Court Opinion

ID: 1009556
Source: CourtListenerOpinion
Date Created: 2013-07-04 19:58:02.207669+00
Date Added: 2024-06-11T09:33:36.499418
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,              
                 Plaintiff-Appellee,
                 v.
                                                 No. 01-4811
JOHNNY WILLIAM CABE, a/k/a Bill
Cabe,
              Defendant-Appellant.
                                       
           Appeal from the United States District Court
          for the District of South Carolina, at Rock Hill.
           Joseph F. Anderson, Jr., Chief District Judge.
                             (CR-00-301)

                      Argued: December 6, 2002

                      Decided: January 23, 2003

  Before WILKINSON, Chief Judge, MOTZ, Circuit Judge, and
      James P. JONES, United States District Judge for the
       Western District of Virginia, sitting by designation.

Affirmed by unpublished opinion. Judge Jones wrote the opinion, in
which Chief Judge Wilkinson and Judge Motz joined.

                             COUNSEL

ARGUED: Richard Dwight Biggs, LAW OFFICE OF MARCIA G.
SHEIN, P.C., Decatur, Georgia, for Appellant. Dean Arthur Eichel-
berger, Assistant United States Attorney, Columbia, South Carolina,
for Appellee. ON BRIEF: Marcia G. Shein, LAW OFFICE OF
2                       UNITED STATES v. CABE
MARCIA G. SHEIN, P.C., Decatur, Georgia, for Appellant. J. Strom
Thurmond, Jr., United States Attorney, Columbia, South Carolina, for
Appellee.

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                              OPINION

JONES, District Judge:

   Johnny William Cabe appeals from his conviction and sentence for
wire fraud and money laundering. Cabe argues that the government
failed to prove the elements of the charges. In addition, he claims that
the district court erred in sentencing him by using relevant conduct to
find a loss amount in excess of five million dollars. Finding sufficient
evidence and no reversible error, we affirm.

                                   I.

   Cabe was pastor of a small independent Baptist church in Rock
Hill, South Carolina. Beginning in January 1998 and continuing
through October 1998, Cabe and another minister, Shelton Joel Shir-
ley, solicited individuals to invest money in an investment scheme
called "high yield trading programs." They promoted the scheme as
a charitable venture affiliated with a religious organization, Hisway
International Ministries of London, England.1 Cabe and Shirley told
potential investors that they had contacts with "traders" who would
invest their money in European bank debentures. Some solicitations
described the investments as charitable "gifts" and the return of
investments as "re-gifts" and suggested that because of their charita-
ble nature, there would be no tax consequences.
    1
   The investment scheme was offered under various names, including
Gideons Christian Family Wellness Center and Hisway Financial Asso-
ciates.
                        UNITED STATES v. CABE                         3
   Cabe portrayed the investment programs as profitable and without
risk and claimed that investors typically would double their money
within thirty to ninety days of investment. Cabe told potential inves-
tors that he had been receiving large profits from his personal invest-
ments in the programs and that "through years of research and three
years of participation" in the program he had been able to secure the
necessary contacts in order to invest in the programs.

  Potential investors were given documents describing the lucrative
nature of the scheme and prohibiting them from revealing any infor-
mation relating to it. The documents instructed that if any such disclo-
sure occurred, the investor would forfeit the investment. Investors
were also required to pay a three percent "administration gift" fee to
Cabe on every transaction.

   On January 9, 1998, Cabe began establishing bank accounts in
order to aggregate and aid in the transfer of investors’ funds. Upon
receiving contributions from investors, Cabe wired the funds to vari-
ous organizations and individuals for alleged investment. The evi-
dence at trial showed that these investments were in fact fictitious and
that the money was stolen by the traders. Moreover, the evidence
established that $679,317 of investors’ contributions were diverted to
Cabe, Shirley, and their families.

