Court Opinion

ID: 857995
Source: CourtListenerOpinion
Date Created: 2013-04-15 17:00:16.516518+00
Date Added: 2024-06-11T15:06:56.452389
License: Public Domain

FILED
                                                  United States Court of Appeals
                     UNITED STATES COURT OF APPEALS       Tenth Circuit

                            FOR THE TENTH CIRCUIT                         April 15, 2013

                                                                      Elisabeth A. Shumaker
                                                                          Clerk of Court
UNITED STATES OF AMERICA,

             Plaintiff-Appellee,

v.                                                         No. 12-1097
                                                 (D.C. No. 1:09-CR-00529-PAB-1)
PHILIP R. LOCHMILLER,                                        (D. Colo.)
a/k/a Philip R. Lochmiller, Sr.,

             Defendant-Appellant.

                            ORDER AND JUDGMENT*

Before BRISCOE, Chief Judge, HOLLOWAY, Senior Circuit Judge, and
TYMKOVICH, Circuit Judge.

      A jury convicted Philip Lochmiller, Sr. of various crimes arising from an

investment scheme, including conspiracy to commit mail and securities fraud,

conspiracy to commit money laundering, and multiple substantive counts of mail

fraud and money laundering. The district court sentenced Mr. Lochmiller to 405

months in prison and ordered him to pay more than $18.6 million in restitution. In

*
      After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
this direct appeal, Mr. Lochmiller challenges his conspiracy convictions, claiming

they were predicated on insufficient evidence and a flawed jury instruction. We have

jurisdiction under 28 U.S.C. § 1291 and affirm Mr. Lochmiller’s convictions.

                                           I

      In 1999, Mr. Lochmiller began soliciting investors to develop low-income

residential communities. At the time, Mr. Lochmiller was president and founder of

Valley Mortgage, Inc., or Valley Investments, Inc., as it came to be known, a

mortgage brokerage firm based in Grand Junction, Colorado. Mr. Lochmiller’s

step-son, Philip Lochmiller, Jr. (“Philip”), joined the firm that same year, and

together the two men turned the company into something of a Ponzi scheme.

Mr. Lochmiller and his son would advertise in a local paper and mail out promotional

materials promising investors a 10%, 14%, or even a 20% return on two-year

investments. They told investors that obtaining bank financing was more onerous

than their offer, which pledged as security a promissory note and first deed of trust

recorded against specific property planned for development. The property’s value

was supposed to be commensurate with the investment amount, and investors had the

option of choosing simple or compound interest, which was actually paid to some

investors. What investors did not know, however, was that the interest was actually

paid from new investments rather than company profits, and the trust deeds were

almost always recorded against previously encumbered and inadequately valued lots,

if they were recorded at all.

                                          -2-
       As early as 2001, the state of Colorado ordered Mr. Lochmiller to stop

soliciting investments because neither he nor his company was licensed to sell

securities. Mr. Lochmiller ignored the order, however, and in the coming years, he

diverted significant investment funding from project development to personal use.

Indeed, he used the money to pay for homes and cars for himself and his family, a

vacation property in Mexico, and his daughter’s salary despite the fact that she never

worked for Valley Investments. Mr. Lochmiller even deposited company funds into

his own “private venture” account, R., Vol. 5 at 1252, all without any knowledge to

his investors.

       In 2005, Philip hired an assistant named Shawnee Carver, who took charge of

tracking the number of trust deeds recorded against or “stacked” on a particular lot.

Ms. Carver also helped prepare false promotional materials, notarize forged investor

signatures, and mislead investors into releasing their deeds of trust. She kept much

of the individual investor documents away from the company’s chief financial

officer, Richard Langley, but Mr. Langley, who was hired in May 2008 and resigned

four months later, eventually accessed some materials. What he found was

staggering but perhaps not surprising: the company was losing as much as $60,000

on any given home sale, and the interest rates promised to investors were

“unsustainable,” id. at 1244. Mr. Langley urged Mr. Lochmiller to reduce the

interest rates and revise his development plans, but Mr. Lochmiller rejected

Mr. Langley’s suggestions and intensified his efforts to solicit more investments.

                                         -3-
      By 2009, Mr. Lochmiller had amassed an estimated $34 million in liabilities.

