-4.
viewed “in the light most favorable to the government.” United

States v. Yashar, 166 F.3d 873, 880 {7th Cir. 1999). We may decide

questions of law raised in a motion to dismiss, but since the jury
is the fact-finder, any arguments which rely on disputed facts must

be rejected. See United States v. Shriver, 989 F.2d 898, 906 (7th

Cir. 1992).

McGowan argues that each of the nineteen counts of the
indictment is barred by the statute of limitations. We first take
up his argument on the wire fraud counts. There are two elements
of the offense of wire fraud under 18 U.S.C. § 1343: (i) a scheme
to defraud, and (ii) the use of a wire communication in furtherance

of that scheme. See United States v. Lindemann, 85 F.3d 1232, 1240

(7th Cir, 1996). The statute of limitations for wire fraud is five

years, United States v. Pearson, 340 F.3d 459, 464 {7th Cir. 2003),

and the limitations period begins to run from the date of the wire

communication. See United States v. Tadros, 310 F.3d 999, 1006

(7th Cir. 2002). Each use of the wires - here, each telephone call

- constitutes a separate offense. See id.

McGowan contends, and the government. does not dispute,
that in March 1998, [ndividual A, having received neither her money
nor her requested documentation, brought her concerns Lo the FBI
and began recording her conversations with McGowan. This fact,
according to McGowan, dooms the wire fraud counts. McGowan reasons

that since each of the charged calls occurred after Individual A



-7-
that because of the financial results shown in the report, Lhe
amount of operating ecxpenses deducted from his income had bean
increased.

On appeal, the defendant argued that neither mailing was in
furtherance of the scheme to defraud because “his victims were
smelling a rat and beginning to seek legal counsel,” and “[wlith
the scheme unraveling . . . the mailings could not have been in

furtherance of it.” id. 521. The Seventh Circuit flatly

rejected the argument, holding that “{i]t is irrelevant that the
mailings failed in their purpose; a scheme to defraud need not
succeed to violate the mail fraud statute.” tid. at 522.

What is material is not the effect of the communication, but
vather defendant’s purpose in making the communication. On that
score, the Bach Court noted that “when asked at argument what the
purpose of the mailings could have been, if not to lull the
recipients into thinking that maybe they would get the promised
returns from their investments after all, his lawyer was at a
loss.” Td. at 521.

The reasoning in Bach informs our holding here, Th is
immaterial that Individual A was on to McGowan at the time of the
misrepresentations alleged in the wire fraud counts. If McGowan’s
purpose was to deceive or lull Individual A, then a jury could

reasonably find his communications to have been in furtherance of



~3-
return of the principal, by falsely stating: (i) that he had
received income payments bul they were held up by banking
practices; (ii) that he was “about to send the money”; (iii) that
he had obtained health insurance for her; and (iv) that he had a
plan for quick liquidation of the investments through other
investors.

The indictment charges eighteen counts of wire fraud in
violation of 18 U.S.C. § 1343, and one count of fraud by an
investment adviser in violation of 15 U.S.C. § 80b-6(2). The wire
fraud counts, Counts One through Eighteen, allege eighteen
telephone calls between McGowan and Individual A between April 13
and June 29, 1998, all in furtherance of the scheme to defraud.
The remaining count, Count Nineteen, alleges that between
appreximately September 1997 and July 1998, McGowan, as an
investment adviser, willfully engaged in a practice and course of
business which operated as a fraud and deceit upon Individual A as
described in Count One of the indictment,

McGowan has filed a motion to dismiss the indictment.

DISCUSSION

The Federal Rules of Criminal Procedure permit a defendant
to “raise by pretrial motion any defense, objection, or request
that the court can determine without a trial of the general issue.”

FRD. R. CRIM. P. 12{b) (2). In considering a motion to dis

SS an

indictment, all facets in the indictment are taken as true arid


-5-
had approached the FBI (the first occurred on April 13, 1998), the
calls could not be “in furtherance” of the scheme hecause
Individual A could no longer be duped, or “lulled,” by Lhe
representations made in the conversations.

