* District Judge of the Northern District of Texas, sitting by designation. UNITED STATES COURT OF APPEALS

For the Fifth Circuit

___________________________________

No. 99-20165

___________________________________

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

VERSUS

PHILLIP S. PETERSON,

THEODORE F. CLARK,

SANDRA LYNN HOLICK, and

DEBRA WILLS O’KEEFE,

Defendants - Appellants.

__________________________________________

Appeals from the United States District Court

for the Southern District of Texas

__________________________________________

March 8, 2001

Before DUHE’ and PARKER, Circuit Judges, and LINDSAY, * District Judge.

LINDSAY, District Judge:

I. BACKGROUND AND PROCEDURAL HISTORY

This case involves a telemarketing operati on called American Land Liquidators (“ALL”),

which solicited fees from landowners to advertise their land for sale and put them together with

buyers. ALL collected more than $9,000,000 in fees from about 27,000 property owners, between2

Jun e 1992 and May 1995, when the business was shut down by the government investigation. It

spent less than 3% of the income on advertising the properties to prospective buyers. Fewer than

than 1% of the property owners who paid fees to ALL sold their property as a result, and those who

did usually sold at very low prices. The government characterized ALL as a fraudulent scheme,

contending that ALL misrepresented the number of buyers available and the likelihood of sales, and

that the landowners would not have paid marketing fees to ALL if they had known the truth. A prior

case led to the convictions of several managers and organizers. S ee United State s v. Reissig , 186

F.3 d 617 (5th Ci r. 1999), c ert. denied

, 528 U.S. 1094 (2000). In this case, defendants Phillip S.

Peterson (“Peterson”), Theodore F. Clark (“Clark”), Sandra Lynn Holick (“Holick”), and Debra Wills

O’Keefe (“O’Keefe”) were each convi ct ed o f one count of conspiracy to commit mail fraud, wire

fraud, and money laundering, in violation of 18 U.S.C. § 371; four counts of mail fraud, in violation

of 18 U.S .C. §§ 2, 1341; and three counts of money laundering, in violation of 18 U.S.C.

§ 1956(a)(1)(A)(i).

They appeal their con vict ions, asserting several points of error: 1) that the evidence was

legally insufficient to support the convictions; 2) that evidence of o t her conduct was improperly

admitted under Fed. R. Evid. 404(b); 3) t hat a motion to sever by Holick and O’Keefe was

improperly denied and a related limit ing instruction, concerning the Rule 404(b) evidence, requested

by them was not given; and 4) that a “deliberate ignorance” jury instruction should not have been

given. As to most of the defendants’ arguments, we find no error on the part of the trial court. While

the trial court may have erred in refusing to give a requested limit ing instruction concerning the Rule

404(b) evidence of other conduct, we conclude that the court’s refusal does not constitute an abuse

of discretion. We therefore affirm the convictions.3 II. ANALYSIS

A. Sufficiency of the Evidence

Clark, O’Keefe, and Holick challe nge the sufficiency of the evidence to support their

convictions for mail fraud, conspiracy to commit mail fraud, and money laundering. In reviewing a

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

to the prosecution and affirm if a reasonable juror could conclude that t he government proved al l

e ssential elements of the offense beyond a reasonable doubt. U nited States v. Richards

, 204 F .3d

177, 206 (5th Cir.), cert. denied

, 121 S. Ct. 73 (2000). All evidence is considered, no t just that

supporting the verdict, but the evidence need not conclusively disprove alternatives; the jury is “free

to choose among r easonable constructions of the evidence.” I d. If the evidence is relatively

balanced, a reasonable juror could not convict beyond a reasonable doubt, and we would be required

to reverse the conviction in such instance. Id

.

To prove mail fraud, 18 U.S.C. § 1341, the government must show (1) a scheme to defraud;

(2) use of the mails to execute the scheme; and (3) the specific intent to defraud. U nited States v.

Rico Industries, Inc.

