Source: http://wakeforestlawreview.com/tag/sophisticated-means/
Timestamp: 2018-12-10 13:06:19
Document Index: 339427084

Matched Legal Cases: ['§1001', '§1001', '§ 80', '§ 80', '§ 80', '§ 2']

Sophisticated means Archives - Wake Forest Law Review
Defendant Acted as an Investment Adviser in a Fraudulent Scheme Employing “Sophisticated Means”
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Today, in United States v. Graves, the 4th Circuit affirmed the conviction of John Robert Graves, a former F.B.I. employee who—along with his wife—ran a sophisticated investment scheme that he used to defraud mostly elderly investors. Mr. Graves raised three issues on appeal. First, he claimed that his conviction for making false statements was contrary to law because some of the questions posed during his interrogation, and some of his answers, were ambiguous. Second, he disputed his convictions under the Investment Advisers Act because he claimed that during the relevant period he was working as a broker-dealer and not an investment adviser. Finally, Mr. Graves disputed the finding of fact that his scheme involved “sophisticated means,” and thus argued that he should not have been subject to a sentence enhancement. The Fourth Circuit affirmed each of these convictions.
Mr. Graves made False Statements
First, Mr. Graves argued on appeal that the government had not established that he made one or more “materially false, fictitious, or fraudulent statement[s] or representation[s]” in violation of 18 U.S.C. §1001(a). To support this argument, Mr. Graves pointed to isolated evidence from his interrogation. For instance, when a government agent asked him—“And that’s where the $150,000 went, came from to go to [victim]?.” Mr. Graves responded: “I guess.” Mr. Graves claimed that this question was ambiguous as was his answer, and thus he had not made an affirmatively false statement. The Fourth Circuit observed that this was the “slightest snippet” from a larger conversation that Mr. Graves surreptitiously recorded and then played to the jury during his trial. The recording included other unambiguously false statements by Mr. Graves, and thus the jury had a reasonable basis to conclude that he had made false statements in violation of §1001(a).
Mr. Graves was acting as an Investment Adviser
Second, Mr. Graves argued that his conviction under the Investment Advisers Act, 15 U.S.C. § 80b-6, was improper because he was employed as a broker-dealer and not an investment adviser during the relevant time period. As a professional matter, Mr. Graves was registered as an investment adviser, and the court observed that he provided “investment advice for a fee to his victims to prompt them to invest in his and his wife’s companies.” Even if the statutory understanding of the term “investment adviser” differed from what was required to be registered in this profession, the court noted that Mr. Graves stipulated at trial that between 2006 and 2010 he “was an Investment Adviser” as that term is intended under 15 U.S.C. § 80b-6. Thus, as a matter of law Mr. Graves acted as an investment adviser under § 80b-6.
Mr. Graves used “sophisticated means” to defraud his victims
Finally, Mr. Graves disputed that he should be subject to a sentence enhancement under U.S.S.G. § 2B1.1(b)(10), which punishes fraudulent schemes using “sophisticated means.” This sentence enhancement is intended to apply to “especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense.” Mr. Graves claimed that his conduct was not sufficiently complex to receive this punishment. The Fourth Circuit observed that the district court had “ample basis” for concluding that his conduct involved sophisticated means, given that Mr. Graves and his wife engaged in a “veritable shell game” routinely “transfer[ing] funds multiple times through multiple accounts, in one case channeling [a victim’s] money through four accounts in a matter of days.” As a result, there was sufficient evidence for a sentence enhancement in a fraud involving “sophisticated means.”
Tags: False statement Fraud Investment Investment Adviser Sophisticated means
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