## United States Court of App eals

F O R T H E E I G H T H C I R C U I T

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No. 1 0- 33 45

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Uni te d S ta te s o f Am eri ca, *

* App el le e, *

* App eal fro m

th e Uni te d S ta te s

v. * Dis tri ct Co ur t fo r th e

* Dis tri ct of M in ne so ta

. Caro lyn M. Lou pe r-M or ris

, *

* App el la nt

. *

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No. 1 1- 10 21

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Uni te d S ta te s o f Am eri ca, *

* App el le e, *

* App eal fro m

th e Uni te d S ta te s

v. * Dis tri ct Co ur t fo r th e

* Dis tri ct of M in ne so ta

. W il li am J. Mo rri s, J r., *

* App el la nt

. *

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Su bm it te d: Octo be r 21 , 20 11
Fil ed : M arch 2, 2 01 2

__ __ __ __ __ _Befo re RILEY, Ch ie f Ju dg e, SHEPHERD, Ci rcu it Ju dg e, an d W EBBER, Dis t r i c t 1

Ju dg e.

__ __ __ __ __ _

W EBBER, Dis tri ct Ju dg e.

A jury co nv ic te d Caro lyn M. Lo u p er-M or ris of co ns pi rin g to co m m it m ai l

frau d an d wire frau d in vi ol at io n of 18 U.S.C. § 37 1, aid in g and ab et ti ng wire frau d

in vi ol at io n of 18 U.S

. C

. § 13 43 , a nd ai di ng an d ab et ti ng m ai l frau d in vi ol at io n of

18 U.S.C. § 13 41

. A jury co nv ic te d W il li am J. M or ris , Jr., o f co ns pi rin g to co m m it

m ai l frau d an d wire frau d in vi ol at io n of 18 U.S.C. § 37 1, ai d i n g a n d ab et ti ng wire

frau d i n v io la ti on of 1 8 U.S.C. § 13 43 , m ai l fr au d i n v io la ti on of 1 8 U.S.C. § 1 34 1,

a n d m ak in g an d su bs cri bi ng a fal se ta x ret ur n in vi ol at io n of 26 U.S.C. § 7 2 0 6 ( 1 )

. Lou pe r-M or ris an d M or ris bo th ap pe al

.

Lou pe r-M or ris rai se s si x is su es on ap pe a l: 1) th e di st ric t co ur t erre d by 2

de nyin g h e r mo t i o n to di sm is s th e in di ct m en t be cau se th e Uni te d St at es m ad e a

m at eri al m is rep res en ta ti on to th e gr an d jury; 2) th e di st ric t co ur t erre d in ov erru li ng
he r ob jecti on un de r Bat

so n v. Ken tu cky

, 47 6 U.S. 79 (1 98 6) ; 3) th e e v i d e n c e was

in su ffi ci en t to su pp or t he r co nv ic ti on s; 4) th e Uni te d S t a t e s i n ti m id at ed on e of he r
wi t n es se s th ereb y de pr iv in g he r of th e rig ht to pr es en t a co m pl et e de fen se ; 5) th e
di st ric t co ur t erre d by en ha nc in g he r ba se le ve l of fen se by fo ur po in ts fo r he r ro le as

a le ad er or or ga ni zer of an act iv it y in vo lv in g fiv e or m or e pa rti ci pa nt s un de r Uni te d

St at es Sen te nc in g Gui de li ne s § 3B 1.1 ; an d 6) cu m ul at iv e tri al erro rs warra nt rev ers al

or at l eas t re m an d.

The Hon or ab le E. Ri ch ard W eb be r, Uni te d St at es D i st ric t Ju dg e fo r th e 1

East ern Dis tri ct of M is so ur i, s it ti ng by des ig na ti on

.

Th e H o n o r ab le Jo hn R. Tun he im

, Uni te d St at es Dis tri ct Ju dg e fo r th e 2

Dis tri ct of M in ne so ta

.

- 2

-Mo rri s rai se s si x is su es on ap pe al : 1) th e ev id en ce was in su ffi ci en t to su pp or t

hi s c o n v i c t i on s; 2) th e wire an d m ai l frau d st at ut es , as ap pl ie d to Mo rri s, ex ceed

Co ng res s’s au th or it y to le gi sl at e in vi ol at io n of th e Ten th Am en dm en t; 3) th e di st ric t

co ur t erre d by n ot al lo win g th e jury to vi ew th e li ve web si te at is su e; 4) th e di st r i ct

co ur t erre d in ov erru li ng hi s ob jecti on u n d e r Ba ts on , 47 6 U.S. at 79 ; 5) th e di st ric t

co ur t erre d in en ha nc in g hi s ba se of fen se le ve l by fo ur po in ts fo r hi s ro le as a le ad er

or or ga ni zer of an act iv it y in vo lv in g fiv e or m or e pa rti ci pa nt s un de r U.S.S.G § 3B 1.1

an d by two po in ts fo r th e so ph is ti cat ed -m ean s en ha nc em en t un de r U

. S

. S

. G. §

2B 1.1 ( b )(9 )(C) ; an d 6) th e di st ric t co ur t’s res ti tu ti on or de r im pr op erl y in cl ud ed

res ti tu ti on to an en ti ty th at was al read y rece iv in g co m pe ns at i on fro m a se tt le m en t

ag reem en t.

Hav in g ju ris di ct io n u nd er 2 8 U.S.C. § 12 91 , we affi rm

.

I. Ba ck gr ou nd

W e st at e th e fact s in th e li gh t m os t fav or a b l e to th e jury’ s ve rd ic t. Uni te d

St at es v. Jo hn so n , 45 0 F.3 d 36 6, 36 9 (8 th Ci r. 20 06 ). Aro un d 19 96 in W as hi ng to n, D.C., Caro lyn M. Lou pe r-M or ris

, a fo rm e r c o ll eg e pr of es so r, as si st ed in th e
de ve lo pm en t of a so ftwa re pr od uc t e n t i tl ed Cy be rSt ud y 10 1. Cy

be rSt ud y 10 1

so ftwa re al lo wed co ll eg e st ud en ts to en te r th ei r cl as s no te s in to th e pr og ram an d th e

pr og ram wou ld ge ne rat e qu iz zes fro m th is da ta

. As a so ftwa re pr od uc t, Cy be rSt ud y

10 1 n ev er re ap ed a pr of

it an d t he ve nt ur e fai le d.

Lou pe r-M or ris t h e n m ov ed to Mi nn eap ol is

, Mi nn es ot a to li ve wit h he r so n,

W il li am J. Mo rri s, who is an at to rn ey

. Lou pe r-M or ris an d Mo rri s (co ll ect iv el y ,

“ App el la nt s” ) de ci de d to try to se ll Cy be rSt ud y 10 1o ve r th e in te rn et us in g th e we bsi te

cy be rs tu dy10 1.c om

. App el la nt s fo rm ed th e co m pa ny, Cy be rs tu dy 10 1, a Mi nn es ot a

co rp or at io n (h erei na fte r “ Cy be rSt ud y ”). Lou pe r-M or ris own ed a 51 pe rcen t in te res t

in th e co m

pa ny and Mo rri s o wne d a 49 pe rcen t i nt eres t.

- 3

-Aro un d 19 98

, App el l a n t s le arn ed of a Mi nn es ot a ta x cred it cal le d th e

Edu cat io n Tax Cred it

. Ena ct ed in 19 97 , th e ta x c red it was a va il ab le to lo w-in co m e

Mi nn es ot a fam il ie s who in cu rred ou t-o f-p oc ke t ex pe ns es fo r cert ai n su pp l e ment al

ed uc at io na l o pp or tu ni ti es for th ei r ch il dr en in ele m en ta ry sch oo l, m id dl e sc ho ol , or

hi gh sc ho ol

. In or de r to ut il iz e th e ta x cred it

, App el la nt s c h a n ge d th e ed uc at io na l

co nt en t of Cy

be rSt ud y 10 1 fro m a co ll eg e cu rri cu lu m to an el em en ta ry an d se co nd ary

sc ho ol cu rri cu lu m

. Lou pe r-M or ris al so m et wit h em pl oyees of th e Mi nn es ot a Dep art m en t of Edu cat io n, th e Mi nn es ot a Dep art m en t of Rev en ue , an d ot he r ag en ci es

to res earc h t he ta x cred it ’s req ui rem en ts in or de r to ut il iz e th e ta x cred it to ex pa nd
Cy be rSt ud y ’s bu si ne ss op po rtu ni ti es

.

One su ch in di vi du al wit h who m Lou pe r-M or ris m et to d i s c u s s th e ta x cred it

was Mo rg an Bro wn, th e Dire ct or of th e Part ne rs hi p fo r Ch oi ce in Edu cat io n (“ PCE”).

PCE is a no np ro fit or ga ni zat io n th at se ek s to ed uc at e lo w-in co m e fam il ie s ab ou t th e
ed uc at io na l op po rtu ni ti es av ai la bl e to th em an d ad vo cat es fo r ad di ti on al ed uc at io na l

op ti on s. At th e ti m e, PCE fo cu se d on im pl em en ti ng th e ta x cred it an d im pr ov in g it s

acce ss ib il it y

. PCE ha d an in fo rm al rel at io ns hi p with th e Mi nn es ot a Dep art m en t of

Edu cat io n an d th e Mi nn es ot a Dep art m en t of Rev en ue

. Bec au se of th e or ga ni zat io n’s

go al s, m an y in di vi du al s an d gr ou ps co nt act ed Bro wn to ed u c at e th em on ho w to

ut il iz e th e ta x c red it

.

At a Decem

be r 19 99 m eet in g, Bro wn de sc rib ed to Lou pe r-M or ris th e two

a v a i l a bl e ed uc at io na l ta x cred it s an d th ei r req ui rem en ts

. The fir st cred it ap pl ie d t o
ed uc at io na l co m

pu te r so ftwa re or ha rd ware, whi ch al lo wed a fam il y to cl ai m up to
$2 00 in a ta x cred i t f

o r p u r c h as in g a qu al ifi ed co m pu te r pr od uc t. The ot he r cred it

ap pl ie d to in st ru ct io n or tu to rin g pr ov id e d b y a qu al ifi ed in st ru ct or , wh ic h al lo wed

a fam il y to cl ai m up to $1 00 0 fo r on e ch il d or $2 00 0 fo r th e fam il y

. Bro wn st res se d

th at th e tu to rin g ta x cred it req ui red an act ua l qu al ifi ed in st r u c t o r in te ract in g wit h

st ud en ts

. He e x p l a in ed th at st at ic co nt en t wou ld no t sa ti sf y th e ta x cred it ’s

req ui rem en ts an d an y tu to rin g p r o d u ct m us t be in te ract iv e. Lou pe r-M or ris to ld

- 4

-Bro wn th at sh e was in te res te d in rev is in g Cy be rSt ud y 10 1 to m ak e it co m pl y wit h th e

ta x c red it req ui rem en ts

.

Bro wn al so ex pl ai ne d to A p p e l l an ts th at th e ta x cred it co ul d no t be cl ai m ed

un ti l t he pe rs on ha d act ua ll y m ad e th e qu al ifyin g ex pe nd it ur e. Bec au se m an y lo win co m e fam il ie s h av e li m it ed di sp os ab le in co m e, App el la nt s di sc us se d wi th Bro wn

fin an ci ng op ti on s fo r po te nt ia l Cy be rSt ud y cu st om ers

. Alt ho ug h th e ta x cr e d i t

al lo wed fin an ci ng , th e ta x cred it pr oh ib it ed th e ve nd or of th e se rv ic e fro m al so be in g

a le nd er. Onl y a se pa rat e th ird pa rty co ul d lo an m on ey to th e ta xp ay er to pa y fo r th e

qu al ifyin g e du cat io na l s erv ic e o r pr od uc t.

Bro wn al so ha d in te ract io ns wit h Mo rri s in earl y 20 00

. Acco rd in g to Bro wn,

Mo rri s fu nc ti on ed as Cy

be rSt ud y ’s le ga l cou ns el an d was al so in vo lv ed in bu si ne ss pl an ni ng an d de ve lop m en t. Br ow n re pe at ed ly di sc us se d wit h Mo rri s th e req ui rem en ts

of ed uc at ion al ta x cr ed its and ho w th os e req ui rem en ts rel at e to Cy be rSt ud y ’s pr od uc t.

Bro wn m et wit h App el la nt s on nu m ero us oc cas io ns , an d each ti m e he rei te rat ed th e

req ui rem en ts of t he tax cred it

.

At so m e po in t, Bro wn le arn ed th at App el la nt s were m ark et in g Cy be rSt ud y 10 1

b y o f f e rin g a free co m

pu te r if a pe rs on si gn ed up fo r th e on li ne tu to ria l pr o g r a m. App el la nt s to ld Bro wn th at th ey ha d ne go ti at ed wit h K-Mar t fo r a cert ai n nu m be r of

co m pu te rs to off

er wi th th ei r pr og ram

.

In May 20 00

, Bro wn was pr es en t at a m eet in g wit h th e Mi nn es ot a Dep art m en t

of Rev en ue an d t h e Mi nn es ot a Dep art m en t of Edu cat io n in whi ch App el la nt s

pr es en te d Cy

be rSt ud y 10 1 in an effo rt to q u al ify th e pr od uc t fo r th e ta x cred it s. At

th at m eet in g, it was cl earl y co m m un ic at ed to App el la nt s th at tu to rs an d in te ract iv it y

were n eces sa ry

to qu al ify for t he cred it

.

- 5

-App el la nt s be ga n se ll in g Cy be rSt ud y 10 1 on flo pp y di sk fo r $9 99 fo r fam il ie s
wit h on e qu al ifyin g ch il d, an d $1 49 9 fo r fam il ie s wit h two or m or e qu al ifyin g
ch il dr en

. Cy

be rSt ud y 10 1’s co nt en t was th en pl aced on li ne

. App el la nt s in fo rm ed

Bro wn th at th ey were in th e pr oc es s of hi r i n g r e t i r e d te ach ers to sa ti sf y th e ta x
cred it ’s in te ract iv it y

req ui rem en t an d t he qu al ifi ed in st ru ct or req ui rem en t.

