In the

United States Court of Appeals

For the Seventh Circuit

Nos. 13-3283 & 13-3537

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

MATTHEW GIOVENCO and

GUY POTTER,

Defendants-Appellants.

Appeals from the United States District Court for the 

Northern District of Illinois, Eastern Division.

No. 11 CR 316 — Rebecca R. Pallmeyer, Judge.

ARGUED SEPTEMBER 11, 2014 — DECIDED DECEMBER 9, 2014

Before BAUER, MANION, and KANNE, Circuit Judges.

BAUER, Circuit Judge. Matthew Giovenco and Guy Potter

(collectively “Appellants”) were charged, tried, and convicted

on six counts of mail fraud in violation of 18 U.S.C. § 1341.

Following his conviction, Giovenco filed a renewed motion

for acquittal, which the district court denied. Thereafter, both

Giovenco and Potter were sentenced. On appeal, Giovenco

asserts that the district court erred in denying his motion for
2 Nos. 13-3283 & 13-3537

acquittal as he was no longer part of the mail fraud scheme at

the time of the relevant mailings. Potter appeals as well, but on

different grounds. Potter contends that the district court

erroneously enhanced his offense level at sentencing because

the victim did not suffer a loss. For the reasons that follow, we

affirm the district court’s rulings as to both Appellants.

I. BACKGROUND

Since 1990, the City of Chicago has operated The Minority

and Women-owned Procurement Program designed to give an

advantage to businesses owned by minorities (“MBEs”) in the

award of city contract money. The City promotes the use of

MBEs by requiring companies contracting with the City to

expend certain amounts of money hiring or subcontracting

with MBEs. To gain MBE status, a local business must be

at least 51 percent owned by one or more members of a

minority group, and its management and daily operations

must be controlled by those minority-group members. Businesses wishing to qualify must submit documentation to the

City supporting the minority-ownership requirements. If the

City is satisfied that a business qualifies, it submits an official

certification letter and includes the business on an online

directory identifying MBEs.

RCN Telecom Services of Illinois, LLC (“RCN”), a cable

provider, participates in the MBE program through its franchise agreement with the City. Pursuant to its agreement, RCN

is required to exercise its best efforts to ensure that qualified

MBEs receive 40 percent of RCN’s expenditures for goods and

services. To satisfy its requirement, RCN seeks out MBE

subcontractors offering cable installation services using the
Nos. 13-3283 & 13-3537 3

City’s online directory. It was through this directory that RCN

found Appellants’ cable company in 2003.

Starting in April 2003, and continuing into 2006, Appellants

participated in a scheme to defraud RCN, in which they held

out their cable installation business, ICS Cable, Inc., (“ICS”) as

a legitimate MBE. As a purported MBE, ICS was eligible to

provide cable services in return for the expenditures contractually reserved for MBEs. ICS, however, was a fraud. Appellants,

along with other co-schemers at ICS, used false documentation

to obtain MBE certification. They also hired a black front-man,

Jerone Brown, to pose as ICS’s president, when in reality he

had no managerial responsibilities; Appellants, white men,

actually controlled ICS. Appellants maintained this scheme for

three years, throughout which RCN was ICS’s only client and

sole source of income. In total, RCN paid ICS $8,303,562 for

the annual subcontracts earned as an apparent MBE. The

profits of these fraudulently obtained contracts were shared

among Giovenco, Potter, Brown, and another co-schemer,

Cheronne Mayes.

The scheme continued into 2006 when Giovenco signed that

year’s subcontract agreement with RCN on behalf of ICS.

Shortly thereafter, Giovenco was fired from ICS because the

senior vice president of RCN found it difficult to work with

Giovenco, and ICS did not want to risk losing its subcontract

with RCN. According to Giovenco, however, he was fired

because Potter suspected him of stealing business from ICS.

Whatever the reason for his termination, Giovenco continued

to receive checks generated by the scheme after he was fired,

receiving at least two in February 2006 and one in April 2006.

Potter and the remaining members of ICS continued the
4 Nos. 13-3283 & 13-3537

scheme until August 2006, when the City began investigating

ICS’s MBE status. At that point, the members dissolved ICS in

an apparent effort to avoid detection.

 As a result of the City’s investigation, Appellants were

indicted charging six counts of mail fraud relating to their

scheme under 18 U.S.C. § 1341. Each of the six mailings

charged in the indictment occurred between May 1, 2006, and

October 4, 2006, after Giovenco had been fired from ICS. The

mailings were checks sent from RCN to Potter’s residence

pursuant to the 2006 subcontract agreement signed by

Giovenco. At trial, the government presented evidence that

both Giovenco and Potter intentionally defrauded RCN and

created ICS as an MBE for the sole purpose of being awarded

RCN contracts.

