Opinion ID: 2723829
Heading Depth: 3
Heading Rank: 1

Heading: Sufficiency of the Evidence on Counts 2 and 5

Text: Durham argues that the evidence was insufficient on Counts 2 and 5, two of the ten counts of wire fraud of which he stands convicted. Count 2 involved a transfer of $250,000 from Fair to Fair Holdings on February 13, 2007; Count 5 concerned a transfer of $50,000 from Fair to Fair Holdings on November 10, 2008. To prove that these transfers constituted wire fraud, the government needed to establish that Durham: (1) was involved in a scheme to defraud; (2) had an intent to defraud; and (3) used the wires in furtherance of that scheme. See United States v. Leahy, 464 F.3d 773, 786 (7th Cir. 2006). We review the evidence “in the light most favorable to the government and ask whether any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” United States v. Love, 706 F.3d 832, 837 (7th Cir. 2013). Durham moved for judgment of acquittal on these counts, so our review is de novo. United States v. Claybrooks, 729 F.3d 699, 704 (7th Cir. 2013). We agree with Durham that there was insufficient evidence in the record to establish that these particular wire transfers were made in furtherance of the fraudulent scheme. The government introduced single-page printouts reflecting each transfer. As to Count 5, the government also introduced an email indicating that an Obsidian employee asked a Fair employee to wire $50,000 to Fair Holdings. At most, this evidence shows that the wire transfers were in fact made; it does not establish that the transfers were made in furtherance of the fraudulent scheme. Nos. 12-3819, 12-3833 & 12-3867 9 The government apparently intended to introduce additional evidence regarding the circumstances of these transfers but neglected to do so. The single-page printouts were meant to be the first pages of much larger exhibits. The complete exhibits were transmitted to us in connection with this appeal; they include financial records tracing the money and documenting how it was used. (For what it’s worth at this too-late stage of the case, the additional documentation shows that the $250,000 wire transfer paid for a luxury garage and the $50,000 transfer was used to pay dues at a country club.) But the trial record contains only the single-page printouts showing that the two wire transfers were made. Without the additional documentary evidence, the jury had no evidence about how the money was used. The government offers up a Hail Mary in an attempt to salvage these two convictions. Its theory is that the trial evidence was sufficient to show that the modus operandi of the entire scheme involved wire transfers between Fair and Fair Holdings. Money from investments in Fair would fund phony insider loans after being moved around by wire. These “loans” would usually start with a wire transfer from Fair to Fair Holdings, just like these two, and the transfers were typically requested via email, as the $50,000 transfer was. In other words, there was a stream of money going from Fair to Fair Holdings and not coming back. Thus, the jury could conclude that these two transfers were used to originate fraudulent loans even without the additional documentary evidence. This argument is problematic for a couple of reasons. It essentially transforms every wire transfer from Fair to Fair 10 Nos. 12-3819, 12-3833 & 12-3867 Holdings into a criminal act. To be sure, the evidence amply supports the basic theory that Fair Holdings was used to further the defendants’ illicit scheme, but the government has not established that fraud was its exclusive function. Moreover, because this argument was not raised at trial, Durham was unable to defend against it. At bottom the government introduced no evidence from which a jury reasonably could conclude that these particular wire transfers were made in furtherance of the fraudulent scheme. The gap in the trial record, though inadvertent, leaves us no choice but to reverse Durham’s conviction on Counts 2 and 5 based on insufficient evidence.