Court Opinion

ID: 4552173
Source: CourtListenerOpinion
Date Created: 2020-07-30 19:00:39.23378+00
Date Added: 2024-06-11T13:07:31.180574
License: Public Domain

Case: 18-15072   Date Filed: 07/30/2020   Page: 1 of 19

                                                      [DO NOT PUBLISH]

             IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                              No. 18-15072
                          Non-Argument Calendar
                        ________________________

               D.C. Docket No. 5:17-cr-00026-MTT-CHW-1

UNITED STATES OF AMERICA,

                                                             Plaintiff-Appellee,

                                  versus

ISAAC J. CULVER, III,

                                                         Defendant-Appellant.

                        ________________________

                              No. 18-15073
                          Non-Argument Calendar
                        ________________________

               D.C. Docket No. 5:17-cr-00026-MTT-CHW-3

UNITED STATES OF AMERICA,

                                                            Plaintiff-Appellee,

                                  versus
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PROGRESSIVE CONSULTING TECHNOLOGIES, INC.,

                                                              Defendant-Appellant.

                           ________________________

                   Appeals from the United States District Court
                       for the Middle District of Georgia
                          ________________________

                                  (July 30, 2020)

Before MARTIN, ROSENBAUM, and ANDERSON, Circuit Judges.

PER CURIAM:

      Isaac Culver appeals his convictions and 87-month sentence for conspiracy

to commit mail and wire fraud, mail and wire fraud, and money laundering. His

appeal was consolidated with that of his company, Progressive Consulting

Technologies, Inc. (“Progressive”). Progressive was convicted of the same

offenses and sentenced to 5-years probation and a $500,000 fine. In their

consolidated appeal, Culver and Progressive (“Appellants”) first argue that

insufficient evidence supported their conspiracy and substantive convictions for

mail and wire fraud, because the government failed to show any intentional scheme

to defraud. Second, they argue that insufficient evidence supported their

convictions for conspiracy to commit money laundering because the government

failed to prove concealment. Finally, Culver argues that the district court

improperly applied a two-level sophisticated means enhancement in calculating his

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guideline sentence. After careful review, we affirm Appellants’ convictions and

Culver’s sentence.

                                          I.
      In 2012, the Bibb County School District decided to upgrade the school

system’s technology infrastructure. In June of that year, the School District

published a Request for Qualifications (an “RFQ”) for an entity to fill the upgrade

project’s Technical Project Manager role. The School District looked for a firm

capable of providing “technical project management and network management

support.” The School District wanted a firm to oversee the purchase and

installation of the technology upgrades, rather than a firm to complete the

installation itself. The RFQ was the first step in the process for an applicant to

become the project manager. Relevant here, another step required applicants to

submit letters of recommendation from companies with whom they had recently

worked.

      In July 2012, Culver, on behalf of Progressive, completed an RFQ outlining

Progressive’s qualifications. As part of its submission package, Progressive

included a letter from Allen Stephen, CEO of CompTech, Inc., a federal

contracting firm located in Dayton, Ohio. However, Culver actually wrote the

recommendation letter and at Culver’s direction, Stephen put Culver’s letter on

CompTech stationary. At trial, evidence was introduced that Culver knew the

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assertions contained in the letter were “totally made up.” Stephen also

acknowledged that some assertions made in the letter were entirely false.1

       Progressive was ultimately selected to serve as the project manager for the

upgrade. The “Services Agreement” reflects the terms of the parties’ agreement.

It states that as project manager, Progressive would “[i]nstall, relocate, configure,

modify and test routers, switches, and servers”; assist with “infrastructure

deployments and technical hardware refresh, renovation, and transition initiatives”;

and “[e]valuate and recommend new and evolving networking technologies.”

       Appellants recommended the School District use the NComputing L300

device as part of its technology upgrade and the School Board approved the

purchase. Culver was involved with the purchase of these devices. However, the

School District believed the devices were purchased from CompTech, because

Culver was directing CompTech to invoice the School District. The School

District paid CompTech $3,768,000, but CompTech wired $2,151,750 of that

amount back to Progressive so that Progressive could pay for the NComputing

devices. In a separate transaction, CompTech wired $1,537,990 in profit to

Progressive and kept the remaining $78,260 for itself. Out of the over $1.5 million

wired to Progressive, Progressive wrote several checks payable to Culver. The

       1
         For example, Progressive and CompTech never worked together on the project Culver
described in the letter. And, despite the letter’s claim that CompTech had an office in Atlanta,
CompTech did not.
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School District did not know that CompTech was sending money back to

Progressive as part of the purchase.

