Opinion ID: 12942
Heading Depth: 2
Heading Rank: 1

Heading: sufficiency of the evidence

Text: All the appellants argue that the evidence is insufficient to sustain their convictions.3 Johnston, Wilkins, and Dollar were convicted of one count of conspiracy to commit mail fraud in violation of 18 U.S.C. § 371 and substantive counts of mail fraud in violation of 18 U.S.C. § 1341 (Johnston, two counts; Wilkins, seven counts; and Dollar, five counts). Gandy and Moser were acquitted of the conspiracy count but convicted of mail fraud (Gandy, two counts; Moser, one count). When reviewing the sufficiency of the evidence, this Court views all evidence, whether circumstantial or direct, in the light most favorable to the Government with all reasonable inferences to be made in support of the jury's verdict. United States v. 3 O'Neill attempts to adopt by reference Gandy's arguments that the evidence is insufficient to sustain his convictions. Because these are fact-specific challenges, O'Neill will not be permitted to adopt these arguments by reference. United States v. Alix, 86 F.3d 429, 434 n.2 (5th Cir. 1996). 5 Salazar, 958 F.2d 1285, 1290-91 (5th Cir.), cert. denied, 506 U.S. 863, 113 S.Ct. 185 (1992). The evidence is sufficient to support a conviction if a rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. Id. The evidence need not exclude every reasonable hypothesis of innocence or be completely inconsistent with every conclusion except guilt, so long as a reasonable trier of fact could find that the evidence established guilt beyond a reasonable doubt. United States v. Faulkner, 17 F.3d 745, 768 (5th Cir.), cert. denied, 513 U.S. 870, 115 S.Ct. 193 (1994). To prove a violation of the mail fraud statute, 18 U.S.C. § 1341, the Government must prove beyond a reasonable doubt that there was (1) a scheme or artifice to defraud, (2) specific intent to commit fraud, and (3) use of the mails for the purpose of executing the scheme to defraud. United States v. Shively, 927 F.2d 804, 813-14 (5th Cir.), cert. denied, 501 U.S. 1209, 111 S.Ct. 2806 (1991). Intent to defraud requires an intent to (1) deceive, and (2) cause some harm to result from the deceit. Jimenez, 77 F.3d at 97 (citation omitted). A defendant has the intent to defraud if he acts knowingly with the specific intent to deceive for the purpose of causing pecuniary loss to another or bringing about some financial gain to himself. Id. A conviction for conspiracy under 18 U.S.C. § 371 requires the Government to prove beyond a reasonable doubt (1) an agreement between two or more persons, (2) to commit a crime against the United States, and (3) an overt act in furtherance of the agreement 6 committed by one of the conspirators. United States v. Krenning, 93 F.3d 1257, 1262 (5th Cir. 1996).
Johnston argues that his offer of payment in kind is an accepted banking practice and that the CMO and the CBC could be valid if they had been accepted by the financial institution. He contends that if the bank had accepted the offer of payment he would not have been guilty of mail fraud. He then reasons that as a matter of law he cannot be guilty of conspiracy to commit mail fraud and mail fraud simply because the bank decided not to accept his offer of payment. This argument is specious. The evidence at trial clearly established that the CMOs and CBCs underlying his convictions are worthless. His convictions do not rest on the bank's decision to reject his offer of payment because that is not an element of the offenses. He does not otherwise challenge the sufficiency of the evidence to support his convictions. This argument is without merit.
Dollar challenges the evidence to support his convictions for conspiracy and mail fraud, arguing that the Government failed to prove that he had the intent to defraud. He contends that the principals of USA First did not inform the users of the packet that they were engaging in a fraudulent act and that it was not manifest from the packet itself. He concedes that the materials advised the user not to tell the bank that he was using pretend money just like 7 the banks were using pretend money,4 but he nonetheless asserts that this statement in itself does not reveal that the use of the CMOs was fraudulent. He further asserts that the statement was in accord with USA First's theory that banks were unlawfully lending their credit; therefore, their debtors could respond in kind. (emphasis added). Dollar's argument proves too much. In other words, if the debtor is responding in kind to the bank's illegal conduct, the packet is at least implicitly stating that the debtor's conduct also is illegal. In any event, viewing the evidence in the light most favorable to the verdict, the evidence is sufficient to show the requisite intent. In addition to the statement regarding the pretend money, the jury could infer knowledge from the fact that Dollar paid $300 for a packet of materials that included money orders that could be filled out for any amount of money. Moreover, Dollar ignores that, after his CMOs were rejected, he filed a $49 million lien against a bank's employee.5 Finally, although Dollar testified that he had no intent to defraud, the jury obviously found his testimony incredible. The evidence is sufficient to 4 The packet advised the user that just like in the children's story about the Emperor's new clothes, do not mention that your current credit money, the negotiable instrument, is pretend money, only speak of the bank's negotiable instruments as being pretend money or only promises while yours are according to U.C.C. law. 5 Dollar testified that the $49 million figure was [j]ust a number that we came up with. It was just a figure that I pulled out of the air. 8 support Dollar's convictions.