   In the course of their dealings with investors, Cabe and Shirley
recruited "stewards" for the scheme. After making a contribution to
Cabe’s ministry, the stewards were tasked with recruiting other inves-
tors for the programs. In order to recruit stewards, some of whom
were already investors, Cabe provided them with literature detailing
the success of the programs. In return for recruiting new investors,
these stewards expected to receive a portion of the profits from matur-
ing investments.

   In meetings with investors, Cabe categorically stated that none of
his prior investments had faced any problems. However, beginning in
April 1998, Cabe complained to the "traders" that he had not received
any return on the investments and was unable to pay any of his con-
tributors. He expressed concern that he would not only lose future
potential investors, but that he also might be "sued for fraud." Even
with this knowledge, however, Cabe continued to solicit investors
4                      UNITED STATES v. CABE
with representations that the programs were highly profitable and
risk-free.

   In July 1998, after certain of the investors demanded payment of
the promised return on their investments, Cabe transferred money to
some of them. Cabe represented that these payments were profits
from their investments in the trading programs. However, these funds
were in reality from the aggregated funds of new investors. The evi-
dence presented at trial showed that these payments to investors were
made to prove the programs profitable and to encourage further
investments.

   In February 1999, following inquiries by federal law enforcement
officers, Cabe and Shirley directed investors to call an international
telephone number in order to obtain information relating to the pro-
grams. At this number, an associate of Cabe had placed a warning
message that investors were not to discuss or disclose any details
about the scheme to government officials.

   Eventually Cabe and Shirley were indicted in the court below.
Shirley pleaded guilty and testified for the government at trial. One
of the alleged traders, Terence Wingrove, an English art dealer, also
testified for the government pursuant to a plea agreement. He admit-
ted that he had received several million dollars in investment money
from Cabe, which he had stolen.

   Cabe testified on his own behalf at trial and defended his actions
by claiming that he had been merely a victim in the investment
scheme. He contended that he had acted in good faith and had been
an innocent pawn of the traders. He denied lying or misrepresenting
the program to the investors and testified that he only relayed infor-
mation from the traders to the investors.

   The jury convicted Cabe of all twenty-six felony counts relating to
the fraudulent investment scheme. The convictions included nine
counts of wire fraud in violation of 18 U.S.C.A. § 1343 (West 2000)
(counts one through nine); two counts of money laundering in viola-
tion of 18 U.S.C.A. § 1956(a)(1)(A)(i) (West 2000 & Supp. 2002)
(counts ten and eleven); thirteen counts of money laundering in viola-
tion of 18 U.S.C.A. § 1957 (West 2000) (counts twelve through
                        UNITED STATES v. CABE                        5
twenty-five); and one count of conspiracy to obstruct justice in viola-
tion of 18 U.S.C.A. §371 (West 2000) (count twenty-six).

                                  II.

                                  A.

  Cabe first argues that there was insufficient evidence to find him
guilty of the wire fraud charges.

   In evaluating the sufficiency of the evidence, we consider whether
"‘any rational trier of fact could have found the essential elements of
the crime beyond a reasonable doubt.’" United States v. Lomax, 293
F.3d 701, 705 (4th Cir. 2002) (quoting United States v. Myers, 280
F.3d 407, 415 (4th Cir. 2002)). Secondly, "[w]e review the suffi-
ciency of the evidence by determining whether ‘there is substantial
evidence, taking the view most favorable to the Government, to sup-
port’ the verdict." United States v. Edwards, 188 F.3d 230, 234 (4th
Cir. 1999) (quoting Glasser v. United States, 315 U.S. 60, 80 (1942)).

   In order for a defendant to be found guilty of wire fraud, the gov-
ernment must prove: (1) the existence of a scheme to defraud that
involved a material falsehood, and (2) the use of interstate wire com-
munications to facilitate the scheme. See 18 U.S.C.A. § 1343. In addi-
tion, the government must also prove the defendant acted with
fraudulent intent in committing these acts. See United States v. Ham,
998 F.2d 1247, 1254 (4th Cir. 1993).

