Court Opinion

ID: 1026813
Source: CourtListenerOpinion
Date Created: 2013-07-05 07:12:30.371676+00
Date Added: 2024-06-11T15:08:26.137320
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                              No. 06-5281

UNITED STATES OF AMERICA,

                  Plaintiff - Appellee,

             v.

TERESA HODGE,

                  Defendant – Appellant.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Roger W. Titus, District Judge. (8:03-
cr-00133-RWT)

Submitted:    September 11, 2008            Decided:   October 3, 2008

Before TRAXLER, Circuit Judge, HAMILTON, Senior Circuit Judge,
and James C. DEVER III, United States District Judge for the
Eastern District of North Carolina, sitting by designation.

Affirmed in part; vacated and remanded in part by unpublished
per curiam opinion.

David Schertler, SCHERTLER    & ONORATO, L.L.P., Washington, D.C.,
for Appellant.     Rod J.     Rosenstein, United States Attorney,
Baltimore, Maryland; Bryan     E. Foreman, Assistant United States
Attorney, OFFICE OF THE        UNITED STATES ATTORNEY, Greenbelt,
Maryland, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

      Teresa Hodge (Hodge) appeals her convictions on six counts

of   mail   fraud,    18     U.S.C.   § 1341,      seven     counts   of    interstate

transportation of property obtained by fraud, 18 U.S.C. § 2314,

and one count of money laundering, 18 U.S.C. § 1957(a).                           Hodge

also appeals her sentence of eighty-seven months’ imprisonment.

We affirm Hodge’s convictions in toto, but vacate her sentence

and remand for resentencing absent application of the sentencing

enhancement        imposed    pursuant      to    USSG      § 3B1.1(c)      (2000)   in

calculating     her    advisory       sentencing       range    under      the   United

States Sentencing Guidelines.

                                            I.

      In    2000,    Hodge    and     Marcus     Dukes      founded   the    Financial

Warfare Club (FWC) as a Maryland nonprofit corporation. 1                            The

pair, who are both African-Americans, purportedly created FWC to

generate     wealth        within     the     African-American        community      by

promoting investment literacy among those who typically lacked

knowledge     of    financial       markets      and   by    providing      investment

      1
        FWC listed its principal office as 12138 Central Avenue,
Suite  233,   Mitchellville,  Maryland,  20721,   which  address
actually was the address for a mailbox at a Mailboxes, Etc.
location.

                                        - 2 -
opportunities        in    companies          that    would       generate       revenue        that

would stay within the African-American community.

      Hodge and Dukes primarily sought to grow FWC through live

presentations        to    African-American           clergy       and    their     respective

congregations.             The       pastor    of     the     hosting          church        usually

introduced        Hodge        and      Dukes        to     the      attendees           at     the

presentations.            The         pair      would            then      make          material

misrepresentations to the attendees in order to induce them to

become a member of FWC at one of three membership levels.

      The top level required a $2,550.00 investment, the middle

level a $1,050.00 investment, and the lowest level a $550.00

investment.          The       top     level    entitled          the     member        to    three

financial literacy courses; 2,000 shares of stock in each of

three     infrastructure             companies       that        Hodge    and     Dukes         were

purportedly developing; and the opportunity to buy additional

shares    of    stock     in     those   companies          at    reduced       prices       before

their     initial     public         offerings        (IPOs).            The    middle        level

entitled       the   member      to     two    financial          literacy       courses,       500

shares of stock in each of the three infrastructure companies,

and   the   same     opportunity         to    purchase       more       shares    at        pre-IPO

prices.        The least expensive level entitled the member to one

financial literacy course, 250 shares of stock in each of the

three infrastructure companies, and the opportunity to buy more

shares at pre-IPO prices.

                                              - 3 -
        Among other items, Hodge claimed that the African-American

community        had    been   intentionally          locked   out       of    achieving

financial success on Wall Street via the sophisticated investor

accreditation rules of the Securities and Exchange Commission of

the United States (the SEC).                Hodge held out FWC as a mechanism

for African-Americans to bypass such rules.                    In this vein, Hodge

falsely told attendees at FWC presentations that if a potential

investor did not have an income of at least $200,000.00 during

the     previous       three   years,    the     SEC’s     sophisticated         investor

accreditation rules prohibited such person from investing in an

initial public offering of stock (IPO).

