Opinion ID: 2967475
Heading Depth: 3
Heading Rank: 1

Heading: Sufficiency of the Evidence on Count One--

Text: Conspiracy to Commit Wire Fraud, Securities Fraud, and Obstruction of Justice To support a conviction for conspiracy, the government must show, first, that a conspiracy existed; then that the defendant had knowledge of the conspiracy; and finally, that the defendant voluntarily became a part of the conspiracy. United States v. Bell, 954 F.2d 232, 236 (4th Cir. 1992), overruled on other grounds by Burgos, 94 F.3d at 862. Gormley contends that the Government proved three distinct conspiracies instead of the single conspiracy alleged in Count One of the indictment: one conspiracy to commit wire fraud, a second conspiracy to commit securities fraud, and a third conspiracy to obstruct justice. Gormley argues that the Government's proof resulted in a material variance. A variance occurs when the evidence at trial establishes facts materially different from those alleged in the indictment. United States v. Kennedy, 32 F.3d 876, 883 (4th Cir. 1994). A defendant may establish that a material variance occurred by showing that the indictment alleged a single conspiracy but that the government's proof at trial established the existence of multiple, separate conspiracies. Id.; see also Kotteakos v. United States, 328 U.S. 750, 755-56 (1946). The question whether the evidence shows a single or multiple conspiracies is for the jury, and the finding of a single conspiracy must stand unless the evidence, taken in the light most favorable to the Government, would not allow any reasonable juror to reach such a verdict. United States v. Urbanik, 801 F.2d 692, 695 (4th Cir. 1986). We are satisfied that the jury's finding of a single conspiracy was supported by substantial evidence. Although the conspiracy had multiple objects--wire fraud, securities fraud, and obstruction--the objects clearly were related to the overall goal of defrauding investors through fraudulent offshore debentures trading programs. See United States v. Squillacote, 221 F.3d 542, 574 (4th Cir. 2000) (explaining that a close relation between the objects of alleged separate conspiracies supports a finding of a single conspiracy), cert. denied, 121 S.Ct. 11 1601 (2001); United States v. Walsh, 544 F.2d 156, 161 (4th Cir. 1976) (noting that a single conspiracy may have multiple objects). The co-conspirators obtained funds from investors through securities fraud. The wire fraud was used to move the investors' funds into the hands of Oles, the Raimers, and Tietjen. The obstruction was part of controlling the damage after Damron came under investigation for his role in the fraudulent debentures trading program. The fact that some of the co-conspirators, including Gormley, never marketed the debentures trading programs to the actual investors does not prevent a finding of a single conspiracy because a defendant may be a member of a conspiracy without taking part in all of its activities. See United States v. Banks, 10 F.3d 1044, 1054 (4th Cir. 1993). Similarly, a single conspiracy may be found even though Tietjen, Holcombe, and Benz were not active in returning money to investors. The very structure of the scheme in this case required the conspirators to play different roles--brokers, project managers, and traders--to carry out the fraud and obscure the disposition of funds placed in the trading programs. Gormley prepared the different instruments used to carry out the scheme to defraud investors and directed the opening of the offshore trusts. Further, because a shifting membership in the conspiracy does not preclude a finding of a single conspiracy, a single conspiracy may be found even though Benz and Tietjen were involved only in later deals. United States v. Lozano, 839 F.2d 1020, 1023 (4th Cir. 1988). Finally, regardless of whether hostility arose between Oles on one side and Damron, Gormley and Bollin on the other after Damron was indicted in 1997, Oles was the source of the funds sent to Damron and the source of the funds used to repay investors, thus supporting the conclusion that they were participating in a common scheme. In sum, the evidence was sufficient to support the jury's finding of a single conspiracy.99 _________________________________________________________________ 9 The evidence also was sufficient to support the jury's conclusion that Gormley was part of the conspiracy. Gormley was involved with Oles, the Raimers, Bollin, and Damron from the very beginning. Gormley knew how the Exodus Program worked, as we discuss in more detail below, knew the program was fraudulent, and took actions in furtherance of the scheme. After Damron was placed under investigation, Gormley also played a role in the return of funds to investors. 