McGowan argues that the scheme was completed when Individual
A approached the FBI in March 1998. It was then, he contends, that
the statute of limitations began to run, and the indictment, filed
5 years and one month later, is time-barred.

It seems to us, however, that McGowan misunderstands the
relationship of limitations to the argument he is making. It is
not the scheme that starts the limitation period. It is the scheme
plus a wire communication in furtherance of the scheme. Only when
the wire communication has occurred has the crime of wire fraud
been committed, triggering the limitations period. All of the
alleged telephone calls were made within the five-year window prior
to the filing of the indictment. It is true that a substantial
amount of the scheme activity is alleged to have occurred more than
five years before the return of the indictment. But there are no
charged wire communications going back that far. They are all
alleged to have occurred less than five years before the

indictment. See United States v. Howard, 350 F.3d 125, 127 (D.C.

Cir. 2003) (“[T]he use of the mails or wires within the period
allowed the government to reach the crime and yet rely on proof of

scheme activity in an otherwise time-barred period.”).



-8-

the scheme to defraud.- Accordingly, defendant's motion to dismiss
Counts One through Eighteen must be denied.

As for Count Nineteen, defendant's argument that if

Counts Qne through Eighteen are dismissed, then there remains no
charge to support a “course of fraud” under Count Nineteen. Counts
One through Eighteen are still alive. Because McGowan proffers no
other argument in support of dismissing Count Nineteen, that count
also survives the motion.
CONCLUSION
For the foregoing reasons, defendant’s motion to dismiss the

indictment as untimely is denied.

DATE: April 21, 2004

John/Fj Grady, United States Distrig

‘In his papers, McGowan emphasizes that all of the charged
telephone calls were initiated by Individual A, at the diraction of
the FBI. The government disputes that assertion and submits that
several of the charged conversations were initiated by McGowan.
Even assuming, for the sake of argument, that all calls were
initiated by Individual A as McGowan contends, it is of no moment
to our analysis. The wire fraud statute requires the interstate
transmission of sounds and signals in furtherance of a scheme to
defraud, and as the government states, “({njothing in the language
of the statute requires that the defendant himself dial the
telephone.” (Govt.’s Resp. at 14.) See 18 U.S.C. § 1343, And
although McGowan generally objects to the FBI’s role in making the
telephone calls, he advances no real argument on the subject.


Minutt Order Form (0697)

United sf. District Court, Northern pistrif@r Tllinois

Name of Assigned Judge
or Maglstrate Judge

John F. Grady

Sitting Judge if Other
than Assigned Judge

CASE NUMBER

03 CR 0350

DATE

April 22, 2004

CASE United States of America vs. Brian McCiowan
TITLE
[In the following box (a) indicate the purly filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state bri¢fly the nature
MOTION: of the motion being presented. |
DOCKET ENTRY:
(1) o Filed motion of | use listing in “Motion” box above.]
Q oO Brief in support of motion due
(3) oO Answer brief to motion due. . Reply to answer brief duc.
(4) Oo Ruling/Hearing on | ____ set Lor at
(5) OQ Status hearing[held/continued to] [set for/ for] on set for al
(6) Oo Pretrial conference[held/continued to) (set for/re-set for] on ______ set for at
{7) oO Trial[set for/re-set for] on at :
(8) QO [Rench/Jury trial] [Hearing] held/continued to
(9) o ‘This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) CLocalRule 41.1 OFRCP4l(a)(1) OO FRCP41(a)(2)
qo) [Other docket entry) © Enter Memorandum Opinion and Order. Defendant’s motion to dismiss the
indictment is denied.

(1) «fl {For further detail see order attached to the original minute order.]

No notices required

U_ | Notices mailed by judge's staff,

Notified counsel by telephone.