   This court has held that "fraudulent intent ‘may be established by
circumstantial evidence and by inferences deduced from facts and sit-
uations.’" United States v. Celesia, 945 F.2d 756, 759 (4th Cir. 1991)
(quoting United States v. Bales, 813 F.2d 1289, 1294 (4th Cir. 1987)).
Similarly, "fraudulent intent may be inferred from the totality of the
circumstances and need not be proven by direct evidence." United
States v. Ham, 998 F.2d at 1254.

   Cabe relies on United States v. Brown, 79 F.3d 1550, 1557 (11th
Cir. 1996), in which the court held that the government did not show
that the defendant acted with fraudulent intent because he had not cre-
6                       UNITED STATES v. CABE
ated a scheme "reasonably calculated to deceive persons of ordinary
prudence and comprehension." Id. Cabe contends that a person of
ordinary prudence and comprehension would not have relied on his
representations or those of his accomplices. He asserts that because
the victims did not investigate the validity of the investment program,
consult financial professionals, or make any attempts to substantiate
the claims regarding the success of the program, their actions were
not those of a person of ordinary prudence.

  We have previously held that criminal fraud does not take into
account the victims’ lack of prudence:

    The susceptibility of the victim of the fraud . . . is irrelevant
    to the analysis. "If a scheme to defraud has been or is
    intended to be devised, it makes no difference whether the
    persons the schemers intended to defraud are gullible or
    skeptical, dull or bright. These are criminal statutes, not tort
    concepts."

United States v. Colton, 231 F.3d 890, 903 (4th Cir. 2000) (quoting
United States v. Brien, 617 F.2d 299, 311 (1st Cir. 1980)). However,
even if we were to accept Cabe’s argument that in order to prove
fraudulent intent the government must show that the scheme was
"reasonably calculated to deceive persons of ordinary prudence and
comprehension," the evidence here was sufficient. First, the victims’
failure to conduct investigations of Cabe’s scheme is explained by the
fact that there was no readily available external source for the inves-
tors to obtain further information. As Cabe stressed in his solicitations
to investors, these were supposed secret investment opportunities
known only to a small number of wealthy persons. Additionally,
because of the non-disclosure requirements, investors were dissuaded
from conducting any outside research. Finally, Cabe’s position as a
religious leader and his alleged charitable motivation led victims to
believe that his representations were truthful.

   Furthermore, as demonstrated by the evidence at trial, one victim’s
research attempts proved that an investigation of the scheme did not
discourage even a relatively savvy investor from relying on Cabe’s
representations. Before investing, Ralph Nurnberger, a Capitol Hill
lobbyist and adjunct professor at Georgetown University, discussed
                         UNITED STATES v. CABE                          7
his proposed investment with friends, including a financial planner,
a former Wall Street broker, and an international developer. None of
these individuals had any information that caused him to doubt
Cabe’s representations.

   For these reasons, the appellant’s contention that the evidence was
insufficient to prove the charges of wire fraud is without merit.2

                                   B.

   The next argument presented by Cabe is that he may not be con-
victed of money laundering as charged in counts twelve and thirteen
because the money laundering occurred before any of the wire fraud
charged in the indictment. The monetary transactions charged in these
counts occurred on July 2, 1998, eleven days before the first alleged
wire fraud. Cabe asserts that because this money laundering predated
any of the other criminal activity charged in the indictment, the funds
were not "criminally derived" and therefore fail to satisfy a required
element of the offense.

