Court Opinion

ID: 4372248
Source: CourtListenerOpinion
Date Created: 2019-02-28 17:00:26.639251+00
Date Added: 2024-06-11T14:22:24.490660
License: Public Domain

United States Court of Appeals
                             For the Eighth Circuit
                         ___________________________

                                 No. 17-3279
                         ___________________________

                              United States of America

                         lllllllllllllllllllllPlaintiff - Appellee

                                            v.

                                     Keith Hagen

                       lllllllllllllllllllllDefendant - Appellant
                                       ____________

                     Appeal from United States District Court
                    for the District of South Dakota - Aberdeen
                                    ____________

                            Submitted: October 25, 2018
                             Filed: February 28, 2019
                                  ____________

Before WOLLMAN, LOKEN, and ERICKSON, Circuit Judges.
                         ____________

LOKEN, Circuit Judge.

       Keith Hagen and Amanda Holy Bull, then husband and wife, established Holy
Bull Cattle Company (“HBCC”) in 2004 to provide custom grazing services to cattle
producers on pasture land leased through the Bureau of Indian Affairs (“BIA”), which
manages and leases land the federal government holds in trust on behalf of individual
Indian owners. Hagen served as point of contact with cattle producers and worked
the cattle, while Holy Bull arranged pasture land leases through the BIA.
       Hagen and Holy Bull were charged with three counts of wire fraud, four counts
of mail fraud, and one count of conspiracy to commit mail and wire fraud after cattle
producers who contracted for grazing services during the 2012-2014 seasons received
neither those services nor refunds of payments made to HBCC. Holy Bull pleaded
guilty to the conspiracy count and testified for the government at Hagen’s trial. After
a three-day trial, the jury convicted Hagen of all eight counts. He was sentenced to
concurrent terms of 46 months imprisonment and 3 years of supervised release on
each count, restitution in the amount of $236,000, and a $100 special assessment on
each count. Hagen appeals, arguing the evidence was insufficient to prove he had the
requisite intent to defraud, and two mailings were not in furtherance of any fraud.
Reviewing the evidence in the light most favorable to the jury’s verdict, we affirm
Hagen’s conviction of conspiracy and two substantive fraud counts but vacate the
conviction and special assessments on the other five substantive counts.

Sufficiency of the Evidence

       The grazing season in this region of South Dakota runs from May 15 to
October 15 each year. The BIA leases pasture land through a negotiation process
with individual trust land owners or through an advertised and open bid process each
spring. Most leases run for one, three, or five years; payment is due in October of the
year prior to the lease. In each lease, the BIA provides a default grazing ratio for the
entire season of one cow-calf pair per six acres of land. A person seeking to graze
more cow-calf pairs per acre must submit a grazing plan to the BIA for approval.

      From 2004 through 2011, HBCC provided custom grazing services for one or
two cattle producers each year on land leased through the BIA’s negotiation process.
Hagen promoted HBCC’s services and contacted producers seeking pasture using an
agricultural publication, the Farm Forum, known locally as the “Green Sheet.”
Business with producers ran smoothly these years, but the BIA wrote letters to Hagen
and Holy Bull noting their noncompliance with the agency’s leasing procedures --

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signing multi-year leases in May 2008 that were later cancelled for nonpayment,
grazing cattle on land where leases had not been paid, letting cattle get loose and
trespass on other property, and overgrazing leased land. Hagen and Holy Bull never
responded and did not submit grazing plans to deviate from the default grazing ratio.

       In 2012, the first of the grazing seasons at issue, Holy Bull leased 347.53 acres
of pasture through the BIA for grazing. Under the BIA grazing ratio, that land could
support a full season of grazing for 57.92 cow-calf pairs. Without submitting a
grazing plan to deviate from that ratio, Hagen and Holy Bull contracted with three
cattle producers to graze at least 100 cow-calf pairs and 200 heifers. Andrew
Stroschein grazed at least 70 pairs, as planned. Only 33 of John Haefner’s 100 cow-
calf pairs grazed with HBCC, and only for one day. Bruce Penner needed to find
temporary grazing land at the beginning of the season because HBCC had not
properly leased BIA land, and was forced to remove his 200 heifers five weeks early
because the land HBCC supplied could not support the cattle. Haefner and Penner
paid $30,000 and $46,000 in advance for HBCC grazing services; neither received
a refund for services not provided.