, 854 F.2d 710, 712 (5th Cir. 1988). To prove conspiracy, 18 U.S.C. § 371, the

government must show (1) an agreement between two or more persons to pursue an unlawful

objective; (2) the defendant’s knowledge of the unlawful objective and voluntary agreement to join

the conspiracy; and (3) an overt act by one or more of the members of the conspiracy in furtherance

of the objective of the conspiracy. U nited States v. Dadi

, 235 F.3d 945, 950 (5th Cir. 2000). “The

government must prove the same degree of criminal intent as is necessary for proof of the underlying

substantive offense.” I

d

. Clark, O’Keefe, and Holick challenge the conspiracy and mail fraud

convictions on the gr o und t hat there was insufficient evidence of the required intent to defraud.4

O’Keefe denies that ALL was engaged in a fraudulent scheme at all, asse rting that it was j ust an

unsuccessful venture. A similar argument was raised in R eissig

. The evidence in the trial record as

to the nature of the operati on is essentially the same for this case as it was in Reissig . As we did

there, we conclude that there was sufficient evidence to support the jury’s conclusion that “ALL was

a sham and . . . [a] fraudulent telemarketing scheme.” Reissig , 186 F.3d at 619.

O’Keefe, Clark, and Holick further claim that, to the extent any representations they made

were false, t hey had no knowledge that the representations were false. ALL was separated into a

Seller’s Division (the telemarketers, dealing with property owners) and a Buyer’s Division (dealing

with prospective buyers and handling complaints). The defendants were employed in the Seller’s

Divisio n, and were ALL’s top telemarketers. O’Keefe, Clark, and Holick claim that those in the

Buyer’s Division or in management would h ave been aware of the fraud but those in the Seller’s

Division were deliberately kept in the dark, thus negating the intent to defraud necessary for the mail

fraud and conspiracy counts.

The government presented evidence at trial from which a reasonable juror could in fer

knowledge by the defendants that their representations (as to the large number of prospective buyers

for the properties, how quickly the properties would sell, and so on) were false. For example, the

defendants collected substantial sums from a large number of property owners (Clark - $137,805

from 379 individuals; Holick

- $328,787 from 832 individuals; O’Keefe

- $326,714 from 908

individuals). Only three of the properties for which Clark solicited fees were sold through ALL, all

after he left ALL. Only twenty-seven of the pro pert ies fo r which Holick solicited fees were sold.

Telemarketers received a bonus for each property that later sold, so the defendants would have been

aware that very few of the properties for which they obtained advertising fees were actually sold.5

The defendants point out that no bonus was paid when properties were sold directly from seller to

buyer rather than through ALL, implying that the failure to receive bonuses did not me an that the

properties were not selling. To support their claim that they were misled by ALL management,

however, the defendants point out that the Buyer’s Division constantly reported how well ALL was

doing. Relying on such reassurances is inconsistent with the defendants’ implied assumption that

properties were being sold directly f ro m seller t o buyer. The jury could reasonably infer that the

defendants knew that few properties sold at all, either through ALL or directly from seller to buyer.

I n addition, evidence showed that O’Keefe received complaints from customers, and had in her

possession a summons and copy of a complaint in a lawsuit alleging misrepresentations by ALL and

specific employees, including herself.

The defendants also challenge the sufficiency of evidence as to the money laundering counts.

The money laundering statute prohibits two different categories of transactions

— “pr omoti on”

mo ney laundering, 18 U.S.C. § 1956(a)(1)(A)(i) (“with the intent to promote the carrying o n o f

specified unlawful activity”), and “concealment” money laundering, 18 U.S.C. § 1956(a)(1)(B) (“to

conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds

of specified unlawful activity”). The defendants were charged only with the former. The transactions

in question were disbursements for advertising, travel and entertainment (including hotels and casinos

in Las Vegas), office and administrative expenses, and so on. For a conviction of promotion money

laundering, “the Government must prove that the defendant (1) conducted or attempted to conduct

a financial transaction, (2) which the defendant knew involved the proceeds of a specified unlawful

activity, (3) with the intent

. . . to prom ote specified unlawful activity

. . . .” U nited States v. Wyly

,

193 F.3d 289, 295 (5th Cir. 1999).6

Holick argues that she had no knowledge of unlawful activity and therefore could not have

intended to prom ote such activity. That argument fails for the same reason as does her argument that

