The amounts the distributor and insurance agents received also varied, with the agents

receiving approximately 75% of the total commission. 

4

lease identified the location for the payphone the investor was purchasing,

specified the rent ETS would be paying the investor each month, spelled out

2

ETS’s responsibility for installing and servicing the phones, and contained a buyback provision. The buy-back provision required ETS to purchase the payphone

from the investor at the end of the lease for the same price the investor had paid

for the phone. The provision also gave the investor the right to sell the payphone

to ETS for that price at any time during the term of the five-year lease on 180 days

notice to ETS. 

If the investor agreed to this arrangement, the investor gave the insurance

agent a check made out to the distributor for the price of the payphone. The agent

then forwarded the check to the distributor, which deposited the check into its

bank account. Once the investor’s check cleared, the distributor deducted the

sales commission, which was divided between it and the insurance agent, and 3

wire transferred the net sale proceeds to PSA’s bank account. On a regular basis,

PSA wired funds from its account to ETS for operating expenses, lease payments,
 In 1996 and 1997, the phones sold for $5,000 and $6,000, respectively, and the monthly

4

rental payment stayed at $75. Thus, the rate of return was 18% for 1996 and 15% for 1997. 

 Investing in ETS’s payphone program became extremely popular because it offered a 5

significantly higher rate of return than annuities and other forms of investment and allowed the

investor to cancel the lease prior to its expiration, triggering ETS’s buy-back obligation without

penalty.

5

and buy-backs. PSA also wired funds to some 114 accounts designated by

Edwards. Some of these accounts related to ETS’s business, some were held by

other business entities Edwards owned, and some accounts were held by Edwards

for his and his wife’s personal expenditures.

The price the investor paid for a payphone and the rent ETS remitted to the

investor varied as Edwards’s plan unfolded. In 1994, the payphones were sold for

$4,770, and the monthly rental payment was $75. This gave the investor an 18.8%

return on his investment. By 1999, the payphones were sold for $7,000, and the

monthly rental payment was $82, for a return on investment of 14%.4

The insurance agents touted the ETS payphone program as a highly

profitable alternative to investing in annuities or other forms of life insurance.5

ETS provided the agents with promotional materials for distribution to

prospective investors, primarily seniors, claiming that the payphone industry was

“virtually recession-proof,” that it was “primed for a successful and profitable

future,” and that “pay phone profits have grown dramatically and are expected to
 ETS also gave its top agents ocean cruises and European vacations.

6

 ETS’s senior management staff tracked this information and provided it to Edwards on 7

a regular basis.

6

continue to escalate.” ETS’s slogan was, “Opportunity doesn’t always knock . . .

sometimes it rings.” 

The revenues the payphones generated were insufficient to cover ETS’s

operating expenses, lease payments, and buy-back obligations. In short,

Edwards’s payphone business was never profitable. Because PSA paid its

distributers and insurance agents commissions of up to 25% of the retail price of

each phone sold, and ETS was contractually obligated to buy back every phone 6

for the full price paid by the investor, ETS immediately owed each investor more

money than it collected on the sale of the phone – a deficit that could only be

overcome by operating the phones at a substantial profit. The revenues the

payphones provided, however, were extremely inadequate; by 2000, ETS was

operating its phones at a loss of $5 million a month. Nearly 90% of the installed

payphones were unprofitable. This problem was compounded by the fact that ETS

leased more payphones from investors than it actually placed into service, a gap

that increased from 150 in October 1996 to 17,960 by September 11, 2000. ETS,

7

therefore, always depended on the influx of money from new investors to sustain

its payphone business. Moreover, if ETS suffered a “run on the bank” – a sudden
 ETS’s board consisted of Edwards and ETS senior staff members.

8

 One of the reasons why the investors were unaware of ETS’s financial plight was the 9

fact that ETS paid the lease payments due investors on time. ETS kept its payments current until

it filed for bankruptcy in September 2000. 

7

invocation of the lease’s buy-back provision by a significant number of investors –

the company would have collapsed. Whenever ETS’s board of directors met,

8

ETS’s mounting financial losses and the optimistic outlook ETS was portraying to

the investors were discussed. According to Charles Bynum, ETS’s Chief

Operating Officer, Edwards attitude was that “we can’t possibly let [investors] see

what is really going on because if this money coming in from [new investors] ever

stopped, the whole thing would crash.” Edwards’s attitude prevailed; the

investors were kept in the dark. 

9

ETS’s financial outlook appeared shaky from the outset. By 1996, the

company had leased 750 payphones, but only 600 were in operation. Of the 600,

at least 150 of the phones were not making enough money to cover the $70

monthly payment due the telephone company, let alone the additional operating

expenses attributable to those phones, such as repairs, maintenance, and the cost of

collecting the coin revenue. After conducting a comprehensive analysis of ETS’s

operational structure in October 1996, Bynum wrote in a memorandum to Edwards

that ETS was not yet a “viable company” and that they were currently “in
 For example, in April or May 1997, Edwards informed potential investor Ben Bolt that 10

ETS was “rock solid” and that his investment would be extremely safe. Edwards went on to say

that “God had really blessed” ETS and that Bolt had “nothing to worry about” because ETS

would refund his investment within two weeks if he ever decided to sell his payphones. Having

been thus assured, Bolt bought a total of 86 payphones. In August 1997, Edwards, in response to

potential investor John Woodley’s suggestion that ETS was operating a “Ponzi scheme,” said

that ETS’s operations provided all the funds the company required and that an influx of money

from new investors was not needed. Following this conversation, Woodley bought 15 payphones

and later purchased 115 more. 