The day before closing arguments, Giovenco moved for

judgment of acquittal. He argued that he was entitled to the

judgment because he was no longer part of the scheme when

the charged mailings took place. He also argued that acquittal

was appropriate because RCN suffered no tangible loss as a

result of the scheme. The government disagreed, arguing that

withdrawal is not a defense to mail fraud and that it was not

required to prove a loss. The district court did not rule on

Giovenco’s motion at that time and the case went to the jury.

The jury found Giovenco guilty on all six counts. Giovenco

filed a renewed motion for judgment of acquittal following the

verdict, raising only the withdrawal argument. The district

court denied both motions before sentencing. A separate jury

also found Potter guilty on all six charges. 
Nos. 13-3283 & 13-3537 5

At sentencing, the district court imposed a 16 offense level

increase on each Appellant’s sentence according to United

States Sentencing Guidelines § 2B1.1 and based on RCN’s loss.

Potter was sentenced to 54 months’ imprisonment, and

Giovenco was sentenced to 36 months’ imprisonment.

Giovenco now appeals the district court’s denial of his

motions to acquit, arguing that because he no longer worked

for ICS at the time of the six mailings underlying the mail

fraud charges, he cannot be held legally accountable for the

scheme. Potter also appeals, but he does not challenge his

conviction. Instead, Potter argues that the district court

improperly imposed the 16 offense level increase because RCN

did not actually suffer a loss. Because Appellants appeal on

separate grounds, we will consider their arguments individually, beginning with Giovenco.

II. DISCUSSION 

A. Giovenco’s Conviction 

We review a district court’s denial of a motion for judgment

of acquittal de novo in the light most favorable to the prosecution. United States v. Seidling, 737 F.3d 1155, 1159–60 (7th Cir.

2013). If any rational trier of fact could have found the essential

elements of the crime beyond a reasonable doubt, we must

uphold the jury’s conviction. Id. A mail fraud conviction

requires three elements: (1) a scheme or artifice to defraud, (2)

the use of the mailing system for the purpose of executing the

scheme, and (3) the defendant’s participation in the scheme

with the intent to defraud. 18 U.S.C. § 1341; Seidling, 737 F.3d

at 1160.
6 Nos. 13-3283 & 13-3537

Giovenco’s challenge centers on the third element. He

argues that because he was fired before the six charged

mailings were sent, he cannot be considered a participant in

the scheme. Essentially, Giovenco claims he withdrew from the

scheme, precluding conviction. Withdrawal, however, is not a

recognized defense to mail fraud. United States v. Read, 658 F.2d

1225 (7th Cir. 1981). This is because unlike conspiracy where

withdrawal is an available defense, no agreement is necessary

for mail fraud liability. Id. at 1240. See also United States v.

Adeniji, 221 F.3d 1020, 1026 (7th Cir. 2000) (“The joint agreement that is essential to a defendant’s liability for the crime of

conspiracy is not a prerequisite to a conviction for mail

fraud.”). While conspiracy punishes membership in an

agreement to commit illegal activity, mail fraud punishes the

act of using the mail system to further a scheme to defraud.

Read, 658 F.2d at 1240. Therefore, “[a] party’s ‘withdrawal’

from a scheme is ... no defense to the crime because membership in the scheme is not an element of the offense.” Id. Instead,

association and participation in the criminal venture are

sufficient for liability. Id. See also Adeniji, 221 F.3d at 1026

(concluding adequate evidence of “knowing participation in

the ... scheme” was sufficient to support a mail fraud conviction).

This fundamental distinction between conspiracy and mail

fraud is also consistent with the longstanding rule that a mail

fraud conviction does not require proof that a defendant

personally mailed the letters at issue. United States v. Daniel,

749 F.3d 608, 615 (7th Cir. 2014); see also United States v. Briscoe,

65 F.3d 576, 583 (7th Cir. 1995) (stating that the government

need only prove that a scheme existed in which use of mails
Nos. 13-3283 & 13-3537 7

was reasonably foreseeable). All that is required is that “the

use of the United States mail system was reasonably foreseeable to [the defendant] and that an actual mailing occurred in

furtherance of the scheme.” Daniel, 749 F.3d at 615.

The undisputed facts presented at trial show Giovenco’s

participation in the mail fraud scheme. The government

presented testimony that Giovenco admitted to investigators

that he and Potter founded ICS as an MBE for the purpose of

obtaining contracts from RCN. He also stated he knew ICS

received its payments from RCN in the form of checks mailed

to Potter’s residence. Although Giovenco no longer worked for

ICS at the time of the charged mailings, it was reasonably

foreseeable that the mailings would continue to occur as a

result of his prior participation. In fact, the relevant mailings

were caused by Giovenco—he signed the very contract that

obligated RCN to send the checks in issue. Based on these facts

alone, Giovenco’s conduct satisfies the participation with intent

to defraud element of mail fraud.