App el la nt s m ark et ed Cy be rSt ud y th ro ug h th ei r “ br eak th e di gi ta l d iv id e”

cam pa ig n th at pr om is ed a free co m pu te r an d free in te rn et acce ss fo r li fe to ev eryone
who reg is te red fo r th e pr od uc t. The y di st rib ut ed fli ers to lo cal ch ur ch es , sc ho ol s, an d

co m m un it y cen te rs in Afri can Am eri can , So m al i, an d Hm on g co m m un it ie s. App el la nt s al so m ai le d fli ers to in di vi du al s re sid ing in lo w-in co m e co m m un it ie s. The

fli ers hi gh li gh te d th e free co m pu te r an d di d no t m en ti on th e co st of th e on li ne tu to ria l

pr og ram

. Fl ie rs st at ed su ch th in gs as , “ St op , br eak th e di gi ta l di vi de an d si gn -u p fo r Cy be rSt ud y 10 1. Rec ei ve a ne w, fu ll y -lo ad ed co m pl im en ta ry free co m

pu te r. No ou tof -p oc ke t ex pe ns e.” Bec au se of th is cam pa ig n, ev id en ce sh ows th at m em be rs of th e

co m m un it y th ou gh t Cy

be rSt ud y was a c h a r i ta bl e or ga ni zat io n whe n, in fact , i t was

a for -p ro fi t co m

pa ny. Cy be rSt ud y m ark et ed th e tu to ria l as an ag e-ap pr op ria te

, on li ne , in te ract iv e tu to ria l cou rs e th at in cl ud ed twen ty-eig ht st ud y to ol s in fo ur la ng ua ge s.

In Feb ru ary 20 00, the Mi nne sot a A tto rn ey G en er al ’ s of fi ce rece iv ed co m

pl ai nt s

an d in qu iri es rel at in g to Cy be rSt ud y so li ci ti ng pe rs on al in fo rm at io n fro m in di vi du al s

li vi ng in lo w-in co m e co m m uni tie s an d Cy

be rSt ud y ’s pr om is e of gi vi ng away 10 0,0 00

free co m pu te rs to lo w-in co m e in di vi du al s. Deb S t r a f a cci a, a co ns um er frau d

in ve st ig at or fo r t h e Mi nn es ot a Att or ne y Gen eral

, in ve st ig at ed th e co m pl ai nt s.

St rafa cci a be cam e co nc ern ed whe n s h e le arn ed th at hu nd red s of in di vi du al s were

pr ov id in g th e rel at iv el y un kn own Cy be rSt ud y wit h bi rth cert ifi cat es , ta x ret u r n s,

soc ia l se cu

ri ty nu m be rs , an d ch il dr en ’s sc ho ol reco rd s. St rafa cci a sp ok e wit h L oupe rM o r ris who in fo rm ed he r th at Cy be rSt ud y ne ed ed to en ro ll 10 0,0 00 ap pl ic an ts i n

or de r to rece iv e fu nd in g fro m in ve st or s. Lou pe r-M or ris in di cat ed th at th e co m pu te rs

- 6

-an d in te rn et acce ss wou ld be free

, bu t th e cu st om er wou ld ha ve to pa y fo r th e on li ne

tu to ria l.

St rafa cci a was di st ur be d by th e in fo rm at io n fro m he r in it ia l in ve st ig at io n,

th eref or e, sh e po se d as a cu st om er an d co nd uc te d a n u n d e r c o v er in ve st ig at io n at a Cy be r S tu dy en ro ll m en t ev en t he ld at a St

. Pau l, Mi nn es ot a ch ur ch

. At th e ev en t,

St rafa cci a sp ok e wit h in di vi du al s eag er to get th e free co m pu te r. Sh e ob se rv ed th at

m an y of th e in di vi du al s were fro m th e So m al i an d Hm on g co m m un it ie s a nd ha d

li m it ed Eng li sh -s pe ak in g s ki ll s. Th e in di vi du al s wer e co nv in ced th at th e co m pu te r

was free an d fel t an ur ge nt ne ed to en co ur ag e ot he rs to en ro ll fo r th e pr og ram in or de r

to hi t th e 10 0,0 00 cu st om er req ui rem en t. Mo rri s was at th e ev en t and he st at ed th at

th ere wou ld be no ou t-o f-p oc ke t ex pe ns es fo r th e cu st om ers

. He m en ti on ed th e

on li ne tu to ria l. St rafa cci a wait ed in li ne fo r two ho ur s to en ro ll in th e pr og ram

. Sh e

pr ov id ed th e ne ces sa ry do cu m en ts an d si gn ed th e pa pe rwo rk ; ho wev er, sh e was no t

al lo wed to ta ke co pi es of th e ag reem en t wi th he r. She lef t t he ev en t con vi nc ed th at

co ns um ers were be in g m is le d to be li e v e t h at th e co m pu te r an d in te rn et acce ss was

co m pl et el y free an d th at th e co ns um er wou ld no t b e req ui red to m ak e an y pe rs on al

ex pe nd it ur e fo r th e p ro du ct s.

Afte r St raff

aci a’s in ve st ig at io n, as si st an t Att or ne y Gen eral Karen Ols on

co nd uc te d an in ve st ig at iv e m eet in g wit h App el la nt s. At th e m eet in g, App el la nt s to ld

Ols on th at pr iv at e in ve st or s were fu nd in g th e pr og ram in or de r to gi ve lo w-in co m e

in di vi du al s free co m

pu te rs an d free in te rn et acce ss “ fo r li fe.” The y to ld he r th at th e

pu rp os e of th es e free pr od uc ts was to faci l i t a t e a cces s to th e Cy be rSt ud y on li ne

tu to ria l pr og ram

. A p p e l l a nt s in di cat ed th at th ey ne ed ed 10 0,0 00 pa rti ci pa nt s to go

fo rward an d th at co st wou ld be ap pr ox im at el y $1 00 0 fo r each pa rti ci pa nt

. Ols on to ld
App el la nt s th at if th e pa rti ci pa nt s were in de ed si gn in g lo an do cu m en ts

, th en in fact

, th e co m pu te r an d i nt ern et acce ss were n ot free

.

- 7

-Lou pe r-M or ris al so recr ui te d vo lu nt eers to st aff Cy be rSt ud y by de sc rib in g th e

co m pa ny’ s pr od uc t an d App el la nt s’ effo rts to “ br eak th e di gi ta l di vi de ” to pa st or s of

Afri can Am eri can ch ur ch es in th e area

. One pa st or , Rev eren d J erry McAfee o f th e

New Sal em Bap ti st Ch ur ch

, be c am e pa rti cu la rly in vo lv ed wit h Cy be rSt ud y : he le t App el la nt s op erat e Cy

be rSt ud y fro m a bu il di ng own ed by th e New Sal em

co ng reg at io n an d he recr ui te d co ng reg at io n m em be rs to vo lu nt eer t o en ro ll pe op le

in th e Cy be rSt ud y pr og ram

. Rev

. McAfe e te st ifi ed th at he lo an ed App el la nt s $2 50 0.

Co nt rary to th e as se rti on s on Cy be rS tud y ’ s m ar ke tin g m at er ia ls, A

ppe lla nts ha d

no t se cu red pr om is es fro m pr iv at e in ve st or s to fu nd th e pr og ram if th ey en ro ll ed

10 0,0 00 cu st om ers

. App el la nt s ne ed ed to se cu re fin an ci ng fo r cu st om ers in or de r to

sa ti sf y th e ta x cred it ’s p ay -u p- fro nt req ui rem en t an d to pa y em pl oyees. Ap pe ll an ts

ap pr oa ch ed va rio us ba nk s, Cat ho li c Ch ari ti es , co m m un it y or ga ni zat io ns , an d cred it

card co mp a n i e s t o se cu re a rev ol vi ng li ne of cred it or po ol lo an

. The ir en de av or s

were no t su cces sf

ul

. At so m e po in t, App el la nt s ev en tu al ly fo rm ed th e id ea of us in g

Rev

. McAfe e as a fro nt fo r a l e n d e r o f a “ rev ol vi ng po ol lo an ” th ro ug h th e

or ga ni zat io n S al em , Inc

. 3

Ja cq ue li ne Den it a Hol li e, a New Sal em co ng reg at io n m em be r, was in tro du ced

to Lou pe r-M or ris aft er he ari ng ab ou t Cy be rSt ud y fro m he r fat he r an d he r twi n si st er,

J a c q u e l i n e Ben it a W il li am s. Sh e te st ifi ed

, “ I he ard ab ou t [CyberSt ud y ] as th e fre e

co m pu te r pe op le .” Lou pe r-M or ris rep res en te d to Den it a th at sh e was th e CEO an d

The te rm “ po ol lo an ” is no t de fin ed by ei th er pa rty. W e ga th e r th at th e 3

pa rti es are refe rri ng to a lo an th at ag gr eg at es fu nd s an d al lo ws in di vi du al s to bo rro w fro m th at po ol of m on ey

. The bo rro wers th en pa y th at m on ey ba ck in to th e po ol an d

ot he r in di vi du al s m ay th en bo rro w m on ey

. Reg ard in g th e po ol lo an , Mo rri s te st ifi ed
th at “ th e p oo l d id n’t h av e m on ey for a on e-t o- on e ex ch an ge . If we ha d th at ki nd of

m on ey an d we ha d fiv e m il li on do ll ars

. . ., we wou ld ne ve r ha ve ne ed ed a po ol lo an
to be gi n wi th . W ha t we h ad was a po t o f m on ey th at pe op le co ul d – t ha t you c ou ld

acce ss , th at ev erybod y co ul d acce ss if th ey h a d

, y ou kn ow, si gn ed of f on th e
ap pr op ria te do cu m en ta ti on .”

- 8

-pr es id en t of Cy be rSt ud y an d to ld he r th at th e co m pa ny co ul d earn ab ou t th ree m il li on
do ll ars fro m th e ta x cred it

. Den it a be ga n wor ki ng pa rt ti me i n t h e ev en in gs at Cy be rSt ud y an d t h e n f

u ll ti m e, or ga ni zi ng pa pe rwo rk an d as si st in g cu st om ers in

s i g n i n g up fo r th e pr og ram

. Den it a al so crea te d us ern am es an d pa ss wor ds fo r

cu st om ers

. Sh e ex pe ct ed to be pa id fo r he r wor k. Sh e te st ifi ed th at cu st om ers di d no t

rece iv e acce ss to th e tu to ria l an d th at th e pr om is e of a free co m pu te r lu red pe op le to

si gn up fo r th e Cy

be rSt ud y 10 1 tu to ria l. D en it a wor ke d for Cy be rSt ud y fro m Apr il

20 00 un ti l App el la nt s te rm in at ed he r em pl oym en t on Ju ly 13

, 20 01

. At tri al

, Den it a

te st ifi ed th at al l th e act s sh e co m m it te d a t C yb e r S t u d y were “ at th e di rect io n of th e

own ers of th e co m

pa ny.” The re was no ev id en ce to su gg es t th at th e own ers of
Cy be rSt ud y were an y on e o th er t ha n Ap pe ll an ts

.

Ac co rd in g to K-Mar t ex ecu ti ve , Ly m an Loc ke t, App el la nt s en te red in to a

co nt ract wit h K-Mar t on Decem be r 1 9

, 20 00 whe reb y K-Mar t wou ld pr ov id e

co m pu te rs to Cy

be rSt ud y

. Loc ke t ha d be co m e in te res te d in Cy be rSt ud y ’s “ br eak th e
di gi ta l di vi de ” camp a i g n be cau se he be li ev ed th at th e pr og ram wou ld ad va nc e

K-Mar t’s di ve rs it y in it ia ti ve

. The co nt ract st at ed th at Cy be rSt ud y ag reed to pu rch as e

40 00 co m pu te rs at $5 29 .98 pe r un it

, a v al ue of 2 .12 m il li on do ll ars . Fin al pa y m en t

was du e on Feb ru ary 28

, 20 01

. App el la nt s rece iv ed 22 84 co m pu te rs fro m K-Mar t.

The co nt ract co nt ai ne d no pr ov is io n th at wou ld req ui re K-Mar t to pr ov id e free

in te rn et acce ss

. Howev er, at th at ti m e, K-Mar t was of fe rin g li m it ed free in te rn et

acc e s s t h r o ug h Bl ue Lig ht .co m , an in te rn al or ga ni zat io n of K-Mar t, to an y K-Mar t

cu st om er. The co m

pu te rs th at were pr ov id ed to Cy be rSt ud y al l co nt ai ne d a co m pa ct

di sc fro m Bl ue Lig ht .co m , whi ch wou ld en ab le th e own er to acce ss th e in te rn et up on

in st al la ti on of t he so ftwa re.

Sh or tl y aft er th e K-Mar t co m pu te rs were di st rib ut ed

, App el la nt s be ga n to fil e

ta x retu rn s on be ha lf of cus to m ers

. Deni ta Hol li e, al on g wi th App el la nt s, fil le d ou t

th e ta x ret ur n fo rm s. Cy

be rSt ud y ’s ba nk in fo rm at io n was writ te n on th e fo rm s as th e

acco un t to whi ch an y refu nd s h o u l d be ro ut ed

. Cy be rSt ud y fil ed hu nd red s of ta x

- 9

-ret ur ns be gi nn in g Dec em be r 31 , 20 00 . The Dep art m en t o f Rev en ue ret ur ne d m an y
of th os e fo rm s to Cy

be rSt ud y be cau se th e req ui si te po wer-o f-at to rn ey fo rm ha d no t

be en co m pl et ed

. Lou pe r-M or ris in st ru ct ed Cy be rSt ud y em

pl oyees, in cl ud in g Den it a
Hol li e, Ben it a W il li am s, an d Je nn ife r Dav is

, to fo rg e c u s to m ers si gn at ur es if

ne ces sa ry

. Lou pe r-M or ris to ld em pl oyees th at th e cu st om er’s in it ia l si gn at ur e on th e

cu st o mer c on tra ct pr ov id ed th em wit h su ffi ci en t au th or it y to si gn th e cu st om er’s

na m e o n t he po wer-o f-at to rn ey for m

.

In Ja nu ary 20 01 , aft er t he Dep art m en t of Rev en ue rece iv ed m an y ta x ret ur ns
cl ai m in g th e ed uc at io na l ta x cred it fro m m on ey s pa id to Cy be rSt ud y , it he ld a

m eet in g wit h App el la nt s to di sc us s de ta il s ab ou t it s fin an ci ng , sp eci fic al ly, who was

act in g as th e co m

pa ny’ s th ird -p art y le nd er. The Dep art m en t of Rev en ue wan te d to

se e ev id en ce th at th e th ird -p art y lo an s ha d be en pr ov id ed to th e ta xp ay er an d th at th e

ta xp ay er th en us ed th at m on ey to pu rch as e Cy be rSt ud y ’s s erv ic es

. At th e m eet in g, App el la nt s to ld th e Dep art m en t of Rev en ue th at Rev

. McAf e e ’s co m pa ny, Sal em , In c., was pr ov id in g a po ol lo an fo r Cy be rSt ud y cu st om ers

. App el la nt s s t at ed th at

th ey ha d rece iv ed pa y m en t fo r th e tu to ria l p r o g ram fro m Sal em , In c., fo r each

cu st om er th at su bs cri be d to th e pr og ram

. The Sal em , In c., le nd in g arra ng em en t was

on ly a pap er t ran sa ct io n a nd am ou nt ed to a sh am lo an ag reem en t.