8

command of a near certain disaster.” Edwards recognized this dire situation and

acknowledged that ETS was “hemorrhaging” money. Bynum recommended

shutting down the 150 unprofitable phones. Edwards rejected the

recommendation. He told Bynum that if the investors found out that ETS was not

operating a payphone for every lease, they would panic and demand their money

back. Bynum also recommended that Edwards shut down the leasing side of the

business and not bring on any more investors. Edwards rejected this

recommendation as well and continued to recruit investors. He held weekly

seminars for prospective investors – all identified by the distributors’ insurance

agents – at ETS’s offices, where he would pitch ETS’s sale and lease-back

program as extremely profitable. Bynum left ETS in January 1997. He was

10

concerned about ETS’s financial condition and the legality of what Edwards’s was

doing, concerns he conveyed to the FBI after leaving the company. 

In the spring of 1998, ETS hired the Gross Collins accounting firm to
 Specifically, from the outset, Edwards had instructed that ETS classify the sale and 11

lease-back program as an operating lease as opposed to a capital lease. An operating lease is

essentially a rental situation where the lessor (owner) transfers the right to use the property to the

lessee. At the end of the lease period, the lessee returns the property to the lessor. The lease

payments are treated as a monthly operating expense and the balance sheet does not reflect the

liability for future lease payments. In a capital lease, the lessee accounts for the asset as though it

had actually purchased the asset (even if the lessor retains the title to the asset); that is, the

balance sheet reflects the lessee’s total future obligation under the lease. Based on Generally

Accepted Accounting Principles (“GAAP”), the auditors informed Edwards that the sale and

lease-back program was undoubtedly a capital lease – a conclusion affirmed by multiple ETS

chief financial officers and a subsequent analysis of the lease classification by the accounting

firm of Grant Thornton in 1999. As a result, the money that ETS/PSA received from the

payphone sales could not properly be characterized as revenue; rather, it had to be characterized

as debt because it eventually had to be paid back to the investors with interest in the form of lease

payments. Although ETS was not legally obligated to use GAAP in compiling its financial

reports for internal use, this accounting difference changed the appearance of ETS from a

company that was losing millions of dollars a year to a company that was earning substantial

profits.

9

perform an audit. In July, auditors Steve Gross and Derek Starnes met with

Edwards and presented him with a report of their preliminary findings. They told

Edwards that the revenue generated by the payphone operation was not sufficient

to cover the required monthly lease payments to the investors, that ETS had leased

far more payphones than it had placed in service, and that ETS did not have the

financial resources to fund its buy-back obligations. The auditors also told

Edwards that ETS’s characterization of the monies generated through the

payphone sales as revenue painted an inaccurate picture of the company’s

financial health. When the auditors finished their presentation, Edwards threw 11

their report in the trash can and discharged their firm. 
 As numerous ETS chief financial officers and outside auditors testified at trial, these 12

non-GAAP numbers would drastically mislead investors as to the company’s profitability.

10

On March 30, 2000, Edwards sent a memo to all ETS employees stating that

“profits were below expectations in 1999” and that the company had entered into a

period of “drastic times for the Payphone Industry.” Edwards kept this

information from ETS’s distributors and their insurance agents. The agents,

having no reason to question ETS’s financial viability, therefore kept touting

ETS’s program as a sound investment. Edwards also continued to paint a rosy

picture of ETS’s profitability for investors. In May 2000, he gave a group of

prospective investors a tour of ETS’s offices. At the completion of the tour, he

told them that ETS had sales of $28 million the previous year, netted $8 million in

profit, and planned to expand its business into Mexico and the Carribean. 

12

By mid-2000, investors were cancelling their leases and triggering the buyback provision at an increasing rate, causing significant cash flow problems for the

company. Nevertheless, Edwards continued to woo investors with representations

of ETS’s prosperity. On July 1, 2000, he wrote his existing investors a letter

stating that ETS was financially stable, “made a profit of nearly $8,700,000 last

year and [that its] profit potential looks even brighter for this year.” Additionally,

when Edwards learned that some of the insurance agents were advising their
 Edwards sent similar letters to BEE agents Scott Fountain and Phil Kerley on July 5 13

and 14, 2000, respectively, threatening legal action if they encouraged investors to cancel their

leases. 

 Many of the payphones ETS was leasing were situated in kiosks. 14

11

investor clients to cancel their leases, he took steps to dissuade them. For

instance, on July 5, 2000, he sent the following letter to Ron Bryant, one of BEE’s

agents, who had recommended that his clients request an early termination of their

lease agreements:

The ETS corporate family made a profit of over eight million dollars

last year ($8,000,000+) and this year looks even better. . . . If you are

telling a different story to our Lessors, you may be assured that ETS

will not hesitate to take legal action against you to set the record

straight in a public forum.13

Edwards echoed similar sentiments in a July 12, 2000, speech to dozens of BEE

agents in Cartersville, Georgia, reassuring them that ETS was financially solid and

that they should focus on selling more payphones.