        Hodge also falsely told attendees at FWC presentations that

Dukes    had     considerable       investment       experience     on    Wall    Street,

including      having     personally        taken    the   retail    clothing        store

Today’s Man public.            Hodge also knew that Dukes often falsely

told attendees at FWC presentations that he had given financial

advice to a church in Washington, D.C. and, as a result, the

church    made       $50,000   and    two     church     members    bought       matching

Porsche automobiles with their profits.

        Hodge,    as    well   as    others    who    introduced     her      during   the

presentations, told attendees that she was a wealthy woman with

decades of business experience.                  Hodge also told the attendees

that    she    had     personally     invested      $1,000,000.00        in   FWC.     The

                                         - 4 -
evidence    at   trial     proved       all     of   these    representations       to   be

false and misleading.

     After making numerous FWC presentations to African-American

churches in Maryland, Hodge and Dukes took FWC on the road,

giving    presentations       at    numerous         churches    throughout    Georgia,

Michigan, Ohio, New York, New Jersey, and Alabama.                              When it

became apparent that FWC’s promised benefits (financial literacy

courses and IPO profits) were not forthcoming, a number of FWC

members requested a refund of their investments.                       Only a handful

of members actually received a refund.                         When Dukes failed to

respond timely to some FWC members’ complaints, some of those

members complained about FWC to the Maryland Attorney General’s

Office.

     On    March      5,   2001,       the     Maryland      Securities     Commissioner

issued a cease-and-desist order (the Cease and Desist Order or

Exhibit Maryland 1) against Dukes, Hodge, and FWC, ordering them

to stop offering or selling unregistered securities, including

memberships      in    FWC,      and      to    stop    violating     the    anti-fraud

provision of the Maryland Securities Act, Md. Code Ann., Corps.

& Ass’ns §§ 11-101 to 11-805.                    Hodge received her copy of the

Cease and Desist Order on March 7, 2001.

     Approximately         one     week      later,    on    March   13,    2001,   Dukes

incorporated a new FWC entity in Washington, D.C.                            Around the

same time, FWC moved out of its Maryland office.

                                             - 5 -
     On April 10, 2002, Hodge and Dukes entered into a consent

decree    with     the   Maryland   Securities   Commission      (the    Consent

Decree).     Pursuant to the terms of the Consent Decree, Hodge and

Dukes admitted to certain facts, including the fact that they

had raised approximately $800,000.00 from about 800 FWC members,

they had provided no financial literacy courses to FWC members,

and none of the three infrastructure companies had any prospect

of going public.         The Consent Decree also contained the Maryland

Securities Commission’s legal conclusions that Hodge and Dukes

had committed securities and investment fraud under the Maryland

Securities Act, which the pair neither admitted nor denied.                        In

the Consent Decree, the Commission also repeated its orders to

Hodge and Dukes to cease and desist from engaging in fraudulent

investment activities.

     In    December      2003,   Hodge   and   Dukes   were    indicted       by   a

federal grand jury for mail fraud, interstate transportation of

property obtained by fraud, and money laundering.                    A fourteen-

count     second    superseding     indictment    naming      only    Hodge    was

returned on November 28, 2005.            The district court severed the

cases for purposes of trial.

    On June 8, 2005, a jury convicted Dukes on all but three

counts, which three counts the district court had dismissed on

the government’s motion.            On July 3, 2007, we affirmed Dukes’

                                      - 6 -
convictions, but remanded for resentencing.             United States v.

Dukes, 242 Fed. Appx. 37 (4th Cir. July 3, 2007) (unpublished).

      On June 6, 2006, following a three-week trial, the jury

convicted Hodge on all counts.             The district court sentenced

Hodge to eighty-seven months’ imprisonment. 2           Hodge noted this

timely appeal.

                                    II.