12 Moreover, even if the evidence established separate conspiracies, a variance is grounds for reversal only if it infringed the defendant's `substantial rights' and thereby resulted in actual prejudice. Kennedy, 32 F.3d at 883. In order to show actual prejudice stemming from a multiple conspiracy variance, an appellant must prove that `there are so many defendants and so many separate conspiracies before the jury' that the jury was likely to transfer evidence from one conspiracy to a defendant involved in an unrelated conspiracy. Id. (quoting United States v. Caporale, 806 F.2d 1487, 1500 (11th Cir. 1989)). In Kennedy, we held that an alleged variance had no prejudicial effect because there was no possibility that evidence from unrelated conspiracies would be improperly attributed to individual defendants. Kennedy, 32 F.3d at 883. Kennedy involved eight defendants and, at most, three related conspiracies. We recognized that cases involving similar numbers of defendants and conspiracies are `not so complex by definition that the jury will be unable to segregate the evidence properly.' Id. (quoting Caporale, 806 F.2d at 1501 (eleven defendants and two conspiracies)). Further, the fact that the district court ordered a severance, and each defendant thus faced trial alone, virtually eliminated any likelihood of prejudicial spillover of evidence. Id. Like in Kennedy, this case involves only eight named defendants and, if there was a variance, at most three conspiracies. Although the district court did not order a severance, only four of the eight defendants named in the indictment were tried together. Further, the district court granted Gormley's request for a multiple objects jury instruction, instructing the jury to consider each defendant's role in the conspiracy. The verdict form required the jury to make particularized findings about which objects each defendant conspired to violate, further helping the jury to compartmentalize the evidence as to each defendant. Any risk of a spillover effect was slight. Gormley's conviction on Count One is affirmed. B. Sufficiency of the Evidence on Count Three, Wire Fraud To convict Gormley for wire fraud in violation of 18 U.S.C. § 1343, the government must prove: `1) a scheme to defraud and 2) 13 the use of a wire communication in furtherance of that scheme.' United States v. ReBrook, 58 F.3d 961, 966 (4th Cir. 1995) (quoting United States v. Brandon, 50 F.3d 464, 467 (7th Cir. 1995)); see also 18 U.S.C. § 1343. Gormley argues that the evidence is insufficient to prove that he transmitted or caused to be transmitted to Damron a September 13, 1995, memorandum, which furnished the wire coordinates for investors to send funds to Oles' offshore Exodus account. Gormley also argues that the Government failed to prove that Gormley knew the funds to be sent to Oles' offshore account came from the Toumas, and thus the Government failed to prove that Gormley had the requisite fraudulent intent. We conclude that the evidence was sufficient to support the jury's verdict. Holcombe testified that she faxed the memorandum containing the wire coordinates to Gormley's office on September 13, 1995, and the fax headers on the document confirm her testimony. Damron testified that he received the memorandum from Bollin on September 13, 1995. Bollin testified that he could not recall how he obtained the document. Holcombe, however, testified that she faxed the memorandum only to Gormley because she believed that he was the person controlling the funds. Although Gormley shared office space with seven to nine other attorneys, he was a sole practitioner, and the attorneys in Gormley's space-sharing arrangement did not share clients. There is no evidence that Bollin worked with any of the other attorneys in Gormley's office. The evidence supports the conclusion that Gormley received the memorandum from Holcombe and furnished it to Bollin, who in turn sent the memorandum to Damron. Further, assuming that Gormley did not know the $400,000 came from the Toumas,1010 Gormley's lack of knowledge is irrelevant because, as the Government points out, it was not required to prove that anyone had put up any money and had actually been defrauded in the wire fraud scheme (i.e., that the scheme succeeded), so long as the act of wire fraud was in furtherance of the scheme. See United States v. Bryan, 58 F.3d 933, 943 (4th Cir. 1995), abrogated on other grounds by United States v. O'Hagan, 521 U.S. 642, 650 (1997). Gor_________________________________________________________________ 10 As we discuss below, there was sufficient evidence from which the jury could infer that Gormley was aware that the Toumas had contributed to the $400,000. 