        In March 2013, the School District contacted CompTech to ask when the

NComputing devices would be installed. Stephen, however, never intended

CompTech to perform the installation because he believed Progressive was doing

it. When Stephen contacted Culver about this issue, Culver sent Stephen

information about the equipment and deployment and directed Stephen to respond

to the School District’s inquiries.

        At some point during the spring of 2013, the School District began to

question how the technical upgrade was being managed. On April 17, 2013,

Culver sent Stephen a letter advising him that the School was putting together a

timeline and record of payments to vendors for 2012. Culver again directed

Stephen how to respond on behalf of CompTech. Culver told Stephen to say that

in order to get the School District a discount on the NComputing devices,

Progressive asked CompTech to purchase the devices and take a small profit “as a

pass through for using CompTech’s GSA schedule.” Then on April 22, 2013,

Culver sent Stephen a “heads up” email, letting Stephen know that he should tell

the School District that CompTech was doing the install of the NComputing

devices, and that CompTech had two “employees.” None of this information was

true.

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      Eventually, the School District shut down the technology upgrade project.

Only 300 of the 15,000 NComputing devices purchased were installed. The

School District deemed the rest of the devices “unusable” because key

components, like monitors and keyboards, were not purchased. In June 2017, the

government indicted Progressive and Culver based on their roles in this scheme. A

jury found them guilty of conspiracy to commit mail and wire fraud, mail and wire

fraud, and money laundering. Culver was sentenced to a term of 87-months

imprisonment and Progressive was sentenced to 5-years probation and a $500,000

fine. This appeal followed.

                                          II.
      We review de novo whether sufficient evidence supported a jury’s guilty

verdict. United States v. Foster, 878 F.3d 1297, 1303–04 (11th Cir. 2018). In

doing so, we view the evidence in the light most favorable to the prosecution and

resolve all reasonable inferences and credibility evaluations in favor of the verdict.
Id. at 1304. In considering the sufficiency of the evidence, our only task is to

determine whether any rational trier of fact could have found all the essential

elements of the crime beyond a reasonable doubt. United States v. Feldman, 931
F.3d 1245, 1258 (11th Cir. 2019). The jury’s guilty verdict must be affirmed

unless there is no reasonable construction of the evidence from which the jury

could have found the defendant guilty beyond a reasonable doubt. Foster, 878

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F.3d at 1304. A jury is free to choose among reasonable constructions of the

evidence, so it is unnecessary that the evidence exclude every reasonable theory of

innocence or be wholly inconsistent with every conclusion except that of guilt. Id.

It is not enough for a defendant to put forth a reasonable hypothesis of innocence,

as the issue is not whether a jury reasonably could have acquitted, but whether it

reasonably could have found guilt beyond a reasonable doubt. United States v.

Beckles, 565 F.3d 832, 840–41 (11th Cir. 2009).

      Credibility determinations are also left to the jury. United States v. Flores,

572 F.3d 1254, 1263 (11th Cir. 2009) (per curiam). A jury is entitled to believe as

much or as little of a witness’s testimony as it finds credible. United States v.

Matthews, 431 F.3d 1296, 1312 (11th Cir. 2005) (per curiam). If the jury does not

believe a defendant’s testimony, the jury may take it as evidence that “the opposite

of his testimony is true.” United States v. Williams, 390 F.3d 1319, 1325 (11th

Cir. 2004) (quotation marks omitted).

      That said, we turn to Culver and Progressive’s two sufficiency-of-the-

evidence arguments.

A. MAIL AND WIRE FRAUD
      A conviction for wire fraud requires that the government prove beyond a

reasonable doubt that the defendants (1) participated in a scheme or artifice to

defraud, (2) with intent to defraud, and (3) used, or caused the use of, interstate

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wire transmissions for the purpose of executing the scheme or artifice to defraud.

United States v. Machado, 886 F.3d 1070, 1082–83 (11th Cir. 2018). Mail and

wire fraud “are analytically identical save for the method of execution.” United

States v. Bradley, 644 F.3d 1213, 1238 (11th Cir. 2011); see also 18 U.S.C.

§§ 1341, 1343.

      Courts have construed the phrase “scheme to defraud” broadly. United

States v. Pendergraft, 297 F.3d 1198, 1208 (11th Cir. 2002). The word “defraud”

means “the deprivation of something of value by trick, deceit, chicane, or

overreaching.” Id. (quotation marks omitted). To establish a scheme to defraud,

the government must offer “proof of a material misrepresentation, or the omission

or concealment of a material fact calculated to deceive another out of money or

property.” Bradley, 644 F.3d at 1238 (quotation marks omitted).