   In order to sustain a conviction under these counts, the government
must prove that (1) the defendant knowingly engaged (2) in a mone-
tary transaction (3) in criminally derived property (4) of a value
greater than $10,000 (5) derived from specified unlawful activity. See
18 U.S.C.A. § 1957(a). Criminally derived property is "any property
constituting, or derived from, proceeds obtained from a criminal
offense." 18 U.S.C.A. § 1957(f)(2).
  2
   Cabe additionally argues that because there was insufficient evidence
presented to convict him of the wire fraud counts, the convictions for the
money laundering counts must be reversed because there was no predi-
cate illegal conduct. Because we have concluded that sufficient evidence
existed, this claim is without merit.
  Cabe also separately challenges his conviction under Count Two of the
indictment, claiming that no evidence was presented that the victim,
Eddie Howard, transferred any money. This contention was not raised
below and thus is subject to a plain error analysis. See Fed. R. Crim. P.
52(b). The evidence at trial was clear that although Eddie Howard did
not personally make a wire transfer, one was made from his account to
Cabe following a face-to-face solicitation by Cabe. The jury could there-
fore properly infer that the defendant’s conduct caused the wire transfer.
8                       UNITED STATES v. CABE
   While not previously addressed by this court, other circuits have
made it clear that there is no requirement that a defendant be con-
victed of any specific unlawful activity for a money laundering con-
viction to be sustained. A conviction for money laundering under 18
U.S.C.A. § 1957 "does not require proof that the defendant committed
the specified predicate offense; it merely requires proof that the mon-
etary transaction constituted the proceeds of a predicate offense."
United States v. Richard, 234 F.3d 763, 768 (1st Cir. 2000) (citations
omitted); see also United States v. De La Mata, 266 F.3d 1275, 1292
(11th Cir. 2001); United States v. Mankarious, 151 F.3d 694, 703 (7th
Cir. 1998); United States v. Whatley, 133 F.3d 601, 605-06 (8th Cir.
1998); United States v. Tencer, 107 F.3d 1120, 1130 (5th Cir. 1997);
United States v. Kennedy, 64 F.3d 1465, 1480 (10th Cir. 1995).

   In United States v. Smith, 44 F.3d 1259, 1265 (4th Cir. 1995), we
held that it is not necessary for an indictment to allege any specific
illegal activity from which criminally derived funds were acquired.
We noted that

    [t]he core of money laundering, which distinguishes one
    such offense from another, is the laundering transaction
    itself. Because the requirement that the funds be illegally
    derived is not the distinguishing aspect and therefore does
    not lie at the core of the offense, details about the nature of
    the unlawful activity underlying the character of the pro-
    ceeds need not be alleged.

Id. There is thus no requirement that there must be a conviction for
an underlying predicate offense. As the case law demonstrates, it is
only necessary that the government provide sufficient evidence from
which the jury can determine that the monies involved were crimi-
nally derived.

   In this case, the specified criminal activity was alleged in the
indictment and presented to the jury. Paragraph thirteen of count one
of the superseding indictment, which was re-alleged in counts twelve
and thirteen, charges that

    [b]eginning on or about a date unknown to the grand jury
    but at some time between January and July 1998 . . . Johnny
                        UNITED STATES v. CABE                          9
    William Cabe and Shelton Joel Shirley knowingly and will-
    fully did devise and intend to devise a scheme and artifice
    to defraud and to obtain money and property by means of
    false and fraudulent pretenses.

J.A. at 24. The government presented evidence that Cabe knew at
least by April 1998 that the investment program he was running was
not as purported and yet he continued to solicit investors and acquire
funds through misrepresentation and deceit. This evidence was suffi-
cient to show that there was unlawful activity occurring before July
2, 1998, and that the money transfers alleged in counts twelve and
thirteen consisted of monies that were criminally derived.

   Cabe makes a similar argument as to the money laundering
offenses charged in counts twenty through twenty-three and count
twenty-five. He asserts that the criminally derived funds from the
wire fraud counts were exhausted by money laundering counts ten
through nineteen and count twenty-five. Cabe was charged in counts
ten through twenty-five of laundering $1,068,409. However, he
argues that because the amount charged in the wire fraud counts total
only $601,305, the criminally derived funds were exhausted by less
than all of the money laundering counts.

   This argument is also erroneous. The testimony of Special Agent
Kelly Jackson of the Internal Revenue Service detailed the source of
all the payments charged in counts ten through twenty- five. This evi-
dence, coupled with the overwhelming evidence presented at trial
regarding Cabe’s overall scheme, was sufficient to prove that the
funds in question were criminally derived.