In Feb ru ary 20 01

, Dep art m en t of Rev en ue of fic ia ls wen t to Cy

be rSt ud y ’s

of fic e at th e New Sal em Bap ti st Ch ur ch fo r th e pu rp os e of co nf irming de ta il s ab ou t

th e p oo l lo an

. Den it a, Mo rri s, and Lou pe r-M or ris di sc us se d th e po ol lo an , bu t th ey

sp ok e in ge ne ral it ie s. The y st at ed th at Sal em , In c., ha d pa id Cy be rSt ud y fo r e a ch

cu st om er who si gn ed up fo r th e t u t o r i a l. At th e m eet in g, Lou pe r-M or ris ga ve a
de m on st rat io n of th e Cy

be rSt ud y web si te

, bu t sh e di d no t al lo w th e Dep art m en t of

Rev en ue rep res en ta ti ve to na vi ga te th e web si te

.

At th e req ue st of th e Dep art m en t of Rev en ue , C y be rSt ud y se nt a le tt er to th e Dep art m en t de sc rib in g th e le nd in g arra ng em en t. The le tt er was si gn ed by Rev

.

- 1 0

-McAfe e

. H e t e s t i f i e d th at he di d no t dr aft th e le tt er an d he di d no t read th e le tt er.

Den it a Hol li e al so te st ifi ed th at th e le tt er was dr aft ed by Lou pe r-M or ris an d rev ie wed

b y M or ris

. The le tt er st at ed Sal em , In c., ha d lo an ed 48 00 Cy be rSt ud y cu s t o mer s
ei th er $ 99 9 o r $1 49 9.

Sh or t l y th erea fte r, th e Dep art m en t of Rev en ue be ga n rel eas in g ta x cred it

m on ey to App el la nt s. In F e b r u a r y 20 01

, App el la nt s rece iv ed $2 60 ,76 1 fro m th e

D e p a r t m en t of Rev en ue in ta x- cred it rei m bu rs em en ts

. The m on ey was ro ut ed t o Cy be rSt ud y ’s cu st od ia l acco un t op erat ed by W el ls Farg o Ban k. Lou pe r-M or ris

pu rch as ed a ne w Mer ced es Ben z SUV wit h th e m on ey

. Sh e al so pu rch as ed a fu r co at

. Mo rri s pu rch as ed a $6 50 ,00 0 ho m e an d us ed m on ey de riv ed fro m th e ta x cred it fu nd s

fo r a d own pa y m en t.

Cy be rSt ud y di d no t rece iv e ta x cr e d i t mo ne y fro m each of it s cu st om ers
be cau se Cy

be rSt ud y m ad e fil in g erro rs , or a cu st om er in de pe nd en tl y fil ed hi s or he r

o w n t a x ret ur n. In th os e cas es , App el la nt s wou ld th reat en th e cu st om er wit h

co ll ect io n effo rts an d warn th e cu st om er th at su ch effo rts wou ld ru in hi s or he r cred it

sc or e. Bec au se m an y of th e cu st om ers were fro m th e So m al i or Hm on g co m m un it ie s,

A p p el la nt s th reat en ed th at th ey wou ld rep or t cu st om ers to fed eral de po rta ti o n

au th or it ie s if t h e di d no t pa y Cy be rSt ud y

. Man y cu st om ers to ok th es e th reat s

se rio us ly an d br ou gh t m on ey to Cy be rSt ud y ’s of

fic e. App el la nt s al so u s e d t h e s e

in ti m id at in g ta ct ic s to se ek co ll ect io n fro m cu st om ers who di d no t rece iv e th e fu ll ta x
cred it

.

Man y in di vi du a l s wor ke d fo r Cy be rSt ud y

. Den it a Hol li e, Ben it a W il li am s,

Je nn ife r Dav is

, an d Ch eryl Card in al were h i red as em pl oyees, bu t no ne of th em

rece iv ed an y pa y fo r th ei r wor k. Out si de ta x pr ep arer s st art ed as si st in g Cy be rSt ud y , in cl ud in g Al Pen ni ck s. Cy be rSt ud y al so hi red an in fo rm at io n te ch no lo gy sp eci al is t,

Fo ng Xio ng

. His job was to tra in cu st om ers on us in g th e co m pu te r an d tu to ria l if th ey

pu rch as ed a su pp or t p ack ag e.

- 1 1

-I n A p r i l 20 02

, th e Dep art m en t of Rev en ue au di te d Cy be rSt ud y to as se s s
whe th er it qu al ifi ed fo r th e ed uc at io na l ta x cred it

. It de te rm in ed th a t C yber St ud y

pr od uc ts di d no t m eet th e ta x cred it ’s req ui rem en ts

. B et ween Feb ru ary 20 01 an d

M a y 2 0 0 2

, Cy

be rSt ud y fil ed ta x ret ur ns on be ha lf of ov er 18 00 ta xp ay ers , an d

rece iv ed ap pr ox im at el y $2 .35 m il li on in ta x cred it pa y m en ts fro m th e Dep art m en t of

Rev en ue

.

K-Mar t ne ve r rece iv ed p a ym e n t f o r th e co m

pu te rs an d fil ed a br each of

co nt ract su it ag ai ns t Cy

be rSt ud y

. Afte r a few y ears of li ti ga ti on , Cy be rSt ud y en te red

in to a s e t t l e men t ag reem en t in whi ch it was to pa y K-Mar t $6 10 ,00 0. Cy be rSt ud y
fai le d to m ak e an y p a ym en ts

, an d in Octo be r 20 03

, a jud gm en t fo r $1 ,21 1,1 34 .03

, pl us in te res t an d a tt or ne y ’s fees was e nt ered ag ai ns t CyberS tu dy.

On Feb ru ary 27

, 20 08

, a gr an d jury ret ur ne d an in di ct m en t ch arg in g each
App el la n t w i t h o n e co un t of co ns pi racy to co m m it wire frau d an d m ai l frau d in

vi ol at io n of 18 U.S.C. § 37 1, ni ne co un ts of wire frau d i n v i o l at io n of 18 U.S.C. §

13 43

, se ve n co un ts of m ai l frau d in vi ol at io n of 18 U.S.C. § 13 41

, an d fiv e co un ts of

pr om ot io n of m on ey la un de rin g in vi ol at io n of 18 U.S.C. § 19 56 (a)( 1) (A)(i ). Mo rri s

was al so ch arg ed wit h on e co un t of m ak in g a nd su bs cri bi ng a fal se ta x ret ur n in

vi ol at io n of 26 U.S.C. § 72 06 (1 ). On Jan ua ry 7, 20 10

, th e in di ct m en t was am en de d

to st rik e fo ur of th e wire frau d co un ts an d al l of th e m on ey la un de rin g co un ts as to

bo th App el la nt s.

Befo re tri al

, App el la nt s m ov ed to di sm is s th e in di ct m en t. Th e magi st rat e jud ge de ni ed th e m ot io n on th e gr ou nd th at th e m ot io n was un ti m el y fil ed an d als o

4

fai le d on th e m eri ts

. Th e di st ric t co ur t ad op te d th e m ag is tra te jud ge ’s rep or t an d

reco m m en da ti on

.

The Hon or ab le Ja ni e S. Mayeron

, Uni te d St at es Mag is tra te Ju dg e f o r t h e 4

Dis tri ct of M in ne so ta

.

- 1 2

-A th ree- week tri al was co nd uc te d. Num ero us wit ne ss es te st ifi ed on be ha lf o f

th e Uni te d St at es in cl ud in g Mo rg an Bro wn; Deb St rafa cci a; Karen Ols on ; Mi nn es ot a Dep art m en t of Rev en ue emp l o ye es ; an in ve st ig at or fro m th e In te rn al Rev en ue

Serv ic e; fo rm er K-Mar t ex ecu ti ve , Ly m an Loc ke t; a n d a U ni te d St at es Po st al

In sp ect or

. Cy

be rSt ud y em

pl oyees and vo lu nt eers te st ifi ed in cl ud in g Deni ta Hol li e;
he r si st er, Ben it a W il li am s; Carl os Gran ad os , an acco un ta nt ; C h e r yl Card in al ; an d

Rev . McAfee

.

Cy be rSt ud y cu st om ers al so te st ifi ed in cl ud in g Ju an it a Je n s e n; Mo ha m ud

Aid eed

, a So m al i im

m ig ran t; Ju rli ne Bryant ; Kii n Fara h, a So m al i im m ig ran t; Pat ric ia

Mar qu ez-P res to n; Fai th Pfei ffer ; Tan a Dan z; Tin a Bro wn; Ch eryl Card in al

, al so a Cy be rSt ud y e m

pl oyee; Adr in a Hob bs ; Sh irl ey Knu ds on ; Tan da la y a Jo ne s- Pai ge ;

So nja Ove rb au gh ; Farh iya Ali ; Bren da Am po ns ah ; Saee d Ali

, a Yem en i im m ig ran t;

Aim ee Torr es ; Bl on g Ph a, a m em be r of th e Hm on g co m

m un i t y ; an d Thi Huo ng

Keo so ng se ng

. The ir te st im on y can be su m m ari zed as fo ll ows : th e cu st om ers 5

te st ifi ed to si gn in g co nt ract s th at th ey di d no t un de rs ta nd

. The y un de rs to od th at th ey

were to rece iv e a free co m pu te r an d free in te rn et acce ss

. The y di d no t ta ke ou t a lo an

to fin an ce th e co m

pu te r or si gn an y lo an pa pe rs

. So m e cu st om ers di d no t kn ow ab ou t

th e ed uc at io na l tu to ria l. Onc e ho m e wit h th e co m pu te r, m os t cu st om ers di d no t ha ve

in te rn et acce ss

. If th ey ha d in te rn et acce ss , th ey co ul d no t acce ss th e tu to ria l. If th ey

c o ul d acce ss th e tu to ria l, th e tu to ria l la ck ed ed uc at io na l co nt en t an d th e web pa g e

wou ld st at e th at it was “ un de r co ns tru ct io n.” So me cu st om ers un de rs to od th at Cyb e rSt ud y was go in g to co m pl et e th ei r ta x ret ur ns ; ho wev er, th os e in di vi du al s

ex pe ct ed to rece iv e an y refu nd if th e refu nd am ou nt su rp as se d th e ta x cred it am ou nt

. In so m e cas es , Cy

be rSt ud y fil ed mu l t i pl e ta x ret ur ns on be ha lf of on e cu st om er
cl ai m in g th e ta x cred it on each ta x ret ur n. So m e cu st om ers te st ifi ed th at App el la nt s

Bl on g Ph a an d Thi Huo ng Keo so ng se ng bo th te st ifi ed wit h th e as si st an ce of 5

in te rp ret ers

.

- 1 3

-th reat en ed th em wit h col le ct io n a ct io ns . Som e cu st om ers fil ed co m pl ai nt s wi th th e

Att or ne y Gene ral ’s off

ic e o r th e Bet te r Bu si ne ss Bu reau

.

Lo up er-M or ris di d no t te st ify, bu t Mo rri s di d te st ify. He te st ifi ed th at h e
dr aft ed cu st om er agre em en ts an d let te rs to cu st om ers th reat en in g col le ct io n acti on s

an d le tt ers th reat en in g fed eral im m ig rat io n in ve st ig at io ns

. He te st ifi ed th at he he lp ed

r e c r ui t cu st om ers at co m m un it y cen te rs an d va rio us ch ur ch es

. He al so ad m i t t e d

co m m it ti ng tax frau d.

The jury ret ur ne d a ve rd ic t of gu il ty o n al l co un ts in th e am en de d i nd ic tm en t

ex cep t Co un t 7, a m ai l frau d co un t, as to bo th App el la nt s, an d Co un t 9, an ot he r m ai l

frau d c ou nt , as t o M or ris

.

App el la nt s m ov ed fo r a ne w tri al

. In th ei r m ot io n, th ey al le ge d th at Mi ch el le

Garci a-St rai t, a po te nt ia l de fen se wit ne ss , was in ti m id at ed by th e Uni te d St at es

. The

di st ric t co ur t he ld an ev id en ti ary he ari ng on th e m at te r. Afte r th e he ari ng , th e di st ric t

co ur t is su ed an or de r de nyin g th e m ot io n fo r a ne w tri al

. The di st ric t co ur t ex pr es sl y
fo un d th at th e Uni te d St at es di d no t th reat en Garci a-St rai t, an d th at App el la nt s ch os e

no t to cal l he r as a wit ne ss

. The di st ric t co ur t no te d th at Garci a-St rai t was co nc ern ed

ab ou t te st ifyin g be cau se sh e co ul d be cro ss -ex am in ed ab ou t pe nd in g st at e co ur t frau d

an d fo rg ery ch arg es

. The di st ri c t c ou rt co nc lu de d th at th e Uni te d St at es di d no t

im pe rm is si bl y

in te rfer e wit h Gar ci a-St rai t an d a ne w tri al was n ot warran te d.

At se nt e n c in g, th e Uni te d St at es so ug ht m an y en ha nc em en ts to Lou pe rMo rri s’s ba se of

fen se le ve l in cl ud in g a fo ur -le ve l in crea se fo r he r le ad ers hi p ro le in

a cri m in a l a c t i vi ty th at in vo lv ed fiv e or m or e pa rti ci pa nt s pu rs ua nt to U.S.S.G. §

3B 1.1 (a). Ult im at el y , he r to ta l of fen se le ve l was 35 an d he r cri m in al hi st or y cat eg or y

was I. Her U.S.S.G. se nt en ci ng ran ge was 16 8 to 21 0 m on th s im pr is on m en t. The

di st ric t co ur t s en te nc ed Lou pe r-M or ris to 14 4- m on th s i m pr is on m en t.