the evidence is insufficient to show that she had the intent to defraud. Clark argues that, as he did

not personally make the disbursements in question, he was convicted of derivative responsibility as

a member of a conspiracy. S ee Pinkerton v. United States

, 328 U.S. 640, 647 (1946); United States

v. Garcia

, 917 F.2d 1370, 1377 (5th Cir. 1990) (“A party to a conspiracy may be held responsible

for a substantive offense committed by a coconspirator in furtherance of the conspiracy, even if that

party does not participate in or have any knowledge of the substantive offense.”). Clark argues that

the money laundering counts must fall since the evidence is legally insufficient for his conviction on

the conspiracy count. Because we conclude that the evidence was sufficient for the conspiracy

convictions, this argument also fails.

Clark and O’Keefe raise a more substantial argument

— that a “promotion” money laundering

count cannot be based on expenditures for legitimate business activities. S ee, e.g., United States v.

Brown

, 186 F.3d 661, 668-70 (5th Cir. 1999) (holding that payments for legitimate business expenses

of the enterprise cannot support a “promotion” money laundering charge, absent a showing of intent

such as expenditures that “were not necessary to the defendant’s legitimate business operations and

played an important role in his [illegal] scheme”); United States v. Jackson

, 935 F.2d 832, 841 (7th

Cir. 1991) (money laundering charge against leade r o f drug ring supported by expenditures for

beepers, but not by expenditures for mo bile phones, rent, and cash). This argument rests on two

contentions: 1) that ALL was either primarily legitimate or could be divided into separate and distinct

components, one of which was a legitimate business; and 2) that the expenditures on which the money7

laundering counts are based were not associated with the unlawful part, if any, of ALL’s activities.

We reject both contentions.

As noted above, the evidence at trial was sufficient for a reasonable juror to conclude beyond

a reasonable doubt that ALL was a fraudulent scheme. The defendants propose considering ALL as

consisting in essence of two different businesses, one legitimate (advertising to find buyers for land,

maint aining buyer profiles, mailing property listings, enteri ng data into a computer database, and

arranging the sales of a limit ed number of properties) and one illegitimate (recruiting property owners

through fraudulent misrepresentations). We find this argument unpersuasive, and the decisions in

Brown and Jackson inapposite.

Brown dealt with an automobile dealership which perpetrated several types of fraud on some

of its customers, but these constituted “ s ome relatively minor fraudulent transactions” by “an

otherwise legitimate business enterprise.” B rown

, 186 F.3d at 670. The expenditures in question,

for the basic operations of the dealership, o nly indirectly supported the fraudulent operations. I d

.

In this case, by contrast, the fraud was not restricted to isolated instances

— the evidence presented

at trial supports a conclusion that essentially all of the property owners who paid fees to ALL were

treated to the same fraudulent misrepresentations. In J ackson

, the defendant made both expenditures

related to the illegal business (beepers) and personal expenditures (mobile phones, rent); the Seventh

Circuit held that the former sufficed for promotion money laundering, while the latter did no t

.

Jackson

, 935 F.2d at 841. In t his case, all the expenditures related to the illegitimate business

operation.

We further note that ALL’s operations were not two stand-alone divisions, each with its own

revenue source sufficient to earn a profit. The Buyer’s Division and Seller’s Division each relied on8

the existence of the other, and ALL’s revenues came almost exclusively from the Seller’s Division’s

solicitation of fees. Expenditures for the operation of the Buyer’s Division, even if not absolutely

required for the continued operati on of the Seller’s Division, would support the continued operati on

of ALL as a whole. When the business as a whole is illegitimate, even individual expenditures that

are not int rinsically unlawful can support a promotion money laundering charge. See, e.g., United

States v. Coscarelli

, 105 F.3d 984, 990 ( 5t h Cir.) (expenditures supported “promotion” money

laundering charge when used to pay “the coconspirators, the telemarketers, and general operating

expenses of the scheme”), vacated

, 111 F.3d 376 (5th Cir.1997), reinstated

, 14 9 F.3d 342 (5th

Cir.1998); United States v. Leonard

, 61 F.3d 1181, 1186 (5th Cir. 1995) (“paying callers, purchasing

leads, paying phone bills” prom oted the illegal telemarketing activity and supported money laundering

charge). We think that a reasonable jury would conclude that this case more closely resembles

Coscarelli and Leonard than Bro w n and Jackson

. In addition, we note that at least some

advertisements placed by ALL solicited both property owners and property sellers. The expenditures

for advertising expenses therefore did support the fraudulent operations of the Seller’s Division.

