Court Opinion

ID: 4394205
Source: CourtListenerOpinion
Date Created: 2019-05-06 16:00:41.334069+00
Date Added: 2024-06-11T14:52:03.117789
License: Public Domain

United States Court of Appeals
                             For the Eighth Circuit
                         ___________________________

                                 No. 17-1438
                         ___________________________

                              United States of America

                         lllllllllllllllllllll Plaintiff - Appellee

                                            v.

                                   Freya D. Pearson

                       lllllllllllllllllllll Defendant - Appellant
                                       ____________

                      Appeal from United States District Court
                 for the Western District of Missouri - Kansas City
                                  ____________

                            Submitted: February 13, 2019
                                Filed: May 6, 2019
                                  [Unpublished]
                                  ____________

Before BENTON, WOLLMAN, and KELLY, Circuit Judges.
                         ____________

PER CURIAM.

      Freya D. Pearson appeals her conviction of nine counts of wire fraud, money
laundering, tax evasion, and false statements to a federal agency. She argues that the
evidence was insufficient as to all charges; the indictment and jury instructions were
erroneous; and, the district court1 erred in refusing to sever the false statements
charges, and in admitting certain statements by IRS agent witnesses. Having
jurisdiction under 28 U.S.C. § 1291, this court affirms.

       The evidence at trial showed: In 2008, Marva Wilson won the lottery. She met
Pearson in January 2010. In April, Pearson set up a checking account in the name of
a tax-exempt nonprofit organization. Between April and June, Wilson transferred
$480,000 to Pearson’s nonprofit bank account. Pearson also opened a savings
account in the name of the nonprofit organization, and transferred significant funds
from the checking account into that account. The nonprofit organization had been
minimally functioning before receiving funds from Wilson. Pearson put the funds to
personal use. Despite a purported loan agreement, the money from Wilson was not
a loan, but taxable income. Wilson was not aware of how the funds were being used.
Pearson did not pay taxes on the funds (which amounted to $122,186), was aware of
the duty to pay federal income taxes, and misrepresented the nature and scope of the
money transfers to law enforcement and in bankruptcy proceedings.

        On de novo review, this court affirms the conviction for tax evasion, because
the government proved a tax deficiency, willfulness, and affirmative acts constituting
evasion. See United States v. Olsen, 760 F.3d 825, 827 (8th Cir. 2014) (sufficiency
of evidence to sustain conviction is reviewed de novo; this court views the evidence
in the light most favorable to the government, resolves conflicts in the government’s
favor, and accepts all reasonable inferences that support the verdict); United States
v. Renner, 648 F.3d 680, 688 (8th Cir. 2011) (elements of tax evasion under 26
U.S.C. § 7201); United States v. Pomponio, 429 U.S. 10, 12 (1976) (“willfully” in the
context of tax crimes means a “voluntary, intentional violation of a known legal
duty”); United States v. Barker, 556 F.3d 682, 688 (8th Cir. 2009) (finding a

      1
      The Honorable Beth Phillips, Chief Judge, United States District Court for the
Western Distsrict of Missouri.

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reasonable jury could conclude that a defendant’s attempts to place his assets “beyond
the reach of the IRS” demonstrated knowledge of the duty to pay federal income
taxes).

       This court also affirms Pearson’s conviction for wire fraud. The evidence
showed that Pearson had an intent to defraud, participated in a scheme to defraud, and
wired funds in furtherance of that scheme. See United States v. Rice, 699 F.3d 1043,
1047 (8th Cir. 2012) (elements of wire fraud under 18 U.S.C. § 1343); United States
v. Steffen, 687 F.3d 1104, 1109-17 (8th Cir. 2012) (discussing various schemes to
defraud); United States v. Schumacher, 238 F.3d 978, 980 (8th Cir. 2001) (“Intent to
defraud may be inferred from all the facts and circumstances surrounding the
defendant’s actions.”). This court concludes that the indictment as to wire fraud was
sufficient, and that any error in the jury instructions was harmless. See United States
v. Whitlow, 815 F.3d 430, 433 (8th Cir. 2016) (sufficiency of an indictment is
reviewed de novo); United States v. Inman, 558 F.3d 742, 749 (8th Cir. 2009)
(harmless error analysis applies to instructional error).

      Based on the conviction for wire fraud, this court affirms Pearson’s conviction
for money laundering. See United States v. Pizano, 421 F.3d 707, 722 (8th Cir. 2005)
(conviction under 18 U.S.C. § 1957 requires that government prove defendant
knowingly engaged in a monetary transaction, defendant knew the property involved
derived from specified unlawful activity, and property was of a value greater than
$10,000); United States v. Huber, 404 F.3d 1047, 1057 (8th Cir. 2005) (“specified
unlawful activity” includes wire fraud); cf. United States v. Johnson, 450 F.3d 366,
375 (8th Cir. 2006) (evidence supporting conviction for conspiracy to commit wire
fraud also supported conviction for money laundering).