The company went into receivership, and Mr. Lochmiller, Philip, and Ms. Carver

were charged in a multi-count superceding indictment. Ms. Carver pleaded guilty to

conspiracy to commit mail and securities fraud and testified at Mr. Lochmiller’s trial,

as did Philip, who pleaded guilty to conspiring to commit mail and securities fraud

and conspiring to commit money laundering. For his part, Mr. Lochmiller was

convicted on one count of conspiracy to commit mail and securities fraud, 18 U.S.C.

§ 371; one count of conspiracy to commit money laundering, 18 U.S.C. § 1956(h);

ten counts of mail fraud and aiding and abetting, 18 U.S.C. §§ 1341, 2; and twenty

counts of money laundering and aiding and abetting, 18 U.S.C. §§ 1957, 2.

                                          II

       A. Sufficiency of the Evidence

      Mr. Lochmiller first challenges the sufficiency of the evidence supporting his

conspiracy convictions. He first raised this issue at the close of the government’s

case-in-chief, when he moved for a judgment of acquittal under Fed. R. Crim. P. 29.

The district court denied the motion, as well as Mr. Lochmiller’s renewed motion for

acquittal. On appeal, Mr. Lochmiller maintains there was insufficient evidence of a

conspiracy and if there was any such evidence, it showed only a variance.1

1
      A variance occurs when “an indictment charges a single conspiracy, but the
evidence presented at trial proves only the existence of multiple conspiracies.”
United States v. Caldwell, 589 F.3d 1323, 1328 (10th Cir. 2009) (internal quotation
marks omitted).

                                         -4-
      Our review is limited by the considerable deference owed to the jury’s verdict.

See United States v. King, 632 F.3d 646, 650 (10th Cir. 2011). We review the

sufficiency of the evidence de novo but ask “only whether taking the evidence—both

direct and circumstantial, together with the reasonable inferences to be drawn

therefrom—in the light most favorable to the government, a reasonable jury could

find the defendant guilty beyond a reasonable doubt.” Id. (internal quotation marks

omitted).

      1. Conspiracy Convictions

      Mr. Lochmiller was convicted of conspiracy to commit mail and securities

fraud and conspiracy to commit money laundering. To obtain these convictions, the

government was obligated to prove “(1) two or more persons agreed to violate the

law, (2) the defendant knew the essential objectives of the conspiracy, (3) the

defendant knowingly and voluntarily participated in the conspiracy, and (4) the

alleged coconspirators were interdependent.” United States v. Fishman, 645 F.3d
1175, 1186 (10th Cir. 2011); see also United States v. Cooper, 654 F.3d 1104, 1116

(10th Cir. 2011) (setting forth elements of mail fraud); United States v. Lewis,

594 F.3d 1270, 1274 (10th Cir. 2010) (setting forth elements of securities fraud);

United States v. Keck, 643 F.3d 789, 794 (10th Cir. 2011) (setting forth elements of

conspiracy to commit money laundering). “[C]onspiracy convictions may be based

on circumstantial evidence, and the jury may infer conspiracy from the defendants’

conduct and other circumstantial evidence indicating coordination and concert of

                                         -5-
action.” United States v. Wardell, 591 F.3d 1279, 1287 (10th Cir. 2009) (internal

quotation marks omitted). “Interdependence is present if the activities of a defendant

charged with conspiracy facilitated the endeavors of other alleged coconspirators or

facilitated the venture as a whole.” Id. at 1291 (internal quotation marks omitted).

      The government clearly met its burden here. The conviction for conspiracy to

commit mail and securities fraud was supported by evidence that Mr. Lochmiller,

Philip, and Ms. Carver worked together to send false and misleading solicitations to

investors via the mail. The parties stipulated that the promissory notes were

securities, see Aplee. Addendum at 124-25, and there was evidence that the notes and

trust deeds were represented to secure investments in entry-level home construction.

Philip testified that he and Mr. Lochmiller told investors the funds were to be used

for building entry-level homes throughout the Rocky Mountain region, R., Vol. 5 at

1026, though he acknowledged that four of their five communities in Colorado, Utah,

and Idaho were never fully approved for development, see id. at 1047-52. Investors

were told by Mr. Lochmiller and his son that the property securing their money was

worth as much as their investment or more. Most investors simply trusted that they

had priority on the encumbered property, but a few demanded a first deed of trust. In

those instances, Ms. Carver would mail a packet to senior lien holders, asking them

to release their deeds of trust because the property had been sold. On several

occasions when a release was not returned before a scheduled closing, Philip testified

that he would confer with Mr. Lochmiller and forge the investor’s signature on the

                                         -6-
release. Ms. Carver would then facilitate the scheme by notarizing the forged

release, though she claimed the document was signed outside of her presence, and the

closing would go forward, along with the investment.