- 1 4

-The Uni te d St at es al so so ug ht m an y en ha nc em en ts to Mo rri s’s ba se of fen se
le ve l in cl ud in g th e le ad ers hi p en ha nc em en t pu rs ua nt to U.S.S.G. § 3B 1.1 (a) an d th e

so ph is ti cat ed -m ean s en ha nc em en t pu rs ua nt to U.S.S.G. § 2B 1.1 (b )(9 )(C)

. Mo rri s’s

ad jus te d of fen se le ve l was 35

. His U.S.S.G. se nt en ci ng ran ge was 16 8 to 21 0 m on th s

im pr iso nm en t. T he dis tri ct co ur t se nt en ced Mo rri s to 13 2- m on th s im pr is on m en t. The

co ur t or de red Lou pe r-M or ris an d Mo rri s, joi nt ly an d se ve ral ly, to m ak e res ti tu ti on in

th e am ou nt of $2 ,35 1,3 68 .7 1 t o th e Mi nn es ot a Dep art m en t of Rev en ue an d

$1 ,21 1,1 34 .03 to Sear s/ K-Mar t Co rp

. Neit he r App el la nt ob jecte d to th e res ti tu ti on

or de r.

Lou pe r-M or ris an d Mo rri s no w ap pe al

. Lou pe r-M or ris rai se s si x is su es on

a p p e a l: 1) th e ev id en ce was in su ffi ci en t to su pp or t he r co nv ic ti on s; 2) th e di st ric t

co ur t erre d in ov erru li ng he r ob jecti on un de r Ba t

s o n , 4 7 6 U.S. a t 79 ; 3) th e di st ric t

co ur t erre d by de nyin g he r m ot io n to di sm is s th e in di ct m en t be cau se th e Uni te d St at es

m ad e a m at eri al m is rep res en ta ti on to th e gr an d jury; 4) th e Uni te d St at es in ti m id at ed

on e of he r wit ne ss es th ereb y de pr iv in g he r of th e rig ht to pr es en t a co m pl et e de fen se ; 5) th e di st ric t cou rt erred by enh an ci ng he r ba se lev el off en se by fo ur po in ts fo r he r

ro le as a le ad er or or ga ni zer of an act iv it y in vo lv in g fiv e or m or e pa rti ci pa nt s un de r
Uni te d St at es Sen te nc in g Gui de li ne s § 3B 1.1 ; an d 6) cu m ul at iv e tri al erro rs warra nt

rev ers al or a t l eas t re m an d.

Mo rri s rai se s si x is su es on ap pe al : 1) th e ev id en ce was in su ffi ci en t to su pp or t

hi s co ns pi racy an d wire frau d co nv ic ti on s; 2) th e di st ric t co ur t erre d in ov erru li ng hi s
ob jecti on un de r Bat

so n , 47 6 U.S. at 79 ; 3) th e wire an d m ai l frau d st at ut es , as ap pl ie d

to Mo rri s, ex ceed Co ng re s s ’s au th or it y to le gi sl at e in vi ol at io n of th e Ten th

Am en dm en t; 4) th e di st ric t co ur t erre d by no t al lo win g th e jury t o v i e w t h e l iv e
web si te at is su e; 5) th e di st ric t co ur t erre d in en ha nc in g hi s ba se of fen se le ve l by fo ur

po in ts fo r hi s ro le as a l e a d e r or or ga ni zer of an act iv it y in vo lv in g fiv e or m or e

pa rti ci pa nt s un de r U

. S

. S.G § 3B 1.1 an d by two po in ts fo r th e so ph is ti cat ed -m ean s

en ha nc em en t un de r U.S.S.G. § 2B 1.1 (b )(9 )(C) ; an d 6) th e di st ric t co ur t’s res ti tu ti on

- 1 5

-o r d e r i m

pr op erl y in cl ud ed res ti tu ti on to an en ti ty th at was al read y rece iv in g

co m pe ns at io n fr om

a se tt le m en t ag reem en t.

II . Appel la nts ’ Jo in t Cla ims

A. Su ffi ci en cy

of t he Evi de nc e

App el la nt s co nt en d th at th e ev id en ce was in su ffi ci en t to s u p po rt th ei r

co ns pi r a cy , m ai l frau d, an d wire frau d co nv ic ti on s. Sp eci fic al ly, Lou pe r-M or ris

st at es th at th e U n i t e d St at es fai le d to pr ov e th at sh e ha rm ed or in te nd ed to ha rm

an y on e, th at sh e m ad e m at eri al fal se rep res en ta ti on s or p r o m is es , an d th at sh e

in te nt io na ll y pa rti ci pa te d in a sc he m e to de frau d. Mo rri s on ly co nt en ds th at th e
Uni te d S ta te s fa il ed to pro ve hi s i nt en t t o d efra ud

.

W e rev ie w de no vo th e su ffi ci e n c y o f th e ev id en ce to su st ai n a co nv ic ti on

. Uni te d St at es v. W

ie st

, 59 6 F.3 d 90 6, 91 0 (8 th Ci r. 20 10 ). The ev id en ce is vi ewed

m os t fav or ab ly to th e ve rd ic t, gi vi ng it th e be ne fit of al l reas on ab le in fere nc es

. Id

. Rev ers a l i s a p p ro pr ia te on ly whe re no reas on ab le jury co ul d fin d al l th e el em en ts

be y on d a reas on ab le do ub t. Id

. W e do no t weig h th e cred ib il it y of th e wit ne ss es or

th e ev id en ce. Id

. “ The jury ha s th e so le res po ns ib il it y t o r e s o l v e co nf li ct s or

co nt rad ic ti on s in te st im on y , an d cred ib il it y de te rm in at io ns are resolve d in fa vor of th e

ve rd i c t .” Id

. (q uo ti ng Uni te d St at es v. Hon ar va r , 47 7 F.3 d 99 9, 10 00 (8 th Ci r.

20 07 )).

To pr ov e co ns p i r a cy to co m m it wire frau d, th e Uni te d St at es m us t sh ow th at 1) th ere was a co ns pi racy, an ag reem en t to co m m it wire frau d; 2) Lou pe r-M or ris an d

Mo rri s kn ew of th e a gr eem en t; an d 3) th ey in te nt io na ll y joi ne d in th e co ns pi racy.

Jo hn so n , 45 0 F .3d at 37 4. “ The el em en ts of co ns pi racy m ay be pro ve d b y di rect or
ci rcu m st an ti al e v i d e n c e , an d th e jury m ay dr aw reas on ab le in fere nc es fro m th e

ev id en ce pr es en te d ab ou t wha t th e de fen da nt ’s st at e of m in d was whe n he di d or sa id

- 1 6

-th e th in gs pr es en te d in th e ev id en ce.” Uni te d St at es v. Rod ri gu ez -Ramo s , 66 3 F .3d

35 6, 36 1 (8 th Ci r. 20 11 ) ( qu ot in g Uni te d St at es v. Cer va nt es , 6 46 F.3 d 10 54 , 1 05 9
(8 th Cir . 20 11 )).

To es ta bl is h m ai l fr au d p ur su an t to 18 U.S.C. § 1 34 1, t he Uni te d S ta te s m us t

pr ov e: “ ( 1 ) a s ch em e to de frau d by m ean s of m at eri al fal se rep res en ta ti on s or

pr om is es , (2) in te nt to de frau d, (3 ) rea so na bl e fo res eeab il it y th at th e m ai l wo ul d b e

us ed

, an d (4 ) [th a t] th e m ai l was us ed in fu rth eran ce of so m e es se nt ia l st ep in th e

sc he m e.” Uni te d St at es v. Brya nt

, 60 6 F.3 d 91 2, 91 7 (8 th Ci r. 20 10 ) (q uo ti ng Uni te d

St at es v. Par ker , 3 64 F.3 d 93 4, 94 3 (8 th Ci r. 20 04 )). “ [T]o co ns ti tu te m ai l frau d, a
de fen da nt ’s m is rep res en ta ti on s m us t be m at eri al .” Id

. at 91 7- 18

. “ A

m is rep res en ta ti on is m at eri al if it is cap ab le of in flu en ci ng th e in te nd ed vi ct im .” Id

.
at 91 8; se e al

so Pres to n v. Uni te d St at es , 3 1 2 F.3 d 95 9, 96 1 (8 th Ci r. 20 02 ) (p er

cu ria m ) (a m at eri al fact is “ a fac t t ha t wou ld be im po rta nt to a reas on ab le pe rs on in

de ci di ng whet he r to en ga ge or n ot to en ga ge in a pa rti cu la r tr an sa ct io n” ).

The ele m en ts of wire frau d are vi rtu al ly i de nt ic al to m ai l fr au d. To est ab li sh

wire frau d p ur su an t to 18 U.S.C. § 1 34 3, t he Uni te d S ta te s n eed ed to pro ve be y on d

a reas on ab le do ub t th at 1) App el la nt s joi ne d a sc he m e to de frau d; 2) th ey in te nd ed to

de frau d; 3) it was reas on ab ly fo res eeab le th at in te rs ta te wire co m m un ic at io ns wou ld

be us ed ; an d 4 ) th e wir es were, i n fa ct , us ed

. Jo hn so n , 45 0 F .3d at 3 74

.

In te nt is an es se nt ia l el em en t of bo th wire frau d an d m ai l frau d. Uni te d St at es

v. Flyn n , 19 6 F.3 d 92 7, 92 9 (8 th Ci r. 19 99 ) (wir e frau d) ; Brya nt

, 60 6 F.3 d at 9 1 7
(m ai l frau d)

. “ Frau du le nt in te nt ne ed no t be pr ov ed di rect ly an d can be in ferr ed fro m

th e fact s and cir cu m st an ces su rro un di ng a de fen da nt ’s act io ns .” Flyn n , 19 6 F.3d at

92 9. Acco rd in gl y , th e qu es ti on be fo re us is “ whe th er th e fact s an d ci rcu m st an ces of

th is cas e, vi ewed in th e li gh t m os t fav or ab le to th e jury’ s ve rd ic t, are su ffi c i en t to

es ta bl is h in te nt to de frau d.

. . .” Id

. (q uo ti ng Uni te d St at es v. And ra de

, 78 8 F.2 d 52 1,

52 7 (8 th Cir . 19 86 )).

- 1 7

-Co nt rary to Lou pe r

- M o r r i s’s as se rti on s, th e Uni te d St at es is no t req ui red to

sh ow act ua l lo ss or ha rm to th e vi ct im s of th e frau d i n o r d e r t o p r ov e wire frau d or

m ai l frau d. Uni te d St at es v. W il li ams , 52 7 F.3 d 12 35

, 12 45 (1 1t h Ci r. 20 08 ). Rat he r,

“ [t]he g o v e r nm en t m erel y ne ed s to sh ow th at th e accu se d in te nd ed to de frau d hi s
vi ct im an d th at hi s or he r co m m un ic at io ns were reas on ab ly cal cu la te d to de cei ve

pe rs on s of or di na ry pr ud en ce an d co m pr eh en si on .” Id

. (in te rn al ci ta ti on s an d

qu ot at io ns om it te d)

.

The reco rd is rep le te wit h e vi de nc e o f App el la nt s’ in te nt to de frau d t he Sta te

o f M i n n e s o t a , K

- M a r t

, a n d C yb e r S t u d y c u s t o me r s t h r o u g h ma t e r i a l

m is rep res en ta ti on s. App el la nt s int en de d to de ce iv e th e Dep art m en t of Rev en ue ab ou t

th e ex is te nc e of a po ol lo an

. D e n i t a Hol li e an d Ben it a W il li am s te st ifi ed th at App el la nt s were in te nt io na ll y ob tu se in th ei r rep res en ta ti on s of the lo an an d led th e Dep art m en t of Rev en ue to be li ev e th at Rev

. McAfe e th ro ug h Sal em , In c., ha d lo an ed

ov er fo ur m il li on do ll ars to Cy be rSt ud y cu st om ers

. In tru th

, Rev

. McAfe e ha d on ly

lo an ed Cy

be rSt ud y le ss th an $3 00 0, an d th e po ol lo an di d no t ex is t. App el la nt s al so

fo rg ed si gn at ur es on po wer-o f-at to rn ey fo r ms a n d di rect ed Den it a, Ben it a, an d

Je nn ife r Dav is to do th e sa m e. Tho se fo rg ed fo rm s were fil ed wit h cu st om er’s st at e

ta x re tu rn s t he reb y

de frau di ng th e Dep art m en t o f Rev en ue

.

App el la nt s i nt en de d t o d ecei ve K-Mar t. Ly m an Lock et tes ti fie d t ha t K-Mar t

en te red in to a co nt ract wit h Cy be rSt ud y in whi ch K-Mar t wou ld pr ov id e co m pu te rs

to Cy be rSt ud y cu st om ers at a red uc ed rat e

. Lou pe r-M or ris to ld Loc ke t th at Cy be rSt ud y ha d ov er 10 0,0 00 cu st om ers an d tha t tw o oth er co m puter co m pa ni es were

cu rren tl y pr ov id in g co m

pu te rs to Cy

be rSt ud y an d de ferr in g pa y m en t un ti l th e ta x
cred it rei m

bu rs em en t was relea se d from th e St at e in th e fo ll owi ng ta x y ear. Loc ke t

st at ed th at K-Mar t pr ov id ed th e co m pu te rs be li ev in g th at Cy

be rSt ud y wou ld pr ov id e

a co m pr eh en si ve ed uc at io na l tu to ria l to lo w-in co m e in di vi du al s, whi ch wou ld fu rth er

K-Mar t’s di ve rs it y in it i a t i v e

. Num ero us in di vi du al s te st ifi ed

, ho wev er, th at th e

tu to ria l la ck ed th e ad ve rti se d ed uc at io na l co nt en t. K-Mar t al so ex pe ct ed pa y m en t on

- 1 8

-th e co m

pu te rs on ce Cy

be rSt ud y be ga n rece iv in g t a x cred it rei m bu rs em en ts

. Afte r

Mi nn es ot a be ga n de po si ti ng m on ey in Cy be rSt ud y ’s ba nk acco un t, App el la nt s ne ve r

ro ut ed an y of th e fu nd s to K-Mar t

. Lo c k e t ’s te st im on y is su ffi ci en t to sh ow th at App el la nt s i nt en de d t o d efra ud K-Mar t.