The evidence submitted at trial is not proof to an absolute certainty of the defendants’ intent

to defraud, for the conspiracy and mail fraud counts, or intent to promote an unlawful activity, for

the money laundering count; however, such level of proof is not required. The defendants point to

evidence from which one could conclude that they did not have the requisite intent to defraud and

that the expenditures supporting the money laundering counts did not prom ote an unlawful activity

— if believed by the jury. The jury was aware of the evidence and apparently assigned it little or no

weight, which is exclusively within its province, and rendered t he verdict accordingly. We are

convinced that a reasonable juror could conclude that the government proved all essential elements9

of the offenses beyond a reasonable doubt. Accordingly, we reject the defendants’ argument as to

insufficiency of evidence.

B. Rule 404(b) Evidence

The government presented evidence pertaining to Peterson’s conduct after he left ALL, which

Peterson characterizes as “explosive and damning evidence of training other telemarketers to make

misrepresentations,” see Peterson’s Brief at 3. Peterson contends that this evidence does not meet

the standard of Fed. R. Evid. 404(b) governing admissibility of such evidence.

“The district court’s decisi o n t o admit Rule 404(b) evidence is reviewed for abuse of

discretion. This review is necessarily heightened in criminal cases.” R ichards

, 204 F.3d at 199

(citations and internal qu o tati on marks omitted). In making a Rule 404(b) determination, the trial

cou rt must “determine that the extrinsic offense evidence is relevant to an issue other than the

defendant’s character” and also “whether the evidence satisfies Rule 403.” I d

. (citing United States

v. Beechum , 582 F.2d 898, 911 (5th Cir.1978) (en banc)). Peterson challenges the evidence under

both prongs of the Beechum test, arguing that future acts are not evidence of criminal intent in the

past and that the evidence was unduly prejudicial. (Peterson’s brief also discusses that the evidence

in question came from a criminal investigation in Colorado which resulted in an indictment after the

jury verdi ct in t his case, but does not explain how that fact is relevant to the admissibility of the

evidence, and we therefore ignore it.) We disagree as to both arguments.

The evidence was offered as evidence of Peterson’s intent. Our prior decisions clearly allow

for evidence of “bad acts” subsequent to the subject matter of the t rial for the purpose of

demonstrating intent. S ee United States v. Catano , 553 F.2d 497, 499-500 (5th Cir. 1977); Roe v.

United States

, 316 F.2d 617, 623 (5th Cir. 1963) (“Since this is a question of intent, acts done before10

and after the crime charged are admissible if the circumstances s how a sufficient connection from

which inferences may reasonably be drawn.”). The evidence of Peterson’s future conduct would not

be admissible to prove his conduct at ALL. Once the jury concluded that Peterson committed the

conduct at issue, however, they co uld co nsider evidence of similar subsequent conduct (relatively

closely linked in time), and e vidence of his intent on that subsequent occasion, to draw inferences

ab out the intent underlying his conduct at ALL. The order in which the charged conduct and the

similar acts occur may affect which of the possible inferences the jury decides to draw, but does not

preclude admission of the evidence.

We also conclude that the evidence was not unduly prejudicial. The jury heard eleven days

of testimony, and the evidence in question took less than a half hour. This is not a situation where

“[a] substantial porti on of the total volume of testimony before the jury concerned extrinsic offenses,”

see United States v. Zabaneh

, 837 F.2d 1249, 1265 (5th Cir. 1988). In addition, the court provided

a limit ing instruction at the end of the case. Accordingly, we conclude that the evidence satisfies both

prongs of the Beechum test and the trial court did not abuse its discretion in admitting the evidence.