      Once an investment matured, Mr. Lochmiller, Philip, and Ms. Carver would

mail to investors false promotional materials, touting the success and growth of

Valley Investments and encouraging investors to renew their accounts to obtain

interest rates as high as 20%. These letters were generally drafted by Mr. Lochmiller

and typed by Ms. Carver, even after Mr. Langley alerted the Lochmillers to the

company’s dire financial state. Mr. Lochmiller and Philip also went so far as to send

letters and solicitations to investors explaining why Valley Investments continued to

expand and outperform the competition, even during the financial recession.

      Of course, none of these improprieties were known to investors. Among

numerous material omissions and misrepresentations, investors were never told that

Mr. Lochmiller and Philip had prior bankruptcy discharges or that Mr. Lochmiller

had been previously convicted of felony securities fraud. Nor were investors told

that most of the interest payments made to investors were derived from new

investments rather than company profits. Additionally, investors were never told that

their supposed first deed of trust would be recorded behind as many as ten or twelve

other investors, if it was recorded at all. In fact, Ms. Carver testified that she mailed

out deeds of trust listing particular lot numbers that did not even exist. She also

admitted that on occasions when investors demanded a recorded first deed of trust,

                                           -7-
she persuaded other investors to release their trust deeds by lying to them that the

property had been sold. And when investors asked why they had not received their

deeds of trust, she intentionally stalled, telling them the delay was caused by the

clerk and recorder’s office. Finally, she misrepresented to investors in England the

number of homes sold each month and falsely assured other investors that business

was “thriving” because they had a “niche product of entry level homes,” R., Vol. 5 at

523.

       Ample evidence also supports Mr. Lochmiller’s conviction for conspiracy to

commit money laundering. Philip admitted that investor funds were regularly

diverted to the Lochmillers’ personal expenses, including a condo in Mexico

purchased by Mr. Lochmiller with funds wired to him by Philip; more than $144,000

for Mr. Lochmiller’s back taxes, hand-delivered to the IRS by Philip; and mortgage

payments for a home occupied by Philip’s older sister, who was allowed to retain the

sale proceeds when the home sold, even though it was owned by Valley Investments.

Additionally, Mr. Lochmiller directed—and Philip authorized—payments for Philip’s

mother and a salary to Philip’s younger sister, neither of whom worked for the

company; personal credit cards; cars and trucks; Mr. Lochmiller’s $1.5 million

custom-built home; and $150,000 to prevent a former employee from disclosing the

company’s insolvency, see R., Vol. 5 at 1535-40.

       Apart from these expenses, Philip corroborated Mr. Langley’s testimony that

Mr. Lochmiller maintained a separate checking account as his own “private venture.”

                                          -8-
Id. at 1252. Mr. Lochmiller had opened this account in the name of New Liberty

Homes and used it to deposit rebate checks issued to Valley Investments by one of its

vendors. But rather than use those funds for developing low-income communities,

Mr. Lochmiller exploited it for his own personal gain. All of this evidence amply

supports Mr. Lochmiller’s convictions for conspiracy to commit mail and securities

fraud and conspiracy to commit money laundering. Mr. Lochmiller’s assertion that

there was no testimony of an express agreement is unavailing because there was no

need for such testimony. See Cooper, 654 F.3d 1104, 1115 (10th Cir. 2011).

      2. Variance

      Despite the evidence underlying his convictions, Mr. Lochmiller suggests

there was a variance from the overall conspiracies charged in the indictment. We

disagree. Given the difficulty of distinguishing between a single conspiracy and

multiple smaller conspiracies indicating a variance, we “generally defer to the jury’s

determination of the matter.” Fishman, 645 F.3d at 1189. The “focal point of the

analysis is whether the alleged coconspirators’ conduct exhibited interdependence,”

that is, whether they “intend[ed] to act together for their shared mutual benefit within

the scope of the conspiracy charged.” Id. (alterations and internal quotation marks

omitted).