      In addition, the government must prove the defendant’s intent to defraud.

Id. at 1239. “To gauge a defendant’s intent to commit a fraudulent scheme . . . we

must determine whether the defendant attempted to obtain, by deceptive means,

something to which he was not entitled.” Id. at 1240. An intent to defraud for

purposes of mail and wire fraud may be inferred from the defendant’s conduct.

United States v. Maxwell, 579 F.3d 1282, 1301 (11th Cir. 2009). “Evidence that a

defendant personally profited from a fraud may provide circumstantial evidence of

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an intent to participate in that fraud.” United States v. Naranjo, 634 F.3d 1198,

1207 (11th Cir. 2011).

      Appellants’ sufficiency argument rests on United States v. Takhalov, 827

F.3d 1307 (11th Cir. 2016), which held that mere deception is insufficient to

constitute a “scheme to defraud.” Id. at 1313–14. In Takhalov, this Court reversed

a wire fraud conviction because the district court refused to give an instruction to

the jury that the defendants intended to defraud their victims. Id. at 1315–16,

1325. In that case, the government presented evidence to establish that the

defendants tricked men into coming into the defendants’ nightclubs by paying

women (B-girls) to lure them into their clubs. Id. at 1310. Once inside, club

employees “would pour vodka in the men’s beer to get them drunker, misrepresent

the prices of drinks, hide menus, cover up prices, and even forge the men’s

signatures on credit-card receipts.” Id. The defendants asked the district court to

instruct the jury that “[f]ailure to disclose the financial arrangement between the B-

girls and the Bar, in and of itself, is not sufficient to convict a defendant of any

offense[.]” Id. at 1314 (alterations in original) (quotation marks omitted). On

appeal, this Court held that the district court should have charged the jury that in

order to find a scheme to defraud, it had to find both deception about the nature of

the transaction and an intent to harm. Id. at 1312–16.

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      Here, Appellants argue that although there was sufficient evidence that they

deceived the school district, the evidence was not sufficient to prove their intent to

defraud. Appellants claim there was no evidence of intent to misrepresent the

price or fees charged and no evidence that they misrepresented the characteristics

or quality of the devices. However, Appellants’ Takhalov-based arguments are not

persuasive.

      There was sufficient evidence here to support Culver’s and Progressive’s

conspiracy and substantive wire and mail fraud convictions. Progressive, through

its agents, “constructed an elaborate scheme that allowed them to reap inflated

profits” and left the School District “with almost nothing for its $3,768,000.00

investment.” R. Doc. 202 at 3. Witnesses testified that Appellants deceived the

School District into hiring Progressive as the project manager because Progressive

fabricated a recommendation letter from CompTech. There was also testimony

that Appellants used CompTech as a pass-through for the purchase of the devices

to hide the fact that Progressive was acting as a vendor. This is relevant because

under the agreement with the School District, Progressive was to provide product

management services, and when Progressive acted as a vendor, it created a conflict

of interest. Based on this evidence, the jury could reasonably infer that Appellants

made misrepresentations to the School District in an “attempt[] to obtain, by

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deceptive means, something to which [they were] not entitled.” Bradley, 644 F.3d

at 1240.

      Appellants also argue that any misrepresentations they made did not affect

the essential nature of the parties’ bargain and therefore were not material.

Because fraud requires a false statement of “material” fact, Appellants argue this

evidence was not sufficient to prove mail and wire fraud. See Maxwell, 579 F.3d

at 1299 (“A scheme to defraud requires proof of a material misrepresentation . . .

calculated to deceive another out of money or property.”).

      This Court addressed a similar situation in Maxwell. There, the defendant

acquired state and federal contracts to perform work as minority contractors, even

though they were not minorities. Id. at 1291. The defendant argued that, although

various contracts he signed had explicit provisions requiring the work to be

performed by a minority contractor, he did not deprive the victims of money or

property because they received the work they sought. Id. at 1302. A panel of this

Court rejected the defendant’s argument, noting that the mail and wire fraud

statutes “also seek to punish the intent to obtain money or property from a victim

by means of fraud and deceit.” Id.