C. Severance and Limiting Instruction

Because of the testimony of “bad acts” admitted against Peterson, O’Keefe and Holick filed

motions to sever (before, during, and at the conclusion of the trial), which were denied. We review

the denial of a severance motion for an abuse of discretion. R ichards

, 204 F.3d at 193. To prevail,

“the defendant must show that: (1) the joint t rial prejudiced him to such an extent that the district

court could not provide adequate protecti on; and (2) the prejudice ou t weighed the government’s

interest in economy of judicial administration.” Id

.11

O’Keefe and Holick argue that the “bad acts” evidence would not have been inadmissible if

they were tried alone, as it would be hearsay to them and also would violate their Sixth Amendment

right to confrontation, see Bruton v. United States

, 391 U.S. 123, 139 (1968), since Peterson did not

t e st ify. They contend that this testimony was severely prejudicial and that the trial court did not

provide an adequate limit ing instruction. The jury charge instructed the jury that they must give

separate consid erat io n to the evidence as to each defendant, and that Rule 404(b) evidence was

admissible only for limit

ed purposes. O’Keefe and Holick contend that the jury also should have been

i nst ruct ed specifically that Rule 404(b) evidence concerning acts by one defendant cannot be

considered as evidence against another defendant.

We conclu de t hat the risk of prejudice was not so high that it could be cured o nly by

severance. A risk of prejudice may arise when “evidence that the jury should not consider against a

defendant and that would no t be admissible if a defendant were tried alone is admitted against a

codefendant,” but “[t]he risk of prejudice will vary with the facts in each case.” Z afiro v. United

S tates

, 506 U.S. 534, 539 (1993). We have previously noted, however, that severance is no t

necessarily the appropriate remedy. United States v. Rocha

, 916 F.2d 219, 228-29 (5th Cir. 1990)

(“severance is not required merely because the Government introduced evidence admissible only

against individual co-defendants” and “severance is required on the basis of a disparity in the evidence

only in the most extr eme cases”); United States v. Merida , 765 F.2d 1205, 1219 (5th Cir. 1985)

(severance is not required if “the jury could sort out the evidence reasonably and view each defendant

and the evidence relating to that defendant separately”). As discussed abo ve, the Rule 404(b)

evidence was of limit

ed extent and not unduly prejudicial to P et erso n. An appropriate limiting12

instruction, that the evidence of “bad acts” by Peterson should not be considered as to O’Keefe and

Holick, would suffice to reduce the risk of prejudice.

The defendants complain that an a ppro priate limiting instruction was n ot given. They

requested during trial, and were refused at that time, a limit ing instruction pursuant to Fed. R. Evid.

105 as to the Rule 404(b) evidence. Although the better practice may be to give such a limiting

instruction when the evidence is presented, see Rule 105, an instruction at the conclusion of trial will

often be sufficient. See, e.g., United States v. Cihak

, 137 F.3d 252, 258-59 & n.3 (5th Cir. 1998)

(limit ing instruction, apparently given at the conclusion of trial, was sufficient to cure any prejudice

from Rule 404(b) evidence a gainst a co-defendant). We conclude that the evidence was not so

prejudicial and the trial was not so long that the delay in giving a limit ing instruction ren dered i t

inadequate.

The defendants claim that the limit ing instruction at the conclusion of trial was not sufficiently

detailed. It is not clear from the record whether anyone submitted a proposed instruction for the jury

charge along the li nes no w suggested by defendants, that the Rule 404(b) evidence could not be

considered for any purposes as to O’Keefe a nd Holick specifically. We assume, for purposes of

discussion, that such a r equest was made. The trial court’s error, if any, therefore can be

characterized either as denial of the motion to sever or refusal to give the specific limit ing instruction.

We review the refusal to give a requested jury instruction for abuse of discretion. R ichards

, 204 F.3d

at 204.

Such a refusal requires reversal only if the requested instruction (1) was a substantially

correct statement of the law, (2) was not substantially covered in the charge as a

who le, and (3) concerned an important point in the trial such that the failure t o

instruct the jury on the issue ser io usly impaired the defendant’s ability to present a

given defense.13

Id

.