       In 2013, Holy Bull leased 547.53 acres of pasture through the BIA, which
could support 91.26 cow-calf pairs under the BIA default ratio. Hagen contracted
with six different producers to graze a total of 380 cow-calf pairs without submitting
a grazing plan to the BIA. Each producer paid in full up front, a total of $126,500.
Not a single cow grazed on HBCC-leased land, and no producer received a refund.

       In 2014, Hagen and Holy Bull leased 40 acres of pasture through the BIA,
which could support 6.67 cow-calf pairs under the default ratio. Hagen contracted
with three different producers to graze 300 cow-calf pairs. Once again the producers
paid in full up front, a total of $102,500. No producer brought a single cow to
pasture, and none received a refund. One producer, Calvin Herrboldt, was able to
avoid a loss by stopping payment on his check before Hagen could cash it.

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The Conspiracy Count -- Count 1

       Count 1 charged Hagen and Holy Bull with conspiracy to commit mail and
wire fraud by contracting with twelve different cattle producers to graze over 700
cow-calf pairs and 200 heifers during the 2012-2014 grazing seasons for over
$300,000, fulfilling only one contract, and failing to refund cattle producer payments
for services not provided. Mail fraud is use of the mails to execute a “scheme or
artifice to defraud,” 18 U.S.C. § 1341; wire fraud is use of the wires to do the same,
18 U.S.C. § 1343; conspiring to do either is a separate offense, 18 U.S.C. § 1349.
Each offense requires proof of intent to defraud, proof that the defendant willfully
participated in a scheme with knowledge of its fraudulent nature and the intent to
achieve illicit objectives. United States v. Bailey, 859 F.2d 1265, 1273 (7th Cir.
1988); see United States v. Louper-Morris, 672 F.3d 539, 555-57 (8th Cir. 2012).

       In support of this charge, the government introduced detailed testimony
regarding Hagen’s above-summarized dealings with certain cattle producers in 2012,
2013, and 2014. The government also introduced evidence that five other cattle
producers contracted and paid for HBCC grazing services those years but received
neither services nor refunds, and that Calvin Herrboldt would have suffered a loss in
2014 had he not stopped payment on his check before Hagen could cash it. Many
cattle producers testified that they contracted with Hagen and paid up front, but when
grazing season began, Hagen pushed back the grazing dates, made excuses as to why
the cattle could not come, or simply stopped communicating until producers were
forced to arrange other grazing.

       “In reviewing the sufficiency of the evidence, we consider the evidence in the
light most favorable to the jury’s verdict, accepting all reasonable inferences that
support the verdict.” United States v. Brown, 627 F.3d 1068, 1072-73 (8th Cir.
2010), cert. denied, 565 U.S. 892 (2011). “We must uphold the conviction unless no
reasonable jury could find the defendant guilty.” United States v. Walker, 818 F.3d

                                         -4-
416, 419 (8th Cir. 2016) (cleaned up). After careful review of the extensive trial
record, we conclude the evidence was sufficient to convict Hagen of conspiracy to
commit mail and wire fraud.

       The evidence established that Hagen contracted to graze substantially more
cattle on land HBCC leased than the BIA default ratio recommended in both 2012
and 2013. And in 2014, Hagen contracted to graze 300 cow-calf pairs on 40 acres --
forty times more than the default ratio recommended and substantially more than 40
acres could support. Holy Bull testified she knew what she and Hagen were doing
was wrong, but they needed the money to support their large family. While
contracting that exceeds the BIA ratio does not without more prove intent to defraud,
evidence that Hagen knowingly collected money to graze more cattle than his leased
land could support permitted a reasonable jury to find the requisite fraudulent intent.