Perh ap s Ap pe ll an ts ’ m os t eg reg io us be ha vi or in th ei r frau du le nt sch em e was

th ei r joi nt in te nt io n to de cei ve Cy be rSt ud y cu st om ers , lo w-in co m e in di vi du al s, m an y
who di d no t sp eak Eng li sh

. Num ero us Cy be rSt ud y cu st om ers t e st ifi ed th at App el la nt s pr om is ed th em a free co m pu te r. In fact

, th e co m

pu te rs were no t free an d

req ui red cu st om ers to si gn a se rv ic e co nt ract wit h Cy be rSt ud y an d to as si gn th ei r ta x
cred it refu nd to Cy

be rSt ud y

. Cy

be rSt ud y cu st om ers te st ifi ed th at th ey were pr om is ed

a co m pr eh en si ve ed uc at io na l tu to ria l with m at eri al in fo ur lan gu ag es . That co nt en t

ne ve r ex is te d. De n i t a an d Ben it a te st ifi ed th at App el la nt s ha d th em pr ep are Cy be rSt ud y cu st om ers ’ t a x ret ur ns fo r m ai li ng on Decem be r 31 , 2 00 0 ev en th ou gh

th e Cy be rSt ud y c o n tra ct st at ed th at ta x ret ur ns wou ld no t be fil ed un ti l Apr il 15

, 20 01

. W he n App el la nt s di d no t rece i v e t h e fu ll ta x cred it am ou nt

, App el la nt s in

m an y cas es th reat e n e d le ga l act io n ag ai ns t th e cu st om ers , in cl ud in g im m ig rat io n

en fo rcem en t.

Des pi te App el la nt s’ rep eat ed as se rti on th at th ey were jus t tryin g to “ br eak th e
di gi ta l di vi de ” an d ed uc at e lo w-in co m e in di vi du al s, th e t r ia l te st im on y sh ows th at App el la nt s in te nd ed to de frau d ot he rs

. The Uni te d St at es pr ov ed be y on d a reas on ab le

do ub t th at App el la nt s m ad e m at eri al m is rep res en ta ti on s an d in te nd ed to de frau d th e

st at e of Mi nn es ot a, K-Mar t, an d Cy be rSt ud y cu st om ers

. W e co nc lu de th at ev id en ce

was su ffi ci en t to s up po rt App el la nt s’ co ns pi racy, m ai l frau d, an d wire frau d

co nv ic ti on s.

- 1 9

-B. Bat

so n cla im

App el la nt s as s e rt th at th e di st ric t co ur t erre d in ov erru li ng th ei r ob jecti on

un de r Bat

so n v. Ken tu cky

, 47 6 U.S. 79 (1 98 6)

. Dur in g jury se le ct io n, th e Uni te d

S t a t e s us ed on e of it s pe rem pt or y st rik es to st rik e juro r nu m be r 41

, an Af

r i c a n

Am eri can , fro m th e ve ni re pa ne l. App el la nt s ob jecte d. The fo ll owi ng si de -b ar
di sc us si on oc cu rred :

Mr. Kell y : You r Hon or , de fen da nt s ob ject to go v e r n ment ’s

st rik in g pe rem

pt or y c h a ll en ge of juro r nu m be r 41

. The reco rd sh ou ld

refl ect th at juro r nu m

be r 41 i s t h e on ly Afri can Am eri can le ft on th is

p an el

, an d th ere is no , as far as th e de fen da nt s are co nc er n e d

, n o jus ti fia bl e rea so n fo r st rik in g t hi s ju ro r ot he r th an race ba se d.

M r

. Gen ric h: W el l, You r Hon or , cl earl y th e is su es in th e c a s e

in cl ud e bo th sc ho ol an d no ns ch oo l ba se d e du cat io n in st ru ct io n an d

tu to ria l in te ract iv it y wit h res pe ct to ap pl ic at io n of th e ed uc at io n ta x
cred it

, whi ch am on g ot he r th in gs ha s a pr on g rel at ed to whe th er tu to rin g

se rv ic es were p ro vi de d b y qu al ifi ed in st ru ct or s.
And we als o s tru ck , for ex am pl e, juro r nu m

be r ei gh t, wh o I wi ll

refe r to as th e Alab am a juro r, who in di cat ed sh e ha d tu to rin g ex pe rie nc e,

an d ju ro r nu m

be r [fi ve ] who work ed in th e sp eci al ed en vi ro nm en t.

And we ha ve a real co nc ern th at th ere co ul d be a te nd en cy am on g juro rs , p art ic ul arl y th os e who ha ve tu to red c h il dr en in sc ho ol se tt in gs ,
to ap pl y th ei r o w n s t a nd ard s, th ei r own le ga l st an da rd s or a m at te r of

hu m an na tu re t he ir o wn ex pe rie nt ia l s ta nd ard s t o t he fact s o f th e cas e.
And th at was th e pr im ary ba si s cert ai nl y on whi ch we st ru ck juro r

nu m be r 41

, an d th ere was no race co ns id erat io n to it

. In fact

, we st ru ck

th es e o th er jur or s fo r th e sa m e rea so n b efo re we s tru ck 41

. The Co ur t: Anythi ng els e?

- 2 0

-Mr. Kell y : No, You r Hon or

. W el l, You r Hon or , I th in k th at th ere

are, as th e Co ur t ob se rv ed he re, th ere are a nu m be r of ju r or s who are

co nn ect ed to th e ed uc at io na l syste m in on e fas hi on or an ot he r, an d th is

pa rti cu la r juro r is th e on ly rem ai ni ng Afri can A mer i c an

. The Co ur t

ex cu se d on e ot he r ge nt le m an , th e sc ho ol bu s dr iv er , f o r em pl oym en t

reas on s.
And as c oi nc id en ce, t he on ly rem ai ni ng po te nt ia l ju ro r, th e o nl y

on e th at was no t se at ed

, is th e on ly ot he r Afri can Am eri can th at is he re.

So th is ge nt le m an , juro r nu m be r 41 , rep res en ts th e so le m em be r of th e

race of bo th of th e de fen da nt s. W e th in k it ’s im po rta nt th at th e
de fen da nt s h av e rep res en ta ti on fro m th ei r rac e.

Mr. Gen ric h: You r Hon or , I wou ld no te wit h res pe ct to th e raci al

co m po si t i o n o f t h e jury, th at juro r nu m be r 10 al so co m es fro m a

co m m un it y of co lo r an d was st ru ck by th e de fen se , an d th e fact th at 41

wou ld ha ve be en th e on ly rem ai ni ng juro r o f c o l o r , at le as t by m y
ob se rv at io n, i s n ot so le ly excl us iv el y a fu nc ti on of o ur st rik e.
The Co ur t: W el l, he do es w o r k in th e ed uc at io na l se tt in g. I

un de rs ta nd th e rat io na le fo r i t

, a n d w h il e I cert ai nl y in th e gr an d
[s ch em e] of th in gs wou ld pr efer to ha ve a raci al ly m ix ed jury, th e Co ur t

fin ds th at th e go ve rn m en t has st at ed a su ffi ci en t reas on fo r th ei r st rik e,

w h i c h is no t race ba se d, bu t th e is su e is pr es erv ed if ne ces sa ry f o r

ap pe al

.

The Equ al Pro te ct io n Cl au se of t he Fo ur te en th Am en dm en t p ro hi bi ts th e u se

of pe rem pt or y ch al le ng es to st rik e juro rs so le ly on th e ba si s of race

. Bat so n , 47 6 U.S.

at 86

. In or de r to su ccee d on a Bat so n ch al le ng e, a pa rty m

us t sa ti sf y a th ree- pa rt te st

. Id

. at 96

. Fi rs t, th e ob jecti ng pa rty m

us t m ak e a pr im a f

a c i e sh owi ng th at a

pe rem pt or y ch al le ng e is race ba se d. Id

. The n, th e pa rty se ek i n g t o st rik e th e juro r

m us t sh ow a race ne ut ral jus ti f i c a t i o n th at is “ cl ear an d reas on ab ly sp eci fic ” an d

rel at ed to th e cas e to be tri ed in or de r to ov erco m e th e ob jecti on

. Id

. at 98 n.2 0. The

- 2 1

-di st ric t co ur t th e n d e c id es whe th er th e ob jecti ng pa rty ha s sh own pu rp os efu l

di sc riminat io n in li gh t of al l th e ev id en ce. Id

. at 9 8

. [ T]he cri ti cal qu es ti on in

de te rm in in g whe th er [th e ob jecti n g p a r ty] ha s pr ov ed pu rp os efu l di sc riminat io n at

st ep th ree is th e pe rs ua si ve ne ss of th e pr os ecu to r’s jus ti fic at io n fo r hi s pe rem pt or y

st rik e.” Mil le r- El v. Co ckr el l , 53 7 U.S. 3 22 , 32 4 (2 00 3)

.

[T]he is su e co m es do wn to whe th er th e tri al co ur t fin ds th e pr os ecu to r’s

race -n eu tra l ex pl an at io ns to be cred ib le

. Cred ib il it y can be m eas ur ed by,

am on g ot he r fact or s, th e pr os ecu to r’s de m ean or ; by ho w reas on ab le

, or
ho w im pr ob ab le

, th e ex pl an at io ns are; an d by wh e t h e r th e pr of fere d

rat io na le ha s s om e b as is in acce pt ed tri al st rat eg y

.

Id

. at 33 9. Bec au se “ th os e fact ua l fin di ng s tu r n l a r ge ly on cred ib il it y ev al ua ti on s,

th ey are d ue gre at de fere nc e[.]” Uni te d S ta te s v. All en , 64 4 F .3d 74 8, 7 52 (8t h C ir.

20 11 ) (ci ti ng Bat

so n , 47 6 U.S. at 98 n.2 1)

. The refo re, we rev ie w th e di st ric t co ur t’s

Bat so n rul in g fo r cl ear e rro r. Id

.

“ If a pr os ecu to r’s pr of

fere d reas on fo r st rik in g a bl ack pa ne li st ap pl ie s jus t as
well to an ot h erwi se -s im il ar no nb la ck who is pe rm it te d to se rv e, th at is ev id en ce

te nd in g to pr ov e pu rp os efu l di sc riminat io n to be co ns id ered at Bat so n ’ s th ird st ep .”

Mil le r- El v. Dre tk

e , 54 5 U.S. 23 1, 24 1 (2 00 5)

. In th is cas e, ho wev er, th e Uni te d

St at es st ru ck two ot he r ve ni re pe rs on s fo r th e sa m e reas on as i t s t r u ck an Afri can

Am eri can ve ni re pe rs on : th es e in di vi du al s al l wor ke d in ed uc at io na l se t t in gs

. The

Uni te d St at es as se rte d th at it was co nc ern ed th at th es e in di vi du al s wou ld ap pl y th ei r

own ed uc at io na l st an da rd s to th e cas e. The di st ric t co ur t fo un d th at th e Uni te d St at es

ex erci se d th is st rik e fo r a le gi ti m at e reas on

. Rev ie win g th e reco rd

, th is fin di ng is no t

cl earl y erro ne ou s. Ap pe ll an ts ’ Bat so n ch al le ng e th us fai ls

.

- 2 2

-II I. Lo uper -Mo rri s’ s Cl ai m s

A. All eg at io n o f Mat eri al Mi sr ep res en ta ti on to th e Gran d J ur y

Lou pe r-M or ris al le ge s th at th e di st ric t co ur t erre d by de nyin g App el la nt s’ joi nt

m ot io n to di sm is s th e in di ct m en t be cau se th e Uni te d St at es al le ge dl y m ad e a m at eri al

m is rep res en ta ti on to th e gr an d jury. “ In rev ie win g th e di st ric t co ur t ’s d e n i a l of a

m ot io n to di sm is s th e in di ct m en t fo r al le ge d go ve rn m en t m is co nd uc t, we rev ie w th e
di st ric t co ur t ’s f

a c tu al fin di ng s fo r cl ear erro r an d it s le ga l co nc lu si on s de no vo .”

Uni te d St at es v. Pump ki n Se ed

, 57 2 F.3 d 55 2, 55 7 (8 th Ci r. 20 09 ) (in te rn al ci ta ti on s

an d q uo ta ti on s o m it te d)

.

App ro xi m at el y two m on th s aft er th e de ad li ne fo r fil i n g pr et ria l m ot io ns , App el la nt s m ov e d t o d is m is s th e in di ct m en t. The y al le ge d th at th e Uni te d St at es

m is in fo rm ed th e gr an d jury by rep res en ti ng to th e gr an d jury th at no pr og ram

m at eri al s o r ed uc at io na l co nt en t ex is te d o n t he Cy be rSt ud y webs it e in 20 00

.

Th e mag is tra te jud ge he ard or al arg um en ts on th e m ot io n. It co nc lu de d th at App el la nt s h ad no go od cau se for un ti m el y fil in g th e m ot io n and al so ru le d th at th e

m ot io n fai le d on th e m eri ts

. Sp eci fic al ly, th e m ag is tra te jud ge fo un d th at th e reco rd

was de vo id of an y fact s to su pp or t th e pr op os it io n th at t h e U ni te d St at es m ad e an y

m is rep res en ta ti on s in th e in di ct m en t or to th e gr an d jury. Thu s, th e m ag is tra te jud ge
de ni ed th e m ot io n.

W e fin d no rev ers ib le erro r in th e di st ric t co ur t’s de ni al of th e di sm is sa l of th e

in di ct m en t, “ be cau se ev en as su m in g th at th ere were er ro rs in th e ch arg in g de ci si on

th at m ay ha ve fol lo wed fro m

th e co nd uc t o f th e p ro se cu ti on , th e p et it jury’ s g ui lt y

- 2 3

-ve rd ic t ren de red th os e erro rs ha rm le ss .” Id

. ( i n t e r na l ci ta ti on an d qu ot at io n

om it te d)

. 6

B. Pro se cu to ria l M is co nd uc t Al le ga ti on

Lou pe r-M or ris as se rts th at th e di st ric t co ur t erre d in de nyin g App el la nt s’ joi nt

m ot io n fo r a ne w tri al be c a u s e t h e Uni te d St at es al le ge dl y in ti m id at ed on e of
App el la nt s’ w i t n e s s es th ereb y de pr iv in g he r of th e rig ht to pr es en t a co m pl et e
de fen se

. W e rev ie w a di st ric t co ur t’s de ni al of a m ot io n fo r ne w tri al fo r an ab us e of

di sc ret io n. Uni te d St at es v. Pere z , 66 3 F.3d 38 7, 39 1 (8t h C ir. 2 01 1)

. “ Rev ers al of

a de ni al of a m ot io n for new tri al is rare.” Pere z , 66 3 F.3d at 39

. (ci ta ti on om it te d)

.

In th e mo ti on fo r a ne w tri al

, App el la nt s al le ge d th at Mi ch el le Garci a-St rai t,

a po te nt ia l de fen se wit ne ss , was in ti m id at ed by th e Uni te d St at es

. Garci a-St rai t ha d

se nt a fax an d an em ai l to th e di st ric t co ur t de sc rib in g he r un pl an ne d m eet in g wit h a

go ve r n men t a l ag en t. The di st ric t co ur t co nd uc te d an ev id en ti ary he ari ng on th e

m at te r.