At some point in the spring of 2000, Edwards hired a consultant, Ken Baker,

to conduct a financial analysis of ETS and Twin Leaf Media – a company Edwards

had formed to sell advertising spots on the payphone kiosks. Edwards thought 14

that the income Twin Leaf produced might alleviate ETS’s financial problem. In

July 2000, Baker informed Edwards that even if highly successful, Twin Leaf

would not be able to solve the problem; ETS’s sale and lease-back program was
 As indicated in note 9, supra, ETS paid its investors all the rent they were due until it 15

filed for bankruptcy.

12

not sustainable. While continuing to sell more payphones would prolong the

company’s existence, eventually the number of new sales would not be sufficient

to service the mounting debt, which Baker projected to reach $1.7 billion by 2004. 

In short, Baker told Edwards that it was only a matter of time until ETS would

have to file for bankruptcy, and he recommended that ETS seek bankruptcy

protection in October 2000.

Despite Ken Baker’s grim projections, Edwards continued aggressively to

market his company as financially sound. On July 29, he sent a letter to ETS’s

investors, stating that ETS continued to prosper and that he “personally believe[d]

that this [was] without a doubt the best time to be in the payphone industry!” 

Shortly thereafter, on August 3, he wrote a follow-up letter to Ron Bryant, stating

that “[t]here is no legitimate reason to advise any Lessor to liquidate his or her

payphones.” Three weeks later, Edwards hired two of his long-time investors,

Bob and Alice Worsham, to contact other investors who had notified ETS that

they were cancelling their leases and try to convince them to withdraw their

notices. He offered to pay the Worshams $100 for every phone that they 15

convinced the investors to keep. As it turned out, they were able to persuade at
 The laws governing Chapter 11 proceedings are codified at 11 U.S.C. §§ 1101-74. 16

 PSA continued to sell, and ETS continued to lease, payphones until a day or two 17

before filing the petitions. 

13

least thirty-nine investors to stay with ETS. In a final effort to generate additional

revenue, Edwards sent a memorandum to BEE and NCMI on September 1,

announcing a $350 rebate for anyone who purchased a payphone within thirty

days.

On September 11, 2000, ETS and PSA filed petitions for Chapter 11

bankruptcy relief in the United States Bankruptcy Court for the District of

Delaware. During the two months prior to filing these petitions, PSA, at

16

Edwards’s direction, continued to sell payphones, taking in $22 million from

investors. The sales ceased after the petitions were filed. As of September 11, 

17

ETS had 73,107 payphones under lease and was contractually obligated to buy

back those phones at a total cost of $414,091,985. Edwards’s investors lost

millions, but Edwards faired quite well. He received more than $21 million from

ETS and its subsidiaries in the form of salary, consulting fees, and interest free

“loans” that he never repaid. He used this money to purchase “[e]verything from

expensive cowboy boots to million-dollar homes.”

B.

On June 8, 2004, a Northern District of Georgia grand jury indicted
 The applicable statutory texts provide as follows: 18

Whoever, having devised or intending to devise any scheme 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 communication in interstate or foreign commerce, any

writings, signs, signals, pictures, or sounds for the purpose of executing such

scheme or artifice, shall be fined under this title or imprisoned not more than five

years, or both. If the violation affects a financial institution, such person shall be

fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

18 U.S.C. § 1343 (2000).

(a) Whoever, in any of the circumstances set forth in subsection (d), knowingly

engages or attempts to engage in a monetary transaction in criminally derived

property of a value greater than $10,000 and is derived from specified unlawful

activity, shall be punished as provided in subsection (b). 

(b)(1) Except as provided in paragraph (2), the punishment for an offense under

this section is a fine under title 18, United States Code, or imprisonment for not

more than ten years or both. 

(2) The court may impose an alternate fine to that imposable under paragraph (1)

of not more than twice the amount of the criminally derived property involved in

the transaction. 

. . . .

(d) The circumstances referred to in subsection (a) are – 

(1) that the offense under this section takes place in the United States . . . . 

. . . . 

(f) As used in this section – 

(1) the term “monetary transaction” means the deposit, withdrawal, transfer, or

exchange, in or affecting interstate or foreign commerce, of funds or a monetary

instrument (as defined in section 1956(c)(5) of this title) by, through, or to a

financial institution (as defined in section 1956 of this title), including any

transaction that would be a financial transaction under section 1956(c)(4)(B) of

this title . . . . 

14

Edwards on fifty-seven counts of wire fraud, 18 U.S.C. § 1343, and twenty-five

counts of money laundering, 18 U.S.C. § 1957. A superceding indictment 18
(2) the term “criminally derived property” means any property constituting, or

derived from, proceeds obtained from a criminal offense; and 

(3) the term “specified unlawful activity” has the meaning given that term in

section 1956 of this title. 