      The foregoing evidence demonstrates the extent of interdependence exhibited

by Mr. Lochmiller, Philip, and Ms. Carver. These were not mere business associates

working in the same environment, making similarly bad decisions; these were closely

                                          -9-
aligned actors who coordinated their roles to facilitate their fraudulent scheme,

conceal their deceptive conduct, and perpetuate their unlawful practices. See United

States v. Baldridge, 559 F.3d 1126, 1136 (10th Cir. 2009) (“What is required is a

shared, single criminal objective, not just similar or parallel objectives between

similarly situated people.”). Mr. Lochmiller and Philip worked together for years to

defraud investors out of millions of dollars that they used for their own personal

expenses. After Ms. Carver joined the firm, she furthered the goals of the conspiracy

by lying to investors, misrepresenting the solvency of the company, notarizing forged

documents, and restricting Mr. Langley’s access to investor materials that would

have, and indeed did, disclose the true state of affairs. There was no variance here.

       B. Jury Instruction

       Mr. Lochmiller next contends the jury was given a prejudicial instruction that

allowed him to be convicted for the actions of his co-conspirators. Because he failed

to object in the district court, we review only for plain error. See Fed. R. Crim. P.

52(b). “Under plain error review, we may not reverse unless we find (1) error,

(2) that is plain, and (3) that affects substantial rights. If all three conditions are met,

we may then exercise discretion to notice a forfeited error, but only if (4) the error

seriously affects the fairness, integrity, or public reputation of the judicial

proceedings.” United States v. Knight, 659 F.3d 1285, 1287 (10th Cir. 2011), cert.

denied, 132 S. Ct. 1954 (2012) (internal quotations and brackets omitted). We

perceive no error.

                                           - 10 -
      The district court instructed the jury as follows:

             If you find the defendant guilty of the conspiracy charged in
      Count 1 and you find beyond a reasonable doubt that during the time the
      defendant was a member of that conspiracy another coconspirator
      committed one or more of the offenses in Counts 24-33, and that the
      same offenses in Counts 24-33 were committed to achieve an objective
      of or were a foreseeable consequence of that conspiracy, then you may
      find the defendant guilty of the offenses charged in Counts 24-33, even
      though the defendant may not have participated in any of the acts which
      constitute the offenses described in Counts 24-33 . . . .

             ....

             Likewise, if you find the defendant guilty of the conspiracy
      charged in Count 2 and you find beyond a reasonable doubt that during
      the time the defendant was a member of that conspiracy another
      coconspirator committed one or more of the offenses in Counts 3-6,
      8-21, and 23, and that the same offenses in Counts 3-6, 8-21, and 23
      were committed to achieve an objective of or were a foreseeable
      consequence of that conspiracy, then you may find the defendant guilty
      of the offense charged in Counts 3-6, 8-21, and 23, even though the
      defendant may not have participated in any of the acts which constitute
      the offenses described in Counts 3-6, 8-21, and 23 . . . .

R., Vol. 2 at 81-82.

      These instructions, which track nearly verbatim Tenth Circuit Criminal Pattern

Jury Instruction 2.21, correctly state that Mr. Lochmiller may be held criminally

liable for the reasonably foreseeable crimes committed by his co-conspirators in

furtherance of the conspiracy. See Pinkerton v. United States, 328 U.S. 640, 647

(1946). Mr. Lochmiller seems to argue that only crimes committed as an object of

the conspiracy, rather than those that were reasonably foreseeable, could be imputed

to him, but that is not the law. “The Pinkerton doctrine holds each member of a

conspiracy legally responsible for the reasonably foreseeable crimes of fellow

                                         - 11 -
conspirators committed in furtherance of the conspiracy.” Wardell, 591 F.3d at 1291.

Our pattern jury instruction, which incorporates Pinkerton, specifically states that a

crime “committed to achieve an objective of or was a foreseeable consequence of

th[e] conspiracy” may be attributed to the defendant. 10th Cir. Crim. Pattern Jury

Instruction 2.21. Hence, the jury was correctly instructed that Mr. Lochmiller could

be held criminally liable for reasonably foreseeable crimes committed by his

co-conspirators in furtherance of the conspiracy.

      Mr. Lochmiller’s convictions are affirmed.

                                                  Entered for the Court

                                                  Timothy M. Tymkovich
                                                  Circuit Judge

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