14 mley's delivery of the wire coordinates for Oles' offshore account was in furtherance of the fraudulent investment scheme. Moreover, there is sufficient evidence from which the jury could infer that, by the time of the September 13, 1995, fax, Gormley knew the scheme was fraudulent. Gormley was a self proclaimed securities lawyer, and he claimed to be an expert on investment programs. Gormley reviewed the Exodus Program documents and was aware that the Program was a prime bank debentures trading program. The Government's expert testified that there were numerous indicators of fraud in the Exodus Program documents that should have raised a red flag to an experienced securities lawyer. If Gormley was not already aware that the debentures trading program was a scam, on August 17, 1995, Gormley met with Agent David Caruso of the Federal Bureau of Investigations, who explained the fraudulent nature of investment programs involving prime bank financial instruments, like the Exodus Program. We conclude that Gormley's wire fraud conviction was supported by the evidence. C. Sufficiency of the Evidence on Count Six, Money Laundering, and Count Two, Money Laundering Conspiracy A money laundering conviction under 18 U.S.C. § 1956 requires: (1) that the defendant conduct a financial transaction with at least a de minimis effect on interstate commerce; (2) that the transaction involved the proceeds of a specified unlawful activity; (3) that the defendant knew that those proceeds were derived from that specific unlawful activity; and (4) that the defendant engaged in the transaction intending to promote that unlawful activity. United States v. France, 164 F.3d 203, 208 (4th Cir. 1998), cert. denied, 527 U.S. 1010 (1999); 18 U.S.C. § 1956(a)(1)(A)(i). Funds are the proceeds of unlawful activity if they are derived from an already completed offense, or a completed phase of an ongoing offense. United States v. Conley (Conley I), 37 F.3d 970, 980 (3d Cir. 1994); see also United States v. Butler, 211 F.3d 826, 829 (4th Cir. 2000), cert. denied, 121 S. Ct. 1091 (2001). This is true even if the money laundering transaction can also be considered a part of the continuing specified unlawful activity. United States v. Morelli, 169 15 F.3d 798, 804 (3d Cir.), cert. denied, 528 U.S. 820 (1999). A defendant must have subjective knowledge that the funds were the proceeds of unlawful activity. United States v. Campbell, 977 F.2d 854, 857 (4th Cir. 1992). Gormley's money laundering conviction is based on the September 20, 1995, transfer of $400,000 from Edwards' escrow account to Bollin's trust account in the Turks and Caicos Islands. Gormley drafted a letter dated September 19, 1995, from Damron to Edwards directing Edwards to release the $400,000.1111 Gormley disputes only whether the Government proved that he knew the funds were the proceeds of fraud. Gormley argues that the evidence failed to establish that Gormley knew the Toumas had put up the $400,000, but instead established that Gormley had been informed by Damron that the money came from Damron's profits from trading in Gold Eagle coins. There was substantial evidence, however, from which the jury could reasonably infer that Gormley knew the $400,000 was the proceeds of fraud. In July 1995, Damron discussed with Gormley the Exodus Program documents, foreign bank debenture trading programs, and foreign grantor trusts. Damron testified that he wanted a foreign grantor trust because the money he planned to place in the Exodus Program would be his clients' money: If I participated in the program, it would be with money from my clients. So I felt that I should have control over it, I should have my own foreign grantor trust. Damron's client with regard to the $400,000 was Dr. Touma. To protect Dr. Touma's interest, Damron asked Gormley about designating beneficiaries of his foreign grantor trust: Q: When did you have your discussion with Mr. Gormley about foreign grantor -- beneficiaries of foreign grantor trusts? _________________________________________________________________ 11 Gormley suggests that the evidence showed that Damron drafted the release letter, not Gormley. We disagree. Damron testified on direct examination that Gormley drafted the release letter, which Damron then signed and sent to Edwards. Damron did not repudiate his testimony that Gormley drafted the letter, but merely confirmed on cross examination that he instructed Edwards in a letter that the $400,000 was to be transferred. 16 A: That was -- would be just probably late July. It was before Dr. Touma -- or maybe shortly thereafter-- when Dr. Touma was getting ready to make that large investment, he was concerned that if I was okay, it was okay, but what if something happened to me. He wanted some protection for his money. And so I asked Mr. Gormley what could we do. Q: What did Mr. Gormley tell you? A: Well, that's what we did. We set up that successor beneficiary thing so that if something happened to me, it was all spelled out who would get what percentage of the money. This testimony supports an inference that Gormley knew Dr. Touma had contributed to the $400,000. Further, Gormley confirmed in a letter dated July 24, 1995, that Dr. Touma was set up as the beneficiary of the trust. In the same letter, Gormley mentioned that as to the investment matter we discussed, the funds would be held in Gormley's escrow