Opinion ID: 3171512
Heading Depth: 1
Heading Rank: 2

Heading: sufficiency of the evidence

Text: Bravata challenges all fourteen convictions for aiding and abetting wire fraud. We “view[] the evidence in the light most favorable to the prosecution” and affirm if “any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” United States v. Washington, 715 F.3d 975, 979 (6th Cir. 2013) (quoting Jackson v. Virginia, 443 U.S. 307, 319 (1979)) (internal quotation marks omitted). The wire-fraud statute requires proof of three elements: (1) that the defendant devised or willfully participated in a scheme to defraud, (2) that the defendant used or caused to be used an interstate wire communication in furtherance of the scheme, and (3) that the defendant intended to deprive a victim of money or property. United States v. -6- Case Nos. 13-2380, 13-2381, 13-2591, 15-1370, United States v. Bravata Faulkenberry, 614 F.3d 573, 581 (6th Cir. 2010). “A scheme to defraud is ‘any plan or course of action by which someone intends to deprive another . . . of money or property by means of false or fraudulent pretenses, representations, or promises.’” Id. (quoting United States v. Daniel, 329 F.3d 480, 485 (6th Cir. 2003)). Like the trial court, we find the evidence “more than sufficient” to sustain the convictions. First, the record teems with evidence that Bravata devised BBC Equities’ marketing scheme, which was based on oral misrepresentations to potential investors . The jury also heard about mailings designed to lull the investors into a false sense of security—quarterly account statements and a 2008 letter touting BBC Equities’ success vis-à- vis the market. See United States v. Andrews, 803 F.3d 823, 826 (6th Cir. 2015) (finding that post-loan assurances have a lulling effect on the victims and are thus within the scheme to defraud); see also Daniel, 329 F.3d at 489. Second, Bravata stipulated to the interstate wire communications, and each victim testified to transferring funds after hearing Bravata’s deceitful sales pitch. Finally, the jury heard ample evidence of Bravata’s intent to deprive. Trabulsy put it most succinctly: confronted with BBC Equities’ desperate need for funds to stay afloat, Bravata responded, “Okay. I better go get some.” And he did. The evidence supports the convictions. Bravata nonetheless challenges his convictions, and we address each argument for reversal in turn.
Each investor received written disclosures from BBC Equities, including a PPM and a subscription agreement. These disclosures revealed key features of BBC Equities investments that contradicted Bravata’s oral assurances. The subscription agreement and PPM -7- Case Nos. 13-2380, 13-2381, 13-2591, 15-1370, United States v. Bravata notified investors that they could lose their entire principal investment. The subscription agreement warned that investment funds “may be used by the company to pay installments of the preferred distribution, the redemption price and/or early redemption price” to other investors, effectively admitting that BBC Equities functioned as a Ponzi scheme. The 2008 PPM disclosed the fact, but not the amount, of Bravata’s salary. The investors received and signed these disclosures. And Bravata contends that the signed disclosures immunize him from liability for his oral misrepresentations. Specifically, he presses that the disclosures show he never meant to defraud his investors—if they read their disclosures as he intended, he argues, they would not have been deceived. Although he advanced this argument during and after trial, Bravata never cited authority to support it. On appeal, he cites a contract-law case estopping the plaintiffs from voiding a written contract because they were “ignorant of its contents.” Reid v. Sears, Roebuck & Co., 790 F.2d 453, 461 (6th Cir. 1986) (quoting Sponseller v. Kimball, 224 N.W. 359, 360 (Mich. 1929)). True enough, the written disclosures might estop investors from enforcing Bravata’s oral representations or from voiding their subscription agreements. But those are not at issue here. Indeed, the jury heard testimony about Bravata’s treatment of the written disclosures that reinforced his intent to defraud investors. Katie Witkowski, a BBC Equities administrative employee, testified that Bravata told her to remove risk-acknowledgement forms from investor packets. The forms announced that investors could lose their principal, and Bravata was “upset” that Witkowski distributed them to investors. Robert Whitfield, a named victim who also worked for BBC Equities, testified that Bravata asked him to give PPMs only to -8- Case Nos. 13-2380, 13-2381, 13-2591, 15-1370, United States v. Bravata investors who requested them. If possible, Bravata wanted Whitfield to “sidetrack” the requests. The government presented sufficient evidence for the jury reasonably to infer that Bravata intended to defraud. We therefore reject Bravata’s argument that the written disclosures per se negated the intent element. We also reject any implicit argument that the written disclosures made the oral misrepresentations immaterial. See United States v. Ghilarducci, 480 F.3d 542, 547 (6th Cir. 2007) (“That the contracts should have placed the . . . victims on notice of the fact that no oral representation would be honored, does not mean the oral representations were immaterial or without tendency to influence.”).