At th e ev id en ti ary he ari ng , Garci a-St rai t te st ifi ed to th e fo ll owi ng : on th e da y
sh e was to te st ify, so m eo ne who sh e be li ev ed to be fro m th e Uni te d St at es Att or ne y ’s

of fic e sp ok e wit h he r in a co nf eren ce ro om ou ts id e of th e co ur tro om

. The

go ve rn m en ta l ag en t su m

m on ed Garci a-St rai t fro m th e de fen se ’s co nf eren ce ro om to

th e Uni te d St at es ’s co nf eren ce ro om

. The do or was le ft p a r ti al ly op en

. Fo r

ap pr ox im at el y fiv e to ten m in ut es , th e ag en t as ke d h er ab ou t CyberS tu dy an d so m e
ch eck s sh e ha d writ te n. Garci a-St rai t sa id th at sh e fel t in ti m id at ed by th e ex pe rie nc e.
Sh e di d no t recal l tel li ng ei th er o f App el la nt s’ at to rn ey s th at sh e was in ti m id at ed or

Mo reo ve r, we ag ree wit h th e m ag is tra te jud ge th at th e reco rd is de vo id of an y 6

fact s th at th e Uni te d S ta te s m ad e an y m is rep res en ta ti on s i n t he in di ct m en t or to th e
gr an d ju ry

.

- 2 4

-un wil li ng to te st ify. W he n as ke d by th e di st ric t co ur t if th e go ve rn m en ta l ag en t ha d

th r e a t e n e d h e r or to ld he r no t to te st ify, Garc ia -St rai t rep li ed th at th e ag en t ha d no t

do ne ei th er of th os e th in gs

. Garci a-St rai t co ul d no t reca ll if App el la nt s’ at to rn ey s
di sm is se d he r be fo re or aft er sh e ha d sp ok en wit h th e go ve rn m en ta l ag en t. Sh e al so

in di cat ed th at App el la nt s were de ba ti ng whe th er to c a l l h e r to te st ify be cau se of

Garci a-St rai t’s pe nd in g fel on y frau d an d fo rg ery ch arg es on whi ch sh e co ul d be cro ss

ex am in ed

. T he fo llo w ing co llo quy oc cu rred be twee n Garci a-St rai t an d Ass is ta nt U.S.

Att or ne y Tim ot hy Rank :

Ran k: You sa id th at on e of th e th in gs th at [d efen se at to rn ey ] was tryin g to fig ur e ou t was whe th er y ou wou ld ge t cro ss -ex am in ed on th os e
is su es ?

Garci a-St rai t: Co rrec t. Thi s is ex act ly why I was afra id to te st ify,

y es

. Ran k: You were afra id to te st ify be cau se y ou co ul d ge t cro ss

ex am in ed on – Garci a-St rai t: By

y ou , y es

. Ran k:
-- on is su es rel at ed to y ou r pe nd in g fel on y frau d an d

fo rg ery ch arg es ?

Garci a-St rai t: Yes.

Afte r th e he ari ng , th e di st ric t co ur t is su ed an or de r de nyin g th e m ot io n fo r a

ne w tri al . The di st ric t co ur t ex pr es sl y fo un d th at th e Uni te d S ta te s d id no t t hr eat en
Garci a-St rai t, an d th at App el la nt s ch os e no t to cal l he r as a wit ne ss

. The di st ric t co ur t

no te d th at Garci a-St rai t was co nc ern ed ab ou t te st ifyin g be cau se sh e co ul d be cros se x a mi n e d ab ou t pe nd in g st at e co ur t frau d an d fo rg ery ch arg es

. The di st ric t c o u r t

co nc lu de d th at th ere was no t an y im pe rm is si bl e go ve rn m en ta l in te rfer en ce an d a ne w
tri al was n ot warran te d.

- 2 5

-In li gh t of th e reco rd

, Lou pe r-M or ris ’s arg um en t is un pe rs ua si ve

. In fact

, th e

reco rd di rect ly refu te s he r arg um en t. The reco rd cl earl y sh ows th at Garci a-St rai t was

afra id to te st ify be cau se of th e po ss ib il it y of be in g cro ss -ex am in ed on he r p e n d i n g

frau d an d fo rg ery ch arg es

. Mo reo ve r, Garci a-St rai t a d m it te d th at sh e was no t

th r e a te ne d in an y way or in st ru ct ed no t to te st ify. Garci a-St rai t was av ai la bl e to

te st ify, bu t App el la nt s’ at to rn ey s ch os e n o t to cal l Garci a-St rai t as a wit ne ss

. The

Uni te d St at es ’s co nd uc t di d no t pr ev en t Garci a-St rai t fro m te st ifyin g an d, th eref or e,

th e Uni te d St at es di d no t co m pr om is e Lou pe r-M or ris ’s rig ht to a fai r tri al

. Se e Dod d

v. Ni x , 48 F.3 d 10 71

, 10 75 -7 6 (8 th Ci r. 19 95 ) (fi nd in g no du e pr oc es s vi ol at io n whe n
de fen se co un se l ch os e no t to cal l wit ne ss wit ho ut co ns id erat io n to th e pr os ecu ti on ’s

co nd uc t). The di st ric t co ur t di d no t ab us e it s di sc ret io n in de nyin g App el la nt s’

m ot io n fo r ne w tri al on th e g ro un d o f wit ne ss in ti m id at io n.

C. All eg ed Sen te nc in g Err or

Lou pe r-M or ris as se rts th at th e di st ric t co ur t erre d by en ha nc in g he r ba se le ve l

of fen se by fo ur po in ts fo r he r ro le as a le ad er or or ga ni zer o f a c r i mi n a l act iv it y

in vo lv in g fiv e or m or e pa rti ci p a n t s un de r Uni te d St at es Sen te nc in g Gui de li ne s §

3B 1.1

. Sh e arg ue s th at th e Uni te d Stat es fai le d to pr ov e by a pr ep on de ran ce of the

7

ev id en ce th at on e of th e pe rs on s id en ti fie d in th e pr e-s en te nc e in ve st ig at io n rep or t as

a pa rti ci pa nt

, Je nn ife r Dav is

, was cri m in al ly res po ns ib le fo r th e of fen se

. The refo re,

8

sh e co nt en ds th at th e di st ric t co ur t erre d in ap pl y in g th e le ad ers hi p en ha nc em en t

pu rs ua nt to § 3 B1 .1.

“ W he n we rev i e w t h e im po si ti on of se nt en ces , whe th er in si de or ou ts id e th e
Gui de li ne s ran ge , we ap pl y ‘a de fere nt ia l ab us e-o f-d is cret io n st an da rd .’ ” Un i t e d

The di st ric t co ur t rel ie d on th e 20 10 ve rs io n of th e Uni te d St at es Sen te nc in g 7

Gui de li ne s M an ua l.

Lou pe r-M or ris do es no t ch al le ng e he r ro le as a le ad er of th e cri m in al act iv it y

. 8

- 2 6

-St at es v. Hay es , 51 8 F.3 d 98 9, 99 5 (8 th Ci r. 20 08 ) (q uo ti ng Gal l v. Uni te d St at es , 55 2

U.S. 38

, 41 (2 00 7) ). “ In rev ie win g fo r pr oc ed ur al erro r, we rev ie w th e di st ric t co ur t’s

a p p li cat io n of th e [G]uid el in es de no vo an d it s fact ua l fin di ng s fo r cl ear e r r o r

. ”

Uni te d St at es v. Be n n e t t

, 65 9 F.3 d 71 1, 71 4 (8 th Ci r. 20 11 ) (ci ta ti on s & qu ot at io n

om it te d)

. “ ‘Proce du ral erro r’ in cl ude s ‘ fa ili ng to ca lc ulate (o r im pr op erl y cal cu la ti ng )

th e Gui de li ne s ran ge , tre at in g th e Gui de li ne s as m an da to ry , fai li ng to co ns id er th e §

35 53 (a) fact or s, se le ct in g a se nt en ce ba s e d o n c le arl y erro ne ou s fact s, or fai li ng to

ad eq ua te ly ex pl ai n th e ch os en se nt en ce— in cl ud in g an ex pl an at io n fo r an y de vi at io n

fro m th e Gui de li ne s ran ge .’ ” Uni te d St at es v. Feems te r , 57 2 F.3 d 45 5, 46 1 (8 th Ci r.

20 09 ) (en ba nc ) (q uo ti ng Gal l , 55 2 U.S. at 51 ).

Uni te d St at es Sen te nc in g Gui de li ne s § 3B 1.1 (a) st at es , “ Bas ed on th e
de fen da nt ’s rol e in th e o ffen se , in crea se th e o ffen se lev el as f ol lo ws: ( a ) I f t h e
de fen da nt was an or ga ni zer or le ad er of a cri m in al act iv it y th at in vo lv ed fiv e or m or e

pa rti ci pa nt s or was ot he rwis e ex te ns iv e, in crea se by 4 le ve ls .” (em ph as is om it te d)

. In or de r fo r th e di st ric t co ur t to ap pl y th e § 3B 1.1 (a) le ad e r s h ip en ha nc em en t, th e
Uni te d St at es ne ed ed to pr ov e by a pr ep on de ran ce of th e ev id en ce th at Lou pe r-M or ris

le d or or ga ni zed fiv e or m or e pa rti ci pa nt s in th e Cy be rSt ud y frau d or th at th e

or ga ni zat io n was ot he rwis e ex te ns iv e. Uni te d St at es v. Co se y , 60 2 F.3 d 94 3, 94 7- 48
(8 th Ci r. 20 10 ); Uni te d St at es v. Rod ri gu ez -Ramo s , 66 3 F.3 d 35 6, 36 5 (8 th Ci r. 20 11 )
(s ta ti ng bu rd en of pr oo f). “ A ‘part ic ip an t’ is a pe rs on who is cri m in al ly res po ns ib le

fo r th e co m

m is si on of th e of

fen se , bu t ne ed n o t h a v e be en co nv ic te d.” U.S.S.G. §

3B 1.1 cm t. n .1.

The reco rd co nc lu si ve ly sh ows th at fiv e or m or e in di vi du al s were pa rti ci pa nt s
wit hi n th e m ean in g of U.S.S.G. § 3B 1.1

. Den it a Hol li e te st ifi ed Lou pe r-M or ris was

th e le ad er of fiv e or m or e “ cri m in al ly res po ns ib l e ” in di vi du al s. Sh e st at ed th at in

ad di ti on to he rs el f, Ben it a W il li am s, Mo rri s, an d Je nn ife r Dav is al l fo rg ed si gn at ur es

on th e po wer-o f-at to rn ey fo rm s in o r d e r fo r Cy be rSt ud y to rece iv e th e ta x cred it

. Ben it a W il li am s co rro bo rat ed th is te st im on y

. Ch eryl Card in al al so te st ifi ed th at sh e

- 2 7

-le ft th e em pl oym en t of Cy

be rSt ud y be cau se sh e no lo ng er fel t co m fo rta bl e

“m a r k et in g so m et hi ng th at was n’t th ere” —t ha t is , m ark et in g Cy be rSt ud y 10 1 ev e n

th ou gh it la ck ed ed uc at io na l co n t e n t

. Den it a Hol li e, Ben it a W il li am s, an d Ch eryl

Card in al ’s te st im on y al l pr ov e th at Lou pe r-M or ris was th e le ad er or or ga ni zer of fiv e

or m or e pa rti ci pa nt s who co m m it te d frau d ei th er th ro ug h fo rg in g si gn a t u r e s or

m ark et in g C y

be rSt ud y 10 1's no ne xi st en t ed uc at io na l co nt en t.

The le ad ers hi p en ha nc em en t is al so ap pr op ria te if th e Uni te d St at es pr ov es by

a pr e p o n d e r a nc e of th e ev id en ce th at th e or ga ni zat io n “ was ot he rwis e ex te ns iv e.”

U.S.S.G. § 3B 1.1 (a). A fo ur -le ve l le ad ers hi p en ha nc em en t pu rs ua nt to U.S.S.G. §

3 B 1 .1(a ) is ap pr op ria te if th e tri al te st im on y sh ows th at “ th e cri m in al act iv it y w a s

ot he rwis e ex te ns iv e.” Se e Uni te d S t a t e s v. Bro wn

. 62 7 F.3 d 10 68

, 10 73 (8 th Ci r.

20 10 ) (in te rn al qu ot at io n om it te d)

. “ In acce ss in g w h e t h e r an or ga ni zat io n is

‘oth erwi se ex te ns iv e,’ al l pe rs on s in vo lv ed du rin g th e co ur se of th e en ti re of fen se are

to be co ns id ered

. Thu s, a frau d th at in vo lv ed on ly t h r e e p a r ti ci pa nt s bu t us ed th e

un kn owi ng ser vi ces of m an y ou ts id ers co ul d be co ns id ered ex te ns iv e.” U.S.S.G. §

3B 1.1 cm t. n .3.

Reg ard in g t he lea de rs hi p e nh an cem en t, t he di st ric t co ur t s ta te d:

As to th e le ad ers hi p ro le

, I th in k th ere were m an y pa rti ci pa nt s he re. I

do n’t kn ow th at we ne ed to co un t to on ly fiv e. The re a r e man y who

pa rti ci pa te d in on e way or an ot he r to en co ur ag e pe op le to pa rti ci pa te in

th is p r o g ram , an d I th in k th e ev id en ce was cl ear on th at

. So th e fo ur

le ve l i nc reas e as a le ad er an d o rg an iz er i s ap pr op ria te in th is cas e.

W e co ns tru e th e di st ric t co ur t’s st at em en t as a fin di ng th at it be li ev ed no t on l y t ha t

th e Cy b e r S t u d y frau d in vo lv ed m or e th an fiv e pa rti ci pa nt s, bu t th at th e cri m in al

act iv it y was ot he rwis e ex te ns iv e. The cri m in al act iv it y “ was ot he rwis e ex te ns iv e” in

tha t L oupe r- Mor

ri s recr ui te d nu m ero us in di vi du al s to as sis t in Cy be rS tud y ’ s cu sto m er

- 2 8

-recr ui tm en t an d ta x fo rm pr ep arat io n. In ad di ti on , Rev

. McAfe e pr ov id ed

“ un kn owi ng se rv ic es ” fo r Cy be rSt ud y b y a c t i n g a s a fro nt fo r th e po ol lo an

. Th e r efo re, we co nc lu de th at th e di st ric t co ur t di d no t err in ap pl y in g a fo u r

- l e v e l

le ad ers hi p en ha nc em en t to L oupe r- Mor ri s’ s se nt en ce pu rs ua nt to U.S.S.G. § 3B 1.1 (a)

be cau se th e cri m in al act iv it y was o th erwi se ex te ns iv e.