Docketing to mail notices.

Muil AO 450 form,

Copy ta judge/magistrate judge.

courtroom
soputy’s
initials

KM

No notices required, advised in open court

Document
Number

umber af notices

APR 23,2004

Te dockeresh

Prk Piepury initials

if

ate railed notice

Date/lime received in
central Clerk's Office:

svaifing deputy inital



-6-

Putting aside the non-issue of limitations, McGowan’s real
argument is simply that, as a matter of law, telephone calls cannot
be deemed to be “in furtherance” of a scheme where, as here, the
scheme has been detected before the calls are made. IL is well~
settled that mail or wire communications for the purpose of lulling
a victim of a fraud into a false sense of security, even after a
defendant has obtained the money, can be in furtherance of a scheme

to defraud. ee Schmuck v. United States, 489 U.S. 705, V10-15

109 $.Ch. 1443, 103 1.,Ed.2d 734 (1989); United States v. Rumsavich,

313 F.3d 407, 413 n.2 (7th Cir. 2002). McGowan does not conte

this proposition. Instead, he seeks Lo add the qualification that
such “lulling” communications can be “in furtherance” of a
fraudulent scheme only if the victim is, in fact, misled by the
communication.

The Seventh Circuit has recently considered this question.

In United States v. Bach, 172 F.3d 520 (7th Cir. 1999), the

defendant had lured investors into his Ponzi scheme with promises

of lucrative interests in oil and gas leases. The defendant was

convicted of two counts of mail fraud, he first mailing was a
check, purporting to represent profits from one of the leases,
which defendant sent to one of the victims. The second was a

report of income and expenses on another lease mailed lo a

different victim who crroneously believed he had an interest in the

lease. The report was accompanied by a letter advising the victim



03-350.041-TCM April 22, 2004

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

UNITED STATES OF AMERICA,
Plaintiff,
v. No. 03°CR 350

iy eas | comrge ry

UU ty
APR 2 3 2004

BRIAN MCGOWAN,

Defendant.

MEMORANDUM OPINION

Before the court is defendant’s motion to dismiss the

indictment as untimely. For the following reasons, the motion is
denied.
BACKGROUND

On April 3, 2003, a nineteen-count indictment was returned
against Brian McGowan charging him with investment adviser fraud
and wire fraud. The following facts, drawn from the indictment,
are taken as true for purposes of this motion. In 1997 and 1998,
the years relevant to the indictment, McGowan was an investment
adviser. During those years, McGowan devised a fraudulent scheme,
implemented through verious misrepresentations, to induce
“Individual A” to invest with him. Individual A provided McGowan
with over $260,000 to invest and manage on her behalf. McGowan had

misrepresented to Individual A that he was a partner in a money

management and consulting firm, and additionally, that he managed

AP



-2.
financial and investment matters for cartain well-known sports
figures and their families. Knowing Lhat Individual) A was
partially disabled and that the money she gave him to invest was
substantially “all she had to live on,” McGowan falsely stated that
he would place her money in “safe and low risk investments” but
instead placed the funds in high-risk long term invesLments that
did not yield regular payments of income. McGowan also falsely
represented that if Individual A invested with him, he would obtain
health insurance for her.

Once in possession of Individual A’s money, McGowan never
provided her with an accurale statement of her investments.
Instead, he sent her written materials which in some instances were
confusing and without usable information, and at other times,
contained false information.

Further, “in order to lull Individual A into a false sense
of security, and to prevent her from requesting return of her funds
or complaining to law enforcement authorities,” McGowan falsely
represented the following: (i) that the investments had been
profitable and had generated high returns; (ii) that her money had
been placed in certain investment properties when, in fact, it had
not; and (iii) that he was engaged in ongoing business Lransactions
with various high net-worth individuals, including weli-known
professional athletes. McGowan also stalled Individual A’s request

for the promised investment income, and later, her request for