Throughout his brief, Bravata argues for reversal because no investor heard all his misrepresentations. For example, the government asked many victims about certificates of deposit at Comerica Bank. A few victims—Guidobono, Vidosics, and Whitfield—testified that Bravata mentioned CDs in his presentations. On appeal, Bravata notes that Boerkoel, Cowell, Doa, Makowski, and Weiss said nothing at trial about CD-backed principal, and we should therefore vacate the convictions relating to those investors. But Bravata lied to Boerkoel, Cowell, Doa, Makowski, and Weiss about other aspects of their BBC Equities investments. That Bravata never lied to them about CDs negates no element of wire fraud. Because Bravata materially misrepresented facts to each investor, we reject all his claims that center on a particular investor not hearing a particular lie. (See, e.g., JB Br. at 29 (“[W]hen Mr. Cowell invested, [Bravata] was NOT being compensated or taking a salary[.]”).) -9- Case Nos. 13-2380, 13-2381, 13-2591, 15-1370, United States v. Bravata
Bravata repeatedly argues that the government failed to prove reliance on his misrepresentations. Without reliance, he claims, the oral misrepresentations were not material to the investors and therefore cannot sustain wire-fraud convictions. Simply put, however, “reliance is not an element of mail or wire fraud.” Daniel, 329 F.3d at 486 (6th Cir. 2003) (quoting United States v. Merklinger, 16 F.3d 670, 678 (6th Cir. 1994)). To satisfy the materiality requirement, the fraudulent scheme must “be credible enough to deceive persons of ordinary prudence and comprehension.” United States v. Jamieson, 427 F.3d 394, 416 (6th Cir. 2005) (internal quotation marks omitted). Here, the district court instructed the jury that material misrepresentations have “a natural tendency to influence or [are] capable of influencing the decision of a person of ordinary prudence and comprehension,” and the jury so found. Bravata’s argument fails.
Bravata’s most persistent lie was the safety of the investors’ principal. On appeal, however, he claims that DeFauw, Doa, Fusco, Gienapp, Schondelmayer, and Weiss never testified that Bravata “guaranteed” their principal and therefore these convictions cannot stand. True enough, these six investors never testified that Bravata “guaranteed” their principal investments in so many words. But they nonetheless recounted Bravata’s lies about the safety of their principal. (R. 199, DeFauw Test., Day 3 Trial Tr. at 66 (“Q: Did he tell you [the principal investment] was safe and guaranteed to be safe? A: Yes.”); R. 210, Doa Test., Day 13 Trial Tr. at 14 (“I was told that the [principal investment] would be held at PENSCO Trust. So I can—you can only assume from simple deduction that it would be guaranteed. - 10 - Case Nos. 13-2380, 13-2381, 13-2591, 15-1370, United States v. Bravata PENSCO Trust was holding it.”); R. 206, Fusco Test., Day 10 Trial Tr. at 76 (“He said that [the original investment] would be insured and that we would not lose our principal investment.”); R. 204, Gienapp Test., Day 8 Trial Tr. at 76 (“Q: So he said [the principal] was safe? A: Yes, certainly. Q: You would get it back? A: Yes, you would get it back.”); R. 214, Schondelmayer Test., Day 20 Trial Tr. at 59 (“Q: What did he tell you would happen with your principal investment? A: The money would be safe.”); R. 324, Joan Weiss Test., Day 23 Trial Tr. at 61 (“He said our initial investment would never go down and that it was safe and secure, we could take the money out at any time we wanted to and it was with Comerica Bank.”).) The government proved material misrepresentations, whether or not the witnesses uttered the word “guaranteed.”