18 U.S.C. § 1957 (2000).

18 U.S.C. 1956(c)(7)(A) (2000) defines “specified unlawful activity” as “any act or

activity constituting an offense listed in section 1961(1) of [title 18] except an act which is

indictable under subchapter II of chapter 53 of title 31.” A violation of section 1343 (relating to

wire fraud) is listed as an offense in section 1961(1). 

 18 U.S.C. § 1956(h) (2000) provides that “[a]ny person who conspires to commit any 19

offense defined in this section or section 1957 shall be subject to the same penalties as those

prescribed for the offense the commission of which was the object of the conspiracy.” 

 18 U.S.C. § 982(a)(1) provides that “[t]he court, in imposing sentence on a person 20

convicted of an offense in violation of [18 U.S.C. §§ 1956 or 1957] shall order that the person

forfeit to the United States any property, real or personal, involved in such offense, or any

property traceable to such property.”

15

returned on August 10, 2004, added an additional count for conspiracy to commit

money laundering, 18 U.S.C. § 1956(h), and a forfeiture provision. In total, 19 20

Edwards was charged with eighty-three criminal offenses.

Edwards pled not guilty to all counts and elected to stand trial before a jury. 

Prior to trial, he filed two motions in limine that are at issue in this appeal. The

first sought the exclusion of documents the Government obtained from the

Securities and Exchange Commission (“SEC”) investigation on the theory that the

SEC and the United States Attorney’s Office had conducted a joint and collusive
 The history of this investigation and the subsequent legal proceedings are detailed in 21

SEC v. ETS Payphones, Inc., 300 F.3d 1281 (11th Cir. 2002), rev’d, 540 U.S. 389, 124 S. Ct.

892, 157 L. Ed. 2d 813 (2004), and SEC v. ETS Payphones, Inc., 408 F.3d 727 (11th Cir. 2005).

 Rule 29(a) states: 22

Before Submission to the Jury. After the government closes its evidence or after

the close of all the evidence, the court on the defendant’s motion must enter a

judgment of acquittal of any offense for which the evidence is insufficient to

sustain a conviction. The court may on its own consider whether the evidence is

insufficient to sustain a conviction. If the court denies a motion for a judgment of

acquittal at the close of the government’s evidence, the defendant may offer

evidence without having reserved the right to do so.

Fed. R. Crim. P. 29(a).

16

investigation into Edwards’s business operations. The second motion asked the

21

court to invoke the “sequestration rule” and exclude several Government

witnesses from the courtroom prior to their taking the witness stand. The district

court denied both motions. 

Edwards’s trial began on September 12, 2005. After the Government 

presented its case in chief, Edwards moved the district court to enter a judgement

of acquittal on all counts pursuant to Rule 29(a) of the Federal Rules of Criminal

Procedure. The court denied the motion, and Edwards proceeded to put on a 22

defense. After resting his case, Edwards renewed his Rule 29(a) motion. The

court denied it. The Government then presented its rebuttal, after which both sides

rested and the presentation of evidence closed. At this point, Edwards did not 
17

renew his motion for acquittal, and the court submitted the case to the jury. 

The jury received the case in the afternoon of September 28 and returned its

verdicts the next morning, finding Edwards guilty on all counts.

On February 23, 2006, the district court sentenced Edwards to one prison

sentence of 156 months and ordered him to pay restitution to 10,662 investors in

the amount of $320,397,837 and forfeit several properties that were involved in

the offenses to the United States. This appeal followed.

Edwards presents six arguments; four relate to his convictions, two to his

sentence. Regarding his convictions, he first seeks a judgment of acquittal on all

counts on the ground that the district court erred in denying his motion for

judgment of acquittal made after he rested his defense. Next, and alternatively,

Edwards seeks a new trial on three grounds: (1) the district court denied him a fair

trial and the ability to confront several prosecution witnesses, in violation of his

Fifth and Sixth Amendment rights, when it refused to invoke the Federal Rule of

Evidence 615 sequestration provision and permitted the witnesses to remain in the

courtroom and listen to the testimony before they took the stand to testify; (2) the

court erred in denying his motion to suppress certain documents he submitted to 

the SEC during its investigation of the ETS sale and lease-back program –

documents the United States Attorney’s Office later obtained for use in the
 Edwards also argues that the cumulative effect of these three errors denied him his due 23

process right to a fair trial. As our discussion of his claims of trial error reveals, no error

occurred. Consequently, he was not denied a fair trial.

 Edwards could have moved the district court for judgment of acquittal within seven 24

days after the jury verdict, see Fed. R. Crim. P. 29(c), but he failed to do so.

18

prosecution of this case; and (3) the court’s jury instructions constructively

amended the indictment. 

23

Edwards challenges his sentence on the grounds that (1) the court erred in

calculating the amount of funds involved in the money laundering counts, and (2)

the court’s restitution order was entered in violation of his Sixth Amendment right

to a jury determination of the elements of his offenses. 

We consider first Edwards’s arguments concerning his convictions. 

II.

A.