      This court also affirms Pearson’s conviction for false statements. Pearson
received Section 8 federal housing benefits by misrepresenting to the Department of
Housing and Urban Development (HUD) that she lived in Kansas City, Missouri,

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when she actually lived in St. Louis, Missouri, that she had only $60 in her bank
accounts, and that she had no other income. See Rice, 449 F.3d at 892 (false
statements under 18 U.S.C. § 1001 require that government prove that defendant
made a statement; the statement was false, fictitious or fraudulent as the defendant
knew; defendant made the statement knowingly and willfully; the statement was
within the jurisdiction of a federal agency; and the statement was material). Pearson
contends that her representations were “literally true,” as she had been directed in the
housing subsidy forms to identify only assets belonging to her. However, funds from
the nonprofit-linked accounts were essentially converted to personal use, and should
have been disclosed. See United States v. Hartness, 845 F.2d 158, 160-61 (8th Cir.
1988) (“putting false information into the equation necessarily leads to a false
projection;” based on the facts in existence on the date of defendant’s response,
statement at issue was false and known by the defendant to be false).

       The district court did not abuse its discretion in declining to give Pearson’s
related theory-of-defense instruction. See United States v. Meads, 479 F.3d 598, 601
(8th Cir. 2007) (standard of review). There is also no error in the district court’s
decision not to sever this count from the others. See United States v. Reichel, 911
F.3d 910, 914 (8th Cir. 2018) (refusal to sever counts are reviewed for abuse of
discretion).

       Upon careful review of the record, this court finds no reversible error in the
district court’s admission of testimony from IRS agents about the nature and
characterization of the money Pearson received from Wilson. See United States v.
Robinson, 781 F.3d 453, 466 (8th Cir. 2015) (error in admitting testimony may be
harmless if it is cumulative of other evidence and does not have more than a “slight
influence” on the verdict); United States v. Agboola, 417 F.3d 860, 865 (8th Cir.
2005) (objected-to evidentiary decision is reviewed for abuse of discretion).

                                          -4-
      This court declines to consider Pearson’s ineffective-assistance and
prosecutorial-misconduct claims on direct appeal.           See United States v.
Ramirez-Hernandez, 449 F.3d 824, 826-27 (8th Cir. 2006) (ineffective-assistance
claims are usually best litigated in 28 U.S.C. § 2255 proceedings, where record can
be properly developed); Dakota Indus., Inc. v. Dakota Sportswear, Inc., 988 F.2d 61,
63 (8th Cir.1993) (“Generally, an appellate court cannot consider evidence that was
not contained in the record below.”)

      The judgment is affirmed. The motion for new appellate counsel is denied.

      KELLY, Circuit Judge, concurring in part and dissenting in part.

       Pearson’s convictions for wire fraud should be reversed because the evidence
adduced at trial did not establish each element of that crime beyond a reasonable
doubt. To prove wire fraud under 18 U.S.C. § 1343, the government must show three
elements: “(1) intent to defraud, (2) participation in a scheme to defraud, and (3) the
use of a wire in furtherance of the fraudulent scheme.” Rice, 699 F.3d at 1047. A
“scheme to defraud” does not require affirmative misrepresentations, but
nondisclosure of a material fact generally cannot give rise to an action for fraud
unless the defendant had an independent duty to disclose the information. See
Steffen, 687 F.3d at 1113–16. Pearson’s indictment and the jury instructions stated
that the scheme was fraudulent because Pearson failed to disclose material facts to
Wilson, namely, that Pearson intended to use the wired funds for personal purposes.
The government presented no evidence that Pearson had a fiduciary or statutory duty
to disclose information to Wilson. Accordingly, under Steffen, there was insufficient
evidence to support these convictions.

      The evidence presented would also not allow the jury to find a scheme to
defraud based on affirmative misrepresentations because Wilson never testified that
Pearson made a false statement to her. Rather, Wilson testified she simply had no

                                         -5-
memory of why she transferred funds to Pearson. See United States v.
Louper-Morris, 672 F.3d 539, 555–56 (8th Cir. 2012) (holding that
misrepresentations must be capable of influencing the intended victim;
communications must be designed to deceive person of ordinary prudence and
comprehension). The government’s reliance on United States v. Van Doren, 800 F.3d
998 (8th Cir. 2015), is misplaced because there is no evidence that the transfers were
intended to conceal funds from a third party.

       Since there is insufficient evidence in the record to prove beyond a reasonable
doubt that the wire transfers were induced through fraud, I would reverse Pearson’s
wire fraud convictions and the derivative money laundering convictions. I otherwise
concur in the court’s opinion.
                         ______________________________

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