D. Cl ai m

of C um ul at iv e Erro r

Last ly, Lou pe r-M or ris co nt en ds th at cum ula tiv e trial erro rs warra nt rev ers al or ,
at le as t, rem a n d

. “We may rev ers e whe re th e cas e as a who le pr es en ts an im ag e of

un fai rn es s th at ha s res ul te d in th e de pr iv at io n of a de fen da nt ’s co ns ti tu ti on al rig ht s,

ev en th ou gh no ne of th e cl ai m ed erro rs is it se lf su ffi ci en t to req ui re rev ers al .” Uni te d

St at es v. Mon tg ome ry , 63 5 F.3 d 10 74

, 10 99 (8 th Ci r. 20 11 ) (q uo ti ng Uni te d St at es

v. Sa mpl es , 4 56 F.3 d 87 5, 88 7 (8 th Cir . 20 06 )). W e ha ve pa in st ak in gl y co ns id ered

th e reco rd an d fin d th at th ere is no t ev en a sp ect er of un fai rn es s m uc h le ss an y
de pr iv at io n of Lou pe r-M or ris ’s co ns ti tu ti on al rig ht s. Any erro r was ha rm le ss erro r.

Lou pe r-M or ris ’s cla im

of c um ul at iv e, rev ers ib le erro r is wit ho ut m eri t.

IV. Mo rri s’ s Cl ai m s

A. Ten th Am en dm en t Cl ai m

Mo rri s argu es th at th e wire an d m ai l frau d st at ut es , as ap pl ie d to hi m , ex ceed

Co ng res s’s au th or it y to le gi sl at e in vi ol at io n of th e Ten th Am en dm en t. Mo rri s rai se s

th is co ns ti tu ti on al c h a l l e n g e fo r th e fir st ti m e on ap pe al

. Defen se s no t rai se d or

li ti ga te d in th e di st ric t cou rt no rm al ly can no t be arg ue d fo r th e fir st ti m e on ap pe al

. Gar dn er v. Meyer

s , 49 1 F.2 d 11 84

, 11 90 (8 th Ci r. 19 74 ). “ Thi s ru le

, ho wev er, is on e

of pr ud en ce an d di sc ret io n.” W ar d v. Reso lu ti on Tr us t Co rp

. , 97 2 F.2 d 19 6, 19 9 (8 th

Ci r. 19 92 ).

- 2 9

-Ty

pi cal ly, co nst ituti on al ch al le ng es to th e ch arg in g st at ut e can be rai se d du rin g

pr et ria l m ot io ns , sp eci fic al ly, in a m ot io n to di sm is s th e in di ct m en t. E.g. Uni te d

St at es v. Smi th

, 65 5 F.3 d 83 9, 84 8 (8 th Ci r. 20 11 ) (rev ie win g cl ai m whe n de fen da nt

rai se d co ns ti tu ti on al ch al le ng e in a m ot io n to di sm is s th e in di ct m en t). In th is cas e,

pr es en ti ng th is arg um en t t o t he di st ric t cou rt wou ld ha ve be en fut il e b ecau se , at t he

ti m e, th is Co ur t de ni ed “ Ten th Am en dm en t pr ud en ti al st an di ng to in di vi du al s ‘abs en t

th e in vo lv em en t of a st at e or it s in st ru men t a l i t i e s

. ’” Id

. (q uo ti ng Uni te d St at es v.

Hac ker , 56 5 F .3d 52 2, 5 26 (8t h C ir. 2 00 9) ). Howev er, t he Su pr em e Co ur t rece nt ly

he ld th at cri m in al de fen da n t s may ch al le ng e st at ut es as vi ol at iv e of th e Ten th

Am en dm en t. Id

. (ci ti ng Bon d v. Uni te d St at es , --- U.S. ----, 13 1 S.Ct

. 23 55

, 23 66 -6 7
(2 01 1) ). Mo rri s d i d no t ha ve pr ud en ti al st an di ng un ti l aft er th e Bon d de ci si on

co nf erre d it up on hi m , an d acco rd i ng ly, he co ul d no t m ak e th is co ns ti tu ti on al

ch al le ng e to th e ch arg in g st at ut e. The refo re , w e wil l ad dr es s th e m eri ts of hi s

arg um en t.

W e rev ie w fed eral co ns ti tu ti on al qu es ti on s, su ch as whe th er Co ng res s ha d th e

po wer to en act a st at ut e, de no vo

. Uni te d St at es v. Sa br i

, 32 6 F.3 d 93 7, 94 5 (8 th Ci r.

20 03 ).

The Te n t h A mend m en t pr ov id es th at “ po wers no t de le ga te d to th e Uni te d

St at es by th e Co ns ti tu ti on , no r pr oh ib it ed by it to th e St at es , are res erv ed to th e St at es

res pe ct iv el y , or to th e pe op le .” U.S. Co ns t. am en d. X. A Ten th Am en dm en t

ch al le ng e to a st at ut e “ ne ces sa ril y ” fai ls if th e st at ut e is a va li d ex erci se of a po wer
rel eg at ed to Co ng res s. Uni te d St at es v. W ri gh t

, 12 8 F.3 d 12 74

, 12 76 (8 th Ci r. 19 97 )
(fi nd in g ch al le ng ed st at ut e to be va li d ex erci se of Co n g r e s s ’s po wer to reg ul at e

co m m erce ).

Ar t ic le I, Sect io n 8, Cl au se 7 of th e Uni te d St at es Co ns ti tu ti on au th or iz es

Co ng res s “ To e s t a b l i s h Po st Offi ces an d po st Ro ad s[ .] ” The Po st al Po wer al lo ws

Co ng res s to reg ul at e th e en ti re po st a l s ys t e m. Ex Par te Rap ie r , 14 3 U.S. 11 0, 11 3

- 3 0

-(1 89 2)

. “ The ov ert act of pu tt in g a let te r in to th e p os t o ffi ce o f th e Uni te d S ta te s i s

a m at te r th at Co ng res s m ay reg ul at e.

. . . W ha te ve r th e li m it s to it s p o w e r , i t m ay

fo rb id an y su ch act s do ne in fu rth eran ce of a sc he m e it reg ard s as co nt rary to pu bl ic

po li cy , whe th er it can fo rb id th e sc he m e or no t.” Bad de rs v. Uni te d St at es , 24 0 U.S.

39 1, 39 3 (1 91 6) (in te rn al c it at io n om it te d)

. Co ng res s’s Po st al Po wer pr ov id es th e juri sd ic ti on al ba si s fo r 18 U.S.C. § 13 41

, th e m ai l frau d st at ut e

. U n i t e d S ta te s v.
Ell io tt

, 89 F.3 d 13 60

, 13 64 (8 th Ci r. 19 96 ). Thu s, Mo rr i s’s Ten th Am en dm en t

ch al le ng e to th e m ai l fr au d s ta tu te “ ne ces sa ril y ” fai ls be cau se th e m ai l frau d st at ut e
is a le gi ti m at e ex erci se of C on gr es s’s Po st al Po wer. W ri gh t , 12 8 F .3d at 1 27 6.

Reg ard in g Mo rri s’s ch al le ng e t o t h e wire frau d st at ut e, 18 U.S.C. § 13 43

, Mo rri s ig no res Arti cl e I, Sect io n 8 of th e Uni te d St at es Co ns ti tu ti on , th e Co m m erce
Cl au se , as a so ur ce of le gi sl at iv e au th or it y

. “ [Sec ti on ] 13 43 [is ] wit hi n th e ex te ns iv e

reac h of th e Co m

m erce Cl au se .” Uni te d St at es v. Hoo k

, 19 5 F.3 d 29 9, 31 0 (7 th Ci r.

19 99 ). The refo re, Mo rri s’s Ten th Am en dm en t ch al le nge to the w ire frau d st at ut e al so

“ ne ces sa ril y ” fai ls

. W

ri gh t , 12 8 F .3d at 1 27 6.

B. Evi de nt ia ry

Ru li ng Erro r

Mo rri s as se rts th at th e di st ric t co ur t erre d by no t al lo win g th e jury to vi ew th e

li ve Cy be rSt ud y web si te th ereb y de nyin g hi m hi s Fift h a nd Six th Am en dm en t rig ht

to a co m pl et e de fen se

. “ W e rev ie w a di st ric t co ur t’s ev id en ti ary ru li ng s fo r cl ear
ab us e of di sc ret io n, rev ers in g on ly whe n an im pr op er ev id en ti ary ru li ng affe ct ed th e
de fen da nt ’s su bs ta nt ia l rig ht s or h a d m or e th an a sl ig ht in flu en ce on th e ve rd ic t.”

Uni te d St at es v. W

at so n , 65 0 F.3 d 10 84

, 10 88 (8 th Ci r. 20 11 ) (q uo ti ng Uni te d St at es
v. Sh ie ld s , 49 7 F .3d 78 9, 7 92 (8t h C ir. 2 00 7) ).

At th e be gi nn in g of th e tri al

, Lou pe r-M or ris req ue st ed pe rm is si on to in tro du ce

th e 20 10 ve rs io n of th e on li ne Cy be rSt ud y tu to ria l du rin g he r te st im on y

. The di st ric t

co ur t de ferr ed th e ru li ng un ti l Lou pe r-M or ris was to te st ify. The di st ric t co ur t ag ai n

- 3 1

-rai se d th e is su e be fo re Lou pe r-M or ris ’s op en in g st at em en t. It in st ru ct ed co un se l th at 9

an y d e mo n s t r at io n of th e tu to ria l sh ou ld be do ne th ro ug h “ sc reen sh ot s th at can be

m ov ed to on a sh ot by sh ot ba si s, mu c h li ke cl ic ki ng on to an ot he r si te on th e

In te rn et .” The di st ric t co ur t ex pr es se d co nc ern ab ou t th e jury’ s acce ss to ex hi bi ts an d

op in ed th at th e sc reen sh ot s wou ld en ab le th e jury to rev ie w th e ex hi bi t at a la te r ti m e.
Thu s, t h e di st ric t co ur t ex cl ud ed ad m is si on of th e li ve web si te

. The Uni te d St at es

arg ue d th at th e sc reen sh ot s wou ld no t b e r e pr es en ta ti ve of th e web si te du rin g th e
rel ev an t ti m e pe rio d, 20 00 -2 00 2. The di st ric t co ur t no te d th e co nc ern an d st at ed th at

th e is su e wou ld be ta ke n up la te r. Neit he r Lou pe r-M o r ris no r Mo rri s so ug ht

ad m is si on of a scr een -s ho t ex hi bi t.

The di st ric t co ur t di d no t ab us e it s di sc ret io n in pr ecl ud in g ad m is si on o f th e

li ve 20 10 Cy

be rSt ud y web si te

. Fi rs t, the di st ric t cou rt was clea rly co nc ern ed ab ou t

th e jury’ s acce ss to ex hi bi ts

, whi ch is a le gi ti m at e reas on to ch an ge th e fo rm at of th e

ev id en ce. Seco nd

, Mo rri s ha s no t de m on st rat ed ho w a sc reen -s ho t ex hi bi t is in feri or

to li ve webs it e o r ho w a sc reen -s ho t exh ib it is pre jud ic ia l t o h im . Thir d, we ca nn ot ig no re th e fact th at on ce th e di st ric t co ur t ru le d to al lo w on ly th e sc reen -s ho t ex hi bi t, App el la nt s ab an do ne d th ei r effo rts t o pr of fer an y rep res en ta ti on of th e Cy be rSt ud y
web si te fo r th e ju r y’s vi ewin g. Fi na ll y , App el la nt s so ug ht ad m is si on of th e 20 10

w e b s i t e , wh ic h, as th e Uni te d St at es po in te d ou t at tri al an d on ap pe al , wo ul d h a v e

li m it ed pr ob at iv e va lu e of th e 20 00 -2 00 2 web si te

. In li gh t of th e ov erwh el m in g

ev id en ce ag ai ns t App el la nt s an d th e l i mi t e d rel ev an ce of th e 20 10 Cy be rSt ud y
web si te

, th e di st ric t co ur t di d no t ab us e it s di sc ret io n in de nyin g ad m is si on of th e li ve

20 10 webs it e.

Lou pe r-M or ris ha d de ferr ed he r op en in g st at em en t un ti l aft er th e Uni te d 9

St at es ha d p res en te d i ts cas e.

- 3 2

-C. Sen te nc in g Err or

Mo rri s co nt en ds th at th e di st ric t co ur t im pr op erl y ap pl ie d th e two -l e v el

so ph is ti cat ed -m ean s en ha nc em en t un de r U.S

. S. G

. § 2B 1. 1( b) (9 )( C) an d th e fo ur -le ve l

l e a d ers hi p en ha nc em en t un de r U.S.S.G. § 3B 1.1 (a). W e ap pl y “ a de fere n t i a l

ab us e-o f-d is cret io n st an da rd ” whe n rev ie win g th e im po si ti on of se nt en ces

. Gal l v.

Uni te d St at es , 55 2 U.S. at 41

. “ In rev ie win g fo r pr oc ed ur al erro r, w e r e v ie w th e
di st ric t co ur t’s ap pl ic at io n of th e [G]uid e l i n e s de no vo an d it s fact ua l fin di ng s fo r
cl ear e rro r.” Benn et t , 65 9 F .3d at 7 14 (ci ta ti on s & qu ot at io n o m it te d)

.

Und er th e so ph is ti cat ed -m ean s en ha nc em en t, a de fen da nt ’s ba se of fen se le ve l

m ay be in crea se d by two le ve ls i f “t h e of fen se ot he rwis e in vo lv ed so ph is ti cat ed

m ean s.” U.S.S.G. § 2B 1.1 (b )(9 )(C)

. “ So ph is ti cat ed m ean s” is de fin ed as “ es pe ci al ly

co m pl ex or es pe ci al ly i n t r i cat e of fen se co nd uc t pe rta in in g to th e ex ecu ti on or

co nc eal m en t o f a n o ffen se .” U.S.S.G. § 2B 1.1 (b )(9 )(C) cm t. n.8 (B). The

so ph is ti cat ed -m ean s en ha nc em en t i s app ro pr ia te whe n th e o ffen se co nd uc t, v ie wed

as a who le

, “ was no ta bl y m or e in tri cat e th an th at of th e ga rd e n

- v a r i et y [o ffen se ]. ”

Uni te d St at es v. Han ce , 50 1 F.3 d 90 0, 90 9 (8t h Ci r. 20 07 ). “ Eve n if an y si ng le st ep
is no t co m

pl ic at ed

, rep et it iv e an d co or di na te d co nd uc t can am ou nt to a so ph is ti cat ed

sc he m e.” Uni te d St at es v. Fio ri to

, 64 0 F.3 d 33 8, 35 1 (8 th Ci r. 20 11 ) (q uo ti ng Uni te d

St at es v. Bis tr up , 44 9 F .3d 87 3, 8 82 (8t h C ir. 2 00 6) ).