As to the remaining elements, the record contains ample

evidence in support of both the existence of a scheme and the

use of the mailing system to execute the scheme, neither of

which Giovenco challenges. Because a rational trier of fact

could have found all three essential elements of mail fraud

beyond a reasonable doubt, Giovenco’s conviction must stand.

B. Potter’s Offense Level Enhancement 

By contrast, Potter does not challenge his conviction, but his

sentence. Pursuant to Application Note 3(F)(v) of United States

Sentencing Guidelines § 2B1.1, the district court determined

that the amount of loss was $8.3 million. Based on that loss
8 Nos. 13-3283 & 13-3537

amount, the district court found that a 22 offense level

increase1 was warranted, but departed downward and imposed a 16 offense level increase instead. Potter argues that the

16 offense level increase should not have been applied to his

sentence because RCN did not actually suffer a loss. Accordingly, he asks the court to remand this matter for a new

sentencing hearing. 

We review the district court’s interpretation and application

of the Guidelines de novo. United States v. Natour, 700 F.3d 962,

975 (7th Cir. 2012). We also review de novo whether the facts as

found are sufficient to support an enhancement under the

Guidelines. Id. at 974. As stated above, the district court

applied § 2B1.1 of the Guidelines for Potter’s sentence, which

provides the base offense level for defendants convicted of

mail fraud and includes various offense level increases

depending on the amount of loss at issue. United States

Sentencing Commission Guidelines Manual § 2B1.1 (2013).

None of the parties dispute that RCN spent $8.3 million on

expenditures with ICS. However, Potter challenges whether

that $8.3 million can truly be characterized as a loss. In his

view, because RCN still received its contracted cable services

from ICS, it is of no consequence for a loss calculation that ICS

was a false MBE. 

As the district court noted during Potter’s sentencing

hearing, Application Note 3(F)(v) of § 2B1.1 appears to

contemplate the scheme here. Application Note 3(F)(v)

1

 As a point of clarification, the district court applied a 22 offense level

increase, but the proper offense level increase for an $8.3 million loss is

actually 20 based on § 2B1.1(b)(1)(K) of the Sentencing Guidelines.
Nos. 13-3283 & 13-3537 9

provides that where regulatory approval by a government

agency is obtained by fraud, the “loss shall include the amount

paid for the property, services, or goods transferred, rendered,

or misrepresented, with no credit provided for the value of

those items or services.”United States Sentencing Commission

Guidelines Manual § 2B1.1 cmt. n.3(F)(v) (2013). It is undisputed that ICS obtained MBE certification from the City of

Chicago through fraud, putting Potter’s conduct squarely

within the scheme considered by Application Note 3(F)(v). It

is also undisputed that RCN paid $8.3 million for ICS’s

services. Taken together, RCN’s $8.3 million expenditure is

within the ambit of Application Note 3(F)(v).

Thus, because Application Note 3(F)(v) applies in this

situation, the district court correctly calculated loss consistent

with its terms. Applying Application Note 3(F)(v), the district

court properly measured RCN’s loss as its total expenditures

to ICS without credit for the value of ICS’s services, and was

within its discretion to depart downward from the Guidelines

and impose a 16 offense level increase instead of the applicable

20 offense level increase. See United States v. Lane, 323 F.3d 568,

588 (7th Cir. 2003) (“Once the amount of loss is calculated

under the guidelines, the court has the discretion to modify the

amount of loss to more accurately reflect the economic realities

of the crime.”). In sum, the facts as found in the record support

the district court’s 16 offense level increase.

To that end, it is worth noting that the alternative measurement of loss in this case would have resulted in the same 16

offense level increase. If loss cannot be reasonably determined,

the court must measure loss by the amount of gain

that resulted from the scheme. United States Sentencing
10 Nos. 13-3283 & 13-3537

Commission Guidelines Manual § 2B1.1 cmt. n.3(B) (2013). The

ICS scheme generated $2.2 million in net profits, which would

indicate a 16 offense level increase under the Guidelines. Id. at

§ 2B1.1(b)(I). Even under the more lenient measure, Potter still

properly bears the 16 offense level increase to his sentence.

III. CONCLUSION

We AFFIRM the district court’s denial of Giovenco’s motion

for acquittal. We also AFFIRM the district court’s offense level

enhancement for Potter.