      Appellants argue that Maxwell is distinguishable because the contract in that

case “contained explicit provisions that only minority businesses could apply,”

whereas Progressive’s agreement with the School District “did not include any

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provision preventing them from acting as the vendor for the NComputing

transaction and/or to provide conflict-free advice.” Br. of Appellants at 31. But

this fact does not distinguish Appellants’ case. A misrepresentation need not be a

term included in the parties’ agreement for it to be material. Rather, a

misrepresentation is material if it has “a natural tendency to influence, or is capable

of influencing, the decision maker to whom it is addressed.” Maxwell, 579 F.3d at

1299 (alteration adopted) (quotation marks omitted). A jury could reasonably find

that Appellants’ fabricated recommendation letter and misrepresentations about

CompTech’s role influenced the School District in purchasing the NComputing

devices. We therefore affirm the jury’s verdict as to the mail and wire fraud

convictions.

B. MONEY LAUNDERING

      We next examine the sufficiency of the evidence supporting Appellants’

convictions on the money laundering counts under 18 U.S.C. § 1956(a)(1)(B)(i).

Section 1956(a)(1)(B)(i) is sometimes referred to as the “concealment” provision

of the money laundering statute. United States v. Majors, 196 F.3d 1206, 1211

(11th Cir. 1999). This section “was designed to punish defendants who thereafter

take the additional step of attempting to legitimize their proceeds so that observers

think their money is derived from legal enterprises.” Id. at 1212.

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      In this case, the government had to prove to the jury that: (1) Appellants

conducted or attempted to conduct a financial transaction; (2) the transaction

involved the proceeds of a statutorily specified unlawful activity; (3) Appellants

knew the proceeds were from some form of illegal activity; and (4) they knew a

purpose of the transaction was to conceal or disguise the nature, location, source,

ownership, or control of the illegal proceeds. United States v. Miles, 290 F.3d

1341, 1355 (11th Cir. 2002) (citing § 1956(a)(1)(B)(i)). Appellants challenge the

sufficiency of the evidence only as to the fourth element.

      Specifically, Appellants argue the government’s evidence was insufficient to

prove the existence of “any transaction that was designed to conceal the nature,

location, source, ownership, or control of any illegal proceeds” as required under

the concealment provision in § 1956(a)(1)(B)(i). Appellants say they did not

disguise any transaction with aliases, fake addresses, complicated or unnecessary

transactions, or engage in any other concealment efforts, so the government’s

evidence did not show the “animating purpose” of the transaction made it more

difficult for law enforcement to trace the funds at issue. Br. of Appellants at 33.

      In determining whether there was a purpose of concealment, this Court looks

to whether there is evidence of:

      [S]tatements by a defendant probative of intent to conceal; unusual
      secrecy surrounding the transaction; structuring the transaction in a way
      to avoid attention; depositing illegal profits in the bank account of a
      legitimate business; highly irregular features of the transaction; using
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      third parties to conceal the real owner; a series of unusual financial
      moves cumulating in the transaction; or expert testimony on practices
      of criminals.

United States v. Blankenship, 382 F.3d 1110, 1130 (11th Cir. 2004) (alteration

adopted) (quoting Majors, 196 F.3d at 1213 n.18). In Blankenship, the defendant

deposited illegitimate funds into his business account, and then transferred those

funds into bank accounts in his own name. Id. at 1128–29. We held the evidence

was insufficient to show concealment because (1) the money was in accounts in the

defendant’s name, and (2) the accounts were private so the defendant “could not

reasonably have anticipated” receiving a “marginal increase in secrecy” by moving

the money between those accounts. Id. By comparison, in Majors, defendants

deposited illegitimate funds in business accounts of two corporations, transferred

those funds to other, legitimate third-party corporations, and then transferred those

funds from the legitimate corporations directly into their own pockets. Majors,

196 F.3d at 1214. This Court held that evidence was sufficient to prove money

laundering because, in the light most favorable to the government, it supported the

jury’s finding that the defendants “had a specific intent to structure their financial

transactions so as to conceal or disguise the true nature and source of the transfer

of funds between corporations and, ultimately, to them.” Id.

      Appellants say this case is different because they funneled funds through

CompTech only for the purpose of defrauding the School District, not to conceal

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the funds themselves. Although the evidence introduced at trial shows that

Appellants funneled the purchase of NComputing devices through CompTech to

deceive the School District, there was other evidence in the record that showed

concealment of the funds. For instance, investigators had to examine CompTech’s

account statements in order to discover the fact that, after Progressive paid

NComputing, it retained a profit from the funds paid by the school district for the

NComputing devices. In addition, Progressive instructed CompTech to wire the

funds from the NComputing devices in two separate transactions in two separate

amounts. Based on this evidence, a rational juror could—and did—conclude that

Appellants’ use of CompTech as a third party, and directions to wire funds of

$2,151,750 and $1,537,990 in two separate transactions, was intended to conceal

the illegitimate proceeds of their fraud. See Blankenship, 382 F.3d at 1130

(looking to “secrecy surrounding the transaction,” “depositing illegal profits in the

bank account of a legitimate business,” and “using third parties to conceal the real

owner”).