      Hagen argues the evidence established only that he was a naive businessman
who had no intent to defraud cattle producers. But when a defendant’s victims
“suffered some tangible loss -- as they did here -- the scheme itself often serves as
evidence of a defendant’s intent to defraud.” United States v. Ervasti, 201 F.3d 1029,
1037 (8th Cir. 2000) (cleaned up). Given the government’s evidence of a three-year
scheme that resulted in extensive producer losses, Hagen’s claim that he was simply
a naive businessman “was a credibility issue, the province of the jury to resolve.”
Walker, 818 F.3d at 421.

The 2012 Season -- Counts 2 and 3

      Counts 2 and 3 charged Hagen with using the wires to execute a scheme to
defraud by cashing John Haefner’s and Bruce Penner’s checks for grazing services
that were not provided during the 2012 grazing season. To establish wire fraud, the
government must prove a “scheme,” which “connotes some degree of planning by the
perpetrator,” specific intent to defraud, which “may be inferred from all the facts and

                                         -5-
circumstances surrounding [Hagen’s] actions,” DeMier v. United States, 616 F.2d
366, 369 (8th Cir. 1980), and use of the mails or wires in furtherance of the scheme
to defraud, United States v. Tackett, 646 F.2d 1240, 1244 (8th Cir. 1981). Hagen
argues the government failed to prove that he acted with the requisite intent to
defraud these producers. We agree.

       Regarding Count 2, the trial evidence established that Haefner responded to an
HBCC advertisement in the Green Sheet and paid Hagen $30,000 on April 13, 2012,
for grazing services for 100 cow-calf pairs. Haefner was ready to bring his cattle to
pasture on May 1, but Hagen could not take them until the second week in May.
Haefner then brought 33 cow-calf pairs and unloaded them with Hagen’s help, and
Haefner’s hired hand brought a second load the next day. After unloading, an
unknown man stopped Haefner’s hand and told him “the tribe was waiting for cattle
to confiscate because [Hagen] hadn’t paid his leases in four years.” Hearing this,
Haefner loaded up all of his cows and took them home.

       On this evidence, we cannot say a reasonable jury could find Hagen acted with
specific intent to defraud Haefner. Hagen began fulfilling the contract when he
helped Haefner unload 33 cow-calf pairs. There was no evidence that, had an
outsider not persuaded Haefner to walk away from the deal, Hagen would not have
provided the agreed grazing services. Indeed, Hagen accused Haefner of breaching
the contract by removing his cows. In these circumstances, that Haefner requested
but did not receive a refund does not establish intent to defraud. Likewise, Hagen’s
possible non-compliance with the BIA grazing ratio does not establish intent to
defraud. We vacate Hagen’s conviction and the special assessment on Count 2.

       Regarding Count 3, the evidence established that Penner responded to HBCC’s
advertisement in the Green Sheet, agreed to pay $46,000 to graze 200 heifers during
the 2012 season, and wrote a check to HBCC for the full amount on April 18, 2012.
Early in the grazing season, after delivering his cattle, the BIA advised Penner that

                                         -6-
he must move his cattle because they were on land not properly leased by Hagen and
Holy Bull. Two weeks later, Hagen and Holy Bull resolved the leasing issue and
reimbursed Penner for the cost of substitute grazing. Penner returned his cattle to
HBCC land but due to dry conditions, brought them home five weeks early. Hagen
said he would refund Penner $12,000 for those five weeks but never did.

      This evidence fails to establish Hagen cashed Penner’s check in furtherance of
a scheme to defraud Penner. Hagen attempted to fulfill the contract, but dry
conditions occurring long after Penner’s check was cashed forced its premature
termination. Even if Hagen broke a promise to refund $12,000 for the early
termination, breach of contract is not fraud, and the cashing of Penner’s check in
April was not in furtherance of any dispute that arose at the end of the grazing season.
Accordingly, we vacate Hagen’s conviction and the special assessment on Count 3.

