Opinion ID: 77683
Heading Depth: 2
Heading Rank: 3

Heading: Count Four: Mail Fraud Against Larry Baldwin

Text: 23 Finally, Count Four, the second mail fraud count, charged in the operative paragraph that: 24 On or about January 7, 2002, in the Middle District of Florida and elsewhere, the defendant, Artemus E. Ward, Jr., for the purposes of executing the aforementioned conspiracy to defraud, and for obtaining money and property by means of false pretenses, representations and promises, did knowingly mail and cause to be mailed a matter to be delivered by a private or commercial interstate carrier, Federal Express, CEC investment documents, to Larry Baldwin, in Sarasota, Florida. All in violation of Title 18, United States Code, Sections 1341 and 2. 25 The fourth victim, Larry Baldwin, heard about CEC in the spring of 1999 when he saw advertisements placed by CEC in the Investor's Business Daily and the Wall Street Journal business section. Baldwin called the number listed in the ads and spoke with the defendant Ward. During this telephone conversation, Ward falsely claimed that CEC had been in business for more than three years. Ward promised Baldwin an annual rate of return of 48% on a loan if he invested at least $10,000 right away, instead of the 42% return that some other investors were offered. Additionally, Ward offered Baldwin a finder's fee of approximately $2,000 to $3,000 for each additional investor that Baldwin brought in. After the conversation, Ward sent Baldwin by Federal Express a CEC brochure containing a cover letter that again falsely claimed CEC had been in existence for three-and-a-half years. The cover letter, dated September 25, 1999, was again signed both by Pipher and Ward. See Gov. Ex. 15. The letter also contained a handwritten addition by Ward, which read: An equitable deal for `finder's fee' considerations—Art [Ward]. Id. 26 Baldwin called Rabenstein and Johns, whose names were provided as references, and at the time both told Baldwin that they were satisfied with their investments. Baldwin then decided to invest in December 1999 and contacted Ward to advise him. Baldwin's first investment of $50,000 in cash initially was supposed to be picked up by Ward or Pipher, but eventually, after assurances from Pipher, was picked up by a third party. Baldwin was given a receipt for his $50,000 investment, dated March 1, 2000. See Gov. Ex. 12. Although the signatures on the receipt bore the names of both Ward and Pipher, Baldwin testified that, based on his handwriting expertise as a historian, both signatures appeared identical, and that it appeared to him that Pipher had signed both names. 27 Baldwin made a second investment of $48,000 (which included a rebate of $2000, so that the principal investment actually was $50,000) by sending a cashier's check on March 31, 2000. See Gov. Ex. 13. Baldwin received a collateralized promissory note for his second investment on April 1, 2000. This receipt contained the notarized signatures of both Ward and Pipher, and therefore, unlike the first, there was no question about the authenticity of Ward's signature. 28 Sometime around December 2001, Baldwin contacted Ward on behalf of his cousin, Joseph Blus, who had expressed some interest in investing in CEC. His cousin had $30,000 in cash, which he wanted Baldwin to invest with CEC on his behalf. Ward suggested that Baldwin could send his cousin's $30,000 cash investment by Federal Express. Sensing Baldwin's concern over sending by mail so large an amount of cash, Ward promised that if anything happened to the cousin's money in transit that he would make good on it. You know us. There's no problem. Soon after the telephone conversation with Ward, Baldwin received by Federal Express a contract reflecting the anticipated $30,000 investment. This collateralized promissory note, dated December 15, 2001, contained Ward's and Pipher's signatures. See Gov. Ex. 9. 29 After the FBI commenced an investigation into the affairs of CEC, Ward, and Pipher, Ward admitted in an interview with special agents of the FBI that he was responsible for sending the CEC investment document on January 7, 2002, which is the subject of Count Four. Ward said: In furtherance of the continuing efforts to raise capital for CEC, the attached airbill dated 7 January, 2002, was used to send a client/lender contract/agreement for the purpose of receipting [sic] funds to be used to pay other investors. At the time I sent this I knew investors' funds would not be utilized as promised. Gov. Ex. 21. Though the client/lender contract/agreement was not included in any government exhibit, the Federal Express air bill, showing that Ward sent a package to Baldwin on January 7, 2002, was admitted in evidence. See id. 30 Baldwin decided it was too risky to send his cousin's investment in the form of cash. Since his cousin did not have his own checking account, Baldwin took his cousin's funds, went to a Bank of America branch, and drew a $9,000 cashier's check. Having considerable doubts about the efficacy of a CEC investment because of the recent history of late interest payments, Baldwin advised his cousin not to invest. His cousin left the decision of whether to invest his money to the discretion of Baldwin. Deciding that it would not be prudent to invest his cousin's money in CEC, Baldwin sought to convert the check back into cash for his cousin. Bank of America told Baldwin that it would be a thirty-day wait to get the money back in cash for the cashier's check. Baldwin discussed this with Ward, and Ward advised him to send the $9,000 cashier's check to CEC. Ward told Baldwin that CEC would not invest the $9,000, but rather deposit the cashier's check in their account and return the cousin's money in cash. Ward gave Baldwin CEC's bank routing number and promised Baldwin that he would quickly send back the cash so that Baldwin's cousin did not have to wait thirty days. 31 Somehow convinced of the sincerity of Ward's representations, Baldwin agreed and, on January 10, 2002, sent the Bank of America cashier's check, made out to CEC in the amount of $9,000, by Federal Express to Monterey Federal Credit Union, CEC's bank in Pacific Grove, California. See Gov. Ex. 11 (Federal Express sender's voucher). But Ward did not send the cash back as he had promised. Baldwin unsuccessfully tried to contact Ward several times and finally spoke with Pipher. Pipher sent Baldwin a letter, dated February 7, 2002, characterizing the transaction as a mixup with Art [Ward] and promising to send him his money in the next few days. Gov. Ex. 10. Baldwin never received the money from Pipher either. 32 At some point during the deliberative process, the jury sent a note to the district court judge, which read: Judge Steele, to keep you abreast of where we are, the jury is at an impasse regarding the term `conspiracy.' If we can't come to an agreement on Count One, can we find guilt or innocence on Counts Two, Three and Four? Over Ward's objection, the district court answered the jury's inquiry this way: 33 With regard to the specific question, that is, whether if you still cannot reach an agreement as to the conspiracy count you may find guilt or innocence on Counts Two, Three and Four, the answer is yes, with the following qualifications or restrictions. You may find the defendant guilty of Count Two, Three and/or Four without finding him guilty of conspiracy if you unanimously find that the conduct involved there was for the purposes of obtaining money and property by means of false pretenses .... A second limitation or restriction is if you do not find the defendant guilty of the conspiracy, you may not apply the legal principle I gave you at Page 25 of the instructions [vicarious liability under Pinkerton v. United States, 328 U.S. 640, 646, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946)]. 34 The district court also urged the jury to continue deliberating to reach a verdict on the conspiracy count. 35 Ultimately, the jury was unable to reach a verdict on the conspiracy charge, but found Ward guilty on each of the substantive mail and wire fraud counts. Thereafter, the district court sentenced Ward to sixty months in prison on each of the substantive counts, to be served concurrently. He was assessed $300, but a fine and restitution were waived. Finally, Ward was sentenced to three years of supervised release. This appeal followed.