      In sum, and taking the evidence in a light most favorable to the government,

Culver and Progressive’s transfer of money in two amounts through a third-party

company constituted sufficient evidence to show that a purpose of the transaction

was to conceal or disguise the source, ownership, or control of the illegal proceeds.

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We therefore affirm Appellants’ convictions for conspiracy to commit money

laundering.

                                         III.

      Culver also argues that the district court miscalculated the Sentencing

Guidelines range by erroneously finding his conduct fell within the “sophisticated

means” enhancement. See U.S. Sentencing Guidelines § 2B1.1(b)(10)(C). He

says Appellants’ scheme “was neither complex nor intricate,” as is required to

increase a sentence based on a sophisticated-means offense. Br. of Appellants at

37.

      We review for clear error the district court’s findings of fact related to the

imposition of sentencing enhancements, including a finding that the defendant used

sophisticated means. United States v. Ghertler, 605 F.3d 1256, 1267 (11th Cir.

2010). When reviewing for clear error, we will not disturb a district court’s

findings “unless we are left with a definite and firm conviction that a mistake has

been committed.” Id. (quotation marks omitted). After careful review, we hold

that the district court did not clearly err in applying the sophisticated-means

enhancement.

      The Sentencing Guidelines provide for a two-point enhancement of a

defendant’s offense level if the “offense . . . involved sophisticated means.” USSG

§ 2B1.1(b)(10)(C). The sophisticated means enhancement should only be applied

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to “especially complex or especially intricate offense conduct pertaining to the

execution or concealment of” the scheme. Id. § 2B1.1(b)(10) cmt. n.9(B).

“Conduct such as hiding assets or transactions, or both, through the use of fictitious

entities, corporate shells, or offshore financial accounts also ordinarily indicates

sophisticated means.” Id. There is no requirement that each of a defendant’s

individual actions be sophisticated in order to impose the enhancement. Ghertler,

605 F.3d at 1267. Rather, it is enough if the totality of the scheme was

sophisticated. Id.

      We cannot say the district court clearly erred in finding that Culver used

sophisticated means to perpetrate or conceal his fraudulent scheme because his

offense conduct could be viewed as “especially complex or . . . intricate.” See

USSG § 2B1.1(b)(10) cmt. n.9(B). Here, the district court found that increasing

Culver’s sentence was warranted because of the “significan[ce]” of Culver’s

attempts to cover up his conduct by directing CompTech to communicate with the

School District. The district court also found (albeit when discussing a separate

ground for increasing Culver’s sentence) that the scheme continued for an

extended period of time; Appellants “us[ed] deception to get the contract to

become the project manager”; and Appellants engaged in a well-documented

cover-up “as the School District began to ask questions.”

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       Like in Ghertler, it may be true that “aspects of [Culver’s] scheme were not

sophisticated,” but under our deferential standard of review, the totality of his

activities spanning July 2012 through April 2013 is sufficient to support the district

court’s finding that Culver used sophisticated means. 605 F.3d at 1268; see United

States v. Feaster, 798 F.3d 1374, 1381 (11th Cir. 2015) (“Regardless of whether

the defendant undertook affirmative acts of concealment, the scheme itself may be

designed in a sophisticated way that makes it unlikely to be detected, allowing it to

continue for an extended period and to impose larger losses.”). These activities

included: providing a fabricated reference letter to obtain a government contract;

using false invoices to hide Progressive’s role as a profiting vendor; sending a

deceptive email, copying the School District, that gave the appearance of a fake

arm’s length negotiation; and feeding CompTech responses to the School District’s

inquiries. In short, Culver’s offenses “involved repetitive, coordinated conduct

designed to allow him to execute his fraud and evade detection.” United States v.

Bane, 720 F.3d 818, 826–27 (11th Cir. 2013) (affirming imposition of a longer

sentence when offense involved multiple corporations, required employees to

create a paper trail to mask the fraud, and involved steps to conceal the offense).

       Thus, although Culver did not attempt to conceal his role in the fraud

through false identities or fictitious entities, the totality of his activities carried out

over the course of his relationship with the School District were sufficiently

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complex to support finding that he used sophisticated means. See Ghertler, 605

F.3d at 1267–68. We therefore affirm the district court’s application of the

sophisticated-means enhancement and Culver’s 87-month sentence.

      AFFIRMED.

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