account pending receipt of documents and a bank guarantee. Damron testified that the investment matter was the placement of $400,000 into the Exodus Program. Gormley was aware that Damron had deposited the $400,000 with an escrow agent, Edwards, in preparation for the investment. At this point, Gormley refused to give Damron the green light because no bank guarantee had yet been provided. A short time later, in August 1995, Gormley met with Agent Caruso of the FBI, who explained to Gormley the fraudulent nature of prime bank debenture trading programs. By this point, if not earlier, Gormley knew these debenture trading programs were fraudulent. Nonetheless, on September 13, 1995, in furtherance of a program he knew was a scam, Gormley sent to Bollin the fax from Oles and Holcombe containing the wire coordinates to Oles' offshore Exodus account, thereby participating in wire fraud. Gormley then prepared and faxed a profit sharing agreement between Damron and Bollin, dated September 18, 1995. The agree17 ment noted that Damron has introduced Bollin [sic] certain individuals who have placed U.S. $400,000 in Escrow for investment. This agreement contemplated Damron and Bollin splitting profits of over $1.8 million per week. Gormley then prepared for Damron the September 19, 1995, letter instructing Edwards to transfer the $400,000 to Bollin's foreign grantor trust. The funds were transferred the next day. There is sufficient evidence to establish that Gormley knew the Exodus Program was a fraud, knew the $400,000 was being invested in this fraud, and knew he was facilitating the transfer of the funds to the perpetrators of this fraud. Furthermore, based on his knowledge that Dr. Touma was the beneficiary of Damron's foreign grantor trust, the reference to certain investors in the Bollin/Damron profit sharing agreement, and Gormley's connections with and knowledge of the relationships among Oles, Bollin, Damron, their offshore accounts, and the Exodus Program, the jury could reasonably infer that, at the time Gormley participated in the transfer of the $400,000 to Bollin's offshore account, Gormley knew the money was the proceeds of fraud.12 12 We are satisfied that there was sufficient evidence to support Gormley's money laundering conviction. Gormley raises the same arguments as to the sufficiency of the evidence on Count Two, the money laundering conspiracy charge. For the same reasons, we conclude that there was sufficient evidence to support the jury's verdict. D. Sufficiency of the Evidence on Count Thirteen, False Declarations before the Court Gormley was convicted of making false declarations before the court under 18 U.S.C. § 1623(a), based on two allegedly false statements that he made at an October 23, 1997, contempt hearing. In 1997, after Damron was placed under investigation, a financial _________________________________________________________________ 12 Thus, it is irrelevant whether Gormley, as an attorney, had a duty to inquire as to the source of his client's funds because he knew the $400,000 was the proceeds of fraud. Indeed, Gormley knew the $400,000 was the proceeds of a fraudulent scheme when he participated in wire fraud in furtherance of that scheme on September 13, 1995. 18 restraining order was issued against Damron. While that restraining order was in effect, approximately $400,000 was repaid to certain investors. When questioned about the $400,000 in repayments, Gormley testified as follows: Q: And what is your understanding as to those disbursements and how they occurred? A: And I believe that those are the bank drafts that these individuals received. And from everything I know, that money was not Mr. Damron's money, he didn't own it, he didn't control it. And I don't know what this word expectancy interest is in the Court's order, exactly what that means, but I don't believe that Mr. Damron had any such interest in that money. Q: Did Roger A. Damron direct or coordinate or orchestrate the disbursement of these funds to these individual investors? A: To my knowledge he did not. The indictment alleged that at the time of his testimony, Gormley knew Damron had an interest in the $400,000 and knew Damron had coordinated, orchestrated and directed the repayments. Gormley contends that his perjury conviction should be reversed because (1) there was insufficient evidence to show that Gormley knew of Damron's role in the repayment; (2) the examiner's questions before the grand jury were fundamentally ambiguous and were insufficient as a matter of law to support a perjury conviction; and (3) his responses were literally true. The evidence was sufficient to show that, at the time of his testimony, Gormley knew of Damron's role in returning the money to the investors. Before any money was sent to the investors, Damron and Gormley discussed who should be paid. Damron prepared a list of the amounts due to the investors and sent the list to Gormley. The persons 19 on