      The first issue on appeal concerns the Cease and Desist

Order.     Notably, Hodge premises several of her arguments with

respect to this issue upon her claim that the entirety of the

Cease and Desist Order, a.k.a., Exhibit Maryland 1, was sent to

the   jury    room     for   the   jury’s    consideration    during     its

deliberations.       In contrast to Hodge’s version of events, in its

appellate brief, the government claimed the jury’s only exposure

to the text of the Cease and Desist Order occurred during the

direct testimony of government witness Ronald Wilson, when the

government read certain portions of such document into evidence

while the same portions appeared simultaneously before the jury

on a large video screen in the courtroom, known as the ELMO.

Ronald    Wilson   was   a   securities    fraud   investigator   with   the

      2
       The district court used the 2000 version of the United
States Sentencing Guidelines Manual (effective November 1, 2000)
in calculating Hodge’s advisory sentencing range.

                                   - 7 -
Maryland Attorney General’s Office during the time that Hodge

and Dukes operated FWC.             As part of his investigation of FWC,

Ronald     Wilson    attended       a   FWC    presentation       at    a    church     in

Maryland.      He also served the Cease and Desist Order on Dukes.

       After the completion of all appellate briefing, we remanded

this case to the district court for a factual finding concerning

the extent of the jury’s actual exposure to the contents of the

Cease and Desist Order (Exhibit Maryland 1) during Hodge’s trial

and ordered this appeal held in abeyance pending further order

of this court.          On remand, the district court agreed with the

government’s version, finding that the Cease and Desist Order

did not go to the jury room during deliberations, and that the

jury only heard the portions of the Cease and Desist Order read

into evidence by the government and put on the ELMO for the

jury’s     viewing    during     the    government’s       direct      examination      of

Ronald Wilson.

       This appeal is now back before us.                  The following portions

of the Cease and Desist Order are the only portions of such

order presented to the jury which are potentially troublesome

from   a   Federal    Rule     of   Evidence      403   (Rule    403)       perspective.

Those portions are:          (1) “ORDERED, that Financial Warfare, Hodge

and    Dukes   and    anyone    under     their    direction      . . .       cease   and

desist     from      violating      the       anti-fraud     provisions         of     the

[Maryland]      Securities       Act,”     (J.A.    506);       (2)    “ORDERED       that

                                          - 8 -
respondents        cease    and      desist       from       engaging        in    material

misrepresentations or omissions in connection with the offer or

sale of securities in this State,” (J.A. 516); and (3) “ORDERED

that   respondents        cease   and     desist     from       engaging      in   material

misrepresentations or omissions in connection with the offer of

investment advice in this State.”               (J.A. 517).

       Without the Cease and Desist Order having been sent to the

jury room, Hodge is left with her arguments that the portions of

the Cease and Desist Order that were read into the record and

simultaneously put on the ELMO violated her right to confront

witnesses against her under the Sixth Amendment to the United

States Constitution, as articulated in Crawford v. Washington,

541 U.S. 36 (2004).          Alternatively, she argues that the portions

of the Cease and Desist Order that were read into the record and

simultaneously       put    on    the    ELMO   violated           Rule    403.      Neither

argument has merit.

       A.    Confrontation Clause Argument.

       The   Sixth    Amendment         guarantees       that      “[i]n    all    criminal

prosecutions,       the    accused      shall   enjoy        the    right    . . .    to    be

confronted with the witnesses against him.”                         U.S. Const. amend.

VI.    In Crawford, the Supreme Court held that the Confrontation

Clause prohibits the “admission of testimonial statements of a

witness who did not appear at trial unless he was unavailable to

testify,     and   the     defendant      had   had      a    prior       opportunity      for

                                          - 9 -
cross-examination.”              Crawford,        541     U.S.     at       53-54.         “Only

[testimonial]         statements     . . .       cause     the    declarant          to    be   a

‘witness’ within the meaning of the Confrontation Clause.                                  It is

the testimonial character of the statement that separates it

from        other    hearsay       that,     while        subject          to   traditional

limitations         upon   hearsay     evidence,          is     not       subject    to     the

Confrontation Clause.”             Davis v. Washington, 547 U.S. 813, 821

(2006) (citation omitted).

       Hodge’s      Confrontation      Clause       argument          is    without       merit.