Gandy challenges both the sufficiency of the evidence to show (1) that he had specific intent to defraud and (2) that the mailing was in furtherance of the scheme to defraud. In regard to his first challenge, Gandy states that his defense at trial was that he himself was a victim of the scam perpetrated by USA First and that he never intended to defraud anyone. Specifically, Gandy asserts that he believed in good faith that he was simply refinancing his home at a lower interest rate through W.D. McCall. At trial, Gandy called Jay Newland, who worked for Continental Trust Company in Wichita, as a witness. Newland testified that he had informed Gandy that USA First was providing low interest loans and sent off for a packet that Gandy ultimately purchased. Gandy believed the CMOs could work because a mutual acquaintance, Lonnie Canon, had used the CMOs to successfully discharge a debt. Gandy further asserts that the evidence shows that even when he experienced problems with the CMOs, he still believed he could obtain refinancing through USA First. He attributes this belief to the representations of Hoad, who led Gandy, among others, to believe that W.D. McCall was going to establish its own bank in Panama. As late as April of 1994, Hoad sent a letter to Gandy indicating that he had been preliminarily approved for a loan of up to $200,000. Hoad kept asserting that refinancing was right around the corner. Gandy also relies on the fact that he paid off all his loans prior to the prosecution of this case. 9 The Government responds that Gandy knowingly used the CMOs to erase a debt that had bought him a valuable asset and then insisted that the lender was obligated to accept the bogus payment, accusing the lender of criminal fraud and threatening “non judicial remedies through the Uniform Commercial Code” against the institution's lawyer personally. The jury certainly could have found that this evidence contradicted Gandy's defense of good faith and supported a finding of his intent to defraud. Further, as discussed above, the packet6 contained language referring to the CMOs as pretend money and warned the user not to refer to the CMOs as pretend money. Additionally, the record reveals that in December of 1993, after learning there was a problem with the CMO he submitted to Union National Bank, Gandy represented to a loan officer that he had used [W.D. McCall] several times in the past [and] had not had any problems with them . . . and that he had paid good money for [those] checks. . . . Contrary to Gandy's representation, the evidence at trial demonstrated that Gandy had indeed been put on notice in November of 1993 that a CMO he submitted to Mulvane State Bank was not being accepted as payment. Thus, viewed in the light most favorable to the verdict, the evidence demonstrates that Gandy had the specific intent to defraud. Gandy next argues that there is insufficient evidence to establish that the mailings were used for the purpose of executing 6 Gandy's exhibit 1A. 10 the scheme to defraud because the mailings alleged in counts 15 and 16 occurred after the alleged scheme had come to fruition, which he defines as occurring when the loan was deemed paid in full. On November 12, 1993, Gandy submitted a CMO for $66,750 to Wichita Federal Savings & Loan. On November 15, 1993, Wichita Federal Savings & Loan released Gandy from any obligation on his loans and notified him they were paid in full. Count 15 alleged that on December 6, 1993, a CBC in the amount of $66,750 was mailed by W.D. McCall to Wichita Federal Savings & Loan. Count 16 alleged that on January 11, 1994, a letter was mailed to Wichita Federal Savings in connection with the scheme. We reject Gandy's premise that the scheme came to fruition when the savings & loan initially notified him that his loan was paid in full on November 15, 1993. As the evidence at trial made abundantly clear, that was not the end of Gandy's efforts to make the scheme succeed. Although the receipt of the bogus CMO by the savings & loan caused it to send the release of the loan, the subsequent mailings of the CBC and the letter were incident to an essential part of the scheme. Schmuck v. United States, 489 U.S. 705, 109 S.Ct. 1443, 1448 (1989). We therefore conclude that the evidence was sufficient to support the substantive counts of mail fraud.