The first part of this standard is satisfied, and we conclude that the second is as well. The trial

court’s actual instructions were as follows:

A separate crime is charged against each of the defen dants in each count of the

indictment . Each count, and the evidence pertaining to it, should be considered

separately and individually. The fact that you may find one or more of the accused

guilt y o f any of the crimes charged should not control your verdict as to any other

crime or any other defendant. You must give separate consideration to the evidence

as to each defendant.

You have also heard of acts of some of the defendants which may be similar to those

charged in the indictment, but which were committed on other occasions. You must

not consider any of this evidence in deciding if those defendants committed the acts

charged in the indictment. However, you may consider this evidence for other, very

limited purposes.

If you find beyond a reasonabl e do ubt fro m other evidence in this case that the

defendants did commit the acts charged in the indictment, then you may consider

evidence of the similar acts allegedly committed on other occasions to determine:

Whether those defendants had the state of mind or intent necessary to

commit the crime charged in the indictment; or

Whether those defendants had a motive or the opportuni ty to commit

the acts charged in the indictment; or

Whether those defendants acted according to a plan or in preparation

for commission of a crime; or

Whether those defendants committed the acts for which he is on trial

by accident or mistake.

These are the limit

ed purposes for whic h any evidence of other similar acts may be

included.

We conclude that it might have been better to use actual names rather than “those defendants”

in the instructions in order to make crystal clear to the jury that the Rule 404(b) evidence against

Peterson c o uld no t be considered, even for “other, very limited purposes,” against O’Keefe and

Holick. C

ompare Cihak

, 137 F.3d a t 258 n.3 (jury instruction specified for which purposes and

against exactly which defendants the evidence could be considered). We are not convinced, however,14

that the trial court’s denial of the motion to sever co mbined with the failure to give the requested

limit ing instruction was so prejudicial that it severely impaired O’Keefe and H o lick’s defense and

constitutes reversible error. While the instructions given did not specify that the Rule 404(b) evidence

could not be considered against O’Keefe and Holick specifically, the general instruction that the jury

should “give separate consideration to the evidence as to each defendant” served much the same

purpose and substantially reduced the risk of prejudice. C f. United States v. Hemmingson

, 157 F.3d

347, 357 (5 t h Cir. 1998). Given this general instruction, the limited extent of the Rule 404(b)

evidence, and the totality of the other evidence against O’Keefe and Holick, we do not believe that

they suffered “compelling prejudice” or received an unfair trial, and therefore conclude that the trial

court’s decisions did not constitute an abuse of discretion. Cf. id

.

D. Deliberate Ignorance Instruction

Finally, Clark and O’Keefe challenge the trial court’s court’s decision to submit a deliberate

ignorance instruction. We review jury instructio ns t o det ermine whether, as a whole, they are a

correct statement of the law and are applicable to the factual issues in the case

. United States v.

Faulkner , 17 F.3d 745, 766 (5th Cir. 1994). A deliberate ignorance instruction is appropriate only

“when a defendant claims a lack of guilty knowledge and the proof at trial supports an inference of

deliberate indifference.” U nited States v. Threadgill

, 172 F.3d 357, 368 (5th Cir.), cert. denied

, 528

U.S. 871 (1999). “The instruction is proper where the evidence shows (1) subjective awareness of

a high probability of the existence of illegal conduct, and (2) purposeful contrivance to avoid learning

of the illegal conduct.” I

d

. Although a deliberate ignorance instruction should rarely be given, it is

appropriate when supported by sufficient evidence. I d

. Giving the instruction is error, but harmless

error, if the government shows that the defendants had actual knowledge. Id

.15

The defendants do not challenge the accuracy of the instruction, only whether it is applicable.

They claim that the government presented no evidence that they shut their eyes to evidence of fraud.

We disagree. As discussed above, the jury could reasonably infer from the evidence presented that

the defendants had th e requisit e intent to defraud. That surely encompasses a conclusion that the

defendants either: 1) were aware of a high probability that ALL’s operations constituted fraud but

chose not to investigate (in which case the deliberate ignorance instruction was proper); or 2) actually

knew that they were engaged in fraud (in which case the deliberate ignorance instruction constituted

harmless error). In either event, there is no reversible error here.

III. CONCLUSION

For the foregoing reasons, the judgment of the district court is

AFFIRMED.