Opinion ID: 2763722
Heading Depth: 3
Heading Rank: 2

Heading: Securities Fraud Counts

Text: Lewis argues that there was insufficient evidence to convict him of securities fraud on the counts for which the government did not call the victiminvestor: counts 3–4, 6, 8–15, 17–18, 20–22, and 24 (the “Challenged Counts”). More specifically, he argues that there was insufficient evidence to prove that he had any contact with the investors in those counts of the indictment. He also argues that, because none of the investors in the Challenged Counts testified, there was insufficient evidence to prove that the scheme to defraud had an impact on those investors. As explained below, viewing the evidence in the light most favorable to the guilty verdict, we find that there was sufficient evidence for a “rational trier of fact [to] have found that the evidence established the essential elements of the offense beyond a reasonable doubt.” Harris, 740 F.3d at 962. In order to prove securities fraud, the Government must show: (1) the offer or sale of securities; (2) “by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly,” and (3) one of the varieties of fraudulent conduct in the statute. 1 15 U.S.C. § 77q. This court has previously established that “[s]pecific 1 They are: (1) to employ any device, scheme, or artifice to defraud, or (2) to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or 5 Case: 14-10119 Document: 00512879045 Page: 6 Date Filed: 12/22/2014 No. 14-10119 reliance by the investor” on the fraudulent scheme or fraudulent statements need not be shown. United States v. Ashdown, 509 F.2d 793, 799 (5th Cir. 1975). Rather, the Government must show that the defendant’s scheme had “some impact . . . on the investor and that the mails were used in those instances where the impact occurred.” Id. (quoting United States v. Schaefer, 299 F.2d 625, 629–30 (7th Cir. 1962)). In Ashdown, we held that the mailing of stock certificates or confirmations of purchase in the mail was sufficient evidence to show an impact of the scheme on investors. Id. However, in Ashdown, unlike here, each victim-investor testified that he or she was “influenced either by the misleading shareholder literature, including the annual report, or by [one of the co-defendant’s] representations.” Id. Lewis argues that there was insufficient evidence to prove that he had ever promoted the Rattlesnake Springs offering to the non-testifying investors. Accordingly, he asserts that the Government failed to prove that the scheme to defraud had an impact on the investors in the Challenged Counts. He explains that the decision to invest could have been prompted by ACI’s fronters or closers, thus, indirectly arguing that the Government has failed to prove that he was responsible for having an impact on the decision to invest by the investors in the Challenged Counts. However, we have never held that the testimony of all the investors is required to meet the “some impact” standard set by Ashdown. For example, in a case involving the federal wire fraud statute, we held that there was sufficient evidence to support a conviction where the victim-investor did not testify. See United States v. Freeman, 434 F.3d 369, 377 (5th Cir. 2005). The investor’s testimony was held not to be (3) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser. 15 U.S.C. § 77q(a)(1)–(3). 6 Case: 14-10119 Document: 00512879045 Page: 7 Date Filed: 12/22/2014 No. 14-10119 necessary because the defendant typed the investor’s participation agreement, the investor wired money that was not used for investments as promised, and “lulling payments” were made to the investor. Id. In this case, there is sufficient evidence connecting Lewis to the investors in the Challenged Counts from which the jury could reasonably have concluded that Lewis’s fraudulent statements had “some impact” on the investors in the Challenged Counts, even without their testimony. Griffith testified that Lewis substantially authored the offering memorandum, which was sent to investors. The offering memorandum contained many of the material omissions and misrepresentations underlying the charges, including: Griffith’s inflated experience in the oil and gas industry, the omission of Lewis’s, Griffith’s, and Markham’s prior criminal convictions, the statement that ACI was profitable, and the statements about ACI’s access to the money needed to drill oil wells. Further, Griffith testified that Lewis wrote the scripts that the fronters and closers used when calling all of the investors. These scripts also contained material omissions and misrepresentations, including that there was already pipeline infrastructure for the Rattlesnake Springs project in place. This evidence shows that Lewis had contact, albeit indirectly, with the investors in the Challenged Counts and also supports a finding that he acted with intent to defraud them. Given that the “jury retains the sole authority to weigh any conflicting evidence and to evaluate the credibility of the witnesses,” United States v. Grant, 683 F.3d 639, 642 (5th Cir. 2012) (internal quotation marks omitted), it is not our role to credit Lewis’s testimony over Griffith’s testimony. Furthermore, a reasonable jury could infer that the misrepresentations and material omissions contained in the offering memorandum, especially the omission of Lewis’s conviction for securities fraud in connection with oil and gas interests and Griffith’s conviction for bank robbery, had “some impact” on the decision of the investors in the Challenged Counts to invest, even without 7 Case: 14-10119 Document: 00512879045 Page: 8 Date Filed: 12/22/2014 No. 14-10119 their testimony at trial. This inference is bolstered by the testimony of the investors that they would not have invested had they known about Lewis’s securities fraud conviction and Griffith’s bank robbery conviction. Further, although there is no direct evidence in the record that each of the investors in the Challenged Counts received the offering memorandum, we are to “view all evidence, whether circumstantial or direct, in the light most favorable to the government.” Grant, 683 F.3d at 642 (internal quotation marks omitted). The record reflects that there was evidence that the memorandum was sent to investors generally. Moreover each of the testifying-investors testified that he or she received the memorandum. Therefore, the jury could reasonably infer that each of the investors in the Challenged Counts received the offering memorandum and that its misrepresentations and omissions had “some impact” on his or her decision to invest with ACI. Accordingly, we hold, after accepting all “reasonable inferences made by the trier of fact which tend to support the verdict,” Moreno-Gonzalez, 662 F.3d at 372, that there was sufficient evidence to convict Lewis of the Challenged Counts.