                                   C.

   Cabe’s final argument is that the district court erroneously used rel-
evant conduct in determining the loss amount for sentencing pur-
poses. In calculating Cabe’s sentence, the district court found the loss
to be over five million dollars. Cabe did not object at sentencing to
the use of relevant conduct in determining the loss amount. Instead,
he contended that it was improper to include the money seized by the
government from Cabe’s account in the computation of loss. How-
ever, as the district court correctly held, money returned to victims
10                      UNITED STATES v. CABE
may only be credited against loss if it is returned before the offense
is detected. See U.S. Sentencing Guidelines Manual ("U.S.S.G.")
§ 2B1.1, cmt. n.2(E)(i) (2002).

   Since the current basis for Cabe’s objection to the amount of loss
is different from that raised below, the standard of review is one of
plain error. See United States v. Wilkerson, 84 F.3d 692, 694-95 (4th
Cir. 1996). Plain error is error that is clear or obvious and affected
substantial rights. See United States v. Orlano, 507 U.S. 725, 734
(1993). Cabe’s present objection to the use of relevant conduct is that
he should only be held accountable for the amounts of money he
obtained through the wire fraud specifically charged in the indict-
ment, i.e., counts one through nine, totaling $601,305. Cabe argues
that it was not shown that greater amounts obtained from investors
was as a result of criminal conduct.

   The sentencing guidelines establish that certain relevant conduct
may be considered in determining the guideline range for a criminal
defendant. U.S.S.G. § 1B1.3 (2002). Relevant conduct may be based
on uncharged conduct, dismissed conduct, and even conduct for
which the defendant was acquitted. See United States v. Barber, 119
F.3d 276, 283-84 (4th Cir. 1997). In determining whether conduct is
relevant,

     "the sentencing court is to consider such factors as the
     nature of the defendant’s acts, his role and the number and
     frequency of the repetitions of those acts in determining
     whether they indicate a behavior pattern." The significant
     elements to be evaluated are similarity, regularity and tem-
     poral proximity between the offense of conviction and the
     uncharged conduct.

United States v. Mullins, 971 F.2d 1138, 1144 (4th Cir. 1992) (quot-
ing United States v. Santiago, 906 F.2d 867, 872 (2d Cir. 1990)).
When a defendant has multiple convictions for wire fraud, all acts that
are part of the same course of conduct must be grouped and consid-
ered together. See U.S.S.G. § 3D1.2(d) (2002). Moreover, for
offenses that require grouping a defendant may be held accountable
for all instances of the unlawful conduct regardless of whether or not
he was charged or convicted. See U.S.S.G. § 1B1.3, cmt. n.3 (2002).
                       UNITED STATES v. CABE                      11
   The district court did not commit error, much less plain error, in
its determination of the loss. The relevant conduct relied upon was
Cabe’s conduct after April 1998, a time when he was aware that the
investment scheme was not as he had represented. Cabe was the
leader and organizer of the scheme and was responsible for instruct-
ing stewards and managing the investment funds. Cabe’s conduct, as
documented in the record, involved repeated solicitation of investors
through misrepresentation and deceit. Furthermore, Cabe continued to
solicit funds and accept wire transfers even after his house had been
searched by federal agents in August 1998. In addition to the wire
transfers charged in the indictment, investors made more than one
hundred wire transfers to the defendant between May and December
1998, totaling in excess of five million dollars. As estimated in the
pre-sentence report, Cabe’s scheme had over 210 victims, only nine
of whom were specifically mentioned in the indictment.

   While Cabe was only specifically charged with obtaining $601,305
by fraud, the evidence presented at trial and contained in the pre-
sentence report demonstrated that he had actually caused investments
of $5,759,151.18 in his fraudulent scheme. It was thus appropriate to
calculate his offense level based on that amount.

                                III.

   For the foregoing reasons and after careful consideration of the
record, we affirm Cabe’s conviction and sentence.

                                                        AFFIRMED