Bravata next argues that investors who handed checks to him or BBC Equities representatives never used interstate wires. At trial, however, Bravata stipulated “that the wire transfers charged in Counts 2 through 15 . . . were made in interstate commerce,” so this argument lacks merit. Bravata’s stipulation still put the government to its proof that Bravata caused the interstate wire transfers, and Bravata argues that the government did not carry this burden. But this argument finds no support in the record. Each victim testified to investing, i.e., causing a wire transfer, after Bravata, Antonio, or BBC Equities sales agents encouraged them to do so. And the testimony matches the interstate wire transfers to which FBI Special Agent Suess testified and Bravata stipulated. Sufficient evidence supports the interstate-commerce prong of the fourteen convictions. - 11 - Case Nos. 13-2380, 13-2381, 13-2591, 15-1370, United States v. Bravata
Next, Bravata insists that his convictions must be vacated because of events that occurred after the misrepresentations. First, Bravata notes that investors received quarterly interest payments and full or partial redemptions before the company collapsed, showing that he never intended to defraud them of their investments. But “subsequent investigations, repayments, or settlement attempts shed no light on whether a defendant had a previous intent to defraud.” United States v. Carter, 483 F. App’x 70, 75 (6th Cir. 2012). Second, Bravata remarks that Boerkoel, Cowell, Plohr, Scherer, and Vidosics never requested their investment principal back. This, combined with continued acceptance of interest payments, constituted ratification of the investments under the terms set forth in the written documents. Capital Dredge & Dock Corp. v. City of Detroit, 800 F.2d 525 (6th Cir. 1986). Ratification, however, consents to unauthorized acts, not illegal ones. Id. at 530. Investors may not ratify wire fraud. Third, Bravata argues that the wire fraud convictions for investors who rolled their BBC Equities accounts into Phoenix Venture Capital cannot stand. He fails to support this bizarre position, and we examine it no further.
Finally, Bravata singles out the counts naming Makowski and Scherer as victims. He first challenges the variance between the indictment and the proofs for the count dealing with Theresa Makowski. The evidence at trial showed that Ramon Makowski, Theresa’s husband, transferred $22,359 to BBC Equities, but the indictment listed Theresa as the victim. Bravata - 12 - Case Nos. 13-2380, 13-2381, 13-2591, 15-1370, United States v. Bravata now claims that the “[v]ariance in this count denied [him] the Sixth Amendment right of the U.S. Constitution.” To constitute reversible error, an indictment-proof variance must entail “‘a substantial likelihood’ that a defendant may have been ‘convicted of an offense other than that charged by the grand jury.’” United States v. Feinman, 930 F.2d 495, 499 (6th Cir. 1991) (quoting United States v. Beeler, 587 F.2d 340, 342 (6th Cir. 1978)). Bravata must show prejudice to his ability to defend himself at trial. Id. Bravata made no such showing. The evidence at trial showed that the Makowskis jointly invested. Ramon’s application listed Theresa as a co-owner of the retirement account used to purchase BBC Equities shares. Bravata cross-examined Theresa about both the $22,359 investment from the co-owned retirement account and the $3,306 investment from her personal account. Not only did the proof at trial conform to the indictment, but Bravata also suffered no prejudice because he fully cross-examined Theresa. Next, Bravata asserts that he never spoke to investor Kathleen Scherer and therefore never misrepresented anything to her. But this argument is unavailing. Not only did Scherer testify to hearing Bravata’s sales pitch through Todd Kuzma, a BBC Equities employee, she also received lulling communications from Bravata. See Faulkenberry, 614 F.3d at 582–83 (affirming wire-fraud conviction when the defendant sent a post-investment fax to lull the investors into a false sense of security). Trial testimony therefore established each element of wire fraud.