Mo rri s do es no t di sp ut e th e di st ric t co ur t’s fact ua l fin di ng s th at f or m ed th e
ba si s of th e so ph is ti cat ed -m ean s enh an cem en t. Rat he r, he co nt en ds th at th e di st ric t

co ur t erre d in it s le ga l co nc lu si on th at th e frau d was so ph is ti cat ed

. W e di sa gr ee. The
Cy be rSt ud y frau d in vo lv ed a va st m ark et in g sc he m e th at in cl ud ed m ob il iz in g va rio us

co m m un it y le ad ers

. It in vo lv ed lo bb y in g st at e ag en ci es in cl ud in g th e M i n n es ot a Dep art m en t of Rev en ue an d th e Mi nn es ot a Att or ne y Gen eral

. The frau d req ui red th e

pr ep arat io n of th ou sa nd s of ta x ret ur ns an d po wer-o f-at to rn ey fo rm s, en do rs ed wit h

frau du le nt si gn at ur es

. Cf

. Uni te d St at es v. Se

pt on , 55 7 F.3 d 93 4, 93 7 (8 th Ci r. 20 09 )

-3 3-(aff

irming ap pl ic a t io n of th e so ph is ti cat ed -m ean s en ha nc em en t whe re a sc he m e

in vo lv ed “ su bm it ti ng nu m ero us lo an ap p l i c a ti on s to le nd ers co nt ai ni ng fo rg ed

si gn at ur es , fo rg ed no ta ry st am ps , an d fal si fie d or al te red [d oc um en ts ]”). Fi na ll y , th e

frau d req ui red th e crea ti on of a fak e po ol lo an al le ge dl y fin an ced by Rev

. McAfe e’s

or ga ni zat io n, Sal em , In c. Thi s co or di na te d c o n d u c t am ou nt s to a so ph is ti cat ed

sc he m e. The di st ric t co ur t di d no t err in ap pl y in g th e so ph is ti cat ed -m ean s

en ha nc em en t.

Mo rri s al so arg ue s th at th e di st ric t co ur t erre d in a pp lying th e fo ur -le ve l

le ad ers hi p en ha nc em en t pu rs ua nt to U.S.S.G. § 3B1 .1(a ) be cau se he was “ at wor se ,

. . . a m an ag er or su pe rv is or of th e sc he m e[,]” an d hi s m ot he r, Lou pe r-M or ris

, was th e

t r ue le ad er an d fig ur eh ead of th e or ga ni zat io n. The di st ric t co ur t co ns id e r e d a n d
reject ed th is arg um en t. It st at ed :

As to th e le ad er or or ga ni zer ob jecti on rel at iv e t o p a r a gr ap h 42

, th e

Co ur t wil l ov erru l e t he de fen se ob jecti on

. I ha ve co ns id ered th is

care fu l l y a n d c on si de red dr op pi ng th is to an or ga ni zer or a m an ag er, I

gu es s, rat he r th an a le ad er/ or ga ni zer whi ch wou ld be th ree po in ts

, bu t

ha vi ng on ce ag ai n go ne th ro ug h th e na tu re of th e ro le th at was pl ay ed
by Mr. Mo rri s in th is

, I jus t fin d th at I can no t ch an ge th a t

reco m m en da ti on th at th e p ro ba ti on off ic e h as m ad e.

A le ad ers hi p ro le is de te rm in ed by “t h e n a t u re of de fen da nt ’s ro le in th e

of fen se , th e r e c r u i t m en t of acco m pl ic es , th e de gr ee of pa rti ci pa ti on in pl an ni ng or

or ga ni zi ng th e of

fen se .” Uni te d St at es v. W il li ams , 60 5 F.3 d 55 6, 57 0 (8 th Ci r. 20 10 )
(q uo ti ng Uni te d St at es v. Ort iz -Ma rt in ez , 1 F.3 d 6 6 2

, 67 7 (8 th Ci r. 19 93 )). A

de fen da nt ’s “ de ci si on -m ak in g a u th or it y

. . . an d th e de gr ee of co nt ro l an d au th or it y
th at th e de fen da nt ex erci se d ov er ot he rs ” is in di cat iv e of whe th er th e de fen da nt ha d

a le ad ers hi p ro le in th e of

fen se

. Id

. (q uo ti ng Uni te d St at es v. Del To ro -Agu il er a , 13 8

F.3 d 34 0, 34 2 (8 th Ci r. 19 98 )). The le ad ers hi p en ha nc em en t “ do es no t ap pl y so le ly

-3 4-to th os e who fir st in st ig at ed th e cri m in al act iv it y , an d th e de fen da nt ne ed no t be the

on ly or ga ni zer or le ad e r

. ” U n i t e d St at es v. Bol de n , 59 6 F.3 d 97 6, 98 4 (8 th Ci r.

20 10 ).

Lik e th e di st ric t c ou rt, we di sa gr ee wit h Mo rri s’s ch arac te riz at io n of hi s ro le

in th e Cy be rSt ud y frau d. Den it a Hol li e te st ifi ed th at Mo rri s ha d a le ad ers hi p po si ti on
wit h Cy be rSt ud y

. Sh e st at ed th at al th ou gh he di d no t ge ne rat e m an y of th e id eas th at

pr op el le d t h e sc he m e, he he lp ed im pl em en t Lou pe r-M or ris ’s id eas by in st ru ct in g

em pl oyees. Mo rg an Bro wn, Den it a Hol li e, Ben it a W il li am s, an d Ly m an Loc ke t each

te st ifi ed th at Mo rri s act ed as Cy be rSt ud y ’s at to rn ey

. As th e co m pa ny’ s at to rn ey , he

ha d a de gr ee of au th or it y

. He dr aft ed al l of th e le ga l do cu m en ts fo r th e or ga ni zat io n

i n c l u d in g cu st om er ag reem en ts an d le tt ers th reat en in g co ll ect io n act io ns an d

im m ig rat io n act io ns

. He al so ne go ti at ed th e K-Mar t– Cy be rSt ud y co m

pu te r co nt ract

. Carl os Gran ad os te st ifi ed th at Mo rri s was al so in ch arg e of al l ba nk in g fo r th e

co m pa ny. Last ly, Mo rri s , l i k e Lou pe r-M or ris , t oo k a su bs ta nt ia l am ou nt of m on ey

fro m Cy be rSt ud y ’s ba n k acco un t fo r pe rs on al us e. The se fact s su pp or t th e di st ric t

co ur t’s de te rm in at io n th at Mo rri s was a le ad er or or ga ni zer wit hi n t h e c o n t e xt

U.S.S.G. § 3B.1 .1(a ). The di st ric t co ur t di d no t err by en ha nc in g Mor ris ’s se nt en ce by fou r le ve ls for hi s l ead ers hi p ro le

.

D. Res ti tu ti on Iss ue

Mo rri s arg ue s th at th e di st ric t co ur t’s res ti tu ti on or de r im pr op erl y i nc lu de d

res ti tu ti on to K-Mar t, who wa s al read y rece iv in g co m pe ns at io n fro m a se tt le m en t

ag reem en t. He as se rts th at th e res ti tu ti on ord er i m pr op erl y “ do ub ly com

pe ns at es ”

K-Mar t t hr ou gh th e ci vi l s et tl em en t an d c riminal res ti tu ti on

.

Afte r a few y ears of li ti ga ti on , Cy be rSt ud y en te red in to a se tt le m en t ag reem en t

in whi ch it was to pa y K-Mar t $6 10 ,00 0 in co m pe ns at io n fo r br each in g th e co m pu te r

co nt ract

. Cy

be rSt ud y fai le d to m ak e an y pa y m en ts an d, in Octo be r 20 03

, a jud gm en t

-3 5-fo r $1 ,21 1,1 34 .03 pl us in te res t an d a tt or ne y ’s fees was e nt ered ag ai ns t Cy be rSt ud y
fo r th is fai lu re. In th is cri m in al cas e, th e di st ric t co ur t im po se d m an da to ry res ti tu ti on

in th e am ou nt of $3 ,56 2,5 02 .74 —$ 2,3 51 ,36 8.7 1 owe d to th e Mi nn es ot a Dep art m en t

of Rev en ue an d $1 ,21 1,1 34 .03 o w e d to K-Mar t. App el la nt s were he ld joi nt ly an d

se ve ral ly res po ns ib le fo r th e res ti tu ti on pa ym e n ts

. Mo rri s ad m it te d on cro ss

ex am in at io n t ha t Ap pe ll an ts ha d n ot pa id an y am ou nt on th e ci vi l ju dg m en t.

O r d in ari ly, we rev ie w res ti tu ti on award s fo r an ab us e of di sc ret io n. Uni te d

St at e s v. Jef

fe rs on , 65 2 F.3 d 92 7, 93 2 (8 th Ci r. 20 11 ). Mo rri s, ho wev er, di d no t

ch al le ng e th e res ti tu ti on o r d e r at se nt en ci ng

. W e th eref or e rev ie w th e res ti tu ti on

or de r fo r pl ai n erro r. Uni te d St at es v. Pig gi e , 30 3 F.3 d 92 3, 92 8 (8 t h C i r

. 20 02 );

Uni te d St at es v. Rieb ol d

, 13 5 F.3d 12 26

, 12 31 (8 th Ci r.19 98 ). Pl ai n erro r rev ie w is

“ext rem el y na rro w a nd is li m it ed to th os e erro rs whi ch are so ob vi ou s or ot he rwis e

fla wed as to se rio us ly un de rm in e th e fai rn es s, in t e g rit y , or pu bl ic rep ut at io n of
jud ic ia l pr oc eed in gs .” Pig gi e , 3 03 F.3 d at 92 8 (q uo t i n g Uni te d St at es v. Beck , 2 50

F.3 d 1 16 3, 1 16 6 (8 th Cir . 20 01 )).

The Man da to ry Vict im s Res ti tu ti on Act (MVRA)

, 18 U.S.C. §§ 36 63 A
- 36 64

,
req ui res in di vi du al s who are co nv ic te d of wire frau d to pa y res ti tu t i o n to th ei r
vi ct im s. Uni te d St at es v. Man ci ni , 6 24 F.3 d 87 9, 88 2 (8 th Ci r. 20 10 ); 18 U.S .C. §

36 63 A(c)(1 )(A)(i i) (o rd eri ng m an da to ry res ti tu ti on fo r vi ct im s of “ an of fen se ag ai ns t

pr op ert y un de r th is ti tl e, . . . inc lu di ng an y off en se co m m it te d by fra ud or de cei t” ).

The MVRA in st ru ct s th at

, “ [a]ny am ou nt pa id to a vi ct im un de r an or de r of res ti tu ti on
sh al l be red uc ed b y a n y a mo un t la te r reco ve red as co m pe ns at or y da m ag es fo r th e

sa m e lo ss by th e vi ct im i n

- - ( A ) an y Fed eral ci vi l pr oc eed in g[ .] ” 18 U.S.C. §

36 64 (j)(2 )(A). Alt ho ug h th e pu rp os e o f th e MVRA is to m ak e vi ct im s who le an d

co m pe ns at e th em f

o r t h ei r lo ss es , Uni te d St at es v. Fra zi er , 65 1 F.3 d 89 9, 90 4 (8 th

Ci r. 20 11 ), th e MVRA do es no t al lo w vi ct im s to ob ta in do ub le reco ve ry or a win df al l

th ro ug h res ti tu ti on

. Id

. at 91 0- 11 ; Uni te d St at es v. Ruf f

, 42 0 F.3 d 77 2, 77 5 (8 th Ci r.

20 05 ) ( Ruf

f I ); se e al so Uni te d St at e s v. Man ze r , 69 F.3 d 22 2, 23 0 (8 th Ci r. 19 95 )

-3 6-(fi nd in g th at th e MVRA’s pr ecu rs or , th e Vict im an d W it ne ss Pro te ct io n Act of 19 82

,

do es no t al lo w “ do ub le reco ve ry fo r th e sa m e lo ss th ro ug h bo th a res ti tu ti on or de r an d

a ci vi l ju dg m en t” ); Uni te d S ta te s v. Ga ul ti er , 72 7 F .2d 71 1, 7 16 (8t h C ir. 1 98 4)

.

N ev erth el es s, Mo rri s’s arg um en t is wit ho ut m eri t. By Mo rri s’s own adm iss ion

, K-Mar t ha s y et to rece iv e an y pa y m en ts in sa ti sf act io n of t h e ci vi l jud gm en t.

The refo re, Mo rri s ha s fai le d to sh ow th at en fo rcem en t of th e res ti tu ti on or de r wou ld

res ul t in do ub le reco ve ry fo r K-Mar t. Cf

. Uni te d St at es v. Ruf

f

, 47 2 F.3 d 10 44

, 10 47
(8 th Ci r. 20 07 ) ( Ruf

f II ) (fi nd in g th at th e di st ric t co ur t di d no t pl ai nl y err in de nyin g

Ru ff’s req ue st to of

fs et th e res ti tu ti on am ou nt wit h th e fo rfei tu re pr oc eed s i n p art

be cau se Ru ff di d no t sh ow th at th e vi ct im was rece iv in g do ub le reco ve ry ). If ei th er App el la nt be gi ns to m ak e pa y m en ts on th e ci vi l jud gm en t, ei th er he or sh e m ay se ek

in th e d is tri ct co ur t a red uc ti on of th e res ti tu ti on or de r to cred it or of fs et am ou nt s

reco ve re d b y K-Mar t. Fra zi er , 65 1 F.3 d at 91 0- 11 ; Man ze r , 69 F.3 d at 23 0;

Gau lt ie r , 72 7 F.2 d at 71 6. Abs en t ev id en ce of a do ub le reco ve ry , we can sa y th at th e
di st ric t co ur t d id no t p la in ly err in award in g re st it ut io n t o K-M art ev en th ou gh

K-Mar t ca n e nf

or ce a c iv il jud gm en t ag ai ns t Ap pe ll an ts

.

V. Concl us io n

Fo r th e fo reg oi ng reas on s, we affi rm th e jud gm en t of th e di st ric t co ur t an d
App el la nt s’ sen te nc es

.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

-3 7-