The 2013 Season -- Counts 5, 6, and 7

       Count 5 charged Hagen with using the mails to execute a scheme to defraud
Robert Kriz by mailing Kriz a grazing contract for the 2013 season. The evidence
established that Hagen, responding to an advertisement in the Green Sheet, offered
to graze Kriz’s cattle for the 2013 grazing season. The Kriz family typically pastured
their cattle with the Stluka family, but due to a fire the two families needed new land
on which to graze their cattle that season. Robert Kriz and John Stluka met Hagen
and viewed the pasture, agreed to graze a total of 100 cow-calf pairs for $35,000 that
season, and Holy Bull mailed the contract to the Krizes, who gave Hagen a check for
$17,500 on April 23, 2013. When the time came to bring the cattle to pasture a month
later, Hagen said he did not have the land to graze the cattle or the money to refund
the Krizes. In August 2013, the Krizes received a letter from HBCC apologizing for
any inconveniences and offering to graze their cattle for the rest of the season. By
then, the BIA had informed David Kriz that Hagen did not have any pasture leased.
The Krizes decided they would not risk losing their cattle by bringing them to HBCC.

                                          -7-
       Once again, although the question is somewhat closer, we conclude a
reasonable jury could not find that Hagen caused the grazing contract to be mailed in
furtherance of a scheme to defraud. The trial evidence established that Hagen had
enough land to graze Kriz’s 50 cow-calf pairs for the 2013 grazing season, well
within the default BIA ratio of 91.26 pairs for the land HBCC leased that season. The
letter Hagen sent in August offered to belatedly fulfill his end of the deal by grazing
Kriz’s cattle for the rest of the season. The government failed to prove he had no
intent or no ability to carry out that offer. Thus, the evidence did not establish either
a scheme to defraud or Hagen’s specific intent to defraud Robert Kriz when the
grazing contract was mailed in April 2013. Accordingly, we vacate Hagen’s
conviction and the special assessment on Count 5.

       Counts 6 and 7 charged that Hagen used the mails to execute a scheme to
defraud Robert Kriz and John Stluka when he sent them letters in August 2013
offering to graze their cattle for the remainder of the season. Under 18 U.S.C. § 1341,
the alleged use of the mail must be “sufficiently closely related to,” and operate to
further, the defendant’s scheme. Tackett, 646 F.2d at 1244. Hagen argues the
government failed to prove these letters were used in furtherance of the fraud alleged.
We agree.

       The letters underlying Counts 6 and 7 were sent in August of 2013, some four
months after Hagen received payments from Kriz and Stluka for 2013 grazing and
three months after the start of the grazing season. Thus, the letters were not sent for
the purpose of executing the alleged scheme to defraud these producers, for Hagen
had already received their payments for cattle HBCC was not grazing. Mailing the
letters had no effect on the success or failure of the alleged scheme; it was already
completed. As in Tackett, Hagen’s “after-the-fact, unsolicited, incidental mailing[s]
at issue” cannot sustain his conviction on Counts 6 and 7. Id. at 1244.

                                          -8-
       The government argues that these letters to producers Kriz and Stluka furthered
the scheme to defraud because they were “designed to lull the victims into a false
sense of security, postpone their ultimate complaint to the authorities, and therefore
make the[ir] apprehension . . . less likely.” United States v. Lane, 474 U.S. 438, 451
(1986) (quotation omitted). However, Hagen’s letters accepting responsibility,
apologizing for delay and inconvenience, and offering to fulfill the Kriz and Stluka
grazing contracts are not communications that would postpone inquiries or
complaints to the BIA or other authorities. And unlike the evidence in United States
v. Fiorito, 640 F.3d 338, 348 (8th Cir. 2011), neither Kriz nor Stluka testified that he
was lulled into a false sense of security. Indeed, when asked on direct exam what
their responses were to this letter, Steve Stluka testified, “I just kind of laughed. . . .
I mean, it’s too late,” and Robert Kriz testified, “My honest reaction was, why do we
want to take cattle down there? We’ve already lost $35,000 between the two of us.”
This brief testimony did not establish the letters were in furtherance of schemes to
defraud. Accordingly, we vacate Hagen’s convictions and the special assessments on
Courts 6 and 7.