Both defendants challenge the sufficiency of the government’s proof on the conspiracy convictions. To secure a conviction for conspiracy to commit wire fraud, the government must - 13 - Case Nos. 13-2380, 13-2381, 13-2591, 15-1370, United States v. Bravata prove beyond a reasonable doubt that “two or more persons conspired, or agreed, to commit the crime of [wire fraud]” and that “the defendant knowingly and voluntarily joined the conspiracy.” United States v. Rogers, 769 F.3d 372, 377 (6th Cir. 2014) (quoting Sixth Circuit Pattern Criminal Jury Instruction 3.01A).
Bravata urges us to vacate his conspiracy conviction due to the lack of proof on the agreement element. The government elicited testimony that “three people independently may or may not [have] given misrepresentations,” but it offered no proof of an agreement. In fact, the jury heard ample testimony that Bravata agreed with Trabulsy to lie to investors. Together, they sold a BBC Equities investment to Boerkoel, misrepresenting the safety of principal and the source of the guaranteed interest payments. Trabulsy heard Bravata falsely assure other investors of the safety of their principal. Although they knew that the “company would collapse” without new investor funds, they continued jointly executing BBC Equities’ business plan, engaging in “weekly conversations . . . about the need for new investor funds because of the lack of money available to cover expenses.” Trabulsy told Bravata that they needed new investor money to keep the doors open, and Bravata responded, “I better go get some.” Knowing their representations were false, Bravata and Trabulsy even co-signed a September 2008 letter reassuring investors that the company’s “portfolio position is strong” and encouraging investors to tell their friends and family “to take money out of the market and park it in an account” with BBC Equities. They agreed that “PPMs were not a good thing for investors to read due to the language that disclosed the ability for loss of principal, risk of investment.” And, in - 14 - Case Nos. 13-2380, 13-2381, 13-2591, 15-1370, United States v. Bravata furtherance of their scheme, Bravata attempted to conceal the PPMs from investors, telling sales representatives to “sidetrack” requests for PPMs. The jury reasonably could infer that Trabulsy and Bravata together founded, operated, and advertised BBC Equities to defraud investors.
Antonio also disputes the sufficiency of the proof for his conspiracy conviction. The government offered no proof, Antonio claims, that he knew BBC Equities lacked the funds to guarantee investments. Indeed, the jury never heard evidence linking him to the first meetings of the conspiracy, to financial discussions, or to weekly management meetings. Antonio believed the sales pitch and therefore lacked the intent to conspire to commit wire fraud. Accordingly, he urges us to vacate his conviction. To secure a conspiracy conviction, the government need not show that Antonio organized the conspiracy or participated in each of its acts. United States v. France, 611 F. App’x 847, 849 (6th Cir. 2015). It was enough that he knew the sales script included lies and knowingly passed those lies to investors. Antonio encouraged other BBC Equities employees to guarantee investors’ principal, citing his father’s sales pitches. He did this despite receiving explicit instructions to the contrary from the company’s compliance officer and general counsel. He even elaborated on the lies in the sales pitch, making fantastical statements to investor Terry Welsh, representing that BBC Equities had net distributable profits exceeding $50 million in 2007, purchased $500 million in properties that year, and also secured a 30% rate of return for its investors. From this evidence, a jury reasonably could infer that Antonio knew that Bravata’s marketing scheme falsely promised investors security and that Antonio willfully participated in this scheme. - 15 - Case Nos. 13-2380, 13-2381, 13-2591, 15-1370, United States v. Bravata