Edwards contends that the district court erred in denying his motion for

judgment of acquittal made after he rested his defense. As we note above,

Edwards failed to renew his motion for judgment of acquittal at the close of all of

the evidence as required by Rule 29; he therefore failed to preserve his right to

challenge the sufficiency of the evidence. Edwards argues that he properly

24

preserved his objection by moving for a judgment of acquittal after resting his

case. That is, he contends that this preserved his objection to the sufficiency of the
19

evidence and that Rule 29(a) did not require him to renew his motion at the close

of all the evidence. We disagree. The drafters of the Rule plainly contemplated

that in the event, as here, the defendant put on a case and the prosecution

presented rebuttal evidence, the district court would only be required to consider

the sufficiency of the evidence if the defendant moved for a judgment of acquittal

at “the close of all the evidence.” See United States v. Rigsby, 943 F.2d 631, 643-

44 (6th Cir. 1991). 

Although Edwards failed to preserve his objection to the court’s Rule 29(a)

ruling, he is not foreclosed from having this court review the evidence that led to

the jury’s verdicts. If we find “a manifest miscarriage of justice – if the evidence

on a key element of the offense is so tenuous that a conviction would be shocking”

– we will set aside a conviction. United States v. Bichsel, 156 F.3d 1148, 1150

(11th Cir.1998) (quotation omitted). We turn, then, to the question of whether the

arguments Edwards presents establish that a manifest miscarriage of justice would

occur if we affirm the district court’s judgment. 

Edwards first argument addresses the wire fraud convictions. He questions

whether the evidence established that he intended to defraud his investors; absent
 If the wire fraud convictions are vulnerable and must be set aside for lack of intent to

25

defraud, Edwards submits that we must reverse his money laundering convictions since they

depend on the validity of his wire fraud convictions. 

20

such intent, the wire fraud convictions fail. We are satisfied that the jury had 25

ample evidence of intent to defraud before it, and hence, Edwards’s wire fraud

convictions stand. 

The jury learned that Edwards, with full knowledge that ETS was

“hemorrhaging money” and unable to sustain its operations without a constant

influx of investment capital, aggressively courted both new and existing investors

with assurances that ETS was financially sound and profitable. Indeed, less than

seven weeks before seeking the bankruptcy court’s protection under Chapter 11,

Edwards sent a letter to investors proclaiming that ETS continued to prosper. 

Moreover, he never disclosed to his investors that ETS would be unable to buy

back the payphones, as required by its leases, if a substantial number of investors

triggered the buy-back provision. From this evidence alone, a rational jury could

determine that Edwards intended to defraud his investors. Given the other facts

recited in part I.A, supra, we find that the Government presented more than

sufficient evidence to make out the wire fraud offenses; thus, affirming Edwards’s

convictions for those offenses would not result in a miscarriage of justice. 

Next, according to Edwards, his conviction for conspiracy to commit money
 To convict Edwards on the money laundering conspiracy charge, the Government had 26

to prove that (1) an agreement existed between two or more persons to violate 18 U.S.C. § 1956

or §1957 and (2) that Edwards knowingly and voluntarily participated in that agreement. United

States v. Silvestri, 409 F.3d 1311, 1328 (11th Cir. 2005). Edwards asserts that the Government

failed to provide sufficient evidence of the first element.

21

laundering cannot stand because the Government failed to establish that he

conspired with another person to launder money. The Government’s position at 26

trial was that Edwards conspired with his wife, Evelyn Sue Edwards, and Joan

Shepler, his assistant. After examining the trial transcript, however, we are left

with an abiding impression that although Mrs. Edwards assisted her husband to

“launder” some of the proceeds of payphone sales, frequently for her own benefit,

the evidence failed to establish that she actually conspired with her husband to

launder those proceeds – that she was aware that what he was doing was illegal. 

Whether Edwards was guilty of the conspiracy offense therefore turns on whether

Shepler was implicated. 

Criminal conspiracies, because they are inevitably secret, are rarely

established by direct evidence. The cases accordingly turn on whether there is

circumstantial evidence that two or more persons conspired to commit the criminal

offense. See United States v. Mercer, 165 F.3d 1331, 1333 (11th Cir. 1999). The

indictment alleged that Edwards and others conspired to use the proceeds from the

sale of the payphones (the “fraud proceeds”) (1) to conduct financial transactions
22

with the intent to promote the scheme to defraud; (2) to conduct financial

transactions with the intent to conceal and disguise the source, location,

ownership, nature, and control of the proceeds; and (3) to engage in monetary

transactions in amounts greater than $10,000. 

After careful examination of the record, we conclude that the Government

proved that Joan Shepler knowingly acted as a coconspirator in the money

laundering scheme. The evidence indicated that Shepler was an integral part of

the senior management of ETS and PSA, regularly attending board meetings

where the financial woes of the company were discussed and performing such

high level tasks as interviewing potential chief financial officer candidates. 

Shepler served as the point person for all monies wired to ETS and PSA by its

distributers, money that was then used to support the operations side of the

business and maintain the appearance of viability that allowed the fraud to

continue. Additionally, Shepler coordinated a series of complex wire transactions

(many of which in excess of $10,000) that routed fraud proceeds from ETS and

PSA through the 114 various bank accounts controlled by Edwards. Because an

agreement may be proven by “inferences from the conduct of the alleged

participants or from circumstantial evidence of a scheme,” United States v.