First, in the form of allegations and orders, the language of

the    Cease    and     Desist     Order    is    obviously        not      testimonial         in

nature.       Second, the allegations and ordering language are not

hearsay because the government did not introduce them for the

truth of the matter asserted, see Fed. R. Evid. 801(c), but

rather to establish that Hodge was on notice of the allegations

and the ordering language set forth in the Cease and Desist

Order, and nonetheless, continued uninterrupted in her active

role in recruiting FWC members.                   Such evidence was probative of

Hodge’s fraudulent intent.

       B.      Rule 403 Argument.

       In    relevant      part,    Rule     403        provides        that     “[a]lthough

relevant, evidence may be excluded if its probative value is

substantially         outweighed     by     the     danger       of     unfair       prejudice

. . . .”       Fed. R. Evid. 403.            According to Hodge, the portions

                                           - 10 -
of the Cease and Desist Order heard by the jury and put on the

ELMO for the jury’s viewing “created an extreme danger that the

jury would infer guilt on the part of Hodge in light of the fact

that the Cease and Desist Order made it appear that the State of

Maryland had already made such findings.”                      (Hodge’s Reply Br. at

10).

       We disagree.        Even if we assume arguendo that the district

court erred under Rule 403 in allowing the jury to see or hear

any portion of the Cease and Desist Order, we can say with fair

assurance     that,       without          stripping     the     assumed        erroneous

admission     from       the      whole,      the      jury’s     verdict       was   not

substantially swayed by the error.                     United States v. Curbelo,

343 F.3d 273, 286 (4th Cir. 2003).                  Accordingly, any error would

be harmless.       In reaching this conclusion, we are mindful that

we rejected, on the same rationale, Dukes’ evidentiary challenge

to the admission of the entirety of the Consent Decree during

his trial, which decree having contained the Maryland Securities

Commission’s       legal       conclusions       that     Hodge     and     Dukes      had

committed    securities        and    investment       fraud    under     the     Maryland

Securities Act, contained far more prejudicial information than

the Cease and Desist Order.                  See United States v. Dukes, 242

Fed. Appx. 37, 48 (4th Cir. July 3, 2007) (unpublished).

       In   sum,    we     hold      the     district     court    did      not     commit

reversible error when it allowed the government to read certain

                                           - 11 -
portions of the Cease and Desist Order into the record and to

put the same portions on the ELMO for the jury’s viewing, all

during the direct testimony of government witness Ronald Wilson. 3

                                       III.

     With respect to her sentence, Hodge first argues that the

district court engaged in impermissible double-counting when it

increased   her    offense   level     by   two    levels,     pursuant    to    USSG

§ 2F1.1(b)(4)(C)     (2000),     and     increased      her    offense    level   by

another two levels, pursuant to USSG § 2F1.1(b)(6)(A) (2000).

According    to     Hodge,       these      two     sentencing      enhancements

impermissibly punish the same conduct in her case.

     When    determining     a    sentence,       the    district       court    must

calculate   the    appropriate     advisory       guideline     range    under    the

United    States    Sentencing       Guidelines         (the    Guidelines)       and

consider it in conjunction with the factors set forth in 18

U.S.C. § 3553(a).      Gall v. United States, 128 S. Ct. 586, 596

(2007).     In reviewing the district court’s application of the

     3
         We have also carefully reviewed and reject as without
merit Hodge’s remaining two challenges to her convictions: (1)
that the district court committed reversible error by denying
her motion for a mistrial based upon the government’s brief
reference to Timothy McVeigh during its rebuttal closing
argument; and (2) that the testimony of securities law expert
Michael Ferraro should have been excluded as irrelevant and
unfairly   prejudicial.    Neither  argument  warrants  further
discussion.

                                     - 12 -
Guidelines,   we   review    findings   of    fact    for   clear    error     and

questions of law de novo.       United States v. Green, 436 F.3d 449,

456 (4th Cir. 2006).

    Hodge’s double-counting argument is without merit.                        USSG

§ 2F1.1(b)(4)(C)    provides     for    a    two-level      increase     if    the

offense involved “a violation of any prior, specific judicial or

administrative     order,     injunction,     decree,       or    process      not

addressed elsewhere in the guidelines . . . .”                   Id. (emphasis

added).    See also USSG § 2F1.1(b)(4)(C) (2000), comment. (n.6)

(“This enhancement does not apply if the same conduct resulted

in an enhancement pursuant to a provision found elsewhere in the

guidelines.”).     USSG § 2F1.1(b)(6)(A) (2000) provides for a two-

level increase if “the defendant relocated, or participated in

relocating, a fraudulent scheme to another jurisdiction to evade

law enforcement or regulatory officials . . . .”               Id.

