Opinion ID: 2997255
Heading Depth: 3
Heading Rank: 2

Heading: Counts of acquittal

Text: With respect to the counts of acquittal, excluding Count Two, which will be separately discussed, Judge Barker found that the essential elements of mail fraud and wire 8 No. 03-1189 fraud were satisfied by a preponderance of the evidence, and that there were no failures of proof as to any of these counts. (11/25/2002 Order at 7.) Specifically, the only feature distinguishing the mail fraud counts of conviction from the mail fraud counts of acquittal was the evidence, in the counts of conviction, of written misrepresentations corroborating the three representative victims’ testimony of oral misrepresentations. (Id. at 7 n.1.) Since oral misrepresentations are sufficient, and since the standard for sentencing under the Guidelines is a preponderance rather than beyond a reasonable doubt, Judge Barker’s inclusion of acquitted conduct was not clearly erroneous. Moreover, Schaefer does not dispute the inclusion of the counts of acquittal (except for Count Two). Adding the conduct of which Schaefer was acquitted (except for Count Two) brings the total amount of loss up to $37,914. Count Two, on which Schaefer was convicted at trial, was later vacated by Judge Dillin because a description of the cel at issue had been removed by the Government from the envelope attached to the back of the cel and was not supplied to the defense. The purchaser of the cel could not remember his conversations with Schaefer about the cel but insisted, based on the price he paid, that the cel must have been represented as an original production cel.5 The cel, however, was an original hand-painted cel, which had a lower value.6 The “Official Description” in the envelope on 5 An original production cel is a one-of-a-kind cel, the physical artwork actually used in the animation process, though it may not appear in the finished film. See http://www.mcguirefinearts.com/ animationdefs.html (last visited August 23, 2004). Each handpainted cel represents a slight change in position of the characters. 6 A “hand-painted cel” may refer to a limited edition, hand-painted reproduction of an image from actual production cels used in (continued...) No. 03-1189 9 the back of the cel confirmed that the cel was an “original hand-painted cel,” not an original production cel. Defense counsel was unable to impeach the purchaser’s testimony because the “Official Description” had been removed, so Judge Dillin vacated the conviction on that count. In resentencing Schaefer, Judge Barker nonetheless in- cluded the loss of $2,700 attributable to Count Two because she determined that Schaefer’s conduct with respect to Count Two was fraudulent, being part of his overall fraudulent scheme. Thus, she concluded that, even if Count Two should not be included with the charged conduct, it would still qualify on the same grounds as the uncharged conduct. Also, the Government had characterized Schaefer’s certificates of authenticity as misleading in themselves, and the Government’s expert James Lentz testified that he had never seen a legitimate certificate of authenticity in the guise of an “Official Description” like the one attached to the back of the cel in Count Two. There is thus sufficient evidence in the record to support Judge Barker’s determina- tion that Schaefer’s conduct with respect to Count Two was—“Official Description” notwithstanding—fraudulent. The inclusion of Count Two brings the total up to $40,614.7 6 (...continued) animations. See http://www.mcguirefinearts.com/animationdefs.html (last visited August 23, 2004). Less commonly, a “hand-painted cel” may be created for publicity purposes, usually depicting a character in an “ideal” pose. See http:// www.animationartcollecting.com/ collectables7definitions.html (last visited August 23, 2004). 7 With respect to Schaefer’s sentence, whether Count Two is included or not matters only if we also accept Schaefer’s argument that the loss stemming from the uncharged conduct was overstated and/or unsupported. Otherwise, excluding the relatively small loss amount attributable to Count II would not affect (continued...) 10 No. 03-1189 3. Uncharged conduct related to three representative victims The final category of loss relates to uncharged conduct involving the three representative victims, which is discussed in the Government’s sentencing materials (i.e., the animation art sales to the three representative victims that were reviewed by the expert and discussed in detail by FBI Special Agent Robert Brouwer). Schaefer disputes the unlawfulness of some of the conduct as well as the loss calculations made by the government’s expert Lentz and relied upon by the government and Judge Barker. Schaefer argues that the district court erred in finding that all of his uncharged conduct with respect to these transactions was criminal, when on approximately half of the occasions, the government’s expert stated that the artwork had been correctly described (though in some instances, the appraised fair market value was lower than the price paid). Schaefer asserts that “there is nothing fraudulent, and certainly nothing criminal, about describing a piece accurately but charging a different price” than that found by the government’s expert to represent the market value of the piece. (Schaefer’s Br. at 27 n.12.) We first reiterate our finding in Schaefer I, now law of the case, that both Special Agent Brouwer and the government’s expert Lentz were credible witnesses, whose testimony and affidavits we specifically suggested the district court could rely upon in making its loss calculation. Schaefer I, 291 F.3d at 943, 944. Thus, charging a higher price than that found by the expert, particularly after misrepresenting to his victims that he was selling art at below market value 7 (...continued) Schaefer’s sentencing range, because the total loss amount would still be above $70,000, which represents the bottom of the loss amount range used by Judge Barker in sentencing him. No. 03-1189 11 from his dead mother’s estate, was criminally fraudulent. (See 11/25/2002 Order at 3.) Judge Barker moreover found that “the Defendant utilized the same methods and means to perpetrate his fraudulent course of conduct as he used in the counts of conviction” and that his sales to the representative victims were similar “in terms of subject matter, content and timing, and were thus part of the common scheme to defraud.” (Id. at 7-8.) Thus, even if Schaefer’s victims paid precisely market value (or less than market value) for a particular piece, the transaction could still have been criminally fraudulent. To cite an analogy, a fraudulent misrepresentation that a mutual fund is a “green” fund with a portfolio of stocks only from environmentally friendly corporations when the portfolio actually includes known polluters might induce environmentally conscious investors to purchase shares of the fund. Even if the fund’s rate of return turns out to be the same or higher than it would have been if the composition of the portfolio had actually been “green,” so that there is no monetary “loss,” the misrepresentation may still be fraudulent even though the victims suffered no monetary loss. Thus, the district court did not err in finding that Schaefer’s uncharged conduct with respect to the representative victims was fraudulent, whether or not the fraud resulted in monetary loss. Further, the district court correctly characterized any excess charges above market value (as determined by the government’s expert) as monetary losses stemming from Schaefer’s fraudulent conduct. Schaefer also argues that the loss calculations were not reliable. However, not only could Schaefer have raised this issue on his first appeal, he also chose not to present alternative expert appraisals of his work. Since we already found in Schaefer’s first appeal that Special Agent Brouwer and the government’s expert Lentz were credible witnesses upon whose testimony the district court could rely in making loss calculations, Schaefer does not get a second bite at this 12 No. 03-1189 particular apple. Moreover, as we also noted in Schaefer I, the Guidelines require that “[t]he court need only make a reasonable estimate of the loss” which can be done by calculating “[t]he approximate number of victims multiplied by the average loss to each victim” or even more generally, by basing it on such factors as “the nature and duration of the fraud and the revenues generated by similar operations.” U.S.S.G. § 2B1.1, cmt. n.3(C).8 Thus, according to the Guidelines, in order to pass muster, loss calculations only need to be a reasonable estimate. We conclude that Judge Barker did not err in implementing her chosen methodology for calculating the losses attributable to Schaefer’s fraudulent conduct.