The 2014 Season -- Counts 4 and 8

      Counts 4 and 8 charged that Hagen used mail and wire to execute a scheme to
defraud Robert Berg during the 2014 grazing season when Berg mailed Hagen a
$35,000 check on May 30, 2014, in full payment of a grazing contract (Count 8) and
Hagen cashed the check using wire transmission on June 4, 2014 (Count 4). After
Hagen responded to Calvin Herrboldt’s Green Sheet ad in the spring of 2014 seeking
grazing land that season, Herrboldt alerted Berg, a family friend, who was also
looking to graze 100 cow-calf pairs. At this time, HBCC had leased only 40 acres of
pasture, which could support 6.67 cow-calf pairs under the BIA default ratio. Berg’s
son Riley traveled to view Hagen’s pasture, where Hagen assured him there was
enough land to support the two producers’ 200 cow-calf pairs. That day, Hagen gave
Riley a signed contract to custom graze 100 cow-calf pairs for $35,000, and Riley

                                           -9-
gave Hagen a check for the full amount. However, the Bergs stopped payment on the
check after a second visit to the pasture. In response, Hagen repeatedly called the
Bergs, assuring them he had enough leased land but insisting on full payment up
front. Still in need of pasture, Berg mailed Holy Bull a second check for $35,000,
which was promptly cashed. Later, when the time came for grazing, Berg called
Hagen several times to plan delivery. Hagen never returned the calls. The Bergs
grazed no cattle on HBCC pasture and never received a refund.

       Based on this evidence, the jury reasonably found that Hagen had the intent to
defraud Robert Berg. Knowing only 40 acres of land had been leased for grazing,
Hagen nonetheless contracted to graze a quantity of cow-calf pairs that 40 acres could
not possibly support. He accepted Berg’s payment in advance, then repeated the
misrepresentation that he had leased sufficient pasture land to induce a second
payment in advance from a skeptical client who had stopped payment on the first
check. When it was time to graze the cattle, Hagen disappeared with the client’s
money. As this was a victim who suffered tangible loss, “the scheme itself . . .
serve[d] as evidence of [Hagen’s] intent to defraud.” Ervasti, 201 F.3d at 1037.
Moreover, Holy Bull testified that she and Hagen knew the land could not support the
cattle they agreed to graze but took the money anyway.

      Hagen argues the government failed to prove he intended to defraud Berg
because there was evidence that he expected to lease the same amount of land through
the BIA for the 2014 season as he had in the past. However, in June 2014, Hagen had
only administratively appealed the BIA’s decisions to lease HBCC only 40 acres that
season. Not only was the outcome of the appeal uncertain, it was also impossible that
the appeal would be decided in his favor before the 2014 grazing season because it
was not received by the BIA until June 30, 2014. Thus, when Hagen contracted to

                                        -10-
graze Berg’s 100 cow-calf pairs, Hagen knew he was promising to graze substantially
more cattle than his 40 acres could possibly support -- a sailor’s promise.1

       On this evidence, Hagen’s intent to defraud Berg is “a credibility issue, the
province of the jury to resolve.” Walker, 818 F.3d at 421. We conclude the jury
reasonably found that Hagen, “having devised or intending to devise any scheme or
artifice to defraud,” used mail and wire “for the purpose of executing such scheme or
artifice.” 18 U.S.C. §§ 1341, 1343. Accordingly, we affirm Hagen’s conviction and
sentence on Counts 4 and 8.

Conclusion

       For the foregoing reasons, we instruct the district court to vacate the
convictions and special assessments on Counts 2, 3, 5, 6, and 7. In all other respects,
the judgment of the district court is affirmed. See United States v. Grimes, 702 F.3d
460, 469, 472 (8th Cir. 2012).
                       ______________________________

      1
        “Tis but a sailor’s promise, weather-bound,” made not with the intent to keep,
but to break as soon as the seas are calm enough to sail. Robert Browning, Sordello
(1840), reprinted in The Poetical Works of Robert Browning 115, 150 (Augustine
Birrell ed., 1902).

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