Silvestri, 409 F.3d 1311, 1328 (11th Cir. 2005) (quotation omitted), the jury had
 Rule 615 provides as follows: 27

At the request of a party the court shall order witnesses excluded so that they

cannot hear the testimony of other witnesses, and it may make the order of its own

motion. This rule does not authorize exclusion of (1) a party who is a natural

person, or (2) an officer or employee of a party which is not a natural person

designated as its representative by its attorney, or (3) a person whose presence is

shown by a party to be essential to the presentation of the party’s cause, or (4) a

person authorized by statute to be present.

Fed. R. Evid. 615.

23

sufficient evidence before it to find that Shepler conspired with Edwards to

launder the fraud proceeds. 

B.

 Rule 615 of the Federal Rules of Evidence provides that witnesses may be

excluded from the courtroom while a trial is ongoing so that they cannot hear the

testimony of other witnesses. The reason for the rule is obvious – to prevent

27

witnesses from “‘tailoring’ their testimony to that of earlier witnesses” and to

“aid[] in detecting testimony that is less than candid.” Geders v. United States,

425 U.S. 80, 87, 96 S. Ct. 1330, 1335, 47 L. Ed. 2d 592 (1976). Rule 615

recognizes an exception, however, for “a person authorized by statute to be

present.” The Crime Victims’ Rights Act (“CVRA”), 18 U.S.C. § 3771, provides 

such an exception: the victim of a crime has “[t]he right not to be excluded from

any . . . public court proceeding.” 18 U.S.C. § 3771(a)(3). The Act, though,
 Edwards does not argue that he provided the district court with clear and convincing 28

evidence of the likelihood that the victim-witnesses would materially alter their testimony if they

were not sequestered. In fact, he concedes that the “degree to which these witnesses may have

‘tailored’ their testimony to each other is not discernable from the record.” Appellant Br. at 57.

 In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), this

29

court adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to

October 1, 1981.

24

authorizes the court to exclude a victim-witness if it finds by clear and convincing

evidence that the witness’s testimony “would be materially altered if the victim

heard other testimony at that proceeding.” Id. 

Prior to the commencement of his trial, Edwards moved the district court to

sequester all potential prosecution witnesses, including those witnesses who

purported to be the victims in the case. Citing the CVRA, the court denied the

motion as to the victim-witnesses. In his brief on appeal, Edwards argues that

Rule 615 is constitutionally based and that the district court’s invocation of the

CVRA to deny his motion denied him his Fifth Amendment due process right to a

fair trial and his Sixth Amendment right of confrontation. This argument fails 28

for one simple reason: A criminal defendant has no constitutional right to exclude

witnesses from the courtroom. Mathis v. Wainwright, 351 F.2d 489, 489 (5th Cir.

1965); Bell v. Duckworth, 861 F.2d 169, 170 (7th Cir. 1988). We accordingly 29

hold that the district court committed no abuse of discretion in denying Edwards’s

motion. 
 See supra note 21. 30

 The district court described these documents in its March 24, 2005, order denying 31

Edwards’s motion to suppress the documents in the instant case. In his motion, Edwards

represented that he had produced the documents as part of settlement negotiations he was having

with the SEC. 

25

C.

On September 29, 2000, eighteen days after ETS and PSA sought relief in

the bankruptcy court, the SEC brought suit against ETS and Edwards in the United

States District Court for the Northern District of Georgia, alleging that ETS’s sale

and lease-back of payphones constituted the fraudulent sale of unregistered

securities in violation of federal securities laws and seeking injunctive relief.30

During the course of the litigation, the court ordered Edwards to produce certain

documents – Edwards’s personal income tax returns for 1995 through 1999, an

appraisal of certain investment property, and consolidated financial statements and

accounting papers prepared by Gross Collins for ETS – and file them with the

court under seal. Edwards promptly complied with the court’s order. The docket 31

sheet for the case indicates that they are still under seal. 

Edwards anticipated that the Government might attempt to use copies of

these documents in prosecuting the instant case and moved to suppress such
 In his brief to this court, Edwards represents that his motion to suppress included a 32

“lengthy declaration” he submitted to the district court on October 11, 2000, in opposition to the

SEC’s motion for a preliminary injunction. In reading Edwards’s motion to suppress, we find no

mention of the declaration. Nor does the district court, in its March 24, 2005 order mention this

document. Edwards’s brief acknowledges such lack of explicit reference to the declaration and

suggests that we should still consider it because a fair reading of his motion to suppress indicates

that the motion was referring to any evidence the United States Attorney acquired from the SEC. 

At trial, the prosecutor used Edwards’s declaration to impeach Edwards while he was

testifying in his own defense. His attorney objected to such use. The objection, which was based

on the court’s instruction as to the manner in which exhibits were to be identified, was meritless.

 Edwards’s motion to suppress did not cite these Fifth Amendment provisions as the 33

bases for relief. Those citations appear for the first time in his brief on appeal. Appellant Br. at

66. The motion stated that the duplicate documents should be suppressed for this reason:

Any evidence that the Government received from the SEC from SEC settlement

negotiations or proceedings, including those filed by [the district court] under seal should

be excluded from presentation by the Government, as this evidence was obtained by the

Government in bad faith and contrary to this Court’s precedent.

