Opinion ID: 779007
Heading Depth: 3
Heading Rank: 1

Heading: The evidence of a scheme

Text: 48 In Caldwell's case, the government advanced two theories of a scheme. First, the government alleged that Caldwell created a scheme to defraud Mississippi taxpayers and officials and the board of Magnolia Venture of money by enrich[ing] himself through financial transactions made possible by unlawful misrepresentations and deceits rather than for the statutory purposes of providing venture capital financing. Second, the government alleged that Caldwell created a scheme to deprive the board of Magnolia Venture of its intangible right of honest services [by] breaching the fiduciary duty owed to [Magnolia Venture] as the corporation's Chairman of the Board and Chief Executive Officer. On the verdict form provided by the district court, the jury indicated its finding that the government had proven both of these theories beyond a reasonable doubt. As to each theory, the jury further specified the manners in which it found that Caldwell knowingly created the scheme. 49 The jury found that Caldwell created a scheme against Mississippi taxpayers and officials and Magnolia Venture's board to obtain money by false or fraudulent representations in the following ways: 50 (1) by unlawful representations concealing from the [board] an agreement in a limited partnership with an investor, Billy Clements, where [CSG], owned by [Caldwell], received a commission of $250,000.00, 51 (2) by lying to the President of [CSG] that a $225,000.00 check made payable to [Caldwell] had been spent for the expenses of [CSG], 52 (3) by soliciting and receiving without knowledge of the [board] a total of $38,730.56 from a local securities broker, 53 (4) by paying to himself a total of $44,302.50 representing 10% of the profits of the General Partner's distribution from [Magnolia Venture], and 54 (5) by authorizing payment out of [Magnolia Venture] funds a total of $14,000.00 to be paid to [CSG] for a secretary never hired. 55 Caldwell contends that neither the conduct specifically found by the jury nor any of the other conduct supported by the evidence establishes a scheme to obtain money by means of false or fraudulent representations. At most, Caldwell contends, this conduct is evidence of ethical improprieties or other offenses. 56 As this court has recognized, for purposes of the federal fraud statutes, [t]he term `scheme to defraud' is not readily defined, but it includes any false or fraudulent pretenses or representations intended to deceive others in order to obtain something of value, such as money. United States v. Saks, 964 F.2d 1514, 1518 (5th Cir.1992) (internal citation omitted). Additionally, the false or fraudulent representations must be material. Neder v. United States, 527 U.S. 1, 25, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999). In the instant case, the government presented sufficient evidence for a reasonable juror to have found beyond a reasonable doubt that Caldwell knowingly created such a scheme to defraud. 57 Based on evidence such as board members' testimony and the Brief on Specifics of Contracts (distributed by Caldwell at the special board meeting), the jury was entitled to infer that Caldwell (through CSG) obtained the $250,000 commission on Clements's investment, the $38,730.56 in split commissions from Pat Gilliand, and the $14,000 for the non-existent secretary, by means of the false, material representations that he made to the board in urging it to approve CSG's contract. Specifically, Caldwell falsely represented that he owned only 50% of CSG, that the DECD approved of his relationship with CSG, and that CSG was the only firm in Mississippi licensed to perform the necessary investment work for Magnolia Venture. 11 58 Further, Caldwell's receipt of the $14,000 directly resulted from his unquestionably false and material representation that CSG had expended that amount to employ a secretary. Caldwell argues that he was unaware that the secretary for which he billed Magnolia Venture did not exist. However, there is ample evidence supporting the jury's contrary finding. In particular, a rational juror could have concluded that Caldwell knew that CSG never employed a secretary based on the evidence that Caldwell worked in CSG's office on a regular basis during the four-month period over which he billed Magnolia Venture for secretarial services and that CSG had only one employee (thus the absence of a secretary was likely apparent). 59 Similarly, although Caldwell points out that CSG's contract with Magnolia Venture entitled CSG to a 5% commission on every $5,000,000 investment, a reasonable juror could have assigned this provision little weight in considering CSG's receipt of the $250,000 commission on the Billy Clements investment in light of the evidence presented at trial indicating: (1) that Caldwell did not inform the board that he agreed to permit Clements to withdraw part of his investment after CSG received the commission, thereby causing the investment to drop below the $5,000,000 threshold required under the contract for CSG to receive a commission, (2) that Caldwell solicited a $75,000 bonus as Magnolia Venture's CEO, in part because he successfully secured the $5,000,000 investment, (3) that Caldwell insisted that Lee Gilliand was responsible for the investment when the board questioned Caldwell about the commission, (4) that Caldwell entered confidential as the payee of the $250,000 check issued to CSG in Magnolia Venture's check register, and (5) that Caldwell told Lee Gilliand that the $225,000 of the commission (which Caldwell deposited in his personal account) had been spent on CSG's expenses. 12 60 We thus conclude that the government presented sufficient evidence for a rational juror to find beyond a reasonable doubt that Caldwell devised a scheme to obtain money by false, material representations. Accordingly, it is unnecessary for us to address the sufficiency of the evidence for the government's alternate theory that Caldwell's scheme also aimed to deprive of the right to honest services. See Powers, 168 F.3d at 753-54. 13 61