Moser argues that the letter that underlies his sole conviction for mail fraud does not further the alleged scheme to defraud. The letter was from O'Neill to Wayne Paul (Paul), an 11 officer of Woodlands Bank. Paul testified that Moser had five loans at Woodlands Bank. In November 1993, Moser was behind in making payments, and the bank received a mailing from Moser with a letter stating that the enclosed CMO constituted: payment in full, on demand of the United States, as required by law at USC 371, from the time of official determination, as required by law at USC 371, from the time of official determination of the substance of said money, or in U.C.C. 1-202(24) credit money. . . . This certified money order is with a Private concern and must be mailed to O.M.B. W.D. McCall, P.O. Box 954, Waxahachie, Texas 75165. Paul testified that the money order looked suspicious and that he did not understand the letter. The bank then sent the CMO to the Waxahachie address, enclosing a letter questioning the validity of the CMO. In response, O'Neill sent the letter that is the mailing that is alleged in count 14. That letter provided in part that: I truly can understand your concern -- especially when your own regulatory laws require you to act within 24 hours or before midnight and seventy-two hours then changing from default to unlawful conversion. Also, the fact that millions of people have learned about the fraud perpetrated by the Federal Reserve System (a private corporation) through you and your bank. Primarily, they are angry that you made loans of credit with no lawful consideration from you from the beginning. You created-from-thin-air-credit-loan of bad- check-loan of credit was bad enough, but you socked it to them with Usury when you had nothing of intrinsic value to charge interest on. wow! what a deal! You will find enclosed a Certified Bankers Check in the amount of $227,400.00 and your 12 accommodating signature will suffice to cancel the Certified Money Order now in your possession. You shall credit your customer, Steve Moser, with this amount and give him clear title to whatever you have a lien against that he is tendering payment on. Moser argues that the tenor and language of the letter does not attempt to lull the victim into a false sense of security. He contends that [t]he letter did not help the plan succeed; instead it created a risk of exposing the alleged scheme. (emphasis in brief). Moser makes much of the fact that Paul testified that he was not impressed with the letter. We have rejected a similar claim. In United States v. Shively, this Court explained that the failure of the letter to in fact lull the institution does not relieve a defendant of criminal liability. 927 F.2d at 815. Additionally, we stated that viewed in the light most favorable to the verdict, a reasonable juror could have concluded that the letter was intended to lull the bank. Any delay as a result of the letter would allow the scheme to continue. Id. Likewise, in the instant case, any delay caused in foreclosure proceedings, or the like, would allow the scheme to continue. Moreover, although we understand Moser's argument, it would be absurd to conclude that the letter, which expressly directs the bank to credit Moser's account, was not sent for the purpose of executing the scheme. Moser further asserts that the letter could not have aided in the execution of the scheme in that it was more likely to cause detection and deter any use of the CMO or CBC. The Supreme Court has rejected this view, holding that [t]he relevant question at 13 all times is whether the mailing is part of the execution of the scheme to defraud as conceived by the perpetrator at the time, regardless of whether the mailings later, through hindsight, may prove to have been counterproductive and return to haunt the perpetrator of the fraud. Schmuck v. United States, 489 U.S. 705, 109 S.Ct. 1443, 1449-50 (1989). Moser next asserts that there is no evidence that he was aware of the letter sent by O'Neill until he received a copy of the government's exhibits in September of 1995. This court has held that when an individual does an act with the knowledge that the use of the mails will follow in the ordinary course of business, or when such use can reasonably be foreseen, even though not actually intended, then he/she causes the mails to be used. Shively, 927 F.2d at 815 (internal quotation marks omitted) (emphasis in opinion). Here, it was reasonably foreseeable to Moser when he sent the CMO that the use of the mails would follow in the ordinary course of business at USA First. Moser's claim of insufficient evidence is without merit.
Wilkins continues to argue that the CMOs were not fraudulent instruments because it was credit for credit. The evidence clearly demonstrated that the CMOs submitted were worthless and that the users submitted those CMOs in an attempt to discharge real debts and keep valuable assets. Wilkins also argues that the evidence shows that he was simply a legal advisor. Wilkins ignores the evidence that he used a CMO in the amount of $137,700 in an attempt 14 to pay off his home mortgage. Wilkins is not entitled to relief on this claim.