26

duplicates. Edwards represented that the SEC filed suit against him for the 32

purpose of acquiring evidence for the United States Attorney’s use in the instant

prosecution, and had the SEC informed him that it had filed suit for that purpose,

he would not have produced the documents. Such a tactic, he argued, smacked of

collusion and infringed his right under the Fifth Amendment’s Due Process Clause

and the Amendment’s protection against self-incrimination. The court denied his

33

motion in an order entered on March 24, 2005. 

Edwards argues that the documents should have been suppressed because 

“the SEC provided these documents in bad faith to the United States Attorney to

facilitate [his] criminal prosecution . . . after the [SEC, ETS and Edwards] reached
 The quoted language, taken from the district court’s March 24 order, expresses 34

Edwards’s reason for suppressing the documents.

 15 U.S.C. § 77t(b) provides that the SEC “may transmit such evidence as may be 35

available concerning such acts or practices [that constitute a violation of the law] to the Attorney

General who may, in his discretion, institute the necessary criminal proceedings.” 15 U.S.C. §

78u(d)(1) provides that the SEC “may transmit such evidence as may be available concerning

such acts or practices as may constitute a violation of any provision of this chapter or the rules or

regulations thereunder to the Attorney General, who may, in his discretion, institute the necessary

criminal proceedings.”

27

an impasse with respect to the settlement of the SEC case.” The court found no 34

merit in Edwards’s motion to suppress because Edwards had presented 

no evidence of bad faith by the government with respect to the documents

[at issue]. The tax returns . . . were readily accessible by the government

from the beginning of this case, without regard to the [sealing] order in the

SEC case. The other documents . . . were produced pursuant to a grand jury

subpoena. [Edwards] has not contested the fact that all the documents would

have been obtainable (or were obtained) by the government independent of .

. . the sealing order in the SEC case. There is simply no evidence here of

any bad faith or improper exploitation of the SEC case by the United States

Attorney for the purpose of developing its criminal prosecution. 

We find no error in the district court’s ruling. The SEC is authorized by

statute, 15 U.S.C. §§ 77t(b), 78u(d), to provide evidence of misconduct to the 35

Department of Justice. Moreover, there is nothing in this record that suggests,

much less establishes, that the SEC and the United States Attorney somehow
 In support of his argument that the district court erred, Edwards primarily relies on two 36

district court decisions, United States v. Scrushy, 366 F. Supp. 2d 1134 (N.D. Ala. 2005), and

United States v. Stringer, 408 F. Supp. 2d 1083 (D. Ore. 2006), overruled by United States v.

Stringer, No. 06-30100, 2008 WL 901563 (9th Cir. Apr. 4, 2008). In Scrushy, the district court

suppressed the introduction of the defendant’s SEC deposition at his criminal trial and dismissed

the perjury counts predicated on that testimony. 366 F. Supp. 2d at 1138-40. In Stringer, the

district court dismissed the defendants’ securities fraud indictments because the United States

Attorney had used the guise of an SEC investigation to conceal its interest in prosecuting the

defendants. 408 F. Supp. 2d at 1085-86, 90. Both of these cases are distinguishable as their

holdings rest on a showing of prosecutorial misconduct. 

28

colluded to deny Edwards his constitutional rights. 

36

D.

As his final challenge to his convictions, Edwards contends that the district

court constructively amended the indictment in its instruction to the jury as to the

definition of a “Ponzi scheme.” The amendment, he submits, allowed the jury to

convict him of wire fraud without finding that he acted with the intent to defraud. 

“A jury instruction that constructively amends a grand jury indictment

constitutes per se reversible error because such an instruction violates a

defendant’s [Fifth Amendment] right to be tried on only those charges presented in

a grand jury indictment.” United States v. Cancelliere, 69 F.3d 1116, 1121 (11th

Cir. 1995). A constructive “amendment occurs when the essential elements of the

offense . . . are altered to broaden the possible bases for conviction beyond what is

contained in the indictment.” United States v. Keller, 916 F.2d 628, 634 (11th Cir.

1990). To determine whether error has occurred, we consider the court’s
29

instructions as a whole, reading them in light of the trial transcript. See United

States v. Deleveaux, 205 F.3d 1292, 1296 (11th Cir. 2000); United States v.

Artrip, 942 F.2d 1568, 1570 (11th Cir. 1991).

Conviction under the wire fraud statute requires that the defendant (1)

intentionally participated in a scheme or artifice to defraud another person of

money or property and (2) used or caused the use of interstate wires to execute the

scheme or artifice. United States v. Ward, 486 F.3d 1212, 1222 (11th Cir. 2007). 

The first essential element of the offense, mens rea, was spelled out in the

indictment thusly: 

Edwards did knowingly and willfully devise and intend to devise a

scheme and artifice to defraud investors through the sale of coinoperated payphones and to obtain money from those investors by

means of false and fraudulent pretenses and representations, and by

omissions of material facts, well knowing and having reason to know

that such pretenses and representations were and would be false and

fraudulent when made and caused to be made and that said omissions

were and would be material.