     Here, the district court increased Hodge’s offense level by

two levels, pursuant to USSG § 2F1.1(b)(4)(C) (2000), based upon

Hodge’s violation of the Cease and Desist Order by continuing to

make sales presentations and to accept new members in FWC (with

membership applications directed to a mailing address for FWC in

Maryland) after she received the Cease and Desist Order.                       The

district   court   then     increased   Hodge’s      offense     level   by    two

levels, pursuant to USSG § 2F1.1(b)(6)(A) (2000), based upon her

                                  - 13 -
and Dukes’ relocation of FWC to Washington, D.C., to evade the

jurisdiction of the Maryland Securities Commission.

     Contrary        to   Hodge’s     position,        the   district    court        based

these    two    enhancements        on    different      conduct.        Notably,       in

sentencing      Dukes,    the     district      court    applied    these       same    two

enhancements, and we rejected Dukes’ identical double-counting

argument on the same basis.                See Dukes, 242 Fed. Appx. at 51.

In sum, we reject Hodge’s double-counting argument as without

merit.

                                           IV.

     Hodge further contends the district court erred when it

increased      her   offense      level    by    two   levels,   pursuant        to    USSG

§ 3B1.1(c)      (2000),     for    her     alleged      aggravating      role    in     the

offense.       The government concedes that Hodge’s sentence should

be vacated and the case remanded for Hodge’s resentencing absent

the two-level increase in her offense level imposed pursuant to

USSG § 3B1.1(c)(2000).            We agree.

     USSG § 3B1.1(c) (2000) provides for a two-level increase

“[i]f    the    defendant       was   an    organizer,       leader,     manager,       or

supervisor in any criminal activity . . . .”                       Id.    Application

Note 2 to this guideline makes clear that “[t]o qualify for an

adjustment under this section, the defendant must have been the

organizer, leader, manager, or supervisor of one or more other

                                          - 14 -
participants.”        USSG      §     3B1.1(c)       (2000),     comment.     (n.2).

Application Note 1 defines “participant” as “a person who is

criminally responsible for the commission of the offense, but

need not have been convicted.”              Id. comment. (n.1).

     Here,      the   district      court    based     its   application    of   USSG

§ 3B1.1(c)      (2000)   on    Hodge’s      recruitment      and   supervision    of

church leaders, in particular Pastor Samuel Hairston and Bishop

Ralph Dennis.         However, as the government concedes, at Dukes’

resentencing on October 12, 2007, the district court found that

Pastor Samuel Hairston and Bishop Ralph Dennis were not “other

participants” in Dukes and Hodge’s scheme to defraud, within the

meaning of USSG § 3B1.1(c) (2000), comment. (n.2).                         Thus, the

basis    upon   which    the    district       court   applied     USSG   § 3B1.1(c)

(2000) in sentencing Hodge is infirm.                    Accordingly, we vacate

Hodge’s    sentence      on    this    basis    and    remand    for   resentencing

absent application of the two-level increase pursuant to USSG

§ 3B1.1(c) (2000). 4

     4
       We have carefully reviewed and find without merit Hodge’s
two remaining challenges to her sentence: (1) that the district
court erred in increasing her offense level by two levels,
pursuant to USSG § 3C1.1 (2000), for obstruction of justice; and
(2) that the district court erred by using the preponderance of
the evidence standard instead of the more rigorous beyond a
reasonable doubt standard in making its factual findings for
purposes of calculating her advisory sentencing range under the
Guidelines. Neither argument warrants further discussion.

                                        - 15 -
                                     V.

    In conclusion, we:      (1) affirm Hodge’s convictions in toto;

and (2) vacate her sentence and remand for resentencing absent

application   of   a   two-level    increase    in   her   offense   level

pursuant to USSG § 3B1.1(c) (2000).

                                                       AFFIRMED IN PART;
                                            VACATED AND REMANDED IN PART

                                   - 16 -