that list were the persons who were eventually paid. Further, discovered in Gormley's office was a copy of a handwritten fax from Damron to Paul Dempsey in the Turks and Caicos Islands, directing the repayment of money to the investors. The fax was dated August 27, 1997, and a notation indicated that it was faxed before 10:30 am. Damron testified that it was his practice to make a notation in the upper right corner of a document when he faxed it. Moreover, based on the presence of the notation on faxes that Gormley received from Damron, the jury could reasonably infer that Gormley was fully aware of Damron's practice. Although Damron testified that Gormley refused to forward to Dempsey the list of investors to be repaid and advised Damron not to do it himself, there is sufficient evidence to support the conclusion that, at the time of his October 23, 1997, testimony, Gormley knew Damron had directed Dempsey to send the money to the investors. Gormley argues that the examiner's question whether Damron directed, coordinated, or orchestrated the disbursement of funds to the investors was fundamentally unclear and impossible to answer, and therefore an improper basis for a perjury charge. Gormley argues that the question asked of him is like the question found insufficient to support a perjury conviction in United States v. Rendon-Marquez, 79 F. Supp. 2d 1361 (N.D. Ga. 1999), aff'd mem., 228 F.3d 416 (11th Cir. 2000). In Rendon-Marquez, the defendant was asked on an INS form, Have you knowingly committed any crime or offense, for which you have not been arrested; or have you been arrested, cited, charged, indicted, convicted, fined, or imprisoned for breaking or violating any law or ordinance, including traffic violations? The form provided for only a yes or a no response. The defendant answered in the negative, but had once been arrested. The district court granted a judgment of acquittal because it found the question to be a confusing compound question that asked two separate and distinct questions, but provided for only a yes/no response. Id. at 1363. The result was that the defendant would give a partially false answer no matter how he responded, making the defendant's response to the question an improper basis for a perjury conviction. Id. [P]recise questioning is imperative as a predicate for the offense of perjury. Bronston v. United States, 409 U.S. 352, 362 (1973). Unlike in Rendon-Marquez, Gormley was asked a single question, to 20 which he gave a fully false response. The question asked of Gormley presented three possibilities, all of which--direct, coordinate, and orchestrate--are similar in meaning. All three refer to some conduct on Damron's part intended to bring about the repayment of investors. The evidence showed that Damron engaged in such conduct and that Gormley knew Damron engaged in such conduct. We find the question to be perfectly intelligible.13 13 The question asked of Gormley was not ambiguous or unanswerable, and the matter was properly submitted to the jury. See United States v. Heater, 63 F.3d 311 (4th Cir. 1995) (affirming a perjury conviction based on the defendant's false response to the question whether he had ever bought or sold marijuana because the question did not contain any fundamental ambiguity that would have prevented the jury from considering the question). Gormley next argues that his response to the second question was literally true because it was Oles, not Damron, who provided the funds to be used for repayment. A literally true answer, even though unresponsive or `shrewdly calculated to evade,' cannot form the predicate for a perjury conviction. United States v. Sainz, 772 F.2d 559, 563 (9th Cir. 1985) (quoting United States v. Cowley, 720 F.2d 1037, 1042 (9th Cir. 1983)). However, `an answer that is responsive and false on its face does not come within [a] literal truth analysis simply because the defendant can postulate unstated premises of the question that would make his answer literally true.' United States v. Fulbright, 804 F.2d 847, 851 (5th Cir. 1986) (quoting United States v. Cuesta, 597 F.2d 903, 920 (5th Cir. 1979)). Even though Oles provided the $400,000, there was sufficient evidence to establish that Damron was the one who instructed Dempsey to repay certain investors and how much to pay them. Gormley knew of Damron's role in the repayment but testified to the contrary.14 14 Gormley's perjury conviction is affirmed. _________________________________________________________________ 13 Moreover, the question appears to have been perfectly intelligible to Gormley. As his response to the first question indicates, when Gormley did not understand a question or a term, he communicated his lack of understanding. 14 We need not reach Gormley's argument that his response to the first question was literally true because his false response to the second question was sufficient to support his conviction. The jury was entitled to find 21