We now turn to the jury instruction at issue to determine whether it amended the

indictment by effectively eliminating the mens rea element from the wire fraud

offense. Referring to Counts One through Fifty-seven, the court informed the jury

as follows: 

Title 18, United States Code, Section 1343 makes it a federal crime or

offense for anyone to use interstate wire communications facilities in
30

carrying out a scheme to defraud. The defendant can be found guilty

of that offense only if all of the following facts are proved beyond a

reasonable doubt. First, that the defendant knowingly devised or

participated in a scheme to defraud or for obtaining money or

property by means of false pretenses, representations, or promises. 

Second, that the false pretenses, representations, or promises related

to a material fact. Third, that the defendant did so willfully and with

the intent to defraud and, fourth, that the defendant transmitted or

caused to be transmitted by wire in interstate commerce some

communication for the purpose of executing the scheme to defraud.

The court then went on to expound upon the meaning of several key terms to help

the jury better understand the elements of the wire fraud offense, beginning with

“scheme to defraud”:

The term scheme to defraud includes any plan or course of action

intended to deceive or cheat someone out of money or property by

means of false or fraudulent pretenses, representations, or promises.

Now, in this case the government alleges that the defendant

operated a Ponzi scheme which defrauded investors. A Ponzi scheme

is a fraudulent investment scheme in which “profits” to investors[] are

not created by the success of the underlying business venture, but

instead are derived fraudulently from capital contributions of other

investors. In a typical Ponzi scheme a corporation operates and

continue[s] to operate at a loss. The corporation gives the appearance

of being profitable by obtaining new investors and using those

investors to pay for the high returns promised to earlier investors.

The effect of such a scheme is to put the corporation further

and further into debt by incurring more and more liability, but to give

the false appearance of profitability in order to obtain new investors.

Edwards argues that by defining a Ponzi scheme, the court constructively

expanded the indictment by removing the element of criminal intent and allowing
 The district court entered a forfeiture order as part of Edwards’s sentence. He does not 37

challenge that order in this appeal. It therefore remains intact. 

31

the jury to infer intent if it found that the ETS sale and lease-back program was a

Ponzi scheme. We disagree. To begin, the opening paragraph of the jury

instruction clearly states that Edwards could only be found guilty if he possessed

the “intent to defraud.” What Edwards cites as offending language did not speak

to the element of intent at all. Rather, the discussion of a Ponzi scheme merely

served to define the particular type of “scheme to defraud” that Edwards was

alleged to have perpetrated. Moreover, the court went on to reemphasize the mens

rea requirement in defining what it meant to “act with an intent to defraud”:

Now, to act with “intent to defraud” means to act knowingly and with

the specific intent to deceive or cheat someone, ordinarily for the

purpose of causing some financial loss to another or bringing about

financial gain to one’s self. . . . What must be proved beyond a

reasonable doubt is that the defendant, with the intent to defraud,

knowingly and willfully devised, intended to devise, or participated in

a scheme to defraud substantially the same as the one alleged in the

indictment . . . .

As the jury instructions did not alter the mens rea element of the wire fraud

offense, a constructive amendment did not occur.

III.

We do not reach Edwards’s challenges to his sentence because, with the

exception of the district court’s restitution order, we must vacate his sentence 37
 There is nothing in the transcript of the sentencing hearing indicating that the court 38

imposed the 156 month prison term for the conspiracy offense.

 The presentence investigation report states that the maximum incarceration penalty for 39

wire fraud is twenty years’ imprisonment. The twenty-year term was provided by a 2002

amendment to the statute. Act of July 30, 2002, Pub. L. 107-204, Title IX, § 903(b), 116 Stat.

745, 805. The term in effect at the time Edwards committed the wire fraud offenses was five

years (thirty years if the violation affected a financial institution). 18 U.S.C. § 1343 (2000)

 We of course intimate no view as to the sentences that would be appropriate. 40

32

and remand the case for a new sentencing hearing. Although Edwards was

convicted on fifty-seven counts of wire fraud, twenty-five counts of money

laundering, and one count of conspiracy to commit money laundering, he received

only one sentence – a prison term of 156 months. The only single offense for

which he could have received a prison term of that length is the conspiracy to

launder money offense. The maximum incarceration penalty for that offense is 38

twenty years’ imprisonment. 18 U.S.C. § 1956 (2000). The maximum

incarceration penalty for money laundering is ten years, and for wire fraud five

years. 18 U.S.C. § 1957 (2000); 18 U.S.C. § 1343 (2000). On remand, the court 39

must impose a sentence for each count of conviction.

40

Edwards challenges the restitution order on the ground that United States v.

Booker, 543 U.S. 220, 125 S. Ct. 738, 160 L. Ed. 2d 631 (2005), requires that the

factual predicate for restitution be found by the jury beyond a reasonable doubt

(unless trial by jury is waived or the defendant admits to the predicate). Edwards
33

acknowledges in his brief, however, that his challenge is foreclosed by a prior

decision of this court, United States v. Williams, 445 F.3d 1302 (11th Cir. 2006),

abrogated on other grounds by United States v. Lewis, 492 F.3d 1219 (11th Cir.

2007). 

IV.

For the foregoing reasons, we AFFIRM Edwards’s convictions, VACATE

Edwards’s sentence, with the exception of the restitution and forfeiture orders, 

and REMAND the case for